IDC forecasts indicate 5% growth for Brazil's ICT market in 2023

IDC press release

This is a machine translation of the original release issued in Portuguese

São Paulo, February 2, 2023 – The prospects for the Brazilian ICT (Information and Communication Technology) market in 2023 are positive and the sector should see significant growth in both IT and Telecom. The projection is by IDC Brasil, leader in market intelligence, consulting services and conferences in the ICT industries, and is part of the 2023 edition of the IDC Predictions Brazil study , which annually anticipates the trends and movements of these segments. According to the survey, the expectation is that the market as a whole will grow 5% this year, approaching a total of US$ 80 billion. In separate cuts, IDC Brazil projects a 3% advance in Telecom and 6.2% in IT, the latter driven by the consumption of technology by companies (IT B2B), which should grow 8.7% driven by investment in Software and Cloud.

“In general, the scenario of moderate optimism in the IT segment in 2023 is due to adjustments and spending redirections, while Telecom will be driven by the growing importance of connectivity and the advancement of the cloud and 5G. Both scenarios have been stimulated by the interest in new technologies and the need for companies to accelerate their growth through increased productivity, introduction of new products and services supported by digital technology and greater advantage of the volume of data generated by the business”, says Luciano Ramos, Country Manager at IDC Brasil.

The 10 trends in the Brazilian IT and Telecom market for 2023, according to IDC Brasil, are:

1- Maturity in the use of the Cloud will make companies seek greater control over cloud use and spending

For 93% of companies consulted by IDC, the optimization and reduction of cloud costs through automation and the advancement of FinOps should stimulate investments in managed service providers. In this context, in Brazil alone, spending on IaaS (Infrastructure as a Service) and PaaS (Platform as a Service) together will pass the US$ 4.5 billion mark, an increase of 41% compared to 2022. “IT will have to look more strongly at strategies that simplify the management and connectivity of different environments, making hybrid and Multicloud environments more efficient from a cost perspective”, highlights Ramos.

Another point of attention in the Cloud market is that guidelines related to ESG (Environmental, Social and Governance) are gaining more and more space, with companies starting to demand more information from providers about the impact of the cloud on their carbon emissions, whether direct, or indirect (clients). “Suppliers will need to be prepared Currently, 79% of large companies in Brazil already assess whether the use of a certain technology will demand more or less natural resources. There is great concern in the business areas about how the Cloud can contribute to the company's image and results related to ESG”, concludes the executive.

2- Advances in the virtualization of the core of telecommunications networks

The need to enable new IT functions – such as BSS (Business Support Systems) and OSS (Operations Support System), digitization of care, data-driven aspects, implementation of 5G networks, and increased connectivity in enterprises – will cause a major change in the way architecture of telecommunications networks and will change the relationship between companies in the sector (Telcos) and Cloud providers.

“IDC expects that, in 2023, there will be more agreements related to core functions of networks and virtualization”, evaluates Luciano Saboia, director of Telecommunications Research and Consulting at IDC Latin America. “ With the strengthening of ties between cloud providers and Telcos, we expect an improvement in the digital transformation of these companies, which must assume some of the necessary tasks in this new moment. Over the next 5 years, cloud consumption by the Telecom segment will grow, on average, 35.2% in IaaS and 42.2% in PaaS annually” .

3- Wireless first driving mission-critical resiliency and business continuity

“The concept of prioritizing the cloud as a company's application hosting environment (Cloud first) is already something incorporated into IT planning, but in 2023, we will also have the Wireless first movement, which gives prominence to wireless networks. This trend will be driven by the implementation of Wi-Fi 6 and 5G connectivity”, says Saboia.

The adoption of Wireless-first practices will drive the use of managed services, reducing pressure on internal teams and enabling rapid adoption of technologies and best practices. IDC expects that, as early as 2023, the Wi-Fi 6 market will grow by 17% as a result of the deployment of emerging technologies such as IoT and AI. By 2026, Wi-Fi 6 should represent 65% of the Brazilian W-Lan market.

4- Private mobile networks, enabled by 5G, will enable enhanced IoT (Internet of Things), AI (Artificial Intelligence) and ML (Machine Learning) applications in Brazil

With the arrival of 5G, companies from different verticals will invest more in mobile private networks in order to meet specific needs of their operations and solve connectivity challenges. “Never before has a new generation of connectivity brought such transformational anticipation to business. We expect the entire technology ecosystem to be impacted, including telecommunications operators, device OEMs (Original Equipment Manufacturers), cloud and network equipment providers, software and application developers, even integrators” , analyzes Saboia.

The new revenue possibilities in the sector generated from mobile private networks should impact verticals such as Cloud, security, storage, data management and analysis, as well as other managed services needed for more complex applications, such as IoT, AI and ML. Therefore, and impacted by growing investments in IT in Brazil, the market for private mobile networks is expected to grow by more than 35% per year until 2026.

5- Business applications consumed from the cloud are consolidated as the main path for modernization

Business applications offered in the SaaS model (Software as a Service) are advancing rapidly, and by 2023, around 29% of companies will make strategic investments related to SaaS. “The big challenge will be to prevent different solutions consumed from the cloud from becoming silos with the potential to make it difficult to share and integrate data and increase connectivity costs”, assesses Ramos. “Managed service providers will be extremely important in this scenario, as they will take care of the integration of these solutions and the modernization of applications to enable them in the cloud in a proper and functional way”.

According to the IDC study, the software market is expected to grow 15.1% in 2023, driven by security solutions, data management, AI and CX (Customer Experience). By 2023, half of what is spent on software in Brazil will be invested in the SaaS model, with growth of 27.6%.

6- Fusion of intelligence and automation brings new capabilities to support the business, but still needs to gain trust

The IDC study shows that 20.5% of large Brazilian companies interviewed say that automation and RPA (Robotic Process Automation) processes will be strategic for initiatives involving IT in 2023 and that AI will gain more space in their budgets , being the third largest potential, behind only Cloud and security.

“There remains a trust challenge for delegating decision-making to autonomous AI capabilities, which will not resolve itself in the short term. Therefore, IDC believes that in 2026 we will still have half of the companies facing this impasse”, predicts Ramos.

With the maturation of AI, IDC expects that Brazil will exceed US$ 1 billion in spending on this technology in 2023, an increase of 33% compared to 2022. Spending on intelligent automation solutions should exceed US$ 214 million , growth of 17% compared to last year.

7- IT and data security will continue to be a priority and concern in 2023

Since the first spike in Ransomware incidents in 2017/18 (WannaCry), security is seen as the number one priority for most IT executives in Brazil (53.6% in 2022) and Latin America (50.6%). In 2023 it will be no different.

“IT and data security will remain at the top of the concerns of Brazilian companies. Before, to talk to a co-worker and pass on some information or data, all you had to do was look to the side, and confidential information was centralized within the company. Now, whether via chat, WhatsApp, email or any other tool, the information will travel several kilometers, and sensitive and confidential data will be spread across many clouds. Therefore, the strong concern with information security will not diminish”, explains Pietro Delai, Director of Enterprise Research and Consulting at IDC Latin America.

In Brazil, spending on security solutions is expected to reach US$1.3 billion in 2023, a 13% growth compared to the previous year.

8- The Devices market remains important and will represent 43.7% of all IT revenues in the country, despite the challenges expected in 2023

“Desktops, notebooks, tablets, feature phones, smartphones, printers, multifunctionals, monitors and wearables, faced several critical moments in 2022 and this Devices market will continue with a challenging dynamic in 2023. The manufacturers interviewed by IDC Brasil indicate a mixed feeling, but, in general, they expect a first half of adaptations to the new government and a second of some recovery and relative growth in household consumption ”, clarifies Reinaldo Sakis, Director of Consumer Devices Research and Consulting at IDC Latin America.

IDC estimates that the Brazilian Devices market generates a considerable sum of US$ 21.5 billion in 2023, that is, 1.1% more than in 2022. This makes its share in total IT spending in Brazil of 43.7% in 2023, slightly below the 2022 level.

Even with modest revenue growth, the importance of Devices to the total IT segment will still be very large, with smartphones adding $13 billion, PCs $5.8 billion, Wearables $882 million, printers $542 million and Tablets US$464 million.

9- The distribution of Devices sales will undergo changes in 2023, reflecting the dynamism needed to operate in this segment

Some changes that started last year will continue to be accentuated now in 2023. Online retail, for example, lost share last year and will suffer a little more in 2023. Physical retail, on the other hand, has regained spaces lost to online and will follow the same path in 2023 .

“Despite the large portfolio and the benefits offered to users, online retail should lose even more space to physical stores in 2023, even though it continues to have great potential for growth in the short term. The main reason is that physical stores are once again gaining more space due to greater negotiation flexibility at the time of sale associated with a volume of Brazilians who returned to face-to-face shopping after the height of the pandemic” , explains Sakis.

IDC estimates that physical and online retail will generate $10 billion and $5 billion, respectively, in 2023.

10- Device purchasing companies can also reap the benefits of aligning with ESG practices

The Brazilian Devices market will face several challenges in the year 2023, and IDC predicts that manufacturers and distribution channels that offer ESG-aligned products or services will be more likely to succeed.

“National and multinational companies are already starting to look at Devices as a starting point to demonstrate results and metrics aligned with ESG. Therefore, manufacturers or channels that offer practices that demonstrate concern for standards and good social, sustainable and management practices, – such as carbon credits, responsible use of resources, Device as a Service aligned with ESG, reverse logistics and circular economy – , must come out ahead of their competitors. Today, these types of initiatives are considered competitive differentials”, concludes Sakis.

IDC estimates that 5% of Device sales to B2B companies will be completed in 2023 because they have some alignment with ESG concepts, which means something around US$ 250 million.

About IDC - International Data Corporation (IDC ) is a leader in market intelligence, consulting services and events for the information technology, telecommunications and consumer technology markets. With more than 1,300 analysts worldwide, IDC provides global, regional and local expertise on technology and industry trends and opportunities in 110 countries. IDC's analysis and expertise help IT professionals, executives, and the investment community make informed technology decisions and achieve key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology, research and event media company.

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