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Brasscom: Country among top 5 outsourcing destinations in 5yrs

December 9, 2005

By Tony Danby
A report by consultants AT Kearney has established a road map to make Brazil one of the world's top five offshore outsourcing destinations within five years, Antionio C R Gil, president of Brazil's association of software and services export companies (Brasscom) told BNamericas.

"Ten years ago, McKinsey drew up a report that set India on the path to becoming the world's leading IT outsourcing destination, I hope that this report will do the same for Brazil," said Gil.

The global IT outsourcing market is estimated as increasing 6% to US$640bn in 2005 compared to US$607bn in 2004, according to the AT Kearney report.

"The focus on Brazil's drive to become a leader in IT outsourcing will be on the financial industry and e-government where Brazil is already very strong," explained Gil. "We also will aim for the top part by adding value, and not for the low part," he said.

Other countries in this category are India, China, Canada and Russia.

The report highlights the need for investment in education such as English language training or IT skills to adapt Brazil to global needs. The country also requires investment in postgraduate computer science projects, according to Gil.

"There is also a need for tax incentives and a need to alter labor conditions," he added.

Brazilian IT company CPM has plowed US$10mn into its outsourcing business this year and expects to do the same in 2006, according to Gil, who is CPM's president.

The AT Kearney report charts three steps. The first step will last for 6-18 months and establish the groundwork. "Brazil needs marketing initiatives, education programs, IT curriculums and recommendations to the government on areas such as fiscal policy," said Gil.

In early February 2006, a Brazilian road show will travel to New York, Chicago, Texas and San Francisco, later visiting London, Paris and Madrid and eventually Tokyo.

The second step from 18 months to three years, will identify the value added targets and the third step will see Brazil consolidated in the top five, according to Gil.

Gil realizes that there is a huge gap between Brazil and India. "Today, Brazil has some US$300mn in outsourcing, India exports US$20bn," he said. But, "we have many ties with the US. We are very close, with easy access and a similar time zone. We have language skills, trained people, a comparable judicial system and IT experience," he added.

The biggest challenge is not competition, but internal issues, according to Gil. "This is something we know as we have 40 years of experience. Business entrepreneurs should take an aggressive approach as this is a great window of opportunity," he said.

AT Kearney was hired by Brasscom as well as Brazil's ministry of development and foreign trade and the ministry of science and technology to identify the outsourcing opportunities for the country.