Boston, MA -- (SBWIRE) -- 06/04/2014 -- Mexico's exposure to the US will help drive an acceleration in real GDP growth to 3.3% in 2014, from 1.1% in 2013, with knock-on effects for government spending and private consumption in the IT sector. This is particularly true of outsourcing demand from the US supporting the IT services segment in Mexico. Increased demand for cloud computing and infrastructure-as-a-service is leading to growth in the Mexico data centre industry, which is expected to further benefit from government projects such as the new National Digital Strategy and reforms to the telecoms sector. Consumer spending could be channelled into hardware such as computers, where there are still growth opportunities with just 35.8% of households owning a computer at the end of 2013. We estimate the size of the market exceeded MXN210bn in 2013 and that it will rise to MXN274bn by 2018, with CAGR of 5.4%.

Headline Expenditure Projections

- Computer hardware sales: MXN102.8bn in 2014 to MXN123.9bn in 2018, increasing 28.1% over the period. Migrations to Windows 8 should provide a boost to hardware upgrades in the short term, given that a significant proportion of Windows users have yet to migrate to Windows XP.
- Software sales: This is forecast to be the fastest growing segment of the market, increasing from MXN42.8bn in 2014 to MXN52.8bn in 2018, an increase of 32.7%. This outlook could be hurt by illegal software use, however, which is still well above OECD levels.
- IT services sales: This will edge up from 35.4% of the market to 35.6% between 2014-2018, reaching a turnover of MXN97.8bn (+31.6%) by the end of our five-year forecast period in 2018. Driving growth will be sectors such as government, telecoms and financial services.

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Risk/Rewards Ratings: Mexico's score is 57.3 out of 100.0. Mexico ranks fifth out of nine in the Americas region in our latest RRR table.

Key Trends And Developments

- IT service provider Alestra, has launched a new data centre in the Queretaro state, to provide capacity for its growing hosting and cloud services. The 3,250m2 facility is Alestra's fourth in Mexico and cost MXN780mn (USD58.7mn) to build, increasing the company's total space by 270%.
- In November 2013, President Enrique Pena Nieto announced that the country's National Digital Strategy, which aims to increase the level of digital inclusion in Mexico. The strategy rests on improvements in a number of key areas: connectivity, inclusion and digital skills, interoperability, legal framework and open data. BMI believes there are a number of opportunities for the ICT and telecoms sectors in light of these goals.

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