Back in black: as markets expand, technology demands have begun to intensify for Latin America Inc.

With the region's economies humming again and companies eager to shelve outdated technology, spending on software, hardware and related services is expected to rise markedly in Latin America in the next couple of years, according to IDC, a Framingham, Massachusetts consulting firm. "All the economic indicators are fine and good in most countries in Latin America, and there is no evident cloud on the horizon," says Ricardo Villate, director of enterprise solutions for IDC. In 2004 and 2005, tech spending has recovered after three to four years of "disastrous times," Villate says. "Companies wouldn't invest and we saw negative growth across the board."

Small and large firms alike are plowing funds into information technology (IT). Expenditures across the region on hardware, packaged software and services are expected to rise to US$32.18 billion in 2006 from $26.99 billion in 2004. Jay Gumbiner, IDC's director of consumer devices, says economic growth has led many to open their pocketbooks and invest in cellular phones, digital cameras and personal computers.

Corporations have been encouraged by a reduction in prices. After strong spending between 1999 and 2001, Saman, a Montevideo rice processor, cut back; its resources suffered from dependence on Argentina and Brazil during their crises. Spending has remained somewhat subdued since then, but this year the company bought a server and a range of computers and software, says Gerardo Serveti, a systems analyst who runs the firm's computer group. "When the region went into crisis, dollar costs went up compared to the local currency and we felt the pinch a lot," he says. The company also has purchased additional electronic equipment and revamped its Web site.

Fiacao e Tecelagem Silo Jose in Minas Gerais, Brazil designs and manufactures wool, cotton, fiber and silk fabric products. It also has boosted spending in 2005 by approximately $85,000 on various hardware and software systems. It is spending an additional, undisclosed sum on a new enterprise resource planning system for integrating and automating its business. "The new system is an Oracle-based system that will provide us with faster response [to clients] and is more user friendly," says Carlos de Jesus, business manager for the Brazilian manufacturer.

Companies are also investing in systems management software, network management software, application servers, integration servers and portals. They are outsourcing more too, as well as demanding consulting and custom-application development support. Much is spent to cut costs and provide better customer service. "The tendency is to increase the level of process automation to achieve greater efficiencies and to incorporate solutions that support management in order to create deeper relationships with customers," says Maria Agustina Letelier, head of information technology at the Chilean electric utility Chilectra.

Standardized. Political stability has helped companies advance their IT agendas, including in Argentina and Colombia. Bancolombia completed a merger this year with the institutions Conavi and Corfinsura, leading it to invest in standardizing delivery channels, such as call centers and the Internet, across the various banks, says Mauricio Botero, head of investor relations at Bancolombia. Like other financial firms, it has invested heavily in technology, spending approximately $14 million in 2003 and a similar amount in 2004. For this year and 2006, it will ratchet up expenditures to approximately $35 million.

Colombia's government is pitching in too, offering tax breaks to firms when they invest in technology. "The Colombian government has affected us positively. It has generated greater confidence and there are more incentives to invest more" in technology, says Botero.

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DANIEL JOELSON * WASHINGTON, D.C.