Group Project

Networked Policy

Brazil IT is growing fast. Many in the United States say that Brazil is an excellent place to outsource, but Brazil has other plans. This country has no intention of being known around the world as a place companies can send their dirty work. They may be using this work as a means of “practice” but the country has plans to develop its own products and continue its main policy and tradition of being a self-sustaining nation. It is perhaps this intention that will eventually limit their growth and overall IT readiness in the future, but has leap frogged them over many developing nations at present. Not less than a decade ago Brazil faced severe monetary policies, lacked foreign trade and saw triple digit inflation annually. It wasn't until recently elect President Luiz Inacio Lula da Silva began to change the policies of the government that the country saw stability. His concentrations were focused on the social and fiscal reform, but with a philosophy of gradual liberalization of foreign trading, the outlook for the country quickly turned positive. In the time he has been President, Brazil has gone from a US$8 billion deficit to a US$46 billion dollar surplus. Most of this is a result of new agricultural trading policies with China, who is importing massive amounts of Brazilian goods and services. There are many government, business and social policies that have allowed this country to grow, and there are also many that continue to slow it down.

The government of Brazil's IT policy is perhaps the single biggest factor as to why they are still considered an “up and comer” and not an IT powerhouse. The Brazil government is changing to create rapid stability. Part of this process is to give the rest of the world the illusion that the country has deep roots in IT, when in fact they have successfully created a surface of an IT powerhouse and have left the roots undeveloped. Government policy in Brazil is to restrict the flow of technology into the country so that internal organizations can compete. There are tariffs in some cases nearing 100% on goods imported from the United States and other countries. Walking through the malls of Curitiba, Rio de Jineiro and Florianopolis it is quite evident that technology that would be considered expensive in the US is nearly unobtainable to most people of Brazil. One such successful case is with Digitro, a local telecom company headquartered in Florianopolis. With tariffs imposed Digitro controls the Brazilian telecom market over American companies like Lucent, AT&T and Sysco. Many in Brazil view the tariffs as an advantage for the country, especially after the policy was lightened for PC manufacturers to begin selling in the country. Brazil had made very strict rules to the American PC makers. They must manufacturer the machines in the country, they couldn't export machines, many parts had to come from domestic IT companies and special treatment was to be given to Brazil software companies. The government policy to allow Compaq, HP and IBM proved disastrous to local PC makers, many of whom were out of business within the first year of foreign trade.

This liberalization in policy was not a positive for the PC companies of Brazil, but the continuation of high tariffs is hindering its IT culture. The absence of competition is seriously slowing the growth of technology in the country. Brazil companies must innovate technology that has already been developed in other parts of the world before the people can become exposed to it (at an affordable cost). The elimination of tariffs would promote a global influx of technology into the country perhaps being damaging to domestic companies at first, but allowing them the opportunity to slingshot past the competitors in the long run. Promoting global competition to the IT market of Brazil would allow everyone cheap access to IT and encouraging the people to become more involved. The domestic IT companies wouldn't have to waste time and money re-developing technology and instead could build on what has already been developed around the world. Making cutting edge technology available is essential for the country to take its products global and to also help eliminate its second largest drawback, producing enough skilled labor.

The one consistent response from every consulting firm and telecom companies when asked about their biggest challenges was to overcome the shortage of skilled labor. The current government policy in Brazil is to educate those who are ready and forget about those who are not. College level education is free to all citizens of Brazil. They are encouraged to become educated in IT and to start their own companies. In fact, Brazil has funded a significant portion of money to incubator programs to help ensure the success of these start up companies. The plan here is obviously to continue the domestic growth of IT and remain a self-sustaining country. Paying for college education is a great start, except at present two thirds of the country is so improperly prepared through grade and high schools that most are not accepted to college. Government funding for primary levels of education is nearly non-existent. Math and reading are barely taught at this level, let alone IT. The government has done very little to improve the primary education system and to see that its children grow up in an IT environment. In fact because of the lack of skilled labor and the poor education system business has begun to step in for this inadequate government policy and created policy of their own.

Private schools are developing rapidly in Brazil. These schools specialize anywhere from primary education too more specialized skills like programming. Many are even designed to prepare people to gain entry to college. Many of these schools use video technology and are broadcast over the Internet for a tuition fee. Businesses realize in order to produce more skilled labor they must saturate young Brazilians with IT early in their academic development. That is still not stopping them from training employees the best they can now. Companies in Brazil have begun to demonstrate a responsibility to prepare its employees to compete with the world. Companies such as EDS and HSBC demand that employees know English and use it as the primary language to communicate within the office. Businesses know that English is essential to compete and be taken seriously in the IT world. Still others like Genesis are making it their responsibility to help students become entrepreneurs and nurture their businesses until they become established enough to run on their own. Companies like Pellisari, the chamber of commerce and Neki acknowledge that one of the greatest challenges they face is finding good help. IT is not a way of life in Brazil, kids are not growing up text messaging and doing homework online and because of that businesses are having to take extra steps to educate employees themselves and teach them the IT ways at additional costs. These costs could better serve the company by being invested in more advanced technologies. Brazil business is doing its part to integrate IT into their culture, the next step is for the people to embrace it.

People are taking advantage of the IT opportunities when they can and developing a social policy that is necessary for IT life. Cell phone makers have begun offering certain scaled down products for nearly no cost to the consumer to help gain acceptance within the culture. Prepaid cellular plans currently account for 81% of all subscriptions in Brazil. Cell providers and other technology companies must compromise if they expect to penetrate a demographic that makes less than US$400 dollars a month. People are slowly beginning to accept technology as you walk down and see Internet café's, wireless access in hotels, and ATM's (although not nearly as accessible). Visit a futbol game at the Mericana stadium and one might be shocked how many people use cell phones. Another major initiate comes from Nicolas Negropante of MIT University and founder of “One Child Per Laptop” has made it his mission to develop a laptop robust and cheap enough for every child in the world. This laptop currently priced at $176 dollars has Wi-Fi capability two to three times greater than the average store bought laptop. With cutting edge technology Negroponte is trying to reach out to the over 55 million children in Brazil. Many children in Sao Paulo and other cities are currently testing these laptops, and the schools that use them have seen up to a 50% increase in attendance.

People are beginning to accept technology into their lives, but many have yet to demonstrate responsibility with its use. Part of the reason that ATM's and debit cards are not widespread like in the United States is because of poor fiscal policy. The cost of credit in Brazil is still very high. Strict rules with foreign ownerships of banks and products they offer have limited growth. The other reason is because of poor security and ethics. It is not uncommon for a credit card purchase to be run two or three times by the business owner. It is not uncommon for people to be robbed at ATM machines. It is not uncommon for computers to be used for drug dealing. Lack of education can be partly to blame for this lack of responsibility. Many people have begun sending their children to private schools so that the continuous cycle of poverty and crime stops. That is a step, but if IT is going to plant its roots in Brazil and if Brazil is going to grow to be a global competitor in IT then it is absolutely necessary that the people begin to demonstrate personal responsibility and integrate technology into their lives in an ethical manner.

The IT growth in Brazil over the decade has been nothing short of amazing. Policy changes are largely responsible for this. However, now that the wealthy have begun to catch up Brazils growth will begin to slow if they cannot change policies to allow for foreign trade and improved education. Lowering the divide between classes will be essential if Brazil wishes to see continued success. Brazil will need to see that technology is accessible if they ever intend to get away from being the country that others outsource to and move into being a country that leads the way in innovation within the IT fields.