The urgent need for digital transformation in Latin America

6 min read

By Antonio Couttolenc, Co-Founder and CEO of Xertica.

The urgent need for digital transformation in Latin America
The urgent need for digital transformation in Latin America

With the region’s economies in mid-gear, many companies have drastically scaled back their activities and faced wage, salary and other structural costs.

40% of Latin American micro-businesses do not have an email accountAccording to a recent survey by Development Bank of Latin America (CAF). Added the Lack of a logistics chain that guarantees basic suppliesSMEs today face a very strong obstacle in terms of the necessary path to digitize their companies.

In the meantime, they assure from ECLAC that Latin America will have one GDP decline of around 5.3% in 2020. And according to the same agency, poverty will increase by between 4 and 5 percentage points, which will have a direct impact on the demand for products and services that are mainly offered by SMEs.

For these reasons a Diagnosis of the possibilities of restoring or adapting business models and beyond that about the usefulness of its products and services in a post-COVID-19 scenario.

Therefore, it is important to analyze the current skills of SMEs and the future skills that could be acquired in the short term through the provision of different technological resources, especially with a view to adopting Digitization processes

The potential of migration to enable online sales channels


One of the most important urgencies in this regard is the migration of products and services that are marketed analogously to the channels required by the EU E-commerce and especially because of new consumer habits: the use of digital services will continue on its upward trajectory. 30% of current users of E-commerce made its first historic purchase while in quarantine. As a result, 3 in 10 digital buyers are newbies, and 73% of them say they would do it again, according to Kantar.

In general, more than 99% of companies in Latin America are micro, small or medium-sized (MSMEs with 1 to 200 employees), which equates to more than 11 million startups in the region’s five largest Spanish-speaking markets: Argentina, Chile, Colombia, and Mexico Peru. According to ECLAC / UN, these companies create 61% of employment and contribute 29% of GDP.

Ecommerce: Recent Latin American Behavior


Mexico, The company lost 38% of sales from January to March, but it’s not an alarming percentage when you consider that it’s within the average range of decline in online sales that all regions of the world have seen since the pandemic began.

According to Riskified, e-commerce is in Colombia It was hardest hit by the crisis, seeing a 53% drop in online sales from January to March. Chile It is just behind with a 42% decrease in online orders.

However, Colombia and Chile They are countries that can prepare to overcome the crisis because they have relatively low levels of debt in relation to GDP. This may explain the positives of the recent news: Colombia saw online orders jump 29% in the first week of April and Chile by no less than 119% in the last week of March.

In case of PeruAccording to a study by the Lima Chamber of Commerce (CCL), more than 60% of Latin America’s brands are another key axis in Latin America E-commerce that country has indicated that they were affected at the beginning of the quarantine, but they still managed to adapt to the new needs of the market. In addition, only around 20% of these companies had to cease operations.

Another relevant fact in Peru is that more than 90% of companies surveyed by CCL believe that online sales are key to reactivating the country’s economy.

Consolidation of the group’s internal network


Given this scenario, government support and in-house solidarity will be key to Latin America’s recovery.

At Xertica, we know that companies, government agencies and educational centers need to turn to digitization to communicate with their work teams, maintain the quality of customer or citizen service, and get on with educational and productive work quickly. close and efficient. However, for reasons of financial structure, many of these organizations do not have the support to deal with the urgent need.

For this reason, Xertica has developed a range of online resources to facilitate access to training and tools that promote remote working and the digitization of processes.

This portal has been available since March 18th to help ensure that the productive community and governments of the region work together in the region’s economic reactivation.

To date, we’ve helped more than 50,000 users from different countries with their transformation and digital acceleration process for free. This plight of the productive ecosystem needs to be understood in view of the enormous need for support from regional SMEs.

The digital transformation now has a new area of ​​application. It will not be easy, but we leaders will be able to alleviate the critical situation we are going through, ensure government transparency, improve the quality of education and contribute to the well-being of the people in our region.

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