In 2024, Latin America can rightfully be called one of the high-growth technology spots in the world. Its information technology market has already reached a $105 billion value and is expected to grow at an impressive CAGR of 6.5% during the 2019-2029 period. Well-known tech giants like Google, Dell, Amazon, Cisco, IBM, and Microsoft have already entered the region, fueling technological advancement and software development in Latin America.
No wonder 87% of tech companies are considering nearshoring to LATAM. Are you one of them? Then, continue reading this article to explore the booming tech industries and trends of the IT market in Latin America and discover a comprehensive solution to expand to this region hassle-free.
Technology Market in Latin America: 2024 Landscape
So, what are the stars that guide technology in Latin America forward? Brazil, Mexico, Colombia, Argentina, and Chile are shining bright, with Brazil having the highest tech market value at $45 billion and Mexico impressing with $28 billion of market value. And these tech powerhouses show no signs of slowing down! Why? Because of the following factors:
- Internet usage & mobile connectivity: The Internet is becoming available to an increasing number of Latin Americans. Statista predicts that by 2030, there will be almost 500 million Internet users with a smartphone penetration rate hitting 78%, driving a need for more digital services and innovative technology in Latin America.
- Rapid digital transformation: The COVID-19 pandemic created a new focus on economic growth in the form of digitalization that has already begun in the region. The digital transformation market in LATAM is projected to be worth $205.87 billion by 2032. For instance, Mexico targets the digitalization of businesses via its 2022 Economic Reactivation Plan, while Colombia has bolstered digital entrepreneurship via its “Digital Business Development” initiative.
- Booming startup ecosystem: 9K startup companies and 60 unicorns build groundbreaking technologies in Latin America. Just last year, they raised $3.9 billion in VC investment. The outstanding players of the region are Brazil, Colombia, and Mexico, all topping the charts in the startup ecosystem in the region.
- Increasing foreign investment: In 2022, Latin America received a whopping $224.5 billion in Foreign Direct Investment, which is 55.2% more than in 2021, reaching the highest value on record. Brazil (41%), Mexico (17%), Chile (9%), Colombia (8%), and Argentina (7%) enjoyed the most generous share of the FDI, directing most of the funds to the services sector, including IT.
Now, let’s dive deeper into the emerging tech industries in Latin America.
Key New Technological Industries in LATAM
Fintech
The Latin American fintech market has already established itself as a key technology sector, meeting the increasing demands of local consumers for online banking and digital financial services. Impressively, 22.6% of fintech platforms globally are Latin American and Caribbean.
Among the LATAM fintech leaders are Brazil and Mexico, which boast 31% and 21% of the total fintech platforms in the region. Brazil boasted $1.4 billion in revenue in 2023 and is forecasted to grow to $2.6 billion in 2028. Successful companies such as Nubank, C6 Bank, Creditas, CloudWalk, Dock, and Neon drive financial inclusion in the country.
Mexico is also making strides in fintech, being the second-largest fintech hub in LATAM, growing at an annual rate of 18.4% from 2019-2023. Over 54 million Mexicans are digital payments users benefiting from 773 fintech businesses. Bitso, Konfio Stori, and Clara are central to Mexico’s fintech advancement.
E-commerce
The COVID-19 pandemic drove significant growth in the digital realm, taking the e-commerce sector to the forefront. This emerging tech sector in LATAM stands as a global leader in development, anticipated to develop at 19% over 2024-2029. The e-commerce users in Latin America are forecasted to reach 290 million in 2024, growing by 52% in 2029. In 2024, Brazil held about 29% of the e-commerce market in LATAM, followed by Mexico with over 26%.
Still, Argentina and Colombia are catching up. Argentine e-commerce company Mercado Libre remains the region’s most prominent player. In 2023, it generated over $14.5 billion in revenue from services promoting online shopping and digital payments via its marketplace and Mercado Pago. Its growth has helped sustain small enterprises as well as create employment opportunities, particularly in Brazil and Mexico. Another bright star in the e-commerce market is Rappi. This Colombian on-demand delivery service is present in 9 Latin American countries and has over half a million clients. Its innovative approach to logistics and payments has expanded access for merchants and consumers alike.
Agtech & Foodtech
Agriculture has historically been the backbone of the economy in Latin America. Its agricultural exports currently account for 16% of the global food exports, while its net exports are 4% and are projected to increase to 19% between 2020 and 2030. In order to keep up with growing demand, it is estimated that agricultural production will have to grow 80% by 2050. That’s when AgTech and FoodTech along with AI and IoT technologies hold great promise.
In 2022, Latin American agrifoodtech startups raised $1.7 billion, a 183% increase in investment compared to 2020. In total, LATAM holds 5% of the global afrifoodtech market funding. Meanwhile, the number of funding rounds in the sector has consistently increased over the past five years, reaching 176 deals in 2022.
The leader in Latin American agrifoodtech startups and investment is Brazil, taking nearly 50% of the market share with its companies like Agrolend, Terra Magna, Seedz, Evino, Trela, and iFood. Colombia comes second in the region for agrifoodtech development, raising $363 million in investment and boasting top companies like Rappi, Foodology, Agrapp, Muncher, and Foody.
Edtech
The COVID-19 pandemic accelerated the adoption and development of Educational Technology in Latin America, witnessing a remarkable sixfold increase in investment in 2021 alone. This region boasts the world’s fourth-largest edtech market, estimated to be around $8.5 billion. Even though Latin America’s edtech investments are behind those of global markets, its future revenue is set to grow, with its e-learning market expected to generate $3.2 billion by 2024.
LATAM is now home to over 1,500 edtech companies. Brazil is topping the list, hosting 42% of the new edtech startups in the region, followed by Mexico (18%) and Argentina (11%). Workforce, management systems, STEM, and online learning are Latin America’s most widespread types of startups. Descomplica, EduK, Cambly, Cometa, Fidu, Coderhouse, Galena, Vinco, and many more are making waves in the region. When it comes to VC funding, Brazil takes the lion’s share of it — 50% of all funding, while Mexico gets 19%; Colombia and Chile each capture around 6-8% of funding.
Top 3 Trends of LATAM Technology Sector in 2025
Extension of 5G Networks
With the proliferation of new technologies in Latin America largely introduced by the emerging IT sectors, 5G networks are needed as never before. So far, eight countries in LATAM successfully launched 5G networks, including Colombia, Peru, Brazil, Chile, and Mexico. It’s anticipated that 44% of mobile subscriptions will be 5G, with nearly two-thirds of consumers ready to upgrade to 5G today. Meanwhile, local businesses across all verticals find 5G as a critical contributor to digital transformation. In the long run, adopting this technology can benefit various industries, increasing the market worth more than USD 21 billion annually and potentially increasing regional competitiveness and translating into a GDP increase of more than 5 percent.
Artificial Intelligence
AI is not a new technology in Latin America, but its development is going to be impressive. From healthcare and finance to agriculture and manufacturing, companies are leveraging AI-powered tools to improve decision-making, automate processes, and make customer experiences better. Just in 3 years, AI adoption among companies has risen from 58% to 71%, with leading businesses in the region planning to allocate over 15% of their budget to AI technology in the upcoming years. As a result, this technology is forecasted to contribute up to 5.4% to Latin America’s GDP by 2030. Notably, more than 50% of companies with over 5,000 employees are utilizing AI, and over 60% of those with more than 10,000 employees have integrated AI into their operations. To support this growing demand, partnering with an AI development company can provide tailored solutions to effectively implement and manage AI technologies.
According to the Latin American AI index, Chile is topping the list in the region, being the best at AI talent, research, development, and infrastructure. In fact, 70% of Chilean businesses already utilize AI tools, and with the governmental strategy Chile Digital 2035, the digitalization of the public sector is set to reach 100%. Other countries with high AI adoption indexes are Brazil and Uruguay, with the latter already leading the region in the number of people with AI skills per 10,000.
Software Development Nearshoring
With skilled IT talents in high demand worldwide, Latin America has positioned itself as a top IT outsourcing destination. Mexico, Chile, Argentina, and Colombia are among the top locations, with 87% of tech companies considering them for nearshore software development. No wonder, the Latin American IT Services market is expected to grow to over $500 million by 2028.
So, what are the factors that lure an increasing number of companies to nearshore technology in Latin America? Here are the main ones:
- Enormous & skilled IT talent pool: Latin America provides access to over 1.7 million IT professionals who excel at modern technologies like JavaScript, Java, Python, C++, Ruby, and SQL and are best at mobile development, data analytics, cloud computing, and database development.
- Moderate salary rates: Nearshoring software development to Latin America provides cost-effective opportunities to US tech companies. On average, they can save from 50% to 60% on labor expenses without sacrificing quality.
- Proximity to the USA: Minimal differences between the US and Latin American countries provide instant communication, seamless feedback integration, and productive cooperation. For instance, there is only one hour difference between Mexico and the US West Coast and no time difference between Chile and the US East Coast.
Software R&D Center — 360° solution to develop innovative technologies in Latin America
International tech companies have widely utilized traditional staffing solutions like IT outsourcing and outstaffing for software development. However, with the alarming pitfalls of these staffing models—such as hidden costs, possible IT theft, team indifference, and hefty buy-out fees—businesses are increasingly weighing the benefits of nearshoring vs offshoring to determine the most effective expansion strategy. A viable alternative is now available on the market.
Alcor offers an all-in-one R&D center solution for tech companies seeking cost-effective, risk-free ways to expand and build innovative technologies in Latin America. It encompasses tech recruitment, Employer of Record services, and operational support in the booming LATAM region. By building their own R&D teams, tech companies maintain complete control of the team and development process, cut their expenses by 40%, avoid buy-out and setup fees, and keep their IP in-house. Alcor’s 40 tech recruiters close tech positions in 2-6 weeks while their legal and account management specialists provide 24/7 support for hassle-free expansion.
Final Thoughts
Overall, the IT market in Latin America is experiencing rapid growth, driven by various factors such as increased Internet usage, digitalization, growing foreign investment, etc. Such tech sectors as fintech, e-commerce, agritech, and edtech are at the forefront of this development. Regarding technology trends, these are the adoption of 5G networks and AI technologies, as well as software development nearshoring, are making a difference in the region. Establishing an R&D center is one of the potent ways to boost current IT market growth by developing cutting-edge technologies in Latin America.
