Brazil is currently projecting itself as a strategic centre for Information Technology and Business Process Outsourcing. According to BRASSCOM, the Brazilian Association of Information Technology and Communication Companies, the country has the eighth largest Information Technology Business Process Outsourcing market in the world and in 2008 it turned over $59.1 bn. The Braziliangovernment is aiming to become one of the three key global IT centres in the world and to increase IT-BPO exports from US$ 2.2 billion in 2008 to US$ 3.5 billion by 2010. In the last years, the Brazilian IT market has been growing in size, reach and complexity, along with the other sectors of the economy. IT and communications account for 7% of the GDP.
“The world has recognized that the time hascome for Brazil”
The words of a tearful Luiz Inacio Lula da Silva, President of Brazil after Rio de Janeiro was elected to held the Olympic Games in 2016. 2 October 2009, Copenhagen Denmark
In this paper my objective is to analyze the Brazilian IT Industry, how the country can reach the goal of becoming one of the three IT global players, and finally, how Brazilian firms enter the global BPOmarket.
Brazilian IT market
The Brazilian domestic market will expand; Brazilians are increasingly acknowledging the essential role that Information Technology has in the economy. In addition to this, less than 7% of small and medium companies have management software, and they will probably adopt it in the near future. Establishing firms in Brazil (local and multinational firms), will grab much ofthe market share just as foreign competitors will have trouble reaching the market. This is due to the specific know-how, and the knowledge towards the Brazilian culture.
Firms are attracted by a growing market with low barriers of entry. Competitiveness increases the capacity of industries to innovate and upgrade, therefore, this pushes firms to leverage resources and to stretch goals1.Brazilian IT firms maximize the use of their resources by concentrating on the local market, learning from it (clients, competitors, suppliers), finding new solutions (innovating) and by complementing their resources.
The key points of the development in the Brazilian market are mainly explained by the National Competitive Advantage2 and the Resource-based view3. Brazil offers a favourable economic,political and legal environment. Development in the IT is largely driven by; a competitive local market, skilled workers, and the role of the Government (left out by M. Porter in his analysis).
The Government has encouraged competition offering incentives, tax reductions, credit facilities, stimulating venture capital funds and creating new institutions to enhance the industry. Besides it hasalso invested in infrastructure and education (University and technical courses, directly linked to Information Technology).
These investments benefit the creation and improvement of the skilled work force. Skilled workers are an indispensable resource in the IT market and by hiring the most brilliant workers that are scarce and costly firms can build up a competitive advantage as the Resource-Basedview explains.
It’s important to point out that the demand of skilled work has been growing at an annual rate of 6.5% in the last four years. Supplying it to the industry in the years to come is a vital issue.
Finally, the creation of institutions, like BRASSCOM are fundamental. BRASSCOM examine the market, provide reliable information and promote the Brazilian IT industry. It’s an excellentsource of information for everyone who works in this industry or who wants to invest in it, just like foreign investors do.
Brazil & Global Information Technology - BPO Market
The Brazilian companies have performed quite well locally, but their presence in the main BPO markets is very small. Their revenues come almost exclusively from Brazil, with little shares in world BPO exports; the...