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Brazil Outsourcing: Curitiba Comes On Strong as ‘Silicon Valley South’

Brazil Outsourcing: Curitiba Comes On Strong as ‘Silicon Valley South’

By Tarun George

Brazil has a well established global services industry,  with Sao Paulo and Rio de Janeiro hosting shared service centers for US firms since the 1980s. But recently a smaller city in the south has been gaining important momentum as the IT and BPO destination of choice in Brazil.

Curitiba, capital of the state of Paraná, looks like an outsourcer’s dream. But as larger and more high profile firms locate to the area, can the city continue to produce the required IT-specialized talent to meet their needs, or will it suffer in the oft-cited area of scalability? Get the details here.

With a population of approximately 1.8 million people, Curitiba is the seventh largest city in Brazil. Favourably located between sourcing hotspots Sao Paulo, Buenos Aires and Santiago, it has been making a name as a growing IT hub in the region. Big players to move to Curitiba in recent years have included Accenture, HSBC Global Technologies, Siemens, ExxonMobil and Wipro – all attracted by the high quality of life, low wages and excellent infrastructure support from the city.

Some telling figures on Curitiba:

  • GDP for the city is more than US$ 17 billion, of which the commerce and service sectors together make up 65%.
  • Very educated workforce, with a 96% literacy rate.
  • This year Curitiba was awarded the Globe Sustainable City Award for urban planning and development. Reader’s Digest Magazine ranks it as the best place to live in Brazil.
  • Curitiba has 55 higher education institutions, with five universities among them including the Federal University of Paraná, one of the oldest in Brazil.
  • Time zone is one hour ahead of New York.

“Curitiba fits our global strategy perfectly. It allows us to serve both our international customers, as well as the strong domestic market here, all at wages less than in Sao Paulo or Rio” – Fernando Estrazulas, Head of Region-Latin America, Wipro

 

IT-Friendly

 

Much of Curitiba’s attractiveness comes from its reputation as an IT-friendly city. The municipal government a few years ago established what is known as the Curitiba Technopark – specific regions in the city that integrate and interconnect universities, IT companies and R&D institutions in both the public and private sector. Incentives for larger companies to locate in the technopark include a reduced sales tax to 2%, and a ten year exemption of real estate and other municipal taxes. “It’s a project to put all the IT companies in Curitiba together”, says Benjamin Quadros, CIO of BRQ IT Services, a Brazil-based provider. “The tax incentives and support from the city really help to build a good business environment”. BRQ has 300 employees in Curitiba, and offices in other major Brazilian cities.

Quadros also mentions the Curitiba Offshore Center, an initiative by many of the local IT companies in Curitiba that promotes the city as a sourcing destination and provides valuable support and information for US firms considering setting up there.

In terms of infrastructure, Curitiba has it all. Ranked the Third Smartest City in the World by Forbes Magazine, everything from its rapid public transit system to its economic development strategy is an urban planning revolution. “You can get anywhere in the city in less than 25 minutes by car”, says Jacques Depocas, Global Head of Center Operations at HSBC Global Technologies. “And the quality of life is so good that we can attract professionals even from Sao Paulo and Rio, who often don’t mind the lower wages here”. According to Depocas, Curitiba also has one of the best banking and financial service systems in the world, one of the reasons that HSBC set up there. The cost of living is also estimated at up to 30% lower than in larger Brazilian cities.

High Quality/Low Cost

When Indian giant Wipro Technologies came looking to expand their presence in Brazil, one of the reasons they chose Curitiba was “the high labor force quality, at a low cost”, as Fernando Estrazulas, Head of Region-Latin America put it. An average salary for an IT worker would be anywhere from US$400 to $600 monthly. “Curitiba fits our global strategy perfectly. It allows us to serve both our international customers, as well as the strong domestic market here, all at wages less than in Sao Paulo or Rio”. Wipro inaugurated their new delivery center in Curitiba just last month.

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For Jacques Depocas, it’s not only about low labor costs. “There are excellent universities here that graduate a lot of quality talent – not just IT workers, but mainframe programmers which we need”, he says. “And if you’re talking about attrition, I have a 10% rate. In Sao Paulo it’s around 15%”.

The Challenge of Scale

 

While everyone we spoke to agrees on the high quality of the Curitiba workforce, opinions are divided on the scalability of that workforce. Technical training is becoming a huge issue across the region, but in Curitiba specifically the concern is whether universities can continue to graduate enough IT-specialized talent to support the growing demand of US customers, particularly in Silicon Valley.

Benjamin Quadros from BRQ doesn’t think so. “Curitiba is good for small operations of a few hundred people, but if they’re looking to hire a thousand or more they just will not find the talent that they need”. Coincidentally that’s exactly what Depocas from HSBC Global Technologies is trying to do. He has 500 employees currently and needs to almost double that by the end of this year to manage his service volume. “The main problem is that the market is too small for the speed that I need to hire”, he admits. “It’s getting harder to find not just technically skilled workers, but ones who are also bilingual”. Curitiba does have a large immigrant population especially from Europe, but English proficiency remains low.

Companies in Curitiba are finding solutions however. “Wipro can influence the local universities and establish partnerships and training programs to match our requirements for IT workers”, says Estrazulas. “Curitiba already has the highest percentage of English schools per capita in Brazil”. Wipro currently has 400 employees in their delivery center, and Estrazulas is still looking only to hire locally.

Depocas also works with Curitiba’s educational institutions. “My employees actually teach some of the technical IT courses at GrupoAméricas, a local Curitiba-based university. Then we choose the best students to come work for us”.

It’s a Brazil Thing

 

Many of the above challenges that we’ve always known about Brazil – low English proficiency, not enough higher-end IT workers – may be emphasized in Curitiba because of how quickly its outsourcing scene has grown. The IT industry is still organizing itself, and there will of course be a time gap between new training initiatives, and when those trained people are ready to work. The companies that we spoke to remain confident that Curitiba can produce the required talent, even if it takes some time.

“We need to invest more in skilled talent. Society and government here needs to understand the importance of the ITO sector, and that’s a Brazil problem, not a Curitiba problem”, says Quadros. “Still, if you look at the outsourcing cities in Brazil, Curitiba is definitely one of the best”.

About Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

4 comments

  1. Guillaume Rangin

    Interesting point of view is given in this article.

    Above this presentation, it's a pity that speaking of the strong brazilian market, you only mention international companies settling in Curitiba.

    In this fast growing ecomony, there is also Brazilian actors, and some of them have locally making huge investments in the region. You could take example on TIVIT which has a center in Curitiba and more than 20K ressources spread on the territory…

  2. Vision TRE has been providing near-shore IT staff augmentation for U.S. companies out of Curitiba since 2004. We have found a very talented and motivated workforce with a strong interest in working on international projects. The recent focus on Brazil and introduction of companies like Wipro Technologies has driven the cost up, however I have never seen the type of skilled English speakers that I hire at the low rate of $600 suggested above.

    There is an alliance of IT companies in Curitiba that is focused on promoting offshoring called Curitiba Offshore and can be found at http://www.curitibaoffshore.com/news_02.html .

  3. Its not just about the big developer companies. Curitiba also hosts a lot of smaller and much more efficient software companies like GHN LTDA or Flieger do Brasil LTDA. We already developed some very good projects with these guys. SUPER FREAKS!

  4. Brazil has many unique characteristics which make the country a compelling outsourcing option for North American companies considering Nearshore IT services in 2011. CPM Braxis Capgemini's leadership explains why: http://www.youtube.com/watch?v=0Z-_kJZ1mak

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