Google's Chile data center a sign that ICT investments in LatAm and the Caribbean are on the rise

Posted by Investt

As investors become more aware of the real opportunities available in the Latin American ICT sector, an increasing number of major players are staking out their claim in some of the region’s hottest emerging markets. Recently, Google joined that group when it chose the town of Quilicura, Chile, as the site of its new $150 million data center.

Google broke ground on the massive project in this month and hopes to bring the facility online by the end of the year. Once operational, it will house 20 full-time and contract employees, including computer technicians, engineers, catering and security staff.
Google's new data center in Chile
Infrastructure, skilled workforce, and business-friendly environment all important to Google
When Google decided to build a data hub in Latin America, it did an exhaustive search for the right location. Its criteria included a skilled labour force, a pro-business regulatory environment, and a reliable infrastructure. Chile, in comparison to many of its Latin American neighbors, has a head start in all three of those categories.

With it’s Start-Up Chile program, the Chilean government made a sustained commitment to growing its high tech entrepreneurial community, leading TechCrunch to call them “the underdogs that have captured the nation’s attention.” Developing pro-business policies is a trend we’re seeing all over the Latin America and the Caribbean, with some nations making progress more rapidly than others. Chile is a clear leader in the modernization race, and its ranking in the IFC’s 2013 “Ease of Doing Business Index” reflects its progress. Out of 185 countries, Chile came in at 37.

The Heritage Foundation's Index of Economic Freedom ranks countries on a scale of 0-100, with higher rankings signifying more freedom and lower rankings signifying less. It's interesting to note that Trinidad and Tobago and Chile were head-to-head on two key points in the foundation's recently released 2013 index. For fiscal freedom, Trinidad and Tobago earned a score of 71.6, coming very close to Chile’s score of Chile 74. For labour freedom, Trinidad and Tobago scored 76.7, just surpassing Chile’s score of 74.2.

The foundation ranked Chile and Trinidad and Tobago especially high for the protections they’ve put in place to protect investors. Trinidad and Tobago came in 25 out of 185 countries for investor protection policies, while Chile also did well with a rank of 32. Amongst Latin American nations, Chile is a leader in the implementation of pro-business regulation, while Trinidad and Tobago (along with Jamaica) lead the Caribbean movement to improve business climate.

Latin America’s emerging ICT market an opportunity to invest on the ground-floor
In 2011, Latin America’s online population jumped 16 percent, proving its growth rate to be faster than any other region in the world.

Part of the explanation for the surge in Latin American and Caribbean internet users is the region’s growing middle class. A series of successful safety net programs in Latin American and Caribbean countries led the middle class to grow by 50 million over the last decade. With more disposable income then ever before, LatAm consumers are increasingly doing their shopping online.

In a recent blog post for the Huffington Post, WorldPay CEO Shane Happach wrote, "The Latin American e-commerce landscape is diverse as many of the markets are embracing e-commerce at different rates. A result of this is that consumer spending behavior differs immensely across the region.”

Latin American populations have proven themselves to be enthusiastic internet users. Some trends that have sparked e-commerce investors' interest include:

Mobile e-commerce is on the rise.
According to Happach, “There is a substantial opportunity for mobile commerce in Latin America...While UK e-shoppers are still only starting to embrace using their mobile devices to shop online (14 percent), the appetite for mobile shopping in Latin America is already quite substantial in some regions.”

Using the internet for “light” purchases.
Brazillian consumers are unique in their willingness to purchase everday items like toiletries and digital music online. A survey done by WorldPay last year found that Brazilians spent 27% of their disposable income online, compared to 23% in the US and 17% in Canada. Astonishingly, WorldPay predicts that online sales in Brazil will grow 76% between 2011 and 2015.

The emergence of Technolatinas.
A growing number of entrepreneurs in Latin America are starting new tech ventures, earning themselves the title “Technolatinas.” According to Miami-based entrepreneur and lawyer Juan Pablo Capello, "The tech boom in the U.S. has ignited the imaginations of entrepreneurs in Latin America." Notable tech startups in the LATAM market include online reservations site and Mercado Libre, an Argentinian site similar to eBay.

As Latin America’s economic growth increases, high-tech industries will most certainly play a key role in building that new wealth. Edward Dallas, the head of section for the British Embassy in Bogota, said, “The rise is not just IT itself but high-tech products in areas such as security, construction and so on. In the narrower IT sector we have companies like BT and Aveva, which is specifically involved with software for production plants. We also have companies like Smartwater, which offer a high-tech product for forensic security… and Experian, which provides solutions for managing credit risk in the financial sector.”

With an increasingly internet-ready population and a shortage of quality ICT providers, Latin America and the Caribbean stand to be prime locations for international companies looking for high quality investment opportunities. Trinidad and Tobago has a number of characteristics that make it attractive to potential ICT investors. The nation's workforce is highly qualified and growing: more than 400 Trinidadian students graduate from university with ICT-related degrees each year. Another factor to consider is Trinidad's robust infrastructure, which is setup to support the complex needs of ICT providers. Low energy costs and a strategic location at the gateway to South America also add to Trinidad and Tobago's attractiveness as a potential investment site.

To learn more about ICT-BPO in Trinidad, visit the ICT-specific information section of our website.

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