Latin American enterprise cloud services to grow ten times faster than telecom services

According to the new report by Pyramid Research, the enterprise cloud services market, including SaaS, IaaS and UCaaS, represented 5% of the total revenue of the telecommunications market in Latin America in 2014. This number is set to increase to 14% by the end of 2019, showing the extent to which enterprise cloud services could become a strategic growth path for telecommunications service providers. Daniel Ramos, senior analyst at Pyramid Research, says: “Some leading service providers such as Telefonica/Vivo, Telmex/Embratel, Alestra and UOL Brasil have taken steps to address this business opportunity by making significant investments in their network optimization and cloud services provisioning methods. At the moment they are focussing on building cloud capabilities in Brazil, Mexico, Argentina, Chile, Colombia and Peru, but plan to export these initiatives to smaller markets in the region once they have developed the sufficient scale and expertise.”

Together, Brazil and Mexico accounted for 58% of the total enterprise cloud services revenue in LATAM in 2014, followed by the combined revenue of Argentina, Chile, Colombia and Peru at 24%.

Micro-business and SMBs represent a high potential for growth
Micro-businesses and small to medium-sized businesses (SMBs), which make up 99% of all businesses in Latin America, are expected to account for 54% of overall enterprise cloud services revenue by the end of 2019. This suggests that there is a high potential for growth of enterprise cloud service in the SMB segment. Over the last years, telcos have institutionalized massive human operational, marketing and call-center capabilities to serve smaller businesses, selling them network connectivity services with limited exposure to cloud services. Ramos says: “Reaching out to a large number of businesses still represents one of the main obstacles for telcos in Latin America, due to channel saturation. Online self-service platforms are a way to help address the SMB segment more effectively.”

LATAM telcos need to establish relationships with key players
Pyramid Research predicts that Latin American telcos will experience a shift in the way they address the enterprise market from 2015. This change will be driven by SDN and NFV investments, the adoption of cloud self-service platforms and the introduction of network and cloud services bundles. “Our expectation is that by 2019, most Latin American telcos will have achieved higher levels of maturity and will become central players in the enterprise cloud services market,” says Ramos “To exploit the full potential of enterprise cloud services in Latin America, it is fundamental that telcos establish partnerships with cloud technology enablers such as Cisco Systems, Alcatel-Lucent, HP and Oracle and collaborate with OTT cloud service providers such Microsoft and Google.”