Strategic Imperative and Growth Environment

Strategic Imperative

• Public cloud infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) adoption continues to grow steadily on a global scale, and Latin America is no exception. Organizations across the region are increasingly drawn to the public cloud’s cost efficiency, scalability, and ability to support flexible, remote-friendly operations. According to the latest Frost Radar™: Infrastructure- and Platform-as-a-Service Providers in Latin America, 2025 survey (fieldwork in September-October 2024, with 163 respondents), 78% of IT leaders in Latin America believe that the cloud is necessary for a successful competitive business. It is widely recognized that public cloud is a sustainable and agile solution for data management and application development.
• Despite this momentum, significant barriers remain. Security concerns persist as the primary obstacle to broader adoption, particularly in sectors with stringent regulatory requirements. Many organizations also struggle to keep pace with the rapid evolution of cloud technologies while attempting to manage and optimize their cloud environments effectively. These challenges are compounded by a shortage of internal expertise, which limits the ability to fully leverage public cloud capabilities.
• In response, enterprises are turning to hosted private cloud solutions and hybrid cloud architectures. These models offer a balance between control and flexibility, allowing organizations to maintain tighter security over sensitive workloads while still benefiting from the scalability of public cloud services. The same Frost & Sullivan survey found that 61% of respondents are using hosted private cloud solutions, marking a 21-percentage-point increase from the previous year. This sharp rise underscores a preference for managed, secure, and customizable infrastructure—particularly in industries in which compliance and data sovereignty are critical.
• Whether public, private, or hybrid, what is clear is that Latin American companies are moving decisively away from on-premises infrastructure.

Strategic Imperative (continued)

• Public multicloud environments are also growing in adoption, but they still trail hybrid cloud models. While some of this may be due to regulatory considerations in sectors such as government and healthcare, a larger factor appears to be enterprise comfort with a particular vendor. Rather than splitting workloads across multiple vendors, they tend to consolidate operations with a single trusted partner to reduce complexity and streamline management.
• To accelerate public cloud adoption, providers must work to shift stakeholder perceptions about workload placement and demonstrate the operational value of a more diversified multicloud approach — especially given that 62% of respondents to the Frost & Sullivan survey still reserve public cloud primarily for less sensitive operations.
• To drive public cloud expansion while simultaneously supporting private and hybrid environments, hyperscalers must approach the Latin American market strategically. This means understanding not only enterprises’ needs and demands but also their challenges and concerns. Frost & Sullivan defines this approach through a five-fold strategy:
  • Security as the Central Pillar: Security is one of the main concerns for firms worldwide when adopting cloud services. Being able to provide robust and proactive security features must be at the forefront of every cloud provider's regional strategy. This entails delivering a comprehensive suite of value-added services, such as anti-DDoS, threat detection and monitoring, and vulnerability scanning, all managed by a comprehensive platform that enables effective data governance, modularity, and flexibility in hybrid and multicloud environments. While these factors are globally relevant, the regional challenge lies in delivering them cost effectively, because comprehensive security offerings often involve multiple subscription-based fixed costs.

Strategic Imperative and Growth Environment

• Latin America’s economic performance has remained relatively stable but appears to be facing challenges in 2025. While average regional real GDP growth is projected to rise from 2.2% in 2024 to 2.5% in 2025, cloud market hubs are showing signs of slowing momentum. Brazil and Chile, in particular, are forecasted to see a decline in growth—by 1.4 and 0.6 percentage points, respectively—bringing both economies to around 2% growth, according to International Monetary Fund projections.
• Meanwhile, economic disruption is surging as recent US trade policy announcements include high tariffs on the region, with 50% on Brazilian imports and 30% on Mexican imports. Even though most Latin American countries' main trading partner is China (according to a 2024 World Trade Organization report) and exceptions to key imports might soften the blow, US tariffs are likely to strain regional economies through direct effects (such as reduced demand) and indirect (including the risk of a broader global slowdown). Mexico stands to be the most affected by the new trade policies, with projected real GDP growth falling from 1.5% in 2024 to -0.3% in 2025.
• Despite historically trailing other regions in cloud infrastructure and service maturity, Latin America is now undergoing steady, meaningful growth. Although it still accounts for a modest share of the global market, the region’s accelerating expansion underscores rising demand, with cloud providers stepping in to meet it.
• According to Frost & Sullivan estimates, Latin America accounts for 4.5% of the global IaaS-PaaS market. Regional industry revenue is projected to grow 15% in 2025, reaching an estimated $14 billion, and show a compound annual growth rate (CAGR) of 22.4% from 2024 to 2031. In contrast, the global IaaS-PaaS market is expected to grow 13.2% in 2025, with a 2024–2031 CAGR of 21.2%.

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