Offshore outsourcing managers used to traveling back and\n forth to Bangalore may be trading in those frequent flier miles\n for tickets to S\u00e3o Paulo or Rio. And not for any\n much-needed R&R.Some IT organizations experienced in offshoring are looking\n to Brazil as an emerging option for software development and\n maintenance services. In most cases, the move is part of a\n diversification strategy as demand continues to put upward\n pressure on wages in India.In addition, some companies may be looking for a way to\n bring offshore work a bit closer to home in the Western\n hemisphere. \u201cThere are instances where [Brazil] is used\n instead of India because of its closer proximity and similar\n time zones to the U.S.,\u201d says Eugene M. Kublanov, COO and\n managing director for offshoring outsourcing advisor NeoIT.\n MORE ON\n CIO.COM\n \n Intro to OutsourcingCIO's\n 2006 Global Outsourcing GuideMexico's Outsourcing OptionBrazilian IT services companies are eager for the\n international business. The domestic market for IT work is\n growing at a decent 17 percent a year, according to Jair\n Ribeiro, president of S\u00e3o Paulo\u2013based CPM Braxis,\n Brazil\u2019s largest IT services company with $500 million in\n annual revenue. But CPM Braxis and other local market leaders,\n such as Brasilia-based Politec and Rio de Janeiro\u2013based\n DBA, are ravenous for a piece of the offshore outsourcing\n market, which is growing at more than twice that rate.These companies are contending with some much larger\n competitors. Most multinational outsourcers, including IBM,\n EDS, HP, Unisys and Accenture, have set up shop in Brazil. IBM,\n for example, is using Brazil as a hub for infrastructure\n management, employing more than 9,000 people in Campinas, 90\n minutes outside of S\u00e3o Paolo, says Kublanov. Tier-1\n Indian players, including TCS, Satyam, Infosys and Wipro, and\n larger Mexican IT services companies including Neoris and\n Softek, have moved in as well.\n\n Financial services key client for\n Brazil\n The biggest market for companies like CPM Braxis is the\n financial services industry, thanks to that company\u2019s\n experience building robust software to cope with the\n country\u2019s financial crises in the 1980s and '90s.\n Financial services business makes up half of the revenues at\n CPM Braxis.The second major source of revenues is ERP work. Brazil\n boasts one of the largest concentrations of SAP consultants in\n the world outside of Germany. Due to a large population of\n German descent, SAP has been operating in Brazil for years, and\n local corporations and divisions of multinationals have\n aggressively installed the ERP systems, says Kublanov. To be\n fair, Ribeiro says he also does a decent amount of Oracle\n business. Experience in Cobol and other legacy languages are\n also one of CPM Braxis\u2019s selling points.Companies who have outsourced IT work to Brazil include\n JPMorgan, Estee Lauder, and offshore first-moved General\n Electric. Some companies, including Citigroup, Motorola, Dell\n and Oracle, have set up captive (company-owned and operated)\n development centers.Unlike some of its global competition, there is no real\n business process outsourcing, or BPO, business for Brazil.\n \u201cEnglish skills are available from a well-educated subset\n of the population,\u201d says Kublanov. \u201c[There] is far\n less than in countries such as Eastern Europe, giving Brazil\n limited capacity to jump deeply into the businesses such as\n call centers.\u201d The best English speakers go to work for\n multinationals, Kublanov adds.\n\n More growth predicted\n Some analysts predict growth in Brazil\u2019s IT services\n sector, currently valued at $1.1 billion by Frost &\n Sullivan and predicted to triple by 2012. But not everything is\n working in Brazil\u2019s favor. \u201cBrazil is an anomaly in\n the global market,\u201d says Kublanov. On one hand,\n there\u2019s great potential to service the United States and\n European market due to location and cultural affinity. On the\n other hand, employee costs are high and personal security\n concerns plaguing S\u00e3o Paolo and Rio de Janeiro make it a\n challenging work environment, says Kublanov. As one of the\n strongest economies in Latin America, Brazil\u2019s own\n companies are now a target market for other countries like\n India providing cheaper offshore services.Ribeiro, more focused on the international business, is\n concerned that not enough U.S. companies are familiar with the\n IT services options in Brazil. He\u2019d like to see the\n Brazilian government do a better job of branding and marketing\n the country\u2019s IT resources.The country already has an industry association in place:\n BRASSCOM, the Brazilian Association of Software and Service\n Export Companies, Brazil\u2019s version of India\u2019s\n NASSCOM (National Association of Software and Services\n Companies).