Observations From Brazil

Jennifer Belissent, Ph.D.
Principal Analyst
August 26, 2011

My first whirlwind trip to Brazil confirmed much of what I’d expected.  Brazil is booming.  Traffic in the cities is horrendous.  The buzz of helicopters in Sao Paulo is incessant.  And, there is huge opportunity for IT vendors and services providers.  But contrary to what I had expected, IT preparation for the upcoming mega-events seems to be getting off to a slow start. 

Several analysts from Forrester traveled to Brazil this week to participate in events sponsored by the Brazilian Chamber of E-Commerce, the Brazilian Association of Information Technology and Communications Companies (BRASSCOM) and the Brazilian Association for Promoting the Software Export (Softex), and iO2. 

We also met with a distinguished list of Brazilian IT services firms in both Rio and Sao Paulo, including PromonLogicalis, CMP Braxis, Cast, BRQ, Dimension Data, CI&T, iO2, and Sedna Partners. 

What did we hear?

  • Good times for Brazilian IT industry, which was recently among the strategic industries given a tax break to promote its competitiveness.
  • Currently many Brazilian IT services firms are experiencing 30%-40% annual growth. 
  • And, many are looking to double their revenues in the next few years.
  • Unlike their Indian counterparts, they have built their businesses domestically with 80%-90% of their revenues coming from Brazil.  Great partners for vendors looking to enter the Brazilian market.
  • They plan to further exploit the growing internal market but also interest in becoming increasingly relevant international players.  
  • They are not low cost outsourcers; they all try to differentiate based on skill and innovation. 
  • Although the new tax cuts will help the industry’s competitiveness, there is more to do such as addressing the skilled labor shortage by improving and increasing the availability of education. According to one services firm we spoke with, 70% of technology employees receive job offers every month.  Human capital constraints are a major issue.

One surprise I did have was how little mention there was of IT for the World Cup and the Olympics.  Yes, there is talk of the upcoming mega-events but not necessarily from an IT perspective.  We heard from several people that IT will be an afterthought to the Games.  And, with concerns about corruption and the complexity of working for the government, some firms find government work daunting.  Others are ready, but not yet engaged.  Dimension Data mentioned its experience in building connected stadiums in Cape Town, South Africa. And, CI&T is currently building mobile, social applications for several of the sponsors of the Olympics but is still working on London, not Rio.

As for smart cities, as I presented at the Brasscom/Softex event, Latin America is the most urbanized of the developing regions – behind only North America.  Latin American cities are no exception to the pressures of urbanization.  That translates into huge opportunity for IT vendors – once the cities themselves embrace IT as a tool to address both urban pressures and address competitiveness.

I will be going back to Brazil in November to investigate further.  As you can see in my photo above, I didn't get a clear enough picture this time!

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