I recently returned from attending the opening of Belatrix Software’s new office in Lima, Peru, where I was also able to meet with representatives of the Peruvian Association Of Software Producers (APESOFT), which aims to promote the software industry in Peru.
I was keen to travel to Peru to gain a better understanding of one of the fastest-growing Latin American economies, as well as to put this growth into the context of its technology industry. Peru was recently ranked fourth in Bloomberg’s list of the top 20 emerging markets, just behind China, South Korea, and Thailand but ahead of other prominent Latin American destinations such as Mexico and Brazil. It is rated as one of the most attractive Latin American markets for doing business.
Peru has one of the fastest-growing economies in Latin America, and although GDP growth has recently slowed slightly, its forecast for the medium to long term is positive. Although by total size, it is dwarfed by Brazil (whose GDP is approximately 14 times larger than Peru’s), the IMF is expecting continued growth at approximately 6% in 2013 and 2014.
However, despite its fast-growing economy, Peru’s IT market is one of the smaller and more nascent Latin American markets. Forrester estimates that total Peruvian IT purchases in 2012 were $2.5 billion — compared with $23.4 billion in Mexico and $46.5 billion in Brazil.
The Asia Pacific mobile payment landscape is currently in an exciting phase of development, but remains fragmented. Asian telcos will likely need to wait at least another two to three years to see traction with mobile payments. Here’s why:
User readiness. Let’s face it: Cash and credit/debit cards still dominate the payment landscape, and are a lot more convenient to use. While penetration of feature and smartphones has grown substantially in Asia, not many people actually use their phones for mobile payments. Even in markets like Australia and South Korea, cash and credit cards remain highly popular among consumers. And if demand remains low, merchants will not deign to accept mobile payments — creating a vicious cycle.
Infrastructure development. Telecom infrastructure in many Asian countries remains uneven with spotty coverage, (e.g. India and Indonesia). Without proper network access, mobile payments will not propagate outside of urban areas, if at all. While Globe’s Gcash has seen some level of success, the truth is that mobile payments remain nascent in the Philippines specifically and in Asia more broadly. In addition, there is still limited handset support for mobile payments (e.g. some Android models are not able to work with a service). Australia’s Commonwealth Bank went ahead with its m-payment launch after deciding not to wait for incompatible handsets to catch up.
Notes from the IQPC Enterprise Mobility Exchange 21-23rd May, 2013 in Rotterdam:
Last week I chaired, presented and discussed the future of mobility with suppliers and IT leaders at this year’s Enterprise Mobility Exchange. During the event professionals representing many leading European MNCs emphasized themes including best-in-breed customer experience and workforce productivity. IT leaders giving account of their current mobility deployments included BAT, Procter & Gamble, Enel, the National Grid and Lafarge.
Summary: IT departments of European MNCs clearly see the writing on the wall
European decision makers focus on the second wave beyond device management and communication services. They look to balance the response to fundamental trends together with the need to support necessary business requests. The winner won’t necessarily be the one who supports the most devices and the most applications. Successful mobile deployment happens when the IT side understands and caters for the specific needs of the business.
BYOD is no single answer to taking mobile enterprise into the second wave
The discussion on BYOD remains complex. Many participants voiced reservations due to European data protection laws, compliance issues and acceptance of purchasing plans. Interestingly, security issues came second to a more fundamental requirement in the energy sector: safety. Electricians are expected to be on call when power is down, construction workers are on roads, and operations dealing with gas, electricity and water must remain fool proof and protected against unauthorized access to avoid life threatening situations.
China’s GDP growth slowed to 7.7% in Q1 2013. While below market expectations, this growth rate still ensures strong continued IT spending, as local organizations seek to meet ongoing demand for products and services. At the same time, we expect Chinese government stimulus packages to drive increased consumer demand, particularly in the retail, supply chain, and banking industries. Chinese organizations wishing to capitalize on these opportunities are currently seeking ways to transform their business and decision-making processes and broaden their product portfolios. This, in turn, has driven increased interest in third-party service providers as organizations seek to augment limited (or, in some cases, nonexistent) internal IT capabilities.
Recently I spoke with IT managers at two local Chinese companies; they shared their recent experience with third-party service providers.
A top 5 Chinese insurance company worked with multiple service providers to strengthen its CRM data mining and analysis capabilities. While this company started its CRM implementation project in early 2006, it still had limited capabilities to manage fast-growing customer data, which was essential given the increased presence of foreign insurance companies in the local market. In response, the company sourced application development and modernization services from Accenture, primarily to define a data architecture and deliver analysis capabilities. With these new functions added to their existing CRM systems, the company enhanced customer data analysis capabilities, grew related sales, and improved customer experience/loyalty.
The proposed reforms to the H1B visa standards under the Senate’s Comprehensive Immigration Bill have the potential to have a profound impact on the outsourcing industry, and therefore the sourcing professional. A Computerworld report on leading H1B beneficiaries in 2012 puts Cognizant on top with 9,281 visas, followed by TCS (7,469), Infosys (5,600), Wipro (4,304), Accenture (4,037), HCL America (2,070), and TechM/MSat (1,963) and put together they accounted for 40% of all H1B visas allotted during the year. These companies have often been accused of abusing the H1B visa program by bringing in lower-cost foreign resources to the US and ‘hogging’ the visa quotas, thereby making it difficult for US companies’ to recruit skilled foreign workers.
While the changes are designed to protect the integrity of the H1B visa program and enable US employers access to the skilled resources they need, they could potentially change several crucial aspects of IT services and outsourcing relationships – many in ways that will be harmful to customers. In particular we see that:
Mobile devices have cut the mustard as the first tool of choice against the PC. Despite their deficits, they are now poised to become the universal device many people will chose to work with. This trend, driven by end users, was predicted some time ago. But the displacement is happening faster than many anticipated and is now catching the PC manufacturers. One quarter of the world population already has a smartphone and Forrester expects this number to rise to over 40% in 2017*. And they have an impact on the business world. One third of business leaders expect that more than 75% of their employees use a smartphone regularly for work today, only 18% of them believe that the same is true for laptops**.
The latest quarterly figures of manufacturers also speak a clear language. Classic PC and laptop producers like HP, Fujitsu and Dell face restructuring, even Microsoft numbers are down. Meanwhile, Samsung Electronics is generating € 6bn through consumer electronics, a large part of this is due to smartphones, in a single quarter. The numbers also suggest that Samsung is now challenging Apple in a two horse race. Between the two manufacturers, all three established mobile application platforms Android, Microsoft and i-Tunes are covered. But such developments could turn fast with new entrants. Remember, it’s not even a decade ago that Nokia was carefully observed by regulators for holding over 40% market share with mobile handsets. The likely scenario that smartphones and tablets take over is is posing challenges to many organisations. They need to embrace mobile devices as more than an extension for the classic desktop. Users will expect increasing capability to access corporate systems, UC, text and tabular programmes.
IT services buyers are changing their buying requirements. Increasing demand for technologies that drive business innovation agendas, from cloud to analytics to mobile, is creating dramatic upheaval in the technology services market. One result of this, is that while organizations are looking to consolidate their supplier base in traditional service areas like applications outsourcing, buyers are looking to a broader range of providers to acquire specific expertise for these innovation-led engagements.
In light of this shifting backdrop, there is an argument that this will present opportunity to some of the so-called “alternative offshore” locations beyond India. In other words, buyers will look to other regions to try and find some of these specific skills and resources.
My recent report examined this with respect to Central and Eastern Europe (CEE).
The services market in the CEE region remains highly fragmented, with a large number of relatively small providers. However, the region does have a set of key strengths which will position it strongly in the minds of buyers as these broader technology shifts take place. In particular:
Aspirations of young digital natives in the region to become programmers or engineers
Educational systems focused on key strengths in engineering, math and science
Leading providers focus on high-end software engineering with expertise in agile development
Leading providers focus on product development services which helps differentiate from traditional IT services
At a recent Enterprise Mobility event, I spoke with a few Asia-based IT directors about their journey in the age of consumerization of IT, and how they were dealing with Bring-Your-Own Technology (BYOT) at work. Their responses ranged from ‘fear of the unknown’ – as in ‘how do we deal with this trend?’ to ‘paralysis by analysis’ – as in ‘let’s arm ourselves with as much information as possible, and analyze it to death.’
The issue is – their employees are already accessing corporate email on their own mobile devices – which means that these IT managers are scrambling to catch up to managing BYOT in their organizations. In fact, an IT head at a large FMCG organization admitted that he did not know where to start managing BYOT.
Security and compliance were key concerns for these IT folks, and their concerns are valid. Trend Micro predicts, for example, that 91% of targeted attacks begin with spear-phishing, a highly targeted type of phishing aimed at specific individuals or groups within an organization. This was heightened in a recent spear-phishing attack on a South Korea bank. The security provider also predicts that there will be 1 million malicious Android apps in the wild by the end of 2013 – another red flag for organizations coping with the rise of Android devices at their work place.