Nearshore Americas

Latin America Data Centers: Evolving to Match US Standards

Experts agree that hosted data centers in Latin America can offer value to users, but they don’t seem to agree on much else. Three experts discussed the current state and likely future development of Latin American data centers had some surprising differences of opinion on things like who exactly can benefit from using a hosted Latin American data center and what benefits they can obtain. Following are synopses of conversations Nearshore Americas had with Mario DiVece, CTO and co-founder of software development services provider Unosquare, Gabriel Del Campo, VP of data centers at network solutions provider Level 3 Communications, and Tony Mataya, managing partner of sourcing consulting firm Think Solutions.

DiVece: US Data Centers are Generally Superior

DiVece unequivocally presented the opinion that at least for US-based customers, US data centers are superior to Latin American data centers in several key aspects. “US providers are a lot cheaper in my experience,” he stated. “A 100 MB link in Latin America costs significantly more.”

DiVece estimates a 100 MB link that could cost as much as $1,200 in Latin America would only cost about $100 to buy or lease in the US. Part of the reason for this discrepancy is that although a lot of hardware is actually manufactured in Mexico, it is shipped to the US and then has its price increased by as much as 25-30% due to import fees and taxes when it is shipped back to Latin American countries.

In addition, DiVece said the management capabilities, speed, and bandwidth offered by a typical Latin America data center provider is “not even close” to the level of those services offered by a typical US provider. He said that most Latin American data center customers are based in Latin America and are seeking Spanish-language services.

“Quality is still in development, you will find better infrastructure in developed countries,” said Del Campo. “However, in managed services you will find good talent with training and skills, and HR costs are a little cheaper compared to those in the US.”

Del Campo: Latin American Data Centers Have Bright Future

Del Campo also agreed that the quality of service and cost of US data centers is generally better than that of Latin American data centers, but did not describe the gaps as being quite as significant and also offered optimism on the future development of the Latin American data center market.

“We have been in this market 10 years and have seen increased demand for data centers based in Latin America,” said Del Campo. “Most of the growth is from customers in Latin America. International players are also coming into the region and there is a growing need for international business continuity solutions. The region is growing from an economic perspective.”

Although Del Campo said a “one-to-one” price comparison of US and Latin American data centers is difficult and costs can vary quite a bit by individual country, he said that Latin American data centers tend to be “a little more expensive” than ones in the US. Del Campo also seconded DiVece’s comments on import taxes hiking up the costs of technology in Latin America.

“Quality is still in development, you will find better infrastructure in developed countries,” said Del Campo. “However, in managed services you will find good talent with training and skills, and HR costs are a little cheaper compared to those in the US.”

Looking forward, Del Campo predicted Latin America will become a more global player in the data center marketplace. “Latin America is becoming a very important region in the world of data centers,” he concluded.

Mataya: Latin America Data Centers Already on Their Way

Mataya was the most optimistic of the three experts in his assessment of the current state of Latin American data centers. “Right now, there is heavier use from Latin American users, but there is a trend for more US companies to locate some services there, especially disaster recovery services or for subsidiaries.” Mataya cited IBM as a US company with multiple data center facilities in the region serving its Latin American subsidiaries.

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In terms of cost comparison, Mataya said a direct apples-to-apples comparison between US and Latin American data centers is difficult, but using industry standards such as the one from the Uptime Institute, a favorable comparison can be made for the overall cost of using a Latin American data center. The Uptime Institute data center standard evaluates factors including whether a data center is located near an airport or major street and whether it has redundancy.

Mataya advised potential clients of Latin American data centers to carefully investigate whether telecommunications and power redundancy is provided, as in many Latin American countries there is little or no diversity in telecommunications or power providers, which are often state-run monopolies or virtually monopolies.

“You want at least two companies providing power,” he said. “For auxiliary power, a data center will usually have generators. Make sure there are adequate supplies of diesel fuel and oil. In an emergency, the government could say, ‘We’ll give all the diesel to the hospitals.’”

Dan Berthiaume

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