Offshore outsourcing managers used to traveling back and
forth to Bangalore may be trading in those frequent flier miles
for tickets to São Paulo or Rio. And not for any
Some IT organizations experienced in offshoring are looking
to Brazil as an emerging option for software development and
maintenance services. In most cases, the move is part of a
diversification strategy as demand continues to put upward
pressure on wages in India.
In addition, some companies may be looking for a way to
bring offshore work a bit closer to home in the Western
hemisphere. “There are instances where [Brazil] is used
instead of India because of its closer proximity and similar
time zones to the U.S.,” says Eugene M. Kublanov, COO and
managing director for offshoring outsourcing advisor NeoIT.
Brazilian IT services companies are eager for the
international business. The domestic market for IT work is
growing at a decent 17 percent a year, according to Jair
Ribeiro, president of São Paulo–based CPM Braxis,
Brazil’s largest IT services company with $500 million in
annual revenue. But CPM Braxis and other local market leaders,
such as Brasilia-based Politec and Rio de Janeiro–based
DBA, are ravenous for a piece of the offshore outsourcing
market, which is growing at more than twice that rate.
These companies are contending with some much larger
competitors. Most multinational outsourcers, including IBM,
EDS, HP, Unisys and Accenture, have set up shop in Brazil. IBM,
for example, is using Brazil as a hub for infrastructure
management, employing more than 9,000 people in Campinas, 90
minutes outside of São Paolo, says Kublanov. Tier-1
Indian players, including TCS, Satyam, Infosys and Wipro, and
larger Mexican IT services companies including Neoris and
Softek, have moved in as well.
Financial services key client for
The biggest market for companies like CPM Braxis is the
financial services industry, thanks to that company’s
experience building robust software to cope with the
country’s financial crises in the 1980s and ’90s.
Financial services business makes up half of the revenues at
The second major source of revenues is ERP work. Brazil
boasts one of the largest concentrations of SAP consultants in
the world outside of Germany. Due to a large population of
German descent, SAP has been operating in Brazil for years, and
local corporations and divisions of multinationals have
aggressively installed the ERP systems, says Kublanov. To be
fair, Ribeiro says he also does a decent amount of Oracle
business. Experience in Cobol and other legacy languages are
also one of CPM Braxis’s selling points.
Companies who have outsourced IT work to Brazil include
JPMorgan, Estee Lauder, and offshore first-moved General
Electric. Some companies, including Citigroup, Motorola, Dell
and Oracle, have set up captive (company-owned and operated)
Unlike some of its global competition, there is no real
business process outsourcing, or BPO, business for Brazil.
“English skills are available from a well-educated subset
of the population,” says Kublanov. “[There] is far
less than in countries such as Eastern Europe, giving Brazil
limited capacity to jump deeply into the businesses such as
call centers.” The best English speakers go to work for
multinationals, Kublanov adds.
More growth predicted
Some analysts predict growth in Brazil’s IT services
sector, currently valued at $1.1 billion by Frost &
Sullivan and predicted to triple by 2012. But not everything is
working in Brazil’s favor. “Brazil is an anomaly in
the global market,” says Kublanov. On one hand,
there’s great potential to service the United States and
European market due to location and cultural affinity. On the
other hand, employee costs are high and personal security
concerns plaguing São Paolo and Rio de Janeiro make it a
challenging work environment, says Kublanov. As one of the
strongest economies in Latin America, Brazil’s own
companies are now a target market for other countries like
India providing cheaper offshore services.
Ribeiro, more focused on the international business, is
concerned that not enough U.S. companies are familiar with the
IT services options in Brazil. He’d like to see the
Brazilian government do a better job of branding and marketing
the country’s IT resources.
The country already has an industry association in place:
BRASSCOM, the Brazilian Association of Software and Service
Export Companies, Brazil’s version of India’s
NASSCOM (National Association of Software and Services