Despite Brazil’s Economic Slowdown, Sonda IT Sees Outsized Profits from Mining and Energy

As the Brazilian economy begins to step off the accelerator, many multinational IT companies doing business here are cutting back on their profit forecasts.  However one provider –  …

Barone of Sonda: Petrobras and Vale drive profit engine.

As the Brazilian economy begins to step off the accelerator, many multinational IT companies doing business here are cutting back on their profit forecasts.  However one provider –  Sonda IT – is an exception to this rule as it speeds ahead with double-digit revenue growth and a model to become an “aggregator’ for the full expanse of corporate IT requirements.

The Chilean technology giant, operating in Brazil for the past 20 years, expects its revenue to grow by 12 percent in 2013. Sonda IT reported US$ 1 billion in revenue for the first three quarters in 2012. Analysts are surprised to see Sonda’s profit rise at a time when Brazil’s economy is finally moving at a moderate pace, after several years of fast growth. So what is driving Sonda IT’s success in the Brazilian marketplace?

It seems the Chilean firm gets much of its money from providing IT integrated services to energy and mining firms, such as Vale and Petrobras, and the local aircraft manufacturer Embraer. As their clients’ business grows, so does Sonda IT’s.

The Chilean firm is also capitalizing on the growing demand for IT infrastructure services in Brazil where more than six cities are gearing up to host the preliminary football matches (Confederation Cup) as preparation for the Soccer World Cup next year.

“Clients have been cautious throughout this year. We notice the economy is moving ahead, but at a slow pace. Yet, we believe we will be able to advance as much as we did last year,” said Ricardo Barone, executive and IT vice-president of the local unit of Sonda. “Big companies still have a very strong demand, and providing IT services for them is a key to our success,” he says.

The Chilean firm’s portfolio includes IT services, BPO, SAP solutions, customer support, clouding computing and data centers.

Barone says the company is aiming to strike deals with larger firms like Petrobras rather than smaller clients. “We want to be an aggregator of solutions for the entire IT portfolio, for mid to large size companies, going from the service desk to data centers. There are also plans to expand into more services to become more competitive in new spheres,” Barone added.

More Services for Less Cost

He went on saying there is a reason why the company looks for bigger clients. In 2009, when the global economy slumped following recession in the United States, many international firms reduced their IT budgets by around 25 percent. Sonda, according to Barone, saw it as an opportunity and started offering services at a cost lower than its competitors.  As a result, the Chilean firm landed a huge deal last year with Embraer, an international aircraft dealer, to provide IT services, says Barone. (Nearshore Americas interviewed Embraer CIO Alexandre Baulé last year).

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“We broadened our scope of activity. We started to provide more services for less costs. Good for the client and good for us,” he said. “Now we look for big companies that have strong presence in Brazil, in Latin America and all over the world, such as Embraer, Natura, Vale and Petrobras.”

The Chilean firm’s next target, according to Barone, is the retail sector.

Sonda IT expects its business to grow at a faster pace in the days ahead, because the company believes the upcoming sporting events –– 2014 Soccer World Cup and 2016 Olympics –– in Brazil will generate a huge demand for IT services.

 Sonda IT has already won a deal to provide IT infrastructure services to the organizers of Confederation Cup in which soccer teams from more than eight countries are taking part.

Many broadcasting companies, according to reports, have wrapped up agreements with Sonda IT to lease on the company’s optical fiber cables. “We have a 10-year partnership agreement with Oi, one of the sponsors of the sporting event,” explains Barone “Everything has been very well established and a great learning experience for us.”

The Chilean firm is currently focusing much of its attention on garnering as many IT infrastructure service contracts as it can. Brazil has set aside billions of dollars to invest on IT infrastructure as part of an attempt to prepare the country to host the international sporting events.

“Our main goal is to win such contracts. Then those of the world cup next year. And then, the Olympics, in 2016,” Barone said.

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