Business in Latin America: After years of slow growth, Latin American economies are expected to hit an average annual GDP growth of 4.8 percent through 2008. Read more about doing business in Latin America, Mexico, Argentina, and other countries.

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by G. Patrick Pawling, photograph by Darren Robb / Getty Images. iQ Magazine

In Latin America small businesses are thriving. So is the area's optimism—and its use of technology.

From Cisco: Commitment to Latin America As Cisco's senior marketing manager for SMBs in Latin America, Dario Loriato is focused on the wants and needs of the region's businesses. iQ: How are governments helping Latin American SMBs? Loriato: Most have special lines of credit for smaller organizations. For example, government banks in Brazil and Colombia are focused on that segment. Both banks offer subsidized interest rates. iQ: What benefits are organizations most likely to realize from increased technology adoption? Loriato: It affects two main areas: process efficiency and communication with employees, customers, and vendors. Having a well-developed process supported by information systems can decrease costs, generate more profit, improve productivity, and increase your competitive advantage. iQ: What are some of the challenges? Loriato: The two biggest are abundant labor and high interest rates. To grow a business you often need to borrow money. Inexpensive labor makes it more profitable to hire more people rather than invest in adopting technology. iQ: How is Cisco working with companies? Loriato: An initiative called Net Impact, based on research done in each country, shows entrepreneurs, executives, and government officials how the Internet has affected businesses in the region. Net Impact will also guide governments in the investments they make as they introduce small businesses to the digital era. Moreover, Cisco shares its own experiences and findings in technology implementation, such as: Becoming more effective in controlling expenses through online reporting Connecting with customers through ERP/CRM, e-commerce, and online support implementations Improving employee productivity through mobility tools like wireless and IP phones iQ: Can you provide some examples of ways to improve productivity and save money? Loriato: IP Communications has a strong impact due to benefits including: Lower costs for long distance calls and phone management Security technology that ensures information safety and business continuance Low cost wireless, which enable people to access their data and voice systems from anywhere inside an office. IP-based contact centers, which help companies interact with their customers in more personalized and efficient ways. In Latin America, Cisco IP Communications sales for SMBs doubled in the past year.—G.P.P.

In Latin America, the overwhelming majority of companies are small. But the dreams grow bigger every day because:

• Currencies are stabilizing
• Inflation is moderate
• Debt is being managed
• Although interest rates in some countries are high, the foreseeable political future appears orderly

After years of sluggish growth, Latin American economies are expected to hit an average annual GDP growth of 4.8 percent through 2008.

According to the recent 2005 Net Impact study by the Momentum Group, Latin America spends less than any other major region (only 1.4 percent of its GDP) on IT investments, but two of the primary ingredients for growth—access to technology and the money to buy it—are both becoming easier to obtain.

"A stable macroeconomic climate is key for the region's small companies to flourish," says Gabriela Baez, a senior manager at Pyramid Research. Ricardo Villate, program manager of Enterprise Solutions for IDC Latin America, agrees. "I don't see a lot of serious threats on the immediate horizon," Villate says. "There is always uncertainty, but these days things are much more under control."

The State of the Region
Latin America includes some 33 countries, a combined population of more than 500 million, and three main languages: Spanish, Portuguese, and English. The biggest economies are those of Mexico, Brazil, Colombia, Venezuela, Argentina, Peru, and Chile.

According to IDC, which analyzes and predicts technology trends, businesses with between 10 and 99 employees represent 50 percent of the employers in Latin America. Pyramid Research estimates the ratio of SMBs to large corporations at 13 to 1, with more small businesses to come.