Brazilian IT MarketA Brief Overview

Sources:

Gartner Study by Cassio Dreyfuss; 2008

Brasscom; Brazil : An IT Giant Goes Global; 2010

Brazilian IT Market Highlights

Strong and diversified internal market

3rd largest in PC Installation in 2010 – 72 million

Very competitive and open market

Intensive use of diverse platforms: Oracle, SAP, Totvs,

BI, CRM, SOA, EAI, Mainframe, Unix, Linux, .Net, Java,

Natural Adabas, among others

Strong business- technology approach acquired from

local market: Financial Services, e-Gov, Manufacturing,

Telecom, Oil & Gas, Utilities, Retail

Brazil’s Value Proposition

Industry and business knowledge

Sound Infrastructure

Human Resources

Governmental Support

Economic, Political and Legal Environment

Cultural Compatibility | Language

Time Zone Proximity

Industry and business knowledge

8th Largest Economy in the World and 1st in Latin America

2009 GDP: US$1.5T 2010 GDP expected growth: 5,0%

FDI 2008: US$ 45 B - 2nd largest globallySource: Economist Intelligence Unit

45 Years of Investments in IT: strong and diversified IT market

8th largest in the world and 1st in Latin America

Industry Power: 45 of 50 largest multinationals are in Brazil

Global Brazilian Companies: Petrobras, Embraer, Vale, CSN,

Gerdau, Aracruz, Suzano, Sadia, Inbev, Itau / Unibanco, Bradesco

Food Power

World’s leading exporter of coffee, soy beans, beef, poultry, sugar

and orange juice

Sound Infrastructure

Strong Telecom Infrastructure

Country wide network access

170 million mobile phones (2009)

15 million broadband connections (2009)

Strong Energy Infrastructure

Best among emerging countries

Green: Leader in renewable energy (hydroelectric, ethanol, ...)

Strong Transport Infrastructure

World’s 2nd largest country in number of airports - 34 international

and 35 domestic

Direct and fast access to Europe and US

Federal and state highway system covers the whole country

Efficient post office and availability of all major fast delivery

operators

Human Resources

Highly experienced IT professionals, starting 45 years ago

1,7 Million IT professionals in the market

100,000 new professionals per year in IT-related courses

(technical, graduation and post-graduation)

2,281 Universities (Federal, State and Private)

6 million students in professional education

1,714 IT-related courses

220,000 people are being prepared to enter the IT market

Salaries: Half-way between India and the US Programmer salary

bracket: US$ 25 to 50 thousand

Human Resources

Literacy rate over 90% (population over 15 years of age)

In 5 years, Federal investments have doubled to 230,000 the

openings in federal universities for 2009

Country total of 2300 universities, with 6 million students

About 10% of the total educated labor force have completed higher

education, and about 30% completed secondary education

Federal program to equip public schools with computer classes

Investments in education today are 4.1% of GDP; should grow to

5.0% by 2012 (a 20% increase)

Human Resources

Total costs of services relative ranking:

US, Canada

Mexico, Costa Rica

Brazil

Argentina, Chile

India, China

Average salaries for IT professionals are one third those in US and

England.

Salaries in Brazil are growing 5% a year; other costs are not

Cost of living has been relatively stable; average country index is

82, compared to 100 for New York City (IMD).

Governmental Support

Strategic for the Brazilian Government, the IT sector has direct

incentives in payroll and income taxes, and also in human

resources’ qualification programs

Law 11774: reduction of social security contributions on company

payrolls by 50% depending on the amount of exports

Law 11908: income tax deductions of 200% of the amount spent

on staff training and R&D

Tax deductions on technology transfers, licenses and royalties

Fiscal incentives for special projects, such as reduction of Property

Tax and Service Tax

North and Northeast regions: from 40% to 60% of the research-

focused staff’s salaries are subsidized

Training programs’ financing, increasing certifications and

innovation

Governmental Support

Intellectual property protected by law; enforcement still slow but

improving

Momentum growing in the combat to piracy:

Government initiatives in various fronts

Landmark police actions

Strong support from legal courts

Enterprise piracy largely limited to small businesses

Data protection and privacy issues have not been appropriately

addressed yet; large problems have not been reported in these areas

Economic, Political and Legal

Environment

Stable political and economic environment; low risk

Current president (labor party) drives social reform but maintains

economic and fiscal austerity (initiated by former social-democratic

president in 1994)

Economy growing, inflation under control

Brazil ranks among “the best one third” from 178 countries (WAO):

Corruption 57

Press Freedom 56

Democracy 51

Brazil is a proverbial “melting pot”; extremely low racial tension; no

religious tension

Economic, Political and Legal

Environment

International risk rating is the lowest ever (hovering around 210)

Investment grade, DFI growing (over US$ 30 billion in 2007; US,

followed by Spain, the Netherlands, France, Germany, Portugal and

Japan)

A modern environment still has a few roots in the past:

Complex laws and regulations rank Brazil very low for ease of

doing business (122 out of 178, WB)

Legal system overburdened and slow

Investments and contracts thoroughly protected under the law

Brazil is a signee of most international investment and trade

agreements (GATT, TRIPS, WIPO, etc.)

Cultural Compatibility

Very close to a Western Democracy model

Former Portuguese colonies; several waves of immigration from

Europe and elsewhere (Portugal, Spain, Italy, Germany, Japan and

Middle East)

Since WW II, under economic, business and cultural influence

from the US

Brazil comes second only to Germany in the number of high scholl

exchange students in the US

Business practices influenced by American and European

multinationals; several multinational shared services and

development centers established in the country.

Cultural diversity with strong international links

Cultural Compatibility

Portuguese is the only language

English is the first foreign language taught in schools

Spanish and French also widely taught

College-educated Brazilians can read English

Private enterprises undertake initiatives to complement

government

Brazil is an immigration destination: Spanish, Japanese, Italian,

German

Time Zone Proximity

Gartner Summary

Sources:

Gartner Study by Cassio Dreyfuss; 2008

Brazil’s Claim to Global Player Position:

A Very Positive Rating Summary

Fair Data and IP Security and Privacy

Good Global and Legal Maturity

Very Good Cultural Compatibility

Political and Economic Environment

Good Cost

Fair Educational System

Very Good Infrastructure

Good Labor Pool

Good Government Support

Good Language

RatingCriterion

Very Good

Scenario:

Overall rating: Brazil among the best possibilities

Advantages will increase in the short term; challenges will

be resolved in the medium term

Current scenario allows for long range plans (but

recommends watchful attention)

What you should do:

Incorporate Brazil as player in your strategy

Leverage specific positive characteristics

Start small and grow from there

Brazil’s Best Practices:

What You Need to Know

Keep IT simple2011

Service Portfolio

Business StrategyIT Alignment

Systems Architecture

Sourcing Strategy

Budget Building

Metrics Formulation

Data Management

Brazilian Landing

Tailor MadeDecision Making

Sales & Op Planning

Supply Chain

Software Factory.NET Framework

J2EE Platform

Cloud Platforms

Software TestFunctional Test

Non Functional Test

Managed ServicesRemote Monitoring

Help Desk

Vendor Management

Infrastructure Disaster Recovery

Virtualization

Body ShoppingSoftware Development

Operation Management

Consulting Systems Outsourcing

Product Portfolio | Segmentation

Predictive Analytics

Business Intelligence

Smart Surveillance

Geolocation Solutions

Decision Making

Supply Chain Management

Sales & Operation Planning

Advanced Planning & Scheduling

Asset Management

Customer Relationship Mgmt

Collaboration Solutions

High Availability

Disaster Recovery

Virtualization

Application Rollout

Website Evaluation

Remote Monitoring

Data Availability Appl. Performance & Mgmt

Product Portfolio | Business Partners

Decision Making Collaboration Systems

Data Availability Appl. Performance & Mgmt

Clients

Large Enterprises

Global Integrators

Midsize Companies

Communities

Associations

Colleges & Universities

More Information

Pedro Siena Neto

Chief Executive Officer

+55 19 8177-2760

Skype ID: sst.pedro.siena

pedro.siena@sstnet.com.br

SST it solutions

+55 19 3249-0555

http://www.sstnet.com.br