Brazil builds on ICT strength
Brazil builds on ICT strength
With an economy that grew at 7.5% last year and is forecast to keep on growing by more than 5% per annum until at least 2015, the high levels of interest being aroused by Brazil are hardly surprising.
Despite the global slowdown of recent years, Brazil barely dipped into recession and became the eighth largest economy in the world last year after leapfrogging both Canada and Spain. And with newly discovered oil fields off its coast, Brazil is soon expected to become one of the top five global energy producers and one of the top five world economies within a couple of decades.
The country has a large population of about 200 million, some 100 million of whom are middle class consumers, and it already plays host to a number of important industries ranging from agriculture, mining and financial services to aviation, steel and car production.
ICT in Brazil
Moreover, as Mark Hillary, Chief Executive of IT Decisions, a research company that specializes in the Brazilian technology and high tech services industry, points out, ICT is deeply embedded in and crucial to all of these industries, particularly energy production and banking, which could not operate without it. "One of the differences with Brazil is that its ICT sector hasn't jumped on the offshoring or nearshoring bandwagon," he says.
Figures from the Brazilian Association of ICT Companies (Brasscom) indicate that the country spends about $60 billion on ICT each year, but exports only about $3 billion or 5% of the total, although this is a 10-fold increase on five years ago, Hillary adds. "If you've got a big domestic market on your doorstep and you can use Portuguese (Brazil's national language), there's less drive to seek business elsewhere," he says. "Of the BRIC countries, Brazil is more similar to China than India."
And such, demand is only likely to increase over the next few years as a series of huge infrastructure projects comes on stream. These include the football World Cup in 2014 and the Rio 2016 Olympic and Paralympic Games, which will see new stadiums and transport networks being built and necessitate massive ICT spend to support the events.
growing inward investment
As a result, interest among U.S. and European companies in the country has never been greater. The Brazilian ICT industry currently comprises about 50% home grown and 50% foreign ICT companies - many of which, including Orange Business Services and IBM, have been in the country for decades. Brazil is the largest IT services market in South America and accounts for 47% of the region's $23 billion sector, which is forecast to grow at more than 10% per year until 2014, according to Gartner. The sector currently employs about two million people out of a total working population of 104 million.
The government is also pushing a high-tech manufacturing strategy. "Brazil is an important center for South America, but the government is also trying to promote digital inclusion in poorer sections of the population," explains Mauro Cruzeiro, Orange Business Services Vice President for Latin America. "So it's reducing taxes and facilitating manufacturing to make devices more accessible and less expensive as there won't be import duties, while at the same time creating employment."
The international traffic is not entirely one way either. Interestingly, the current strength of the Brazilian Real against the Euro and U.S. dollar is encouraging some domestic players to make acquisitions beyond home shores, particularly in the U.S. market.
Stefanini IT Solutions Group, for example, bought U.S.-based TechTeam Global at the end of last year to boost its onshore business process outsourcing (BPO) and IT support capabilities as well as provide it with a significant presence in Europe. "It's a trend we only expect to continue," says Cruzeiro.
In order to ensure that the ICT sector does not in the future experience similar skill crises to those experienced in areas such as construction and oil and gas, the government is in the process of opening a series of technical and engineering schools around the country. Orange is involved in an apprenticeship program near Rio de Janeiro, where around 200 students are taking courses related to network technologies, while also learning foreign languages like English, Spanish and French.
New ICT skills will become increasingly important to Orange over the next couple of years. Although it is already one of the top three companies in Brazil to provide foreign multinationals with services, mainly in the shape of network implementation and break-and-fix, its aim is to adopt more of a consultancy approach in the future.
The company also intends to deliver a new range of offerings in areas such as security, collaboration, unified communications, enterprise application management and managed services. As Cruzerio concludes: "We're seeing more and more companies investing in ICT systems to improve efficiency and add value. So the whole sector is becoming increasingly important in terms of its contribution to the economy, and our role is to support that."
Orange Business Services in Brazil
present in Brazil for over 50 years, Orange Business Services offers a full range of communications services, including solutions for networks, security, telephony, collaboration, messaging, applications, conferencing, large-project management and green IT supports a wide range of international customers in Brazil and a number of homegrown multinationals, including Souza Cruz and WEG home to 500 customer service and operations professionals at the major service center in Rio de Janeiro, one of four that supports customers worldwide extended account teams throughout the region are made up of solutions consultants, consulting practice experts, project managers and service managers, many of whom have PMP, ITIL, Six Sigma and other certifications.
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