Market Trends of Latin America Cloud Computing Industry
Large Enterprises Are Expected to Hold a Significant Market Share
- Large enterprises in Latin America are rapidly driving the demand for cloud computing. This surge is fueled by factors like rapid digital transformation and increased adoption of advanced technologies, including artificial intelligence, machine learning, and the Internet of Things (IoT). Moreover, the various benefits of cloud adoption, such as flexibility and scalability, bolster this growing demand among major businesses in the region.
- Moreover, over the past two years, large companies in Latin America have rapidly adopted artificial intelligence (AI) technologies. This uptick in AI adoption, particularly among the region's large enterprises, has heightened the demand for cloud computing. Cloud platforms, with their on-demand access to virtually limitless computing power, empower organizations to scale their AI initiatives effectively. Such factors are analyzed to bolster the demand for cloud computing in large enterprises across the region.
- A 2023 survey conducted by NTT DATA revealed that almost 40% of business leaders in Latin America were investigating AI solutions for their companies, marking an 18% rise from the previous year. In contrast, only 10% of respondents reported a lack of AI experience in 2023, down by 9% from 2022.
- As AI adoption surges across various industries in Latin America, global cloud computing vendors are increasingly establishing a foothold in the region to meet the escalating demand for cloud services. For example, in May 2024, Chinese cloud giant Alibaba announced its intention to broaden its reach in Mexico while simultaneously augmenting its cloud regions in the APAC markets. The president of international business at Alibaba Cloud Intelligence stated that in response to the rapidly growing AI demand across sectors, Alibaba Cloud is doubling down on its commitment to bolster its AI infrastructure and elevate its global cloud capabilities.
- In June 2024, Amazon Web Services (AWS) received approval to establish its inaugural data center in Chile. This USD 205 million venture signifies a pivotal step in the company's South American expansion, underscoring the growing demand for cloud services in the continent. Positioned in the Santiago Metropolitan Region, the data center will deliver a comprehensive range of AWS cloud services, encompassing computing, storage, networking, analytics, and artificial intelligence. This initiative empowers Chilean enterprises and institutions with state-of-the-art cloud infrastructure, fostering innovation, operational scalability, and enhanced efficiency.
- In February 2024, Amazon Web Services Mexico (AWS), a subsidiary of Amazon.com Inc., revealed plans to invest over USD 5 billion in establishing a data center cluster in Mexico. This move comes in response to the surging demand for cloud services as businesses increasingly adopt new technologies.
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Mexico Is Expected to Hold Significant Market Share
- In Mexico, demand for cloud-based infrastructure and services is surging, fueled by businesses increasingly adopting digital transformation strategies. This momentum is likely to persist as more companies adopt remote work and digital operations. Moreover, government initiatives promoting cloud computing, coupled with investments in infrastructure, are propelling the market's expansion.
- Moreover, the data center expansion by major cloud providers, such as Google and Microsoft Corporation, as well as regional cloud computing vendors in Mexico, is analyzed to bolster the adoption of cloud computing among businesses in the country. For instance, in February 2024, ODATA, a company under Aligned Data Centers and a key player in providing data center services across Latin America, announced its operational expansion in Mexico. The QR01 data center, situated in the strategic location of Querétaro, is set to undergo an expansion to cater to the surging demand for IT infrastructure and cloud services in the region.
- Moreover, many companies from a wide range of industries in Mexico are seeking to scale their operations, enhance efficiency, and cut costs by transitioning to cloud services, with a variety of international providers available. Furthermore, Mexico's financial services and fintech industry is increasingly adopting cloud computing. This trend is driven by companies' desires to cut costs, enhance scalability, and leverage new technologies.
- As a result, the BFSI sector in Mexico is poised to significantly boost the demand for cloud computing. For instance, Finnovista reported that in 2023, nearly 70% of fintechs in Mexico adopted open finance and APIs, establishing them as the predominant technologies in the fintech sector. Additionally, cloud computing, AI, and machine learning gained significant traction, with over half of all fintech businesses leveraging these technologies.
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