XaaS has arrived in Latin America — but is the region ready?
This article was originally published in Spanish in Forbes CentroAmerica.
In what feels like an instant, anything as a service (XaaS) has exploded in Latin America. Even before the pandemic, the Latin American market was already digitally transforming: in 2018, the region’s software as a service (SaaS) market was predicted to grow at nearly 25% annually. Now, amidst the new normal, LatAm’s tech market is expected to grow tenfold in the next decade as XaaS companies more regularly provide consumers and businesses with cloud-based subscription services.
In fact, some analysts compare the region’s rapid and sudden digital change as on pace with the rate of growth in the early days of Silicon Valley.
Perhaps even more stunning about this change is how it’s being embraced. IDC reports that two-thirds of LatAm IT leaders want an increase in productivity by 2022 and that 40% are investing in the cloud to make it happen. Traditionally seen as a laggard, LatAm is fast adopting XaaS, keeping pace with current tech trends in Europe and the United States.
For a region that traditionally likes to do business in person, this shift raises cultural and business considerations. Most of all, it begs the question: is the region ready?
A changing business climate poised for rapid growth
Let’s first consider this question from the business perspective. At first glance, it’s promising to look at how businesses and consumers in LatAm have rapidly adopted digital solutions to deal with the uncertainty of the pandemic. This is especially evident in Brazil, for example, where digital subscriptions grew by one-third in the first months of the outbreak.
Another bright spot can be found in the region’s telecommunications companies. These operators are fast adopting XaaS to better serve customers and increase their value propositions by bundling cable TV, streaming services, live sports, and monthly broadband internet into consumer-facing packages. For example, major telcos across the region are increasingly leveraging digital marketplaces to reduce go-to-market time and provide end-to-end experiences.
Delivering bundles of multiple digital services is only possible via XaaS subscriptions, and it is clear that some of the region’s leading industries are embracing this model. As demand grows at an exponential rate, companies who prove themselves more adamant about adopting this new technology will not only survive any potential spate of future disruption but thrive in the new reshaped context of a global economy pivoting towards full digitization.
A face to face business culture goes digital
On the other hand, we must also consider the cultural equation of this shift. Latin American companies traditionally prefer to organize deals face to face, in Spanish, and usually with other LatAm nations. These unwritten cultural rules of business are often difficult for non-enterprise companies that don’t have the depth of language and are almost impossible to perform under the restrictions of a global pandemic.
Therefore, the cultural considerations of the region finally started to make a much-needed, global-facing shift with the pandemic. In the past year alone, some of the seemingly ironclad requirements that used to feel to outsiders as non-negotiable obstacles (doing business face to face, for instance) have begun to soften as the region has adapted to the changing times.
Further, widespread regional government support for digitization in LatAm has led to the expansion of internet access into the more rural and remote regions of the vast territory. As new communities open up to digital ways of doing business, this will set the stage for future changes in the years to come.
Before the pandemic, LatAm consumers and companies were more conservative when it came to adopting digital marketplaces and the idea of XaaS. Today, however, the vast majority are realistic about the hurdles facing companies in the region, and about shifting their expectations accordingly.
Ready or not, here XaaS comes
Given how businesses shifted their operating models to meet consumer demand, and from a purely cultural perspective, I’m confident that LatAm can adapt to the rapid growth of XaaS. Why? Because the core customer is changing with the market. There are approximately 400 million people in the region who average approximately 30 years in age, and that is leading to a huge amount of agility and flexibility.
Moreover, as customers become used to selecting one-click solutions, businesses will begin building out their capabilities to offer digital platforms and XaaS to meet demand. The necessity of the current moment has changed customer attitudes, and businesses will inevitably begin to adopt or be left in the dust. With the Covid crisis essentially forcing our hands to transform digitally, I believe that LatAm will move past any growing pains and adapt to the new digital-first reality.
To ensure XaaS success in our corner of the world, I suggest that:
- Company leadership embraces tech evolution from the top down. This means a focus on digital transformation on an institutional level, and the ability of businesses to offer customers their services through centralized marketplaces to meet consumer demand.
- As customers push for new approaches and new ways to do business, businesses must keep their fingers on the pulse and remain open to being flexible to meet demand.
- Companies continue the cultural shift towards a more international way of doing business and seek new opportunities outside of the immediate region, even if that means leaving their comfort zone and doing deals in languages other than Spanish or Portuguese.
As consumer and business demand for XaaS increases and software companies close the gap on what’s possible, Latin America is poised to enter a tech revolution with immense growth. Is the region ready? You better believe it.