Chile lays out welcome mat to ASP industry

Carlos Alvarez, head of the Investment and Development Department of the Chilean Economic Development Agency, rolled out the red carpet to the application service provider industry on Wednesday, inviting members of the ASP Industry Consortium to use Chile as a “springboard” into a lucrative Latin American market.

“In the same way ASPs are a good opportunity for Chile, Chile is a good opportunity for the deployment of this new industry in Latin America,” Alvarez says.

The market research firm IDC predicts application outsourcing will be one of the fastest growing IT services in Latin America during the next few years. The ASP industry, like the Internet economy, is in its infancy in Latin America, but IDC analysts see the application outsourcing market expanding from just US$131 million in 2000 to $418 million in 2004, with ASPs taking “the lion’s share of this revenue.”

While Latin American companies seem more ready than their American counterparts to test the ASP model, IDC analyst Alex Manfrediz cautions there are several hurdles that must be overcome, not the least of which are unstable economies and an immature Internet infrastructure.

But in his speech to members at the ASP Industry Consortium’s Global Membership Meeting, Alvarez said Chile has a solid economy – its GDP grew at 5.5 per cent last year and is expected to continue to grow. The economy is “open and outward looking” and ready for new ideas and investment, said Alvarez, pointing out that the private sector is the main engine of growth for the South American country’s economy.

As for Internet infrastructure, Alvarez said Chile saw big investments in broadband during 2000 and has three fibre-optic cables connecting the country with international networks and major Latin American cities. As a result, ASPs could provide services over the Internet “not only to Chile, but to all of Latin America using Chile as a springboard,” he said.

Alvarez also pointed out that Chile has some of the safest cities in the world, has a highly educated population that is becoming more and more computer savvy – 90 per cent of the public school population now has access to the Internet, he says. In addition, the government has programs aimed at encouraging IT development, including facilitating the purchase of computers for small and midsize enterprises and helping those businesses enter the e-marketplace.

Further, 25 per cent of the country’s income tax statements were filed online last year and 100 per cent of its election information was available on the Internet 12 hours after the election last month, Alvarez said. Government knows “the rapid adoption of network IT is crucial,” he said.

Traver Gruen-Kennedy, chairman of the ASP Industry Consortium, says Latin America is an important region for ASPs as they expand globally. “We expect ASPs to transform the technology sector in Chile to the benefit of businesses and the people nationwide,” he says.

The ASP Industry Consortium is at