A Brit in Brazil: A few myths and a wealth of opportunity…

Mark Hillary: CEO of IT DecisionsEmbassy of Brazil

London, January 20, 2012

Agenda

• Outline of Brazil• IT myths• The famous bureaucracy• Opportunities

A Brit in Brazil j.mp/markhillary• Seven books about technology and globalisation so

far, next is on Twitter• Running IT Decisions in São Paulo, focused on tech

research, analysis, advice, consulting… very close to Brazil CIOs

• Blog for Huffington Post, Reuters etc… shortlisted for Computer Weekly business blogger of the year award in 2009 and 2011

Think back to 2005• Tom Friedman sold

millions of books explaining the globalisation of services

• Focus was on the back office services, outsourcing, offshoring, nearshoring…. Often involving labour arbitrage

BRICs• I explored the BRICs

and offshoring in 2007

• I also wrote another book that year with Dr Richard Sykes of Intellect, commenting on the global flow of services

Global Services• This was 5 years ago,

but we showed that global IT is a lot more complex than just cheap offshore offshoring…

• Locations such as the UK can contribute just as much as India – ask Richard today, he will tell you!

Most predictions were wrong…• Focused on the Friedman view that new

markets were opening up and would become the global ‘back office’ for EU and US firms…

• Global crash changed growth expectations

• Brazil now looks like a market that should be explored for partnerships – not a back office

Myths of IT in Brazil• It’s not cheap and ‘offshore’ – one US company

boss recently told me his IT staff are lower cost back in the US

• It’s not a market created only by the IT boom since the millennium

• $165.7bn ICT spend in 2010 with only $2.4bn of services exported

• There are several industry sectors where Brazil has outstanding world class resource – banking, mining, oil & gas… and the IT expertise supporting these industries!

Economic changes

• The world is changing – you can see this in the news from the US and EU each day

• EIU predicts by the end of this decade, the new world order in GDP will be: China, USA, India, Japan, Brazil

• Just this month, Brazil’s GDP grew larger than the UK

Need a job? Try Brazil…

• Prediction of 8m new professional job openings from now to 2015

• 1.9m new jobs that were created in 2011• 34,000 job openings in IT alone in 2012• Lowest unemployment (6.7%) in recent

history• 40,000 graduates of engineering each year,

but industry needs three times as many!

Changing Class

66

96

13

94.9

73.3

20

113

59

31AB

C

DE

2003 2009 2014

Class A = > £3300 pm … class E = < £370 pm

29 million entered class C between 2003 and 2009In the period to 2014, class A and B will grow by 50%Source: Social Policies Centre of FGV-Rio

Bureaucracy• Paperwork needed for foreigners to reside

in Brazil can be a headache, even when married to a local

• A company can be started quite easily, but does require paperwork (at least 15 documents) and many cartorio (notary) visits

• Different regulations at federal, state, and municipal level means you need good advice – and you have to trust your accountant!

BureaucracyConcept of proving identity

with just a passport or other single document is quite alien

in Brazil… leads to some Kafkaesque situations…

Opportunities• In 2010 CapGemini bought a controlling

stake in CPM Braxis• In 2011, Indra bought Politec• Other IT firms being watched –

Brasscom chief approached ‘every week’ by companies keen on IT M&A

• Remember those spending numbers, almost $200bn on ICT in 2010…

OpportunitiesFIFA World cup 2014 and Rio Olympic

games 2016 – investment in £

Urban Transportation

Hotels

Sanitation

Ports/Airports

Stadiums

Security

Energy

Hospitals

0.00 5.00 10.00 15.00 20.00 25.00 30.00

SummaryBrazil is a market to work with, not a low-

cost offshore outsourcing locationGlobal IT players all there nowMany local IT firms already being snapped

up or entering partnershipsBureaucratic, but can be worked around

with good adviceWith the EU turmoil, where better to be

working?

Mark HillaryThere is now a panel

session for Q&A------

But if you want to stay in touch, you can find

me here:www.markhillary.com

twitter.com/markhillary