IT Decisions covered the recent BRICs summit from all angles. One industry figure we didn’t talk to though was Brasscom president Antonio Gil, because Gil was there in China promoting the Brazilian IT industry at the same time as the BRICs summit was taking place.
Gil explained to IT Decisions the focus of his recent visit to China.
“I explained to them that in terms of IT, Brazil is very big – bigger than China. In terms of software and services, Brazil is very good. And looking ahead ten years, there are several macroeconomic changes taking place that mean Brazil and China can work together closer,” he said.
Gil talked about some of the specific areas where Brazil has world-leading IT expertise, such as automotive engine design that allows Brazilian cars to use regular gasoline or ethanol – or a mixture of both as the engines are flexible enough to manage regardless of what you fill the tank with.
And regardless of the BRICs, Gil believes that there is an immense new wave of IT business that is coming Brazil’s way.
“When you add together the demographic advantages, the economy, and the technology we have there are immediately opportunities for new applications in health, education, security, and banking the unbanked. There will be a completely new demand that we estimate will increase the total demand for software services by a minimum of one trillion dollars by 2020,” he said.
Brazil has particular expertise in banking technology and Gil estimates that over 30m Brazilians and 100m Chinese will soon be asking for banking services they don’t use today. There are also opportunities for Brazil in the way IT services are changing and being delivered.
“The cloud, mobile services, and image processing are all going to be determinant in the future of the IT industry, and this is all linked to innovation. If Brazilian companies don’t include innovation then they won’t be able to compete.”
I had asked Gil about innovation because the World Economic Forum on Latin America has had such a focus on the topic this week and he gave a good answer, but not everything is perfect.
Brasscom is focused on reducing the cost of manpower, HR development, infrastructure improvement, and innovation. In particular, the issue of manpower cost in the local IT industry remains a thorn in Gil’s side.
“One issue today is the cost of labor in Brazil. We still have a higher cost when you compare person to person overseas, but the total cost of ownership is better because we have a lower turnover and better creativity. People here question everything they are asked to do – this eliminates problems early on in the process, rather than the people who follow a methodology and only find problems later on.”
The nod to total cost of ownership (TCO) is something we have heard before at IT Decisions, particularly from companies such as HSBC that perform IT operations across a number of countries.
Regardless of the labor cost, the domestic IT market in Brazil is booming and this means that multinational players want to take their own slice of the action. In some cases the quickest way into the market may be through acquisition, as demonstrates last year when Capgemini bought a majority stake in CPM Braxis.
Gil explained that he is being asked all the time about how to enter the Brazilian market and many in the industry are considering what the implications might be if more players enter Brazil – though he stressed that foreign companies are more than welcome here.
“Capgemini came into Brazil and the best way for them was to buy a company. I receive companies here on a weekly basis, all of them interested in buying their way into Brazil. There is a need to have two or three reasonably sized Brazilian companies though, to make sure that we can still develop innovation here,” he said.
This emphasis on the domestic IT market, and the uncompetitive Real making service exports less likely in the near future seems at odds with the message Brasscom has always given – that of developing IT exports, so has the role of Brasscom changed?
“We change our role on a daily basis. There is no five-month plan, let alone a five-year plan. We have to change every single day. Today, exporting IT services from Brazil is less attractive, but people are focusing more on the total cost of ownership. If you buy a service from Brazil and you are in New York, you know there are hundreds of direct flights here – not a journey across the world with 2 or 3 stops,” he said.
Gil returned to his TCO theme reiterating the strength of Brazil, both in terms of the strong domestic demand for IT services and the potential for exports to customers that are more focused on creativity than price alone. He emphasised the point with an example that assumes he needs a piece of new software to be developed.
“When I want an in-the-box solution, I will send it to India because I know I will get it back in three months. When I want a more creative solution, I send it to Brazil. It might not be ready in three months, but that will be because the developers are asking questions from day one. An analogy is if I ask you to jump out of the window – you will ask how you can jump from the fifteenth floor, yet I suspect in India or China they would jump because someone told them to jump!”
On the video you can hear me laugh as he says this. Of course he is right, but in an era of political correctness, it is rare to be so blunt and for that Gil should be applauded – though perhaps not by his own press office. Open, frank debate always works better than playing cards close to the chest.
It seems the focus of Brasscom has shifted somewhat from just roving overseas and waving the Brazilian flag to lobbying and aiming to reduce taxes. This is how the organisation started and some of their greatest early successes came from government lobbying.
Can they repeat their earlier success and make life easier for IT entrepreneurs today? Only time will tell, but Gil is working on it on a daily basis.
Photo by David Gellner licensed under Creative Commons