Overview of the Chilean IT Industry Miguel Pérez, Ph.D. Chairman Chamber of Chilean IT Companies
Index Introduction The Chilean Business Environment Country Competitive Assessment The IT Industry Summary
Introduction
Founded in 1984 (25 years) Chilean Association of Information Technology Companies (ACTI) ACTI includes IT companies specialized in hardware, software, services, systems integration, IT enabled services. 200 members. Industry Employment: 92.000 people 60% related to SW and SW services Our Services IT industry promotion in Chile and abroad Partnering with Government to formulate IT policies Helping Collaboration among members Promoting quality standards and Intellectual Property rights CORFO operating agent and seed capital sponsor Corporate social responsibility
Chile at a Glance Population: GDP: 16.3 M USD 174.700 M GDP per capita: Annual inflation: 4.5% USD 10.700 (USD 14.000 PPP) Time zone alignment Unemployment: 9.5% Adult literacy rate: 96% Corporate tax: 17% Remitted Profits Tax: 35% (corp tax is credited to this tax) Overnight flights to the U.S. Sources: Treasure Ministry, INE, EIU, IMF
The Chilean Business Environment
Key Facts about Chile Leader in the Region: Chile stands out in the Region. It is an interesting platform for doing business and it has received important long term investors (Telecommunications, Sanitary services, Infrastructure, Transportation, Ports, Energy, Mining, Finance and Services). Sound Infrastructure: good infrastructure and IT capabilities. Good level of IT investment: Companies in Chile invest about 2.3% of the annual budget in Technology (UC Study). Chile has the largest corporate IT investment in the region. Focus on Innovation and Digital Strategy: Chilean government has launched several programs to promote Innovation and a Digital Strategy to foster the Information Society.
Focus on Innovation and Information Society Estrategia Digital was launched in January of 2008. This public plan includes: internet and broadband access, education & training, e- government, industry development and legal framework. The government is offering a scholarship program that cover the costs of English courses for students, professionals and technicians of ICT industry. The President announced a scholarship program for postgraduate and doctoral students for 2.500 professionals. (program will be funded with the interests of the $6 billion fund) R&D Tax Incentives Law will give a 35% credit for IT R&D investment. The National Council of Innovation for Competitiveness identified Global Services" as a key cluster to develop in Chile, creating the National Council of Offshoring. ACTI is part of it.
Country Competitive Assessment
Benchmarking Chile Country Competitiveness Denmark United States Singapore Taiwan United Kingdom Spain Chile China Thailand India Costa Rica Brazil Mexico Argentina 1 3 4 Global Competitiveness Index 2008-2009, WEF: Ranks 28 among 125 countries. 13 15 34 39 46 47 54 56 59 IT Readiness 67 Country United States Switzerland Denmark Sweden Singapore 0 20 40 60 80 100 87 Rank 1 2 3 4 5 Country Chile Spain Panama Mexico Brazil Rank The Networked Readiness Index (NRI) 2008, WEF: Ranks 39 among 134 countries. 28 29 58 60 64
Benchmarking Chile Offshoring attractiveness Global Services Location Index 2007 - A.T. Kearney: Ranks among the 10 most attractive countries for offshoring services.
Business attractiveness Doing Business 2009. The World Bank Group: Rank 40 among 181 countries. Singapore Benchmarking Chile 1 3 6 United States United Kingdom Chile Spain 40 49 53 56 62 65 Colombia Mexico Peru Italy 75 113 Czech Republic Argentina Chile has more than 57 Trade Agreements, in different countries around the world, including countries like Canada, United States, Mexico, China, Korea, European Union and India. Chile has agreements with 20 countries Double Taxation: Argentina, Brazil, Canada, SouthKorea, Croatia, Denmark, Ecuador, Spain, France, Ireland, Malaysia, Mexico, Norway, New Zealand, Paraguay, Peru, Poland, Portugal, United Kingdom and Sweden. Chilean markets are open with very low import duties: General: 6% Hardware: 0% (GAP) Software: 10% - 15% (withholding tax) Services: 10% -20% withholding tax
The IT Industry
Chile IT Investments 2007-2009 (USD M) USD M 3.000 2.500 2.000 1.500 2,501 669 236 2,740 9,5% 7,0% 736 252 2,931 793 271 Services IT Software Hardware 1.000 500 1.596 1.752 1.867 0 2007 2008 2009 (Forecast) Source: IDC, 2009. Sponsored by ACTI
Hardware Market, 2009 (*) USD M 2.000 1.800 1.600 1.400 1.200 1.000 1,752 6,6% 1,867 Other Networking Storage Servers 800 Printers 600 PCs 400 200 0 2008 2009 Source: IDC, 2009. (*)Forecast
Chile, Personal Computer Unit Market, 2006 2008 800.000 700.000 600.000 500.000 543,890 587,970 532,510 515,970 678,210 2006 2007 2008 400.000 300.000 296,300 200.000 100.000 0 24,520 3,510 2,910 Desktop Notebook Others Source: IDC, 2009.
Chile, Personal Computer Market, 2008 (%) Ultraportable 1,67% Workstations NB 0,79% Workstations DT 1,10% Desktop 42,42% Notebook 54,02% Source: IDC, 2009
Software Market, 2009 (*) 300 252 7,6% 271 Applications 250 MUSD 200 150 100 50 Application D&D System Infrastructure Software 0 Source: IDC, 2009. (*)Forecast 2008 2009
Services Market, 2009 (*) 900 800 700 736 7,8% 793 Operations Management 600 Support Services MUSD 500 400 300 Implementation Planning 200 100 Training and Education 0 Source: IDC, 2009. (*)Forecast 2008 2009
Market by verticals, 2008 (USD M) $736 Source: IDC, 2009
Growth of IT Industry Chile v/s Latam 2008-2009 (%) 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 9,5% Chile 7% 16% LatAm 2008 2009* (Feb) 4% USD 2,740 USD M 60,334 Source: IDC, 2009. Sponsored by ACTI
Chilean IT Exports and Global Services USD Million Source: IDC, 2009 Offshoring Cluster hired IDC to measure this number properly ACTI is opening a Business Platform (Promotion Office) for offshoring in key US cities and is planning to do the same in other Latin American Countries.
Summary Chile is a good partner to develop IT business in the region and abroad Chile has a good infrastructure and focus on IT development The government is developing several key programs to promote Innovation and R&D Chile is well positioned culturally and geographically to tackle opportunities in the US and Latam
Thank You! mperez@acti.cl