Latin American Workers Overcome the Connectivity Gap

Although Latin America has been characterized as technologically backward, a study by the IDC consulting firm shows that entrepreneurs and independent professionals are prepared to leap forward into the digital information society. According to the study, 64% of the region’s professionals who use computers are either “hyper-connected” or are “more and more connected to the Internet” when they do their jobs. That’s an even higher rate than among professionals in Asia/Pacific (59%), those in Europe (50%) and the United States (44%).

Those professionals who qualified as “hyper-connected” had mastered at least seven devices and nine software applications. Those that were included in the category of “more and more connected” had mastered four devices and six software applications. The interviews were conducted with 2,400 people up to 40 years of age in Brazil, Mexico andArgentina, the three Latin American countries in the study. According to Eduardo González, professor of engineering and sciences at the Adolfo Ibáñez University [in Chile], those are the three countries that have the most advanced economies and business information sectors in all of Latin America. The three countries together, along with Chile, represent the most advanced countries in the region.

The characteristics of the hyper-connected group were identical, regardless of their place of residence. They used a computer, a PDA (personal digital assistant) and a mobile phone among their hardware products. They read a large number of publications that offered blogs, electronic news and online communities, and they were creating a true global culture. About 60% of the hyper-connected group consisted of males. Most had managerial jobs and were 35 years old or younger.

But what factors are responsible for the fact that the region has been lagging behind when it comes to technology?

The price barrier and the lack of training

Jorge Gatica, professor of engineering and sciences at the Adolfo Ibáñez University in Chile, emphasizes that “the economic factor that matters the most is the unusually high price charged by Internet service providers and mobile phone operators both to companies and home users in Latin America ever since the beginning of the industry.”

Gatica notes that when service providers in the United States were charging 20 dollars for 20 hours of Internet connection, prices in Latin America were three or four times higher than that. “Ever since then, this price gap has always existed and the difference was even more acute when you consider the [difference in] per-capita income. What’s more, the telecommunications market has operated in the region as a regulated monopoly, although it’s important to note that prices have trended downward.”

José Maldifassi, professor of engineering and sciences at the Adolfo Ibáñez University, notes that the pricing factor is also important when it comes to purchasing key hardware products such as computers. “In order to achieve an adequate connection to the Internet, you need high-quality computers or, even better, you need to incorporate more memory and speed; and that gets to be expensive.” As a result, says Maldifassi, independent professionals who are in a precarious economic condition are unable to acquire these tools. And small companies often don’t have enough cash.

Carlos Bravo, also a professor at the Adolfo Ibáñez University’s department of engineering and sciences, adds that the price barrier has made it difficult to access technology. But this variable is not the key obstacle, he adds. “There is a very powerful generational component in this situation, which makes the Latin American employee, especially those over 40 years old, largely unwilling to learn to use information and communications technologies. That’s because they are fearful [of technology] and they lack confidence. They don’t even know the potential that the technology offers, or know about the universe of products and software applications available on the market.”

Maldifassi agrees with Bravo, adding that “there is a segment of professionals in Latin America who have no experience mastering these technologies, and view them with apprehension, since they are not highly skilled at using technology.”

Little mastery of English

Enrique Canessa, a professor of engineering and sciences at the Adolfo Ibáñez University, explains another factor that has had negative repercussions: the low level of education in Latin America. “About 92% of all the information that exists on Internet web sites is in English, including company descriptions; lists of products and services, and other data. So those employees who have little education cannot take advantage of their content,” agrees Maldifassi.

Maldifassi adds that governmental regulations can also act as barriers. “In Cuba, access to the Internet is absolutely restricted to a few government workers. Other professionals have no access because of political conditions.”

Nevertheless, this scenario has begun to change recently, notes Samuel Varas, a professor of engineering and sciences at Adolfo IbáñezUniversity. “As a matter of fact, if you look at the latest international rankings of productivity, the results show a higher level of adoption and use of information technology in order to achieve substantive improvements in corporate efficiency and performance.”

The engine for change

One reason why it is now more and more important to be connected became evident during the Fourth Conference on Business Intelligence, sponsored by IDC, which took place recently in Santiago, Chile. Alejandro Oliveros, research and consulting director of IDC Southern Cone, explained that nowadays valuable information is available in a badly structured way in every database through the Internet and in the huge volume of e-mails that we receive every day. “According to our calculations, this universe of digital information has an approximate size of 281 exabytes (281 billion gigabytes), and it will be ten times higher in 2011 than it was in 2006.”

The cost of not taking advantage of all this information could mean losing important business opportunities, said Oliveros. Bravo completely agrees, noting that “the Internet presents numerous opportunities to do business, so you need to be hyper-connected.”

Regarding that point, Varas emphasizes, “When you are increasingly connected, it doesn’t merely make it easier for you to receive and respond to e-mails. It also makes it easier to make strategic and timely decisions, and then later monitor your results from any place and at any time.”

It’s not just economic factors that are responsible for changing the Latin American employee’s attitude about hyper-connectivity. There are also professional, social and individual reasons, says Gatica. “Professionals are won over by the higher productivity [they achieve] thanks to the way devices can be used for 24 hours a day, seven days a week. They are also attracted to the modern lifestyle, which intensifies social pressure to be more and more integrated into the network; a pressure that is explained by the Law of Networks. This means that the value of using a communications network – in this case, the Internet – increases proportionally when more and more users are added to the network.” Individual reasons for connecting include a desire to display an increasingly high-tech image and to satisfy your needs as a consumer.

Another factor is the globalization of culture, which leads professions to behave the same way as people in developed countries, argues Maldifassi. “You also need to remember that income levels in the region have increased, transforming Latin Americans into more active consumers of high-tech products and services.”

The opportunities and challenges for industry

The general consensus is that hyper-connectivity will continue to strengthen in Latin America. The essence of mobility is that “in any part [of the network] or at any location,” anything can change at any time, which presents attractive opportunities for the various players in the industry.

Varas says that in the short term “interesting possibilities are opening up for suppliers to incorporate and market new services such as image transmission (television and videoconferencing), voice over IP, and localization services, in addition to traditional applications for voice and data transmission.” Varas forecasts that new markets will open for broadband mobile services either through devices that bring together voice with data or those that bring them together through proprietary content.

Undoubtedly, adds Varas, “this will have an important impact from an economic point of view since it will lead to an increase in business productivity over the medium term. Nevertheless, the supply of this kind of service will depend on the capacity of current technology platforms (Internet service and broadband velocity) and on the platforms that will implement technologies in the future.”

Maldifassi exposes the impact of these trends on the companies of the region, such as the development of business models based on the remote processing of information and on access to high-quality information databases. “This strengthens their capacity to do more and better business; it increases the efficiency and performance of the way they manage manufacturing. This is something that will depend in addition on the degree of training offered to employees so they can use current technology and upcoming innovations.”

“And to the extent that developed countries increase the demand for professionals trained in information and communications technology, Latin American employees will have greater opportunities to choose these alternatives,” adds Maldifassi.

According to Canessa, the big question is if all of these things will really help improve the competitiveness of the region. “It’s not enough simply to be more and more connected; you have to use and apply these technologies correctly.”

Canessa notes that suppliers in the industry have yet to address the challenge of converting themselves into “partners” of their customers so they can adequately incorporate new technology into their professional activities and contribute to corporate productivity and innovation. “Although there are attempts to reach this point, most players in the industry are more focused on selling hardware and software that automate processes than on providing applications that add value to business activities in the region,” warns Canessa.

Gatica concludes, “To the degree that companies in the region acquire employees, customers and suppliers addicted to hyper-connectivity and mobility, this trend will increase pressure to make innovations in the internal operations of the firm, especially when it comes to connecting [those companies] with various [external] communities and interest groups.”

Knowledge@Wharton