Software and IT is the fastest growing sector in the world, with annual project numbers growing by 5% according to figures in the latest fDi Global Outlook report. But this growth seemed to have bypassed Latin America, which saw the number of investment projects decline last year by 7.3% with 102 projects in the IT-related services, according to fDiMarkets. In terms of project size measured by the job creation estimate, 2010 saw a whopping decline of 26.3%.

The drop in investments in this sector has been largely attributed to uncertainty regarding world markets. “The global crisis had a direct impact in that sector, since companies and governments had to contain their budget throughout 2009 and 2010,” says Marcelo Silva, market analyst at Frost & Sullivan.

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Companies that were not affected by the recession and had capital to invest were more likely to expand already existing sites than to enter new markets in the unfavourable economic climate.

But figures for 2011 show the sector is staging a recovery. The number of FDI greenfield projects in Latin America within the IT and software sector was up 10.2% in the first half of 2011 and, according to Mr Silva, recent announcements made by Brazil and Argentina regarding more accessible broadband internet coverage could go far in attracting further foreign capital into the sector.

Right time, right place

The Latin American IT sector, similar to other emerging economies, is characterised by low saturation. But given that the middle class in the region is on the rise, the potential for expansion is huge. Mr Silva points out that the main technology hot spots are basic infrastructure software, along with networking and data centre hardware.

Carolina Dams, a partner at Buenos Aires investment consultancy A2C Advisors, adds to this list projects connected with social networking and mobile applications. She says that there are many factors working in favour of Latin America – from the region's entrepreneurial spirit to its convenient location, especially for investors coming from the US and Canada.

Trading software provider Sterling Trader is among the investors coming from North America, hoping to benefit from not only the handy location, but also from access to the growing number of high-value customers in Latin America. Prior to opening a data centre in São Paulo in May, Sterling Trader had been operating through the network of outlets in the US, China and the UK, but the rapid economic development of Brazil opened new opportunities for the Chicago-based company.

“With the emergence of Brazil we found we were in a unique position to extend our network and deliver a top-tier trading system and superior market connectivity,” says Steve Sierszulski, president and CEO of Sterling Trader. And although the company opened its first branch in Brazil only a couple of months ago, Mr Sierszulski claims that the company is already enhancing trading platform offerings in the country.

He also states that Brazil is the gateway to other investments in the region. The pace in which Sterling Trader operates may seem rapid, but then so is the pace of change in Latin America.