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BR
AZ
IL IT
-BP
O B
OO
K
2008
-200
9
BRAZIL IT-BPOBOOK
Cove
r: De
lfim
Mar
tins/
Pulsa
r Im
agen
s
2008-2009
BRAZIL IT-BPO BOOK2008-2009
BRAZIL IT-BPO BOOK2008-2009
brazilian association of information technology and communication companies – Brasscom
President of the boardRogério Oliveira
PresidentAntônio Gil
directorsEdmundo OliveiraNelson WortsmanRicardo AsseSérgio Sgobbi
BraZil it-Bpo Book 2008-2009
coordinationRicardo Asse Daniella Koncz
technical suPPort teamThaís TrappSergio Pessoa
sPonsorshiPApex-BrasilBrasscom membersAccentureBRQCastCPM BraxisIBM BrazilItautecStefaniniTivit
acknowledgementsAlessandro TeixeiraMauricio Borges André LimpMauro PeresAntonio AlmeidaDaniel CunhaArgemiro LeiteJosé C. LabateCássio DreyfussMembers of Brasscom’s Marketing Work Group
brasscomRua Funchal, 263, conjunto 151 04551-060, São Paulo, SP, BrazilPhone 55 11 3053-9100Fax 55 11 3053-9115www.brasscom.org.br
SUMMARY
message from the PresiDents p. 7
global it-bPo trenDs p. 8
brazil goes global p. 24
the brazilian it-bPo sectorp. 20
brazil’s ValUe ProPositionIndustry and business knowledge p. 32
Qualified human resources p. 36
Sound infrastructure p. 42
Governmental support p. 50
Favorable economic, political and legal environment p. 54
Cultural compatibility p. 60
Time zone proximity p. 62
conclUsionCost efficiencyp. 66
aPPenDiXp. 70
brasscom’s agenDa p. 12
Information Technology (IT) plays a key role in the day-to-day lives of companies and nations.
If business needs to be expanded, it provides the essential input for planning, executing and
controlling action. If costs need to be rationalized, it provides the vital tools for enabling
more efficient operations and management. The process is global and Brazil takes a dynamic
and creative part in it. The IT industry has provided the country with great service for over
four decades. The eighth largest IT market in the world is planned here, and information and
communications technology represents about 7% of Brazil’s gross domestic product (GDP).
In this publication Brasscom offers the world a snapshot of Brazil’s IT industry. It is based on
recent studies carried out for Brasscom, which have outlined the comparative outlook for
domestic and global markets, and provided indispensible primary data for the industry and
for investors.
Recent evidence shows that Brazil is rapidly becoming a safe harbor for offshore IT and
business process outsourcing (BPO) services. This is the focus of this report, which is designed
for companies and opinion makers in the industry. It aims to reduce the imbalance in
information provided to agents in the area and to add value to their business decisions.
Above all, this publication seeks to share data and open up horizons. This is why it begins with
an overview of the global IT-BPO services market, which has shown to be resilient in face of
a global economic crisis, and continues to grow. It then presents the position held by Brazil’s
industry and its potential for expansion. It shows why Brazil has arisen as a consistent and
strategic offshore alternative.
This publication also proffers the point of view held by analysts of this market, identifies the
resources and advantages enjoyed by Brazil in global terms, and provides comparative data
on other traditional and emerging players. It also focuses on aspects of infrastructure, human
resources and policies for the industry, with special emphasis on the firm support offered by the
Brazilian government. The situation presented here may surprise some readers, and certainly
reveals a secret that has been well-kept in recent years but which now, with the country’s
projection in IT-BPO, is becoming an ever-more incontestable fact.
Many people, companies and institutions collaborated in the preparation and publication of
this report. Special mention must be made of the Brazilian Trade and Investment Promotion
Agency (Apex-Brasil), which embodies the Brazilian government’s commitment to our industry.
We also extend our warm thanks to our member companies and consultancies International
Data Corporation (IDC), A.T. Kearney, and Booz & Company.
Rogério Oliveira
President of the Brasscom BoardAntônio GilPresident of Brasscom
Brazil: a safe harbor for IT-BPO
6 brazil it-bpo book 2008-2009 message from the presidents 7
global it-Bpo trenDs
CREATING JOBS, BOOSTING PRODUCTIVITY,
COMPETITIVENESS AND PER CAPITA GDP,
THE IT-BPO SECTOR IS TODAY A GROWTH
DRIVER FOR ThE COUNTRIES
Extensive market intelligence research carried out by Brasscom – the Brazilian Association of
Information Technology and Communication Companies – has shown how vital Information
Technology (IT) is to the economic development of any country that wants to be a part of the
global market. Over the last few decades the IT industry has become the main growth driver in
the leading global economies, illustrated by such indicators as job creation, a general rise in
productivity, increased competitiveness and rising per capita gross domestic product (GDP).
This strength and dynamism is best exemplified by Information Technology (IT) and Business
Process Outsourcing (BPO) services, sectors whose strong growth forecasts have been
maintained despite the global crisis. In 2008 IT-BPO generated US$ 1.23 trillion globally, with
outsourcing processes (both domestically and internationally) accounting for US$ 819 billion
of this total, having grown 6% a year from 2004 to 2008. This growth rate is expected to
reach 7.4% a year from 2007 to 2012, according to consultancy A.T. Kearney.
Demand is distributed as follows: applications (IT consulting, system development,
integration, expansion and management), US$ 289 billion; infrastructure (including software
development and software sales), US$ 271 billion; BPO, US$ 171 billion; and hardware
services, US$ 87 billion.
* Compounded Annual Growth Rate.
IT-BPO Services (in-house and outsourced)
IT-BPO Services (outsourced)
IT-BPO Services(offshore)
Source: Gartner, A.T. Kearney analysis.
2008
2009
e
2010
e
2011
e
2012
e
2007
GLOBAL IT-BPO SERVICES MARKETUSD Billion
11861233 1274 1316 1359 1404
748819 872
932997
1069
50 70 84 101 121 145
CAGR*
2004-082007-12
20% 40%
7.4% 6%
3% 3%
IT-BPO TUrNED OVEr US$1.23 TrILLION GLOBALLY IN 2008
global it-bpo trends 9
BPO grew 8.2% a year from 2004 to 2008, a trend which is expected to continue even more
rapidly (8.7% a year) until 2012. We estimate that the rate of expansion will also increase in
infrastructure (7.2% a year from 2008 to 2012, compared with 5.9% in the previous period),
applications (6.6% compared with 5.2%) and hardware (2.8% compared with 2.3%).
In 2007 the United States accounted for 42% of demand, and Europe for 35%. Finance,
manufacturing and the public sector were the main vertical segments in the market.
Companies mainly opt to outsource services in order to expand their operations, to increase
revenue, to reduce costs, to streamline processes, and to concentrate their efforts in their
areas of expertise. Today, many companies are contracting service providers in developing
countries to take advantage of labor cost arbitrage, which leads to reduced costs.
‘Offshore Outsourcing’, which means outsourcing to other countries, is the segment that has
expanded the most, growing an average of 40% a year from 2004 to 2008 and turning over
US$ 70 billion in 2008 alone. From 2008 to 2012 average annual growth is expected to be
20%, turning over US$ 145 billion.
India is by far the largest supplier in this market, having exported US$ 41 billion from 2007 to
2008, according to A.T. Kearney. In the same period, however, Brazil, China, Russia, Mexico
and the Philippines, amongst other players, significantly increased their market shares.
Analysts in the sector forecast that over the next few years around 50% of the market will be
fought over by emerging players. Companies hiring services will need to create new strategies
to globally outsource (for example, prioritizing suppliers closer to their borders, which is
known as nearshore outsourcing), which will create clear opportunities for Brazil. A report
published by Gartner Group at the end of 2008 stated that Brazil is a natural choice when it
comes to potential investment in IT-BPO services.
industry has greatly improved training, quality and competitiveness. IT services are vital for all
sectors – government, industry, retail and services – and are the country’s flagships regarding its
standing on the international market.
The private sector and the Brazilian government share ambitious goals to position the country as
an increasingly relevant and strategic global player in IT-BPO.
Goals were established as a part of a development program for the sector within the government’s
Productive Development Policy (PDP), launched in 2008 by the Ministry for Development, Industry
and Foreign Trade. These goals included strengthening the microelectronics segment, enlarging
the production chain, and expanding the infrastructure for digital inclusion. Furthermore, the
Brazilian government set a goal for 2010 to boost IT-BPO exports, from US$ 2.2 billion to US$
3.5 billion. Projects to create 100,000 jobs in the area are also being implemented, and two large
Brazilian technology groups are being consolidated.
Initiatives that involve the federal government, Brasscom, and other industry associations are
handling expanded access to computers and broadband internet connections, professional
training, and job creation.
Finally, comprehensive, shared agendas to combat the crisis take in specific measures for the IT-
BPO sector, given the consensus regarding its relevance as a strategic sector of the economy.
30
5050
7070
84
101
90
110
2008
USD 31Billion
OFFSHORE COMPETITIVE SCENARIOSpending – USD Billion
Source: Gartner, A.T.Kearney analysis.
Estimate
India
BrazilChinaRussiaMexicoPhilippinesOthers
2009
e
2010
e
2007
BrAZIL HAS BECOME A STrATEGIC GLOBAL PLAYEr IN IT-BPO. WHAT WILL ITS rOLE BE IN THE NEAr FUTUrE?
The Brazilian IT-BPO market is among the strongest and most mature in the world. Over the
last few decades it has been evolving in size, coverage and complexity, in line with the other
economic sectors. Brazilian companies operate in the country, along with multinational firms.
The main hardware manufacturers have facilities in Brazil, and are also one of the main
consumers in this market. In 2008, according to consultancy IDC, Brazil was ranked fourth
in global computer sales, behind only Japan, China and the United States. Brazil’s software
10 brazil it-bpo book 2008-2009 global it-bpo trends 11
brasscom’s agenDa
Brasscom – The Brazilian Association of Information Technology and Communication
Companies – represents the main IT-BPO companies, both Brazilian and international,
which account for 70% of Brazil’s gross domestic product (GDP) in the sector, as
well as research centers, universities and institutional partners. Founded in 2004,
Brasscom works to position Brazil amongst the world’s three leading strategic IT-BPO
centers. To this end, it seeks to align public policies with the private sector and local
and international markets, as well as to encourage cooperation with employees and the
associations that represent them.
Its agenda is built around promoting Brazil ’s excellence and innovative capacity in
IT-BPO, which is essential to increased efficiency and productivity in every sector
of the economy. In five areas of operation, Brasscom works to consolidate the
relevance of the IT-BPO sector in Brazil.
BrASSCOM SEEKS TO GET THE MOST OUT OF THE ADVANCES IN THE IT-BPO SECTOr
INSTITUTIONAL
BRASSCOM’S AREAS OF OPERATION
National councils Market strengthening Institutional relations Institutional communication Public relations
REGULATORY DIGITALCONVERGENCE
EDUCATION & HUMAN RESOURCES MARKETING & EXPORTS
Institutional relations
Labor law
Legislation & taxes
International agreements
IP & piracy control
Language training
Technical training
IT-BPO career promotion
Universities
Technical schools
Government incentives
Educational methods
Local governmentrelations
Market intelligence
Opinion makers
Demand generation Public relations
Publications
Events
Media & web
Branding
Infrastructure
Digital TV
Digital inclusion
Brazilian Digital Convergence Index
Innovation
Mobility
Broadband
LARGE COMPANIES IN THE IT-BPO SECTOR, RESEARCH
CENTERS, UNIVERSITIES AND INSTITUTIONAL PARTNERS
WORK TOGETHER TO PROJECT THE EXCELLENCE OF THIS
INDUSTRY IN BRAZIL AND WORLDWIDE Juscelino Kubitschek Bridge, Brasília
brasscom’s agenda 13
DIGITAL CONVERGENCE
Brasscom provides a guide to the IT-BPO industry regarding the challenges in
infrastructure, digital convergence, and innovation.
Digital convergence is at the core of the profound transformation the IT-BPO sector
is undergoing globally. The fast adoption of new technologies, combined with the
continuous growth in the number of users, is changing the way in which consumers
interact with companies. This rapidly changing landscape demands a constant review of
the technologies and business models being used, and Brasscom coordinates a range of
programs in this area:
A digital TV work group has been set up within the association to deliberate the
massive business opportunities created by interactivity which will require a large
number of trained professionals to develop applications and other software platforms.
Brasscom prepares and publishes The Brazilian Digital Convergence Index, which
indicates that Brazil has been evolving in this area. The most recent issue of the
index shows dynamic growth in the indicators associated with the technological
platform (hardware, software and IT-BPO services) and convergence (connectivity,
communications, media, and digital access to services and products).
In partnership with consultancy Booz & Company, Brasscom has provided a wide
range of recommendations for the Brazilian government to strengthen the IT-BPO
industry and stimulate the national economy. The program is based on a balance
between the five pillars of cost, coverage, awareness, training, and regulation. The
plan is to attract investments of around US$ 407 million in wireless broadband,
generating 15,000 jobs to build this infrastructure, adding one million new
broadband access points in Brazil, selling five million new computers, creating
50,000 formal jobs and adding US$ 35 million in investments in Lan Houses
(Internet access for fee locations similar to Internet cafes).
BRASSCOM PROGRAM FOR IT-BPO INFRASTRUCTURE
Agenda Impact
SPILLOVER EFFECT IN OTHER ECONOMIC
SECTORS
UP TO 5 MILLION NEW PCS – GREATER PENETRATION
CREATION OF AT LEAST 15,000 JOBS
US$ 407 MILLION INVESTED IN WIRELESS BROADBAND
US$ 35 MILLION INVESTED IN LAN HOUSES
OVER 1 MILLION NEW BROADBAND ACCESS POINTS
FORMALIZATION OF UP TO 50,000 JOBS
BROADBAND 1.0
COMPUTER FOR EVERYONE 2.0
LAN HOUSES 3.0
TRAINING FOR SMES
ACCELERATE KEY REGULATORY PROCESSES
LAW N. 11,774 (EMPLOYMENT COST)
IT-BPO IN THE GOVERNMENT
REGULATORY FRAMEWORK
Brasscom aims to establish a competitive, fair, and ethical environment for the IT-
BPO sector. It works together with other associations, unions, and governmental
institutions to propose bills of law that will benefit the sector, and to get these
bills passed into law.
Law number 11,774, of September 17, 2008 reduced social security contributions on
company payrolls by 50% (from 20% to 10%).
Law number 11,908, of March 3, 2009 allows information technology and
communications companies to make tax deductions of 200% of the amount they spend
on training their employees working in software development, when the ‘actual profit’ tax
calculation system is employed.
Brasscom is monitoring the bill of law that deals with outsourcing services. It is also
working to improve the legal framework for intellectual property, digital convergence,
data security and privacy, and tackling software piracy.
The association is working on a standard to be used when IT-BPO professionals are hired,
based on current legislative principles (Consolidation of Labor Laws), allowing self-
regulation of work on the IT-BPO market.
EDUCATION AND hUMAN RESOURCES
Brasscom works actively with governments, universities, training centers,
institutions and companies to influence, create, manage and take part in technical
and language training programs in line with company needs.
A study amongst Brasscom members appraised the demand for IT-BPO professionals in
relation to geographical location, technical, and language needs. Based on these results,
a package of local, regional and federal programs is being offered, including the Sector
Qualification Plan – Information Technology (Planseq – IT), Forsoft and Pós-Técnico,
designed to train programmers and developers, and Englisoft, training people in English.
Brasscom takes part in several institutional forums designed to raise awareness at
various governmental levels of the need to adapt school curricula and to awaken an
interest in the IT-BPO area. This aligns training and education more closely with the
market. In addition, funding is sought to fill the existing gaps in this area.
A COMPETITIVE, FAIr AND ETHICAL
ENVIrONMENT FOr THE IT-BPO
INDUSTrY
Broadcast tower and TV antennas,Resende, Rio de Janeiro
14 brazil it-bpo book 2008-2009 brasscom’s agenda 15
THE TArGET: US$ 3.5 BILLION
BY 2010 IN EXPOrTS
ABOUT APEX-BRASIL
The Brazilian Trade and Investment Promotion
Agency’s (Apex-Brasil) mission comprehends
a series of endeavors which include the
promotion of exports of Brazilian products and
services to foreign countries, the development
of the internationalization of Brazilian
companies and undertakings focused on
attracting foreign investment into the country.
The Agency seeks to increase the number of
Brazilian exporting companies and to add
value to the list of Brazilian exported products.
On the other hand, the Agency also strives
to consolidate the country’s presence in
traditional markets and to open new markets
for the Brazilian products.
At the moment, Apex-Brasil gives support to over 70 sectors of the Brazilian economy, ranging from agribusiness
to machines, technology, architecture and civil construction, entertainment and services to fashion and industrial
equipment. The Agency develops and builds the image of these productive sectors by means of solid marketing
activities and publicity campaigns directed to entrepreneurs and consumers of highly potential purchasing power. Every
year, Apex-Brasil provides assistance to Brazilian companies’ participation in more than 600 events – both in Brazil
and abroad.
To achieve these objectives, Apex-Brasil offers products and services in the following areas:
Information
Export training
Commercial promotion
Apex-Brasil has stepped up action to attract direct foreign investment in Brazil, seeking to identify opportunities,
holding strategic events and supporting investors throughout the process in Brazil.
Positioning and image
Backing for international expansion
INTERNATIONALIZATION, EXPORTS AND INVESTMENTS’ ATTRACTION
Brasscom positions and promotes Brazil’s potential in IT-BPO on both the domestic
and international markets, focusing on increasing Brazil’s export volumes and
building investment in the sector.
In January 2009, Brasscom, together with Brazilian Trade and Investment Promotion
Agency (Apex-Brasil), launched a joint initiative to boost IT-BPO exports to US$ 3.5
billion by 2010. The agreement concentrates on the implementation of a comprehensive
international program, with actions for promoting the sector internationally, fostering
business, and improving relationships with key influencers and decision-makers.
Over the next two years several projects will be rolled out involving ministries, funding
agencies, sector associations, chambers of commerce and international business
promotion agencies. The scope of these projects include the promotion of the sector
in Brazil and internationally, participation in strategic international events, and the
organization in Brazil of conferences and visits by analysts, journalists, and specialists
in the area.
The association maintains a close relationship with the main international organizations
and key stakeholders from the global IT-BPO industry, offering the best and most
accurate information about the Brazilian market.
INSTITUTIONAL
Brasscom represents the IT-BPO sector in Brazil and internationally.
Brasscom is a member of the Economic and Social Development Council, linked to the
Presidency of the Republic, and also of the Private Sector’s Consulting Council (Conex),
linked to the Ministry for Development, Industry and Foreign Trade, at which it discusses
proposals to promote economic and social development and to improve foreign trade
policies. It also participates in national forums on competitiveness.
The association operates as a hub connecting the Brazilian IT-BPO sector to potential
markets, and promoting Brazil’s competitive advantages. Brasscom has been acting as a
facilitator for potential partnerships, mergers and acquisitions, joint ventures, alliances
and other joint efforts between Brazilian and international companies.
Apex-Brasil headquarters, Brasília
16 brazil it-bpo book 2008-2009 brasscom’s agenda 17
the brazilian it-Bpo sector
In 2008 the sector turned over US$ 59.1 billion, including exports and IT-BPO areas that are
part of the structure of Brazilian companies in every economic sector. If the communications
sector is included, which forms the ICT complex, turnover exceeded US$ 139.1 billion.
The country’s IT-BPO sector is 45 years old, has grown in step with Brazil’s economy and has
developed sophisticated solutions for companies in several business segments. Some of these
companies compete on the global market and are amongst the leaders in their fields. Examples
of such companies include Ambev (part of AB Inbev, the world’s second-largest beverage
company, after Coca-Cola), BrasilFoods (the largest chicken processor in the world), Petrobras
(the world’s 12th largest oil company), Embraer (the world’s third-largest commercial jet
manufacturer), Vale (the world’s largest producer and exporter of iron ore), CSN (the world’s
fifth-largest steel maker), Gerdau (the largest producer of long steel in the Americas), and
Aracruz (a global leader in the production of eucalyptus pulp). Brazil’s financial system is also
relevant in this scenario, and is considered by both the World Bank and the Gartner Group,
one of the most advanced in the world, with all the institutions connected to a fully developed
national network.
Hardware still has the largest market share in the IT-BPO sector, mainly servers, storage
devices, peripherals (printers, portable devices), and network equipment, followed by services
(including planning, development, support and systems and process management), BPO
and software.
SUPPORTED BY CONTINUOUS AND
RAPID GROWTH IN RECENT YEARS,
BRAZIL’S IT-BPO INDUSTRY IS
READY TO PLAY A LEADING ROLE
ON THE GLOBAL MARKET
BrAZIL HAS THE EIGHTH LArGEST DOMESTIC IT-BPO MArKET IN THE WOrLD
the brazilian it-bpo sector 21
According to A.T.Kearney, the sector currently employs around 1.7 million people, including
programmers, systems analysts and managers, having grown by around 6.5% a year on
average since 2005 as a result of the constant expansion of the sector. Specialized schools
throughout Brazil produce around 77,000 new professionals for the market every year. Brazil is
recognized for its intensive use of global standard platforms, architectures and methodologies
– including Java, Unix, Linux, Cobol, Natural, .Net, C++, Oracle, SAP, Totvs, Siebel, PeopleSoft,
SOA, EAI, CMMi, ISO, and ITIL, amongst others.
Strong in vertical segments, such as financial services, manufacturing, communications, oil &
gas, retail and government, the Brazilian market is completely open, with both Brazilian and
international companies competing on it.
The Brazilian IT-BPO sector combines technological expertise with an extensive knowledge of
business processes for specific sectors. It currently provides mature solutions for agribusiness,
the aerospace and automotive industries, health services, e-commerce, insurance, banking,
and fiscal and tax operations, amongst others.
IT SPENDING, 2008USD Billion
HARDWARESOFTWARESERVICES
IT-BPO AND COMMUNICATIONS IN BRAZIL, 2008USD Billion
1. IT SPENDING2. BPO3. EXPORTS4. HARDWARE FOR
COMMUNICATIONS5. TELECOM SERVICES
6. IT IN HOUSE7. TOTAL
Source: Brasscom, IDC.
2
4
3 7
139.
1
5
11
6
69
4
2.2
1
29.4
23.5
16.2
10
3.2
7% of Brazil’s GDP
A survey carried out by the Center for Applied Information Technology at Eaesp-FGV at the beginning of 2009 has shown that there are 60 million computers being used in Brazil, in both the business and residential segments. In 2008 12.2 million units were sold – over 30,000 a day – up 16% on 2007, when for the first time computer sales surpassed those of television sets. Today the country has one computer for every three inhabitants and the forecast is that by 2012 this number will have increased to one computer for every two inhabitants. The survey also stated that Brazilian companies spend and invest and average of 6% of their net revenue on IT, an amount that has doubled in twelve years.
SPENDING ONIT-BPO, ADDED TO EXPOrTS AND THE COMMUNICATIONS
SECTOr, ACCOUNTS FOr 7% OF BrAZIL’S GDP
22 brazil it-bpo book 2008-2009 the brazilian it-bpo sector 23
brazil goes global Brazil’s IT-BPO export market turned over US$ 2.2 billion in 2008 – including IT-BPO services,
captive centers and software.
Revenue comes mainly from IT services, and most (73%) is related to development, which is
a higher proportion than in other countries. According to the IDC, the biggest growth is in the
integration and consulting areas, as in the rest of the world, but development will continue to
dominate for a long time.
In the BPO segment demand is concentrated in call centers, which account for 40% of business
activity. These usually involve multinational company branches working for the head offices
(“captive centers”). Operations focusing on the market outside Brazil are mainly help-desks,
B2B, and B2C call centers.THE BRAZILIAN IT-BPO
INDUSTRY REAChES ITS
MATURITY WITH A RECORD
OF EXPORTS AND IS READY
TO MEET EVEN MORE
AMBITIOUS GOALS
HEADED BY IT SErVICES, BrAZIL’S EXPOrTS GO FOWArD SHOWING DYNAMISM AND VErSATILITY
1. IT SERVICES & BPO2. SOFTWARE LICENSES & RELATED SERVICES3. TOTAL
BRAZIL’S OFFSHORE SERVICES MARKET, 2008USD Million
1
3
2 187
Source: Brasscom, IDC.
2013
2200
BRAZIL’S IT-BPO OFFSHORE REVENUES, BY SERVICES, 2008
Source: Brasscom, IDC.
CUSTOM APPLICATION DEVELOPMENT
BPOINFRASTRUCTURE SERVICES
IT CONSULTING
73%
4%7%
16%
brazil goes global 25
The main demand for IT-BPO services comes from the manufacturing sector, which may be
explained by the fact that the country is especially strong in ERP – followed by the finance
sector. Combined they account for 46% of this market. The main services include application
management, testing, and infrastructure, amongst others.
US companies are the main clients, accounting for over 80% of demand, followed by Latin
America (especially Argentina, Chile, Colombia and Mexico), and Europe (especially Germany,
Spain, France, England and Portugal).
The Brazilian market is very diversified, and offers services in several formats. COBOL
dominates, for two main reasons: the presence of heavyweight companies using this
language, and a significant financial sector. The country also stands out in Java applications
– it has one of the three largest contingents of Java programmers in the world, and is a
reference point in this technology. Its consolidated history in ERP has also attracted some
global projects to the country.
Brazil’s strategic position and its positive business environment have driven the development
of shared service centers and IT-BPO regional centers to serve Latin America.
CAPTIVE CENTERS
Captive centers are development centers created by companies to serve the IT BPO
demands of their head offices. They are becoming more common in Brazil as the result
of a combination of factors:
A significant presence of multinational companies
Consolidation of IT-BPO operations in Latin America
Total cost competitiveness
Increased presence on the local market
Global sourcing strategies increasing demand for Latin America
Favorable geographical location
Government incentives
JOHNSON & JOHNSON: MULTIPLYING EXCELLENCE
Johnson & Johnson has important operations in Brazil, in all three
of its business segments – Consumer, Medical and Pharmaceutical.
This was one of the reasons it set up a global service center in
São José dos Campos, São Paulo, with a small initial investment
that leveraged the existing structure of its industrial unit.
The innovative and creative capacity of the people involved in
development also had an influence on the decision. “In four years we
went from 10 to over 400 professionals, including direct employees
and outsourced workers,” says Argemiro Leite, J&J’s IT director.
The time zone benefits Brazil, especially in serving the USA and
Canada, which account for practically 90% of the services provided.
English is the official language at the center, but the use of Spanish
is increasing, in step with the development of the Latin American
market. “We have an English service desk, 24 hours a day, 7
days a week,” says Leite. The development and management
of internet portals and websites are among the projects carried
out by the center. There are hundreds of them, including the
institutional portal.
Johnson & Johnson has 250 companies in 57 countries, with a
complex IT structure. The Brazilian global service center was the
first to obtain the international certification CMMi 2, certifying the
excellence of its processes. “Information technology is not our core
business, but we still believe that we need to match the level of
quality expected of companies in this sector,” Leite explains, adding
that rigor is in part of Johnson & Johnson’s DNA. The Brazilian
team’s focus on results is also praised: “Our professionals are
trained to solve problems quickly, as the sector requires continuous
improvement”. Leite offers an example of a Brazilian solution that
combined innovation and proactivity. “We developed a quantifying
application, based on precise parameters, to effectively measure
the cost of each IT project carried out at Johnson & Johnson. The
tool became a global standard.”
“WE HAVE INTEGRATED A NETWORK THAT OFFERS GLOBAL SOLUTIONS, SUPPORTING INTERNAL IT STRUCTURES”
BRAZIL’S IT-BPO OFFSHORESERVICES MARKET, BY
IMPORTING REGION, 2008
Source: Brasscom, IDC.
USA 80.5%
LATIN AMERICA 8.5%EUROPE 7.8%
CANADA 1.2%
JAPAN 0.7%
OTHERS ASIA/PACIFIC 0.8%
MIDDLE EAST 0.5%
Source: Brasscom, IDC.
BRAZIL’S IT-BPO OFFSHORESERVICES MARKET,BY INDUSTRY, 2008
24%
15%
18%
22%
9%
9%
3%
MANUFACTURING
SERVICES
OTHERS
OIL & GAS
TELECOM
IT
FINANCE
Johnson & Johnson industrial unit, São José dos Campos, São Paulo
26 brazil it-bpo book 2008-2009 brazil goes global 27
CITI: A BANK OF SOLUTIONS
Synergy with teams from North America and Europe, a small time
difference, an attractive alternative for the needs to decentralized
operations, a talent pool with expertise in banking technology,
and competitive costs – these are, in short, the main advantages
recognized by Citi that justified the set up of a global delivery center
(GDC) in São Paulo. “We support the bank’s critical applications,
especially those for institutional clients,” explains José Carlos
Labate, head of Citi’s GDC, which was set up five years ago.
Brazil benefits from flexibility, readiness, and maturity. Labate
says that technical knowledge in Brazil normally goes hand in
hand with practical experience, as many professionals work while
attending training courses. “In other countries, people wait
until the course is over to finally start working. Our dynamics
benefit project development.” Low personnel turnover, at around
3%, also makes teams stronger and improve productivity.
Transition – the Achilles’ heel for internationalization projects – has
been identified as one of the main successes for Citi’s GDC. “All our
transitions, with the transfer of knowledge and activities, were
a success. They followed a plan, stuck to the parameters set by
head office and had no impact on the continuity or the quality of
services, which is crucial for a banking institution,” says Labate.
Brazil has been gaining in strategic relevance. “We also work on
segmented projects, carried out simultaneously in India and Europe,
delivering high level solutions. We need to speed up the process
to become even more competitive, which may be achieved with
government incentives for premises, training personnel, and reducing
payroll taxes. This is a very dynamic market,” Labate concludes.
FLEXIBILITY, PROMPTNESS, AND MATURITY ARE KEY FACTORS IN FAVOR OF BRAZIL
RANKING OF IT-BPO EXPORTERSIN BRAZIL, 2008Total revenue
IBM1º
ACCENTURE2º
EDS3º
BT4º
STEFANINI5º
CPM BRAXIS6º
BRQ7º
DTS8º
SONDA PROCWORK9º
TATA CONSULTANCY SERVICES10º
GRUPO ASSA11º
CI&T12º
TIVIT13º
SATYAM14º
DELOITTE15º
T-SYSTEMS16º
GFT17º
BEARINGPOINT18º
ATOS ORIGIN19º
RESOURCE20º
POLITEC21º
UNISYS22º
SOFTTEK23º
OGEDA24º
IBM1º
EXXON MOBIL2º
MOTOROLA3º
DELL4º
JOHNSON & JOHNSON5º
HSBC6º
EDS7º
CITI8º
GM9º
BASF10º
SHELL11º
ROCHE12º
JP MORGAN CHASE13º
AMBEV14º
FORD15º
GOOGLE16º
RHODIA17º
AVAYA18º
DUPONT19º
BOSCH20º
CATERPILLAR21º
PHILIPS22º
RANKING OF CAPTIVE CENTERS, 2008Total revenue
Source: Brasscom, IDC.
In 2008, IDC carried out a survey of IT-BPO service exports amongst Brazil-based companies,
ranking them in terms of total revenue. The Brazilian offshore market can be split into three main
blocks – large multinational companies, with a long-standing and significant presence in the
country; Brazilian companies with a mature international status; and new players, both domestic
and international. Some companies position themselves as full-service providers, and others as
niche players, specialized in a certain business process, vertical operation, or technology.
Citi headquarters, Paulista Avenue,City of São Paulo
28 brazil it-bpo book 2008-2009 brazil goes global 29
brazil’s VALUE PrOPOSITION
INDUSTrY AND BUSINESS KNOWLEDGE
QUALIFIED HUMAN rESOUrCES
SOUND INFrASTrUCTUrE
GOVErNMENTAL SUPPOrT
FAVOrABLE ECONOMIC, POLITICAL AND LEGAL ENVIrONMENT
CULTUrAL COMPATIBILITY
TIME ZONE PrOXIMITY
1
2
3
4
5
6
7
City of São Paulo
hERE ARE SEVEN STRATEGIC REASONS FOR
ChOOSING BRAZIL FOR CONSISTENT INVESTMENT
IN THE IT-BPO SECTOR – A UNIQUE COMBINATION
OF FACTORS THAT MAKE THE COUNTRY ONE OF THE
MOST COMPETITIVE IN COST EFFICIENCY
Information technology plays a major role in all productive sectors in Brazil, and there is an
increasing awareness of its essential role in achieving real economic gains for the economy. This
explains why the country can put itself forward as a global strategic player in the IT-BPO industry.
Brazilian companies in the sector have created a very strong industry over the years (as we
have seen in the previous chapters). They have accumulated knowledge through decades
of experience, they have innovated to achieve excellent results in various business and
governmental areas, and they have grown in step with increased domestic demand.
FINANCIAL SEGMENT STANDS OUT
The financial area is one of the best examples of this strength. Having faced through the
difficult years of hyper-inflation and constant rule-changes in the 1970s and 1980s, Brazilian
professionals have developed an unmatched agility and innovative capacity. The Brazilian
Payment System (SPB) is amongst the most sophisticated, efficient and reliable in the world –
Brazil is one of the few countries in which inter-banking fund transfers can be made electronically
in real time. The country provides technological solutions that are benchmarks in banking
automation, internet banking, operations via mobile phone, ATMs, serving Brazilian giants
such as Itaú/Unibanco, Bradesco, Banco do Brasil and Caixa Econômica Federal, as well as
international banks, such as ABN/Amro/Real,
Santander, HSBC and Citi – leaders amongst
more than 100 banks in operation.
The most recent far-reaching project
involving banking operations is being
launched in 2009: authorized direct debit
(DDA), a system that will allow all payments
to be received electronically by the banks
that serve individuals and corporations. To
illustrate the impact of this change, monthly
school bills, purchases, mortgages and car
loans, amongst others, leave a paper trail
of around 2 billion printed banking slips per
year. Besides saving paper and postage,
DDA will offer benefits in terms of speed
and security. The implementation of the
system once again confirms Brazil’s position
as a pioneer and a global reference point in
business-related technology solutions for the
financial services sector.
Brazil’s Stock Market and Commodities
Exchange (BM&F Bovespa) is a leader in
Latin American equity and derivatives, and an
international financial center trading shares,
commodities and other financial instruments.
BM&F Bovespa is recognized for its IT-
supported operational excellence.
Brazil has a sound and dynamic payment
system. Electronic payments have been made
in the country for over 50 years, supported by
innovative IT companies. In 2008, according
to the Brazilian Credit Card and Services
Association (Abecs), there were 514 million
cards on the market, including credit, debit,
and private label cards. That year around 5.3
billion transactions were performed, 20%
more than in the previous year.
The companies that make up the financial
system, such as banks, private pension,
insurance, finance and brokerage firms,
account for around 20% of the total
spent on IT in Brazil, according to IDC.
In 2008 the segment was responsible for
42.8% of the total investment in servers
(including mainframes) and 29.3% of the
investment in data storage.
EXPERIENCE AND CAPACITY TO INNOVATE SET BRAZIL APART
INDUSTrY AND BUSINESS KNOWLEDGE
1
Salvador, Bahia
32 brazil it-bpo book 2008-2009
MANUFACTURING, RETAIL AND SERVICES
The manufacturing segment accounts for the greatest volume of IT investments in
Brazil due in part to its competitiveness. Companies, especially in the chemical,
base metal and pharmaceutical sectors, are intense users of integrated Enterprise
Resource Planning (ERP), Business Intelligence (BI), Supply Chain Management
(SCM) and Research and Development (R&D) systems. It is not unusual for
organizations to be challenged by the need for new product or process innovations,
enabled by technological solutions developed in short timeframes.
The Brazilian retail sector, with its large companies, poses similarly large challenges
for IT-BPO companies and professionals. Giants such as Pão de Açúcar and B2W (which
includes Americanas and Submarino) invest massively in technology in order to expand
their businesses, especially in Customer Relationship Management (CRM), e-commerce
and, more recently, radio-frequency identification (RFID), a system that helps monitor
the transport of goods carrying intelligent labels from the pallets in the plants to their
arrival in the supermarkets.
ELECTRONIC GOVERNMENT
Information technology-based public services are on the rise in Brazil. Best practices are being
promoted throughout the most diverse areas – health, education, public safety, and finance,
amongst others – and in the three spheres of the government – federal, state and municipal.
Communications with society are increasingly done via computers. A law approved in May
2009, for example, requires that government agencies report all their revenue and spending
on the internet, consolidating a practice that had already been in use by some agencies.
Some Brazilian e-government case studies are internationally recognized successes. Electronic
voting was used for the first time in the municipal elections of 1996. In the most recent
municipal elections, held in 2008, in which mayors and city councilors were elected, electronic
ballot boxes were available to the entire electorate. The numbers involved are impressive
and show how complex the operation was in terms of information technology: 5,563 cities,
371,874 electoral sections, and over 110 million voters. Almost all the votes were counted
before midnight on the same day of the election.
Another example that adds to Brazil’s credibility is its tax return system, which is almost
exclusively internet-based.
It is also worth to highlight the Brazilian Federal Government’s Electronic Procurement System
(ComprasNet), considered by the Inter-American Development Bank (IADB) to be a reference
point in the procurement of goods and standard services for the public administration,
providing an intuitive and secure application.
BrAZIL EXPANDS BEST PrACTICES
IN E-GOV AND STANDS APArT
ON THE GLOBAL SCENArIO
34 brazil it-bpo book 2008-2009
The great scale and the quality of labor currently available in the country, as well as the ability
to prepare an increasing number of professionals to meet the market demands in an effective
manner, set Brazil apart.
In step with its economic growth, Brazil has invested over the last two decades in the
universalization of its education. Amongst 7 to 14 year-olds, 97.6% – around 27 million
young people – are in school, attending 9 years of primary education. Secondary school’s
duration is 3 years, with 9.4 million students. Professional education, including technical
schools (4 years), short-term technical courses, and professional training courses, take in
6 million people. According to the last Post-Secondary Education Census, in 2007 over 1.5
million people entered post-secondary education, in 2,281 institutions.
The challenge of meeting the labor needs of the IT-BPO market, which has been growing
at an annual average rate of 6.5% over the last four years, is shared by public and private
institutions throughout the country. A Ministry of Education survey carried out in 2007
revealed that there are 1,714 courses, from technical to university courses, directly linked to
information technology in Brazil. Over 220,000 people are estimated to be currently being
prepared to enter the market. This estimate includes courses in mathematics, physics and
some engineering areas, as it is not uncommon in Brazil for professionals from those courses to get into the IT-BPO area. There is an ongoing
plan to double the current number of vacancies offered by the federal technical and technological area to 500,000 places by 2010.
A qualification in information technology will be a priority in this initiative.
QUALIFICATION IN ENGLISH IS ALSO A PRIORITY
Foreign language skills must also be included in the qualification of IT-BPO professionals, especially when the focus is on the external market.
In Brazil, English is a mandatory language course on the school curricula in primary, secondary, and post-secondary schools.
Latin
Am
eric
a(s
elec
ted
coun
tries
)
% total populationENGLISH SPEAKERS, 2007 Million
BRAZIL 5.4%10.2
COLOMBIA 15.7%7.4
CHILE 34.7%5.9
MEXICO 4.5%4.9
ARGENTINA 9.8%3.8Ot
hers
BRI
Cs
INDIA 8.2%90.6
RUSSIA 4.8%6.8
CHINA 0.8%10.0
Source: A.T. Kearney.
PEOPLE AND KNOWLEDGE: ThESE ARE ThE DRIVERS IN ThE IT-BPO SEGMENT IN BRAZIL
QUALIFIED HUMAN rESOUrCES
2
Paulista Avenue, City of São Paulo
36 brazil it-bpo book 2008-2009
RANKING OF DEGREE COURSES IN INFORMATION TECHNOLOGY, 2007
1 Unicamp-Universidade Estadual de Campinas Computer Engineering
2 Unicamp-Universidade Estadual de Campinas Computer Sciences
3 UFRGS-Universidade Federal do Rio Grande do Sul Computer Engineering
4 UFRGS-Universidade Federal do Rio Grande do Sul Computer Sciences
5 ITA-Instituto Tecnológico de Aeronáutica Computer Engineering
6 Unicamp/Limeira-Universidade Estadual de Campinas Technology in Information Technology
7 PUC-RJ-Pontifícia Universidade Católica do Rio de Janeiro Computer Engineering
8 ICMC-USP/São Carlos-Instituto de Ciências Computer Sciences Matemáticas e de Computação da USP
9 Poli-USP-Escola Politécnica da Universidade de São Paulo Computer Engineering
10 UFMG-Universidade Federal de Minas Gerais Computer Sciences
11 PUC-RJ-Pontifícia Universidade Católica do Rio de Janeiro Information Systems
12 Poli-USP-Escola Politécnica da Universidade de São Paulo Engineering, emphasis in Computing
13 UFRJ-Universidade Federal do Rio de Janeiro Computer Sciences
14 ICMC-USP/São Carlos-Instituto de Ciências Information Technology Matemáticas e de Computação da USP
15 IME-USP-Instituto de Matemática e Estatística da USP Computer Sciences
16 UFPE-Universidade Federal de Pernambuco Computer Sciences
17 UFSCar-Universidade Federal de São Carlos Computer Engineering
18 UFPE-Universidade Federal de Pernambuco Computer Engineering
19 UFSCar-Universidade Federal de São Carlos Computer Sciences
20 UFMG-Universidade Federal de Minas Gerais Information Systems
21 PUC-RS-Pontifícia Universidade Católica do Rio Grande do Sul Information Systems
22 UFSC-Universidade Federal de Santa Catarina Computer Sciences
23 Unisinos-Universidade do Vale do Rio dos Sinos Computer Sciences
24 Unisinos-Universidade do Vale do Rio dos Sinos Information Systems
25 PUC-RS-Pontifícia Universidade Católica do Rio Grande do Sul Computer Sciences
26 Fiap-Faculdade de Informática e Administração Paulista Information Systems
27 Unesp/Bauru-Universidade Estadual Paulista Júlio de Mesquita Filho Computer Sciences
28 Unesp/Bauru-Universidade Estadual Paulista Júlio de Mesquita Filho Information Systems
29 UFF-Universidade Federal Fluminense Computer Sciences
30 Unesp/Rio Claro-Universidade Estadual Paulista Júlio de Mesquita Filho Computer Sciences
31 Unesp/S.J. Rio Preto-Universidade Estadual Paulista Júlio de Mesquita Filho Computer Sciences
32 PUC-SP-Pontifícia Universidade Católica de São Paulo Computer Sciences
33 PUC-Campinas-Pontifícia Universidade Católica de Campinas Electrical Engineering, major in Telecommunications
34 UCB-Universidade Católica de Brasília Computer Sciences
35 PUC-PR-Pontifícia Universidade Católica do Paraná Computer Engineering
36 UFCG-Universidade Federal de Campina Grande Computer Sciences
37 UEL-Universidade Estadual de Londrina Computer Sciences
38 UFRN-Universidade Federal do Rio Grande do Norte Computer Sciences
39 UEM-Universidade Estadual de Maringá Information Technology
40 PUC-MG/Poços de Caldas-Pontifícia Universidade Católica de Minas Gerais Information Systems
Source: Info Exame.
Many students also attend supplementary courses in English as a second language (ESL),
which are widely available throughout the country. Out of the largest developing economies,
Brazil has the second-highest number of English speakers (10.2 million), behind only India.
Spanish and French are also widely taught in Brazil, especially in private, independent courses.
The immigrant community also provides professionals fluent in Italian, German, Japanese and
Arabic, amongst other languages.
The development of language skills is a priority as Brazil moves forward with its internationalization
process. To this end, Brasscom has been working hard in close partnership with the government and
private businesses to implement programs over the short, medium, and long term.
BRAZILIAN WORKERS ARE RECOGNIZED
FOR THEIR COMMITMENT AND FLEXIBILITY
According to IDC, Brazil has one of the largest communities of COBOL and Java programmers
in the world. It also certifies a large number of professionals every year in Unix, Linux, Natural,
.Net, C++, as well as other programming languages.
Based on interviews with executives in the sector, IDC has concluded that Brazilian workers
are recognized for the quality of their work and their commitment. They are considered to
be flexible, not afraid to face challenges, and they are also not afraid to draw attention to
problems that arise in projects. This can be explained by their curiosity and more holistic view
of the process. They are also considered innovative and creative.
Turnover in Brazilian teams is around 4% on average, and is even lower in global projects.
For the clients, especially offshore outsourced services, this has a significant impact on
productivity, quality, training and transition costs and, consequently, on the total cost of the
project. Stable teams maintain their knowledge of the business processes and systems, which
is usually transferred in the initial phases of the project.
85MEXICO
QUALITY OF ENGLISH AS A SECOND LANGUAGE, 2007 Score (out of 120) – IBT*
* Internet based TOEFL. Source: A.T. Kearney analysis.
Latin
Am
eric
a(s
elec
ted
coun
tries
)Ot
hers
BRI
Cs
84INDIA
84RUSSIA
78CHINA
88CHILE
80COLOMBIA
86BRAZIL
94ARGENTINA
38 brazil it-bpo book 2008-2009 qualified human resources 39
RIO GRANDE DO NORTE
PARAÍBA
PERNAMBUCO
DISTRITO FEDERAL
MINAS GERAIS
RIO DE JANEIRO
SÃO PAULO
PARANÁ
SANTA CATARINA
RIO GRANDE DO SUL
DistribUtion of selecteD
technology coUrses
The 50 graduate and post-graduate courses
identified in the ranking by Info Exame are in
nine of Brazil’s States and the Federal District.
INFO EXAME SURVEY
The following criteria were included to rank degree courses: academic reputation; integration
with the labor market; number of staff with doctorates; number of exclusively dedicated staff;
infrastructure for research; percentage of students graduated in the minimum period and
candidate/vacancy ratio in the College entrance exam. For post-graduate courses, the criteria
included academic reputation; Capes assessment; number of articles published; integration
in the labor market; number of staff with doctorates; number of PhDs awarded, number of
Masters Degrees awarded, and infrastructure for research. The last criterion is assessed by
connectivity, computer ratios, high technology research, and integration with the market.
RANKING OF THE POST-GRADUATE COURSES IN INFORMATION TECHNOLOGY, 2007
1 Coppe UFRJ-Instituto Alberto Luiz Coimbra Computing and Systems Engineering de Pós-Graduação e Pesquisa em Engenharia
2 UFPE-Universidade Federal de Pernambuco Computer Sciences
3 ICMC-USP/São Carlos-Instituto de Ciências Matemáticas Computer Sciences and Computing Mathematics e de Computação da USP
4 UFMG-Universidade Federal de Minas Gerais Computer Sciences
5 PUC-RJ-Pontifícia Universidade Católica do Rio de Janeiro Information Technology
6 Unicamp-Universidade Estadual de Campinas Computer Sciences
7 Poli-USP-Escola Politécnica da USP Electrical Engineering-Digital Systems
8 IME-USP-Instituto de Matemática e Estatística da USP Computer Sciences
9 UFF-Universidade Federal Fluminense Computing
10 ITA-Instituto Tecnológico de Aeronáutica Electrical Engineering and Computing
Source: Info Exame.
40 brazil it-bpo book 2008-2009
BRAZIL’S INFRASTRUCTURE RESPONDS WELL TO ThE ChALLENGES OF GROWTH IN THE SECTOR AND WILL EXPAND
As with any economic sector, the development of the IT-BPO industry depends on a robust
infrastructure. Brazil offers a world-class infrastructure and a strongly globalized market,
especially in the IT-BPO sector, with a mature regulatory environment and business practices.
Brazil’s basic infrastructure is currently undergoing wide-ranging expansion through the
Program for Accelerated Growth (PAC), launched in 2007 by the federal government. Within
the scope of this program, the public and private sectors intend to invest around US$ 273
billion in energy, logistics, social, and urban infrastructure.
COMMUNICATIONS
Communications services have spread throughout Brazil and continue to develop rapidly.
Gartner states that Brazil ’s infrastructure can support the expected double-digit annual
growth in IT-BPO services.
High quality and 100% digital fiber optic networks connect all large cities internally and also to
hubs outside the country, providing high-speed internet connections. Internet access doubled
from 2005 to 2008 and the broadband sector is expanding rapidly.
Recent data released by the British research institute Point Topic shows that Brazil ranks ninth
globally in total broadband connections. Brazil’s mobile telephone market is the fifth largest in the
world, with 150.6 million handsets, and the fixed-line telephony market is the fourth largest.
Brazil ’s IT-BPO infrastructure has an advantage over that in the other BRIC countries,
according to the Economist Intelligence Unit, whose methodology takes into account the
money spent on hardware, software and IT services, as well as the number of computers
and broadband connections.
SOUND INFrASTrUCTUrE
3
150120906030
LINHAS DE TELEFONE CELULAR NO BRASILEM MILHÕES
Fonte: Anatel, Teleco e Barômetro Cisco
2007
2008
2005
2003
2006
2002
2004
150
120
90
60
30
0
150,
6
121
99,9
86,2
65,6
43
1,7
MOBILE PHONE LINES IN BRAZILMillion
Source: Anatel, Teleco e Barômetro Cisco.
2007
2008
2005
2003
2006
2002
2004
0
150.6
121
99.9
86.2
65.6
43
1.7
Source: Point Topic.
BROADBAND CONNECTIONSMillion, march 2009
Ranking
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Country
China
United States
Japan
Germany
France
UK
South Korea
Italy
Brazil
Canada
Mexico
Russia
India
Turkey
Netherlands
Taiwan
Poland
Argentina
Belgium
Sweden
17.6
15.7
12.4
Connections
88.0
83.9
30.6
24.1
18.0
6.0
5.8
4.6
10.0
9.5
8.01
7.9
6.1
3.1
3.0
2.9
4.3
1. BRAZIL2. RUSSIA3. CHINA4. INDIA
IT INFRASTRUCTURE INDEX
Source: EIU (Economist Itelligence Unit) IT industry competitiveness index, 2008.
13.41
2
5.23
1.34
10.6
Norte Fluminense Thermal Power Station, Macaé, Rio de Janeiro
42 brazil it-bpo book 2008-2009
REAL ESTATE
Large Brazilian cities have experienced expansion of real estate, due to greater demand
fueled by economic growth and greater access to funding. Prices are internationally
competitive and have an advantage over cities in India and Russia. As an example, the
average price of commercial rent in São Paulo, Rio de Janeiro and Brasília is around one third
of the price in Mumbai and Moscow.
In areas close to the technology parks of other Brazilian capitals, such as Porto Alegre, Belo
Horizonte and Recife, the average price of rent can be up to 50% lower. A trend towards
geographical decentralization is helping move IT-BPO centers to these areas, offering scale,
professional qualification, quality, and communications infrastructure comparable to the
large centers.
TRANSPORT
Brazil’s road system covers 1.6 million kilometers and serves the whole country. Brazil also has
a 44,000-kilometer water transport system, which is important in transporting agricultural
production for exports. The country’s rail system is 30,000 kilometers long.
The country has 35 international airports, 33 domestic airports, and 2,498 smaller airports.
Domestic and international airlines offer short-haul direct flights, easily connecting main
Brazilian cities to main cities in North America and Europe.
Air and land transportation are key contributors to the efficiency of the postal service, offering
an express delivery system that covers the whole country and delivers over 32 million letters
and packages every day. All large international dispatch companies, including FedEx, UPS, and
DHL operate in Brazil.
ENERGY
Brazil has a guaranteed, safe, diversified and green supply of energy. The electricity generation
network includes 2,065 stations, including hydroelectric facilities (75% of the sector’s
capacity), thermoelectric, solar, wind and nuclear powered stations. Electricity prices are
established at tender and the market is regulated by the National Electrical Energy Agency
(Aneel). Generation capacity, at 103,502 MW, has grown 42% over the last nine years. The
forecast is that this trend will continue and that by 2013 the amount of energy supplied will
have grown by another 19% on today’s levels. The current infrastructure serves almost the
whole country’s population.
Source: National Energy Report 2009, Ministry of Mines and Energy.
BRAZIL’S ENERGY MATRIX, 2008
PETROLEUM AND DERIVATIVES 37.3%BIOMASS 31.4%
SUGARCANE PRODUCTS 16.6%WOOD 11.4%OTHERS 3.4%
HYDRAULIC AND ELECTRICITY 13.9%NATURAL GAS 10.2%COAL 5.7%URANIUM 1.5%
RENEWABLE RESOURCES
BRAZIL 45.4%
OCDE 6.7%
WORLD 12.9%
rEAL ESTATE PrICES ArE
GLOBALLY COMPETITIVE
sound infrastructure 45
Cumbica Airport, Guarulhos, São Paulo
Sugar and alcohol refinery, Ribeirão Preto, São Paulo
SAFE AND DIVErSIFIED ENErGY DISTINGUISHES BrAZIL
44 brazil it-bpo book 2008-2009
Brazil produces more oil than it consumes, thus being less susceptible to a fluctuation
in prices. The world’s leader in deep water exploration, the country is preparing for
a leap in production. The recent discoveries of reserves in ultra deep water (7,000
meters) indicate that the Brazil ’s oil and gas reserves will at least double over the next
few years, placing Brazil amongst the five largest exporters. This production growth,
combined with the construction of new refineries, will also make Brazil self-sufficient in
oil-based products, such as gasoline.
Brazil has the most advanced biofuel technology in the world. Its sugar cane-based
ethanol production model is considered by the UN an example to be followed, with the
lowest costs and highest environmental sustainability levels. Annual ethanol production is
the second largest in the world – it should reach 27 billion liters in the 2008/2009 harvest
– trailing only the United States.
46 brazil it-bpo book 2008-2009
BrAZIL IS SELF-SUFFICIENT IN OIL, AND WILL INCrEASE ITS PrODUCTION IN COMING YEArS.
IT ALSO HOLDS CUTTING-EDGE TECHNOLOGY IN THE PrODUCTION OF rENEWABLE ENErGY
Tucuruí Hydroelectric Power Station, Pará
TECHNOLOGY PARKSBrazil has speeded up the growth and maturity of
technology parks since 2000, and the objective is to
invest in further development and grow. All major
tech parks have an educational center as an active
component. Brazil currently has 30 technology
parks, including units already operating and those
in the final stage of implementation, which form
dynamic networks and connect various
points in the value chain, including IT-
BPO companies, universities, research
institutes, consulting and service firms,
the government, business fostering agencies
and clients. The report details information on 18 of
these technology parks, those that are fully operational
and with the required infrastructure in place for Brazilian
and international companies to operate.
2
9
13
10 são carlos technology clusterICT Companies: 30Revenue: $ 5MMTarget area: ICTUniversities: USP, UFSCar
12 londrina technology ParkICT Companies: 2Revenue: $ 10MMTarget area: chemistry, ICT, electronics Universities: UEL, UNOPAR
13 curitiba technology ParkICT Companies: 28Target area: ICTUniversities: UFPR
8 rio de Janeiro technology ParkICT Companies: 15Revenue : $ 10MM 2008eTarget area : ICT, energyUniversities: UFRJ
9 Vale do Paraíba technology Park – univapICT Companies: 10Revenue: $ 120MMTarget area: ICTUniversities: Univap, ITA
6 uberaba technology ParkICT Companies: 1Revenue: $ 6MMTarget area: biotech, clean energy, ICTUniversities: Uniube
1 Paraíba technology Park – PaqtcPbICT Companies: 70Revenue: $ 16MMTarget area: ICT, design, digital TVUniversities: UFCG
2 Porto digital technology Park – recifeICT Companies: 117Revenue: $ 236MM Target area: ICTUniversities: UFPE
5 itajubá technology ParkICT Companies: 39Revenue: $ 0,75MMTarget area: energy, ICTUniversities: UNIFEI
11 campinas technology clusterICT Companies: 100 +Revenue: $ 1,4 BnTarget area: ICTUniversities: Unicamp
15 iPtec-ijuí technology clusterICT Companies: 8Revenue: $ 2MMTarget area: ICTUniversities: Unijuí
18 Puc-rs technology Park – tecnoPucICT Companies: 25Revenue: $ 210MMTarget area: biotech, clean energy, ICTUniversities: PUC-RS
17 Vale do rio dos sinos technology Park – ValetecICT Companies: 12Revenue: $ 53MMTarget area: ICT, leather goods and shoesUniversities: Feevale
7 Petrópolis tecnopólis technology ParkICT Companies: 70Revenue: $ 137MMTarget area: ICT Colleges: Universidade Católica de Petrópolis
4 brasília technology ParkICT Companies: 5Target area: biotech and ICTUniversities: UnB
16 são leopoldo technology clusterICT Companies: 39Revenue: $ 175MMTarget area: ICTUniversities: Unisinos
14 alfa technology ParkICT Companies: 42Revenue: $ 160MMTarget area: ICTUniversities: UFSC
3 sergiPetec technology ParkICT Companies: 19Revenue: $ 5MMTarget area: energy, ICT, biotechUniversities: UFSE
Notes: ICT: Information and Communication Technology Revenue 2007Source: Anprotec, A.T. Kearney analysis.
87
4
1
3
2
5
6
10
91112
13
14
15 17
1816
48 brazil it-bpo book 2008-2009 sound infrastructure 49
STRATEGIC FOR ThE GOVERNMENT, ThE SECTOR RECEIVES IMPORTANT INCENTIVES AND SUBSIDIES
Over the last ten years the Brazilian government has viewed the IT-BPO industry as strategic,
which has led to the prioritization of incentives and the creation of institutional support.
These measures have improved the competitiveness of companies, both in domestic and
international markets.
DIRECT INCENTIVES:
TURNOVER TAXES, PAYROLL TAXES, AND INCOME TAXES
Spending on staff training and development, and R&D can be deducted against income tax
at 200% and 160% to 200%, respectively. There is also a 50% deduction on excise tax (IPI)
when purchasing equipment for R&D, and this tax is exempt when software development
materials are imported. Another benefit is the tax deductibility on technology transfers,
licenses and royalties.
For exporting companies, the social security (INSS) contributions may be reduced by up to
50%, depending on the $ amount of exports. They are also exempt from contributing to a
network of employer entities known as the “S System”. When products are purchased to be
exported, social charges (PIS/Cofins taxes) are not applicable.
In downtown São Paulo, as an example, municipal project “Nova Luz” is revitalizing the
region and promoting the creation of a complex of IT-BPO companies. The project offers
several fiscal incentives, such as a 50% reduction on Property Tax (IPTU) and a 60%
reduction in Service Tax (ISS). Companies installed in technological parks, in any region,
do not pay property taxes and receive discounts on service taxes. In the Northern and
Northeastern States of Brazil, the government subsidizes 40% of salaries paid to research-
focused staff. If they work in technology parks, the subsidy increases to 60%. Other benefits,
such as subsidized infrastructure, are offered by municipalities or States that wish to attract
IT-BPO companies.
INVESTMENTS
IT-BPO companies in Brazil can count on several public credit facilities at subsidized rates.
The Brazilian Development Bank (BNDES) is the main public funding agency and Finep, an
agency that finances scientific innovation and technological research and is subordinated to
the Ministry of Science and Technology, offers a special credit line for technology projects. The
main public banks in the country – Banco do Brasil and Caixa Econômica Federal – also offer
credit at special rates and terms.
GOVErNMENTAL SUPPORT
4
Palácio do Planalto (Presidential Complex), Brasília
50 brazil it-bpo book 2008-2009
The government also stimulates the
establishment of consortiums and joint
ventures in the sector, as well as investments
through funds and venture capital into small
and mid-sized companies, and business
incubators.
QUALITY
The Brazilian government has also
systematically supported, together with
Brasscom and other sector-related entities,
initiatives aimed at qualifying human
resources and increasing certifications and
innovations.0
20
40
60
80
100
PUBLIC FUNDINGUSD Billion
TOTAL PUBLIC FINANCE SOURCES
BNDES
Source: BNDES, The Central Bank of Brazil.20
0712
033
2006
9224
2005
6919
2004
5014
2003
4212
2002
3713
120
FISCAL INCENTIVES
Expenditure deduction on income tax base
R&D
Training
Accelerated depreciation
Tax credit (e.g. payroll expenses as VAT credit)
Reduced property tax
Import duty exemption
Special credit lines for selected industries, with reduced interest
rates and longer maturity
Government agencies programs
Infrastructure
Subsidized real estate and infrastructure
CO-INVESTMENTS INCENTIVES
Source: A.T. Kearney.
Turnover taxes
Payroll taxes
Income taxes
INDIRECT INCENTIVES
FINANCING INCENTIVES FOR PRIVATE INVESTMENTS
DIRECT INCENTIVES
SUBSIDIZED PUBLIC
CrEDIT DrIVES TECHNOLOGY
52 brazil it-bpo book 2008-2009
Covering 8.5 million square kilometers, almost double the size of the European Union, Brazil
has the fifth-largest population in the world and massive reserves of natural resources (such as
iron ore and oil). With over 300 million hectares of agricultural land in privileged geographical
conditions, its territory is also safe from natural disasters. Factors such as these put the
country in a relevant position on the global market.
Recent economic growth confirms this positive outlook. From 2002 to 2008, real GDP in
US dollars doubled, going from US$ 724 billion to US$ 1.5 trillion, with constant growth
from 2004 onwards. Brazil is today the tenth-largest economy in the world, ahead of Russia
and India, and the largest in Latin America. The country was classified by the United Nations
Development Program (UNDP) as having a high Human Development Index (HDI), ahead of
the other BRIC countries (Russia, India and China).
Brazil is an important player in global markets such as mining, aerospace, energy, agriculture
and cattle farming.
With a population of 191 million people, Brazil’s domestic market is expanding as a result
of economic growth and income distribution policies. Household consumption has grown
vigorously over the last few years, reaching US$ 243 billion in 2008.
A FAVOrABLE ECONOMIC, POLITICAL AND LEGAL ENVIrONMENT
5
This expansion has been influenced by gains in the lowest income bracket. Between 2004
and 2008, according to a survey carried out by Fundação Getúlio Vargas (FGV), the Brazilian
middle class grew from 42.2% to 51.9% of the population, while the low income segment fell
from 46.1% to 32.6%. In this period, high income and middle class brackets accounted for
large sections of the population, totaling around 122 million consumers.
SELECTED DEVELOPING COUNTRIES’ GDP, 2007 USD Billion
BRAZIL 1313
MEXICO 893
ARGENTINA 262
COLOMBIA 172
CHILE 164
RUSSIA 1290
INDIA 1137
CHINA 3242
Notes: 2007 amounts; forecasts made on Oct. 24th 2008.Source: IPEA, The Central Bank of Brazil, Economist Intelligence Unit, World Bank, A.T. Kearney analysis.
Latin
Am
eric
a(s
elec
ted
coun
tries
)Ot
hers
BRI
Cs
ThE TENTh LARGEST ECONOMY IN ThE WORLD, BRAZIL ENJOYS POLITICAL STABILITY AND SOCIAL PROGRESS
BRAZIL’S REAL GDP EVOLUTIONUSD Billion
724
2002
699
2003
775
2004
961
2005
1115
2006
1313
1570
2007
2008
Source: A.T. Kearney, IPEA, The Central Bank of Brazil.
54 brazil it-bpo book 2008-2009
This positive scenario was recognized by credit rating agencies Standard & Poor’s and
Fitch, which in the first half of 2008 classified Brazil as ‘investment grade’. According to
the analysts, this reflects a continuing trend in its economic policy, focused on inflation
control and in a floating foreign exchange rate system, low external debt and a public debt
profile in line with that of other countries with a similar risk classification.
This progress has attracted foreign direct investments, which more than doubled from
US$ 17 billion in 2005 to US$ 45 billion in 2008, the highest value since the Central Bank
of Brazil began tracking this indicator.
Brazil has commercial partnerships with countries on every continent. China, Europe and
the United States, along with South America and Japan, are among the main commercial
partners and are helping boost Brazilian trade. According to the Ministry of Development,
Industry and Foreign Trade, exports and imports tripled between 2002 and 2008, from
US$ 107,6 billion to US$ 371.1 billion.
30
35
40
45
50
55
JAN
02
JUL
02
JAN
03
JUL
03
JAN
04
JUL
04
JAN
05
JUL
05
JAN
06
JUL
06
JAN
07
JUL
07
JAN
08
JUL
08
JUL
01
JAN
01
JUL
00
JAN
00
NET PUBLIC DEBT In % of GDP
Source: The Central Bank of Brazil.
The democratic system, political stability and consolidated institutions also position Brazil as
one of the safest destinations for investments. With the status of a political leader in Latin
America, and with good relations with neighboring countries, the country has not been
involved in a war since World War II.
Since the 19th century, Brazilian foreign policy has aimed to increase the country’s
international presence, following the principles of commercial collaboration. Brazil currently
has diplomatic representations in 114 countries.
The Brazilian political system is Federative (26 states make up the Federation) and the
presidential mandate is four years, renewable for another four.
Embraer jets assembly line, São José dos Campos, São Paulo
25.3%
10.4%
8.7%12.4%
1.2%
3.8%
7.7%
9.8%10%
INFLATION, 2000 to 2008(IGP-M)
Note: Inflation index calculated from prices of goods and services collected in 12 Brazilian cities up to day 20 of each month.Source: FGV.
2000
2001
2002
2003
2004
2005
2006
2007
2008
FDI* INFLOWS, MAIN RECIPIENTUSD Billion * Foreign Direct Investment.
Source: Economist Intelligence Unit, Unctad.
0
20
40
60
80
100
120
140
BRAZIL
45
35
19
CHINA
7813
8
92
MEXICO
19 19
25
INDIA
20
46
24
RUSSIA
32
70
52
CHILE
7
14 17
COLOMBIA
6 9 11
ARGENTINA
5 6 7
2006
2007
2008
BRAZIL’S FOREIGN TRADEUSD Billion
Source: Ministry of Development, Industry and Foreign Trade.
2008
2007
2006
2005
2004
2003
2002
400350300250200150100
500 10
7.6
121.
4
159.
3
191.
9
228.
9
281.
3 371.
1
56 brazil it-bpo book 2008-2009 a favorable economic, political and legal environment 57
Source: Economist Intelligence Unit, TSE, A.T. Kearney analysis.
POLITICAL STABILITY 2007The Economist Index (high=10)
CHINA
CHILE
INDIA
ARGENTINA
MEXICO
RUSSIA
COLOMBIA
BRASIL
8.3
8.1
7.1
6.9
5.4
6.0
5.1
5.1
CRITERIA
Political instability
Risk of armed conflict
Defense spending
Risk of social unrest
Transfer of power rating
Terrorism threat
International disputes and tensions
Level of corruption
Impact of crimeNote: Every criteria is rated from 1 to 5, where 5 means higherSource: Economist Intelligence Unit, A.T. Kearney analysis.
COMPOUND INSTABILITY INDEX (high=45)
RUSSIA
CHILE
INDIA
ARGENTINA
MEXICO
COLOMBIA
CHINA
19.3
19.8
21.7
22.4
26.5
27.7
31.1
31.9
BRASIL
DEGREE OF PROPERTY RIGHTS PROTECTION(high=5)
Source: Economist Intelligence Unit, Sebrae, MCT, A.T. Kearney analysis.
CHILE
BRASIL
MEXICO
COLOMBIA
INDIA
RUSSIA
CHINA
ARGENTINA
5.0
4.0
4.0
3.4
3.4
2.7
2.4
3.0
high
er p
oliti
cal s
tabi
lity
Leas
t ins
tabi
lity
High
est d
egre
e of
pro
tect
ion
INTELLECTUAL PROPERTY
Brazil has an advanced legal framework regarding the defense of intellectual property. Since
1970 there has been an agency (INPI) regulating and supervising intellectual property rights
and since the 1990s there has been a national council to fight piracy.
Software is protected by law for 50 years (during which time a license is required from
the owner in order to offer technical assistance) and confidential information is protected.
Copyright infringement is punishable by imprisonment and victim compensation for any
eventual damage. Brazil is also a signatory of the Berne Convention, the Patent Cooperation
Treaty (PCT), the Paris Convention, and the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS).
58 brazil it-bpo book 2008-2009
Brazil has a rich mixture of cultures. Native-Indian, European and African roots form the base,
which was formed after the 16th century. The European connection was reinforced by the
intense migration that occurred after the 19th century. In addition to the Portuguese, there
soon came Italians, Germans, Spaniards, and Polish, creating a strong link and contributing
to development and diversity. The arrival of a large number of Japanese and, more recently,
immigrants from other Asian countries, as well as from its South American neighbors, has
increased the multicultural nature of the Brazilian society.
The large variety of ethnic groups living together in the country has molded a tolerant and
plural society. Brazilians respect different cultures, and easily incorporate new habits and
working methods. In outsourcing contracts they integrate quickly with local customs when
working in other countries, and they easily understand the demands made by other countries.
This diversity extends to belief systems. Religious freedom is guaranteed under the Federal
Constitution. Catholicism predominates, followed by Protestantism, Judaism, Buddhism,
Islamism, Umbanda, Candomblé, and others.
CULTUrAL COMPATIBILITY
6
CULTURAL DIVERSITY SETS BRAZILIANS APART
25 million Italian-Brazilians
18 million German-Brazilians
15 million hispano-Brazilians
10 million Arabic-Brazilians
1,6 million Japanese-Brazilians
1,8 million Polish-Brazilians
Flamengo Landfill, City of Rio de Janeiro
60 brazil it-bpo book 2008-2009
Time zone proximity has a positive impact on IT-BPO outsourcing contracts signed with Brazil
enabling more effective communications and reduction in costs.
On the one hand, it contributes to an easier interaction between the client and the offshore
team. New York, for example, has only a two-hour difference in relation to the main Brazilian
cities, and London has a three-hour difference. This facilitates telephone contact between the
units installed in different countries, and avoids additional spending for night shifts.
In additional, Brazil ’s location allows for shorter and less expensive overnight flights to
many developed countries that take from 8 to 12 hours, leading to better use of time and
reduced costs.
WORKING HOURS TIME ZONEGEOGRAPhICAL
LOCATION FAVORS COMMUNICATIONS AND TRANSFERS
TIME ZONE PrOXIMITY
7
WORKING HOURS TIME ZONES (9am to 6pm)
ASIA
BEIJING
DELHI
EUROPE
MOSCOW
PARIS
ROME
BERLIN
LONDON
NORTH AMERICA
NEW YORK
CHICAGO
DALLAS
LOS ANGELES
SOUTH AMERICA
BRASÍLIA RIO DE JANEIRO SÃO PAULO
Source: A.T. Kearney analysis.
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
9am 10am 11am 12pm 1pm 2pm 3pm 4pm 5pm6pm
62 brazil it-bpo book 2008-2009
TIME DIFFERENCES IN REGARD TO BRAZIL
EXAMPLES OF DIRECT FLIGHTS TO BRAZIL
NEW YORK - SÃO PAULO
LONDON - SÃO PAULO
DALLAS - SÃO PAULO
PARIS - SÃO PAULO
MADRID - SÃO PAULO
WASHINGTON - SÃO PAULO
MIAMI - RIO DE JANEIRO
LOS ANGELES - SÃO PAULO
LISBOA - RECIFE
9h30 pm
9h45 pm
7h45 pm
11h20 pm
10h50 pm
10h00 pm
10h10 pm
9h pm
4h pm
8h05 am
5h15 am
7h40 am
5h50 am
5h05 am
8h20 am
7h30 am
1h20 pm
7h50 pm
9h35
11h30
9h55
11h30
11h15
9h20
8h20
12h20
7h50
TAKE-OFF ARRIVAL FLIGHT TIME
Source: American Airlines, British Airways, Delta Airlines, Air France, TAM, TAP, US Airways.
Chicago-3h
Miami-2h
Los Angeles-5h
Brasília
Rio de Janeiro
São Paulo
Paris+4h
Beijing+11h
Luanda+4h
London+3h
Madrid+4h
Berlin+4h
Rome+4h
Moscow+6h
Cape Town+5h
Tokyo+12h
Delhi+8,5h
Dallas-4h
Washington-3h
New York-2h
IN 2008, BrAZIL rECEIVED, ON AVErAGE, 570
INTErNATIONALFLIGHTS
EVErY WEEK
64 brazil it-bpo book 2008-2009
conclUsionCOST EFFICIENCY
Subway Station at Copacabana District, City of Rio de Janeiro
MAXIMIZING GAINS FrOM INFOrMATION TECHNOLOGYOUTSOUrCING
IN PROSPECTING FOR POTENTIAL
SUPPLIERS IN IT-BPO, BRAZIL IS A SAFE AND
ADVANTAGEOUS PARTNER
Companies outsourcing IT services and business processes have an undeniable aim in
common: to improve cost efficiency. They also share the view that delegating tasks to
partners outside their borders may work to their advantage. They are opting to strengthen
their roles in management and control whilst delegating tasks connected to the operation
and the development of solutions. The natural evolution of this strategy was to extend the
geographical frontiers of partnerships, identifying markets in other countries that would
maximize outsourcing gains.
Since the beginning of this movement, one of the main challenges faced by CIOs has been
to evaluate the cost of outsourcing in order to justify their decisions. Inspired by models
such as Total Cost of Ownership (TCO) created by Gartner, which introduced rationality
to the evaluation of direct and indirect costs related to the implementation of IT-BPO
solutions, new models were developed, adjusted to the variables that must be considered in
offshore outsourcing. This produced the Total Cost of Engagement (TCE) model, offering a
comprehensive and holistic view of the costs involved in this type of employment, which go far
beyond project team’s salaries.
This report has presented Brazil as a potential offshore IT-BPO supplier (or near-shore, for
some strategic markets), and has revealed aspects which must be taken into account in a
mature study.
66 brazil it-bpo book 2008-2009 conclusion cost efficiency 67
A unique combination of aspects makes Brazil one of the most competitive destinations in terms
of cost. Brazil has a consolidated and mature IT-BPO industry, knowledge of business, strong
economic indicators, sound infrastructure, qualified human resources, high productivity levels
and low staff turnover, a favorable geographical position, a time zone close to that of the United
States and Western Europe, and is culturally compatible. Furthermore, the Brazilian government
is consistently attracting investments in the IT-BPO sector, making it even stronger.
From any angle that the IT-BPO industry in Brazil is looked at, the challenges and opportunities
lead to the same conclusion: Brazil’s opportunity to be one of the three main global centers in
Information Technology.
LOW TRAVEL & COMMUNICATION COSTS
LOW MANAGEMENT COSTS
HIGH PRODUCTIVITY & BUSINESS KNOWLEDGE
TIME ZONE: REAL TIME INTERACTION
OPTIMIZED ON SITE X OFFSHORE RATIO
HIGH LEVEL OF CULTURAL COMPATIBILITY
LOW LEVELS OF REWORKING
BRAZIL COST
ADVANTAGES
68 brazil it-bpo book 2008-2009
70 brazil it-bpo book 2008-2009
Appendix soUrcesThis report includes data and analysis produced by Brasscom, public and private research
bodies and institutions and consultancies that specialize in the IT-BPO sector.
main sourcesNext steps in the Strategic Agenda for the “IT Offshore Outsourcing” sector, A. T. Kearney
(carried out for Brasscom and the Ministry of Science and Technology).
A.T. Kearney is an international consultancy with 60 offices in over 30 countries.
It advises high-profile companies in their segments on gaining and maintaining
competitive advantages in the markets they operate in. It offers consulting services in
various areas, from strategy and organization to information technology and operation.
It combines its expertise in the industrial sector with management and solutions
consulting to add value to its clients.
www.atkearney.com
Brazil’s offshore services market in 2008, IDC – International Data Corporation
(carried out for Brasscom).
IDC is dedicated to consulting and providing information for the information technology
and communications sectors. It uses its extensive knowledge base on the market, providers
and consumers to help its clients on strategic issues related to the supply and the use of
technological solutions. It has over 1,000 analysts in 110 countries, and provides global,
regional and local information on technology, opportunities, and trends. IDC is a subsidiary of
IDG, a global leader in technology media. In Brazil, IDC has followed the market since 1990.
www.idc.com
Digital Brazil – leveraging ICT for economic stimulus, Booz & Company
(carried out for Brasscom).
Booz & Company is an international consultancy that supports companies, public
institutions and organizations all over the world. It uses vision and knowledge, profound
specialization and a practical approach to develop skills and have a real impact for
its clients. It is recognized for its significant global studies and the development of
administrative key-concepts since the 1940s. It publishes the management magazine
strategy+business.
www.booz.com
Analysis of Brazil as an Offshore Services Location, Gartner Group.
Gartner produces objective and profound analysis on information technology and provides
consulting services on business and technology decisions for executives and public
and private companies. It has 3,700 associates, including 1,200 research analysts and
consultants in over 75 locations worldwide. Among other events of relevance to the sector,
it holds the annual conference in Brazil on the future of technology.
www.gartner.com
Photo credits
p.8 StockXpert; p. 12 Patrick Grosner/
Folha Imagem; p.14 Diomedia;
p.15 Marcos Issa/Argosfoto; p. 17 Apex-Brasil;
p. 20 Diomedia; p. 24 Eric Gevaert/
Veer Marketplace; p. 27 Johnson & Johnson;
p. 28 Citi; p. 30-31 Diomedia; p. 32-33 Diomedia;
p. 33 Vinícius Tupinambá/Veer Marketplace;
p. 36-37 Cia da Foto; p. 37 Diomedia;
p. 42-43 Cesar Duarte/Argosfoto; p. 44 Anac;
p. 45 Claudio Rossi/Argosfoto;
p. 46 Salomon Cytrynowicz/Olhar Imagem;
p. 50-51 Alan Marques/Folha Imagem;
p. 51 Galina Barskaya/Veer Marketplace;
p. 54-55 StockXpert; p. 55 Veer Marketplace;
p. 56 Cássio Roosevelt /Folha Imagem;
p. 60-61 StockXpert; p. 62-63 Nasa;
p. 63 Diomedia; p. 66 Cesar Duarte/Argosfoto.
accentUrewww.accenture.com55 21 4501 9107We work with clients from all industries
to help them become high-performance
businesses.
Management Consulting, Systems
Integration & Technology Services, and
Outsourcing.
atechtecnologias críticaswww.atech.br 55 11 3040 7300Air Traffic, Defense, Health, Transport,
Law Enforcement, Space, Logistics,
International, Environment and Energy.
Conceptualizes; Specifies; Integrates;
Manages problems, challenges and
innovates to make progress and find better
solutions.
atos originwww.atosorigin.com.br55 11 2183 2344Consulting and Information Technology
Services.
Consulting, systems integration and
management services. C&SI Consulting
and Systems Integration; MO - Managed
Operations; Software Factory/ Offshore.
brQit serVices www.brq.com/en EUA 1 516 541 3100 Application Management Outsourcing and
Global Delivery.
Applications Management and Maintenance
- Custom Development - IT Consultancy
- Systems Architecture - Software Factory –
Training - Test Services - Solutions: Portal, IT
Governance, e-commerce, BPM, Web 2.0, BI,
RFID, ERP, ECM e SOA.
btwww.bt.com/globalservices55 11 2101 9800IT & Telecommunications.
Connectivity, Infrastructure, Managed
Services and Outsourcing Solutions.
bsitecnologia ltDawww.bsitecnologia.com.br55 11 4613 7700IT Outsourcing, Development
and Integration of Systems, IT
Management, Infrastructure
Management, Automation and Human
Capital Management.
castinformÁtica sawww.cast.com.br55 11 5105 037155 61 3429 7300Software Development Centers, Testing
Centers, IT Outsourcing, System Maintenance
Centers, Legacy System Refactoring,
Business Intelligence, Enterprise Content
Management, IT Consulting, Projects Office,
Information Security and Business Process
Management.
cesarrecife center for aDVanceD stUDies anD systemswww.cesar.org.br55 11 2166 7100Private innovation center that creates
Information and Communication Technology
products, services and new ventures.
Open innovation for organizations in the
telecom, electro-electronics, finance,
media, health and utilities sectors.
ciscocisco Do brasil ltDawww.cisco.com.br0800 702 4726 Leading supplier of networking
equipment and network management
for the internet.
eDsan hP comPany www.eds.com0800 7700 130Leading global technology service company
delivering business solutions to its clients.
A broad portfolio of information technology
and business process outsourcing services
to clients in the manufacturing, financial
services, healthcare, telecommunications,
energy, transportation, consumer and retail
industries, and to governments around
the world.
cticenter for information technology - renato archerwww.cti.gov.br55 19 3746 6000Development of software technologies,
electronic components, prototypes and
products in the area of information
technology, as well as internet tools and
applications.
MEMBERS
cPm braXiswww.cpmbraxis.comEUA 1 212 717 8500CPM Braxis vision is to be among the Top 10 global IT companies. Already the largest Brazilian IT and outsourcing company providing IT consulting, application, ERP and infrastructure services. Industry expertise spans financial services, telecom, consumer goods, manufacturing, retail, energy and media sectors.
brazilian association of information technology and communication companies – Brasscom
ANTôNIO GIL President
NELSON WORTSMAN Digital Convergence Director
SéRGIO SGOBBI Education and Human Resources Director
EDMUNDO OLIVEIRA Institutional Relations Director
boarD
eXecUtiVe boarD
ROGéRIO MARCOS MARTINS DE OLIVEIRAPresident of the BoardIBM General Manager for Latin America
JAIR RIBEIRO DA SILVA NETOVice-President of the BoardPresident of the Executive Committee of the Board of CPM Braxis
LAéRCIO JOSé LUCENA COSENTINOVice-President of the BoardCEO of TOTVS
BENJAMIN QUADROSMember of the BoardPresident of BRQ IT Services
CLáUDIO VITA FILHOMember of the BoardItautec Executive Commercial Vice-President
HéLIO SANTOS OLIVEIRAMember of the BoardPresident of Politec
JACQUES FRANçOIS DEPOCASMember of the BoardCenter Head of HSBC Global Technology Center Brasil
LUIz ROBERTO NOVAES MATTARMember of the BoardCEO of TIVIT
OSCAR VAz CLARKEMember of the BoardIntel Brazil General Country Manager
RICARDO ASSE Marketing and Exports Director
MARCO ANTONIO SILVA STEFANINIVice-President of the BoardPresident of Stefanini
soFttekwww.softtek.com55 11 3748 0333Global provider of IT and business
process solutions.
Application Development, Software
Testing & Quality Assurance, SAP
Services, AMS, Application Security,
Data Integration, BI, Web Projects
(Java and .NET).
uBik do Brasilwww.ubik.com.br55 11 3179 1102Manufacture, Telecom, Finance, Insurance
and Systems integration services,
Data Center, Security, IT outsourcing,
Software development and IT
infrastructure.
Unisyswww.unisys.com.br55 11 3305 7100Services and IT solutions.
Consulting, systems integration,
outsourcing and infrastructure
services, combined with
enterprise servers.
Uol UniVerso on linewww.uol.com.br55 11 3038 8100UOL is the largest internet portal in
Brazil, with a complete platform of
products and services for the web
environment, such as communication,
e-commerce, host and security.
VirtUswww.virtus-ti.com.br55 11 3847 0105Information Technology (Software)
Virtus IT provides comprehensive tools and
services to enable efficient management
of today’s sophisticated IT and converged
communication environments. Service
assurance, software and hardware
monitoring, IT and telecoms performance
management and capacity planning are
just some of the areas covered by our
portfolio of products.
institUtional members
B2B magaZine
uFpe - Universidade Federal de Pernambuco
unesp - UniversidadeEstadual Paulista Júlio de Mesquita Filho
unicamp - UniversidadeEstadual de Campinas
totVssawww.totvs.com0800 70 98 100Software and support services for
corporate management.
Software, Technology, Consulting,
Support, BPO, E-learning and
Service Desk.
tiVitterceirização De Processos, serViços e tecnologia sawww.tivit.com.br55 11 3757 2222Large-scale critical-mission operations,
process reengineering and business
knowledge for various industries.
IT Infrastructure, Application Systems
and BPO integrated services.
sUnmicrosystemswww.sun.com.brEUA 1 800 786 0404 Finance, Industry, Commerce, Services,
Telecommunications and Government.
Consulting, Training, Infrastructure,
Solution Architect, Implementation &
Migration, Installation, Management,
Support.
tcstata consUltancy serVices www.tcs.com 55 11 3306 7000Financial, Manufacturing, Retail &
Distribution, Telecommunications,
Energy & Utilities and Media. IT
Infrastructure, Enterprise Solutions,
Consulting, BPO, BI, Engineering &
Industrial Services.
hUgheswww.hughes.com.br55 11 3818 7500Global leader in satellite
telecommunication equipment
and services.
ibmbrazilwww.ibm.com/br 0800 707 1426 Information Technology.
Strategic consulting and solutions
involving Services, Hardware,
Software and Financing.
intelsemiconDUtores brasilwww.intel.com55 11 3365 5500Leading manufacturer of computer,
networking and communications
semiconductors.
Develops technology, products and
initiatives to continually advance the way
people work and live.
resoUrcewww.resource.com.br55 11 3748 6000Outsourcing, Software Factory,
Professional Allocation, Card Solutions,
Oracle Service Line, Business
Intelligence, EMC Solutions, Business
Applications Performance Monitoring -
SiteSeeing, Contact Center, SOA/BPM,
Quality Assurance and Infrastructure.
gftbrasil consUltoria informÁtica ltDawww.gft.com55 11 2176 3253One of the leading international IT service
providers for the financial services sector.
GFT offers IT based services covering
consultancy, application development
and management.
hsbcglobal technologywww.hsbcglt.com.br55 41 3778 5555Offshoring to HSBC Group
operations.
Development, Support, Tests and IT
Operations.
gPtitecnologia Da informação sawww.gpti.com.br55 11 3218 4700One of the largest information technology
service providers in Brazil.
ITO and BPO solutions through Consulting/
Mentoring, Projects and Outsourcing.
itaUtecwww.itautec.com.br55 11 3543 3000Hardware manufacturing (PCs, commercial
and banking automation) and services.
Helpdesk and service desk; IT training,
outsourcing and customized projects.
microsoftwww.microsoft.com.br55 61 2107 7243Software and Services in IT
Politecwww.politec.comEUA 1 770 771 6500Nearshore IT Outsourcing, Application
Development, Maintenance, Testing,
Strategy/Transformation, Consulting,
IT Infrastructure Management, plus
a standalone SAP SI practice.
Focus on Financial, Public Sector,
Manufacturing, Utilities, Telecom,
Gas and Natural Resources.
siemens agwww.siemens.comGERMANY 49 89 6 36 00With the largest green portfolio in
the world, the company is a world
leader in many fields with activities
in Infrastructure, Industry, Energy,
Medicine, IT, always focusing on
innovation.
stefaniniit solUtions www.stefanini.com EUA 1 954 229 9150 Stefanini IT Solutions is a global provider
of onshore and nearshore IT Consulting,
Systems Integration and Outsourcing. The
company has over 7,400 employees with
36 offices in 16 countries, and more than
350 active clients in a variety of industries.
Services include: Application Life Cycle
Management, Infrastructure Administration,
BPO, Custom Software Development, ERP,
Systems Architecture (SOA).
76 brazil it-bpo book 2008-2009
www.brasscom.org.br
RORAIMABoa Vista
AMAPÁMacapá
MARANHÃOSão Luís
2
2
2
PARÁBelém
AMAZONASManaus
RONDÔNIAPorto Velho
PIAUÍTeresina
CEARÁFortaleza
RIO GRANDE DO NORTENatal
PARAÍBA
PERNAMBUCO
ALAGOAS
SERGIPE
BAHIASalvador
ESPÍRITO SANTO
2
SÃO PAULO
2
2
PARANÁ
SANTA CATARINA
RIO GRANDE DO SUL
MATO GROSSO DO SUL
TOCANTINSPalmas
ACRERio Branco
MINAS GERAIS
GOIÁS
DISTRITO FEDERAL
2 3João Pessoa
Recife
4
Maceió
Aracaju
2 2Belo Horizonte
2
5
73 2
Vitória
Rio de Janeiro
2 232 3 3
São Paulo
32 22
Curitiba
22Florianópolis
3 6 44Porto Alegre
23Campo Grande
Goiânia
BrasíliaMATO GROSSOCuiabá
Capital
RIO DE JANEIRO
GDPUS$ 1.5 TRILLION
FDIUS$ 45 BILLION
EXPORTS AND IMPORTS: US$ 371 BILLION
POPULATION191 MILLION (80% URBAN)
MIDDLE CLASS AN ABOVE: 122 MILLION
HOUSEHOLD CONSUMPTION: US$ 243 BILLION
IT-BPO SECTOR
Turnover: US$ 59.1 BILLION Exports: US$ 2.2 BILLION
INFRASTRUCTURE Broadband connections: 10 MILLION Mobile phones: 150 MILLIONComputer ownership: 1 for every 3 people
IT PROFESSIONALS
Working: 1.7 MILLION Technical and graduate courses: 1,714 Graduate students: up to 220,000
BRAZIL AT A GLANCE
SERVICES 65.3%
INDUSTRY 28%AGRICULTURE 6.7%
GDP – COMPOSITION
HARDWARE US$ 16.2
SOFTWARE US$ 3.2
SERVICES US$ 10
IT SPENDINGUSD BILLION
2008
BRAZIL’S ENERGY MATRIX, 2008
PETROLEUM AND DERIVATIVES 37.3%
BIOMASS 31.4%
HYDRAULIC AND ELECTRICITY 13.9%
NATURAL GAS 10.2%
COAL 5.7%
URANIUM 1.5% Maritimeports
Graduate courses in IT
Technologyparks
Hydroelectricpower plants
Internationalairports
The ten largestplants:up to
1,500,000 KW
Selected by InfoExame survey, 2007
SUGARCANE PRODUCTS 16.6%WOOD 11.4%OTHERS 3.4%
Source: Brasscom, IDC.
Source: National Energy Report 2009, Ministry of Mines and Energy.
Source: IBGE.
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BRAZIL IT-BPOBOOK2008-2009