Brazil’s 2012 Outlook: It’s Time to Scale Up, Gear Up and Get Real about Talent

On the record: Brasscom, Tivit, Neoris point to some immediate requirements

By Felipe Pacheco

With the World Cup just around the corner, the world waking up to it’s formidable economy and the expanding demand for sophisticated IT services – Brazil is just now entering a powerful new era. To get some perspective on the year ahead, and to hear what Brazil’s technology service providers need to do and deliver to help their outsourcing customers succeed, we talked with five prominent members of the Brazilian IT scene.

André Frederico, corporate development director at Tivit

Benjamin Quadros, CEO and founder of BRQ IT Services

Frederico Vilar, country manager of Neoris

Paulo Pichini, CEO and founder of Go2neXt

Antonio Gil, president of Brasscom

Q: What will be the main challenges for Brazilian IT and services providers and their customers in 2012?

Andre Frederico

André Frederico, from Tivit: The perspective of growth for the Brazilian IT and services market in 2012 remains above 10% – almost 7% higher than the outlook for the Brazilian GDP – which, naturally, generates big challenges for IT service companies. I believe that 2012 will continue to be a challenging year for those companies in some aspects already recognized in the past few years. The biggest of them is the employment of qualified workforce. 2011 was already a very competitive year in that respect, due to the growth seen in industry and the situation with the Brazilian labor market in general.



Frederico Vilar

Frederico Vilar, from Neoris: Our industry will have to keep up with the growth of demand for services and be able to use new technologies in order to deliver services that go beyond the “commodity model.” IT providers will have to be able to aggregate value to the client’s business. The adoption of processes based in cloud computing and Software as a Service will be intensified, just as much as new technology solutions such as in-memory HANA [High-Performance Analytic Appliance], from SAP.

Besides that, it is fundamental for the market to create mechanisms to deal with the lack of professionals, especially for certain platforms. In Brazil today, professionals in certain positions at IT companies are very highly paid, which of course affects the cost of doing business and has an impact on their ability to be more competitive, especially when they aim to widen their participation in the Brazilian market and in the exportation of IT services.

Paulo Pichini

Paulo Pichini, from Go2neXt: I think that 2012 will be a year when many projects that were just being planned “on paper” will be effectively executed. The proximity of the great events in Brazil [the Soccer World Cup in 2014 and the Olympic Games in 2016] will demand sensible and fast investments and implementations to renew the networking infrastructure, the information wires, which are already overwhelmed. Besides that, the process of consumerization of the use of IT is already under way and will not stop, so IT companies will have to reinvent themselves to offer scaled-down services to small and medium-size businesses.

With this aggressive growth in the IT world, IT service companies will have plenty of new job possibilities and new commercialization models. Obviously this scenario points to big growth in the use of IT as a service, which will leverage the use of cloud computing in a wide manner. Cloud will be a new outsourcing model for corporations, and without doubt will be the greatest focus of attention by the big providers, such as telecom operators and datacenters. These providers don’t know yet how to sell this new model, but they are seeking advisors to support them and help create shortcuts to quickly launching the biggest number of IT solutions in the cloud.

Benjamin Quadros

Benjamin Quadros, from BRQ: IT is more and more important to companies both from the innovation and the efficiency perspective. The challenges of the industry are: gain scale to offer more choice of services at a more competitive cost, and to specialize in the segments in which they provide services that offer relevant solutions to their clients. In most parts of the country’s economic segments there is a lack of qualified workforce, and in IT, a market in constant growth, that is no different.

There are three technologies that are transforming the industry, and the companies that are able to support their clients with these technologies will be very successful next year. Those technologies are:

Cloud computing, which will make it much easier for businesses to consume technology without demanding large teams and infrastructure facilities to support them (especially in applications such as e-mail, collaboration, and CRM).

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Agile methodologies, which are transforming the way IT projects are executed, forcing clients and IT companies to work more and more together to achieve better and faster results.

• Smartphones and other mobile devices, which are starting to change the business process of almost every company, and offer enormous opportunities both in terms of innovation and efficiency.

Antonio Gil

Antonio Gil, from Brasscom: Brazil has four main challenges for the development of its IT industry, and some of the recent announcements made by the federal government demonstrate the progress that we have achieved in each of those fronts. They are:

• Labor costs. They represent 70% of the costs of the IT companies, because it is an industry that uses workforce intensively. With the recent passage of the law that provides discounts on payroll taxes, that problem has been addressed. The taxation will go from 20% over the payroll to 2.5% over a company’s income. This will reduce the labor costs of IT companies, and will help to formalize employment in the sector, in a most transparent, ethical, competitive, and productive way.

• Workforce qualification. Even though the IT industry employs 1.2 million people, the segment still faces a serious problem of lack of qualified workforce. Projections point that, for this year, the deficit is almost 92,000 professionals, a number that might be as high as 120,000 in 2012. We need to educate a technological workforce with knowledge of English to incorporate 750,000 new professionals in the market in the next 10 years, with 450,000 working in the domestic market and 300,000 focused on exporting activities. The resolution of that problem might happen with the implementation of Pronatec [Programa Nacional de Acesso ao Ensino Técnico e Emprego], launched in April by the federal government, and which has already been approved in the Senate.

• IT infrastructure. Brazilian broadband is slow and suffers from low quality. We need to invest in networks to support the high data traffic, need to grow the penetration of data services, and need to improve the quality of broadband. The PNBL [Programa Nacional de Banda Larga] has been effective in the expansion of access to broadband, but the low quality and high costs are still a challenge for companies and their development in Brazil.

• Innovation: Brazil still has to meet the challenge of innovation, and incorporate innovation into the DNA of its companies. The program Science Without Borders, a project of the Ministry of Science, Technology and Innovation, will offer, until 2014, 100,000 scholarships to students of different levels to attend 50 of the best foreign universities, promoting expansion and internationalization of Brazilian science and technology. Our talented professionals will participate in the process of technology transfer, experience, and knowledge.

This article was originally published on Sourcing Brazil