Brazil, traditional thought of as an exporter of commodities like coffee, sugar and iron, has become a country with manufacturing power and expertise in information technology. The country's telecommunications infrastructure is already state of the art, after receiving billions of dollars in investment since it was privatized in the late 1990s.
Brazil also has a thriving domestic market for software services and there is a history of rapidly embracing new technology. For example the country recently switched to electronic voting machines for all elections, and Brazilians are now able to file their tax returns over the Internet.
Hoping to follow other developing countries like India, Brazil's government is trying to turn the country into an outsourcing center. In an outsourcing environment that has been shifting from cost-only to cost-and-quality, as well as an increased focus on cultural compatibility, Brazil is in a good position to capitalize. Brazil has two distinct advantages over a country like India: their cultural and demographic similarity to western countries and the minimal time zone difference between the US and Brazil. Also, Brazil’s turnover in the outsourcing industry is roughly 20 percent, compared with India’s rate of about 40 percent. These relatively low turnover rates help ensure project consistency and reduce the risk of mistakes.
Brazil has implemented effective policies to stimulate the development of the IT industry and encourages technological development by providing various incentives including offering special credit lines to technology companies that are focusing on foreign markets.
The Brazil outsourcing industry is supported by a number of government lobbying groups whose members include Microsoft, IBM and Sun. For example, the Brazilian Association of Software Companies and the Association of Brazilian IT, Software and Internet Companies promote the Brazilian software services sector and lobby the government for policies that favor the IT sector.
Outsourcing in Brazil still has obstacles however. Despite preparing tens of thousands of graduates each year for jobs in the information technology business, most of them are not fluent in English. Also, outsourcing to Brazil can be costlier than outsourcing to India. During our meeting at the Florianopolis Chamber of Commerce we learned that companies pay $1 in taxes for every $1 paid to employees. These and other high taxes and a relatively strong national currency, cut into potential savings. Other downsides to the country include a lack of enforcement of privacy and intellectual property protection laws as well as some outdated labor laws.
There are positives and negatives in Brazil’s bid to become a major outsourcing destination, but the industry is making efforts to reform some of the laws and obstacles in the way of progress. This, combined with the fact that more and more companies are looking for an outsourcing solution that offers cultural compatibility and a greater potential for quality work make the future of outsourcing in Brazil look bright.