Brazil IT: Regional Leader, Global PlayerValue Beyond Expectations

CeBITMarch 2011

Agenda

1. Brasscom: Objectives and Agenda

2. The Brazilian IT-BPO Market

3. Brazil’s Value Proposition

2

About Brasscom

Position Brazil as one of the top 3 key global IT centers

Spread the excellence and innovative capabilities of IT to other economic sectors,

increasing their productivity and quality

3

Brasscom’s Agenda

INSTITUTIONAL

Competitive, fair, and ethical IT-BPO sector environment

REGULATORYHUMAN RESOURCES

& EDUCATION

INFRASTRUCTURE

& INNOVATION

MARKETING & EXPORTS

PROMOTION

Educational programs aligned with the IT-BPO sector

Strategic programs to support the the IT-BPO sector growth

Promoting Brazil’s potential in the IT-BPO sector

Institutional Relations Strategic Plans Public Relations

Position Brazil as one of the top 3 key global IT centers

Productive Development Policy (PDP) Growth Acceleration Plan (PAC)

• Industrial and Technological Development and Trade Policy• Investments in innovation for sustainable economic growth• Strategic areas: ICT, Energy, Healthcare, Biotechnology, Nanotechnology, Defense

• Investments in infrastructure for sustainable economic growth• US$ 300 B – 2007 to 2010; US$ 200 B – 2011 to 2013• Strategic areas: Energy, Transportation, Housing, Sanitation, Digital Inclusion (PNBL - National Broadband Plan)

Mega Events: World Cup 2014 and Olympic Games 2016

4

The Brazilian IT-BPO Market

Source: Brasscom, IDC TOTAL ICT SPENDING ACCOUNTS FOR 7% OF BRAZIL’S GDP

US

$ B

ILLI

ON

ICT MARKET

5

The Brazilian IT-BPO Market - Offshore

US

$ B

ILLI

ON

Application Services 73%Infrastructure Services 16%Others 11%

IT-BPO EXPORTS

6Source: Brasscom, IDC

The Brazilian IT-BPO Market vs LATAM

Source: Gartner – Emerging Market Analysis, IT – Brazil – July 2010 7

EXPERIENCE AND

CAPACITY TO INNOVATE

SET BRAZIL APART

Finance� Inter-banking fund transfers in real time� Sophisticated solutions in automation, internet banking, operations via mobiles, and ATMs� Sound and dynamic electronic payment system� 514 million cards in the market� 5.3 billion transactions

Manufacturing, Retail and Services� Responsible for the greatest volumes of IT investments� Intensive use of ERP, BI, SCM, R&D systems, CRM and e-commerce

E-Government

� Electronic Voting System, Online Tax Returns

Energy, Food & Commodities

Telecom, Healthcare

8

The Brazilian IT-BPO Market

Brazil’s Value Proposition

9

BRAZIL’S VALUE PROPOSITION

FAVORABLE BUSINESS ENVIRONMENT

STRONG RESOURCES AND INTELLECTUAL CAPITAL

CULTURAL AFFINITY

TOTAL COST COMPETITIVENESS

Brazil – Economic Strength and Political Stability

Industry Power

�Top multinationals have been in Brazil for decades – IBM: 1917; GE: 1919; J&J:1933�4th largest manufacturer of aircrafts; 7th largest manufacturer of automobiles�World’s top 5 in regulation of securities and exchanges�30+ Brazilian companies in the Fortune Global 500 / Forbes Global 2000 – Petrobras, Vale, Embraer, Itau/Unibanco, Bradesco, Banco do Brasil, AB Inbev, CSN, Gerdau, Aracruz, Suzano, Brazil Foods, among others

Food and Energy Power

�World’s leading exporter of soy beans, beef, poultry, sugar, orange juice, iron, and ethanol�A global reference in the production of renewable energy: biofuels and hydroelectric power�World’s 10th largest oil reserves: Petrobras set the record for largest ever public offering: US$ 70 billion

Sources: Economist Intelligence Unit, IMF, World Economic Forum, Gartner

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

�2009 GDP: US$ 1.5 T 2010 Forecasted GDP Growth: 7.8%�2009 FDI: US$ 25.9 B 2010 Forecasted FDI Growth: 13.3%�Strong and diversified IT market: World’s 8th largest domestic IT market

10

Brazil – Emerging Market Innovation

Brazil – Case Studies

12

Highly Skilled Workforce� 1.7 million ICT professionals� Recognized for their knowledge, commitment and flexibility� 100,000 new professionals / year

Educational Programs� 2,281 Universities among Federal, State and Private (MEC, 2006)� 6 million students (MEC, 2006)� 1,714 academic programs related to ITO-BPO sector� More than 250 new public technical schools will be created by the end of 2010 (MEC, 2008)

17

10

9

2

13

12

14

16

15

6

4

5

111

8

3

18

7

1

2

3

4

5

6

7

8

9

Campinas

Porto Digital

Tecnopuc

Sao Leopoldo

Alfa Tech

Petropolis

Univap

Valetec

Paraiba

10

11

12

13

14

15

16

17

18

Londrina

Rio de Janeiro

Uberaba

Sergipe

Sao Carlos

Iptec

Itajuba

Brasilia

Curitiba

InfrastructureInfrastructure Human Capital and EducationHuman Capital and Education

Technology ParksTechnology Parks

Strong Telecom�Country wide network access�184 million mobile phones (2010)�15 million broadband (2009)

Strong Energy�Best among emerging countries�Leader in renewable clean energy: biofuels and hydroelectric power

Strong Transport�World’s 2nd largest in airports - 34 international / 35 domestic�881 weekly-international flights (2009)

Sound Infrastructure and Human Capital

Growth Acceleration Plan (PAC)

US$ 300 B - 2007 to 2010

US$ 200 B - 2011 to 2013

Brazil Ranks 17th in Scientific

Research Worldwide

13

92.7 million Afro-Brazilians

18 millionGerman-Brazilians

15 million Hispano-Brazilians

10 million Arabic-Brazilians

1.8 million Polish-Brazilians

1.6 million Japanese-Brazilians

25 million Italian-Brazilians

Cultural Landscape

� High Productivity

� Industry / Business knowledge

� Cultural compatibility

� Low-turnover rates

� High Quality

� Low levels of rework

Total Cost Competitiveness

� Optimized On-Shore / Offshore Ratio

� Timezone: Real-time communication

� Nearshore: Lower management / travel costs

15

Government 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%

� 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 subsidized

�Training programs’ financing, increasing certifications and innovation

16

Thank You

sergio.pessoa@brasscom.org.br