Survey: Is Brazil IT for sale?

Posted by By Mark Hillary at 18 August, at 05 : 31 AM Print

IT Decisions recently covered the Politec acquisition story and asked whether this was symptomatic of a greater trend in Brazil, that of local IT companies being bought by foreigners eager to access the lucrative domestic IT market in Brazil.

We sensed that there is some concern in the marketplace because even the Brasscom president, Antonio Gil, has recently outlined similar concerns to us when he suggested that “two or three” local IT companies need to remain local to retain innovation in Brazil.

So we ran a quick survey over a couple of days last week, just to capture the mood of the industry on this issue. The charts you see listed are expressing percentages.

Should some IT companies be retained under Brazilian ownership?

This is an interesting split in opinion. Although almost half of all respondents said ‘yes’ (47.6%) and indicated that Brazilian IT firms should be in some way protected from foreign takeovers, the combined number of ‘no’ and ‘maybe’ votes at 52.3% is actually higher. So it’s clear that half of the industry would like to see Brazil IT firms protected, but then again, half of you are not sure.

Should the government be more involved in international M&A?

Here the response is, once again, rather mixed. Almost half (42.9%) of you want the government to keep their hands off any M&A deals in the IT sector, but the combination of those who want the government to take more active control (28.6%) and those are not sure (28.6%) is a total of 57.2%.

Can a firm in Brazil owned by local management be more innovative than a foreign-owned firm?

28.6% of you supported the idea that locally-owned firm can be more innovative and 33.3% of you thought that it is ‘maybe likely’ that locally-owned firms are more innovative. Just 38.1% rejected the idea.

Would greater control on foreign investment in Brazilian firms lead to reciprocal restrictions on Brazilians investing overseas?

This question had perhaps the most conclusive support one way or the other -and in a world where trade flows across borders day after day it is the really important point, would restrictions on the IT industry in Brazil affect Brazilian companies trying to do business elsewhere? 33.3% of you said that it would lead to reciprocal restrictive measures, with another 47.6% suggesting that it would maybe happen. Just 19% believe that Brazil could restrict foreign investment without reciprocal measures taking place.

Overall, the survey appears to be in favour of openness.

There is a strong sense of wanting to preserve what is special about Brazil IT, but with the pragmatism of knowing that international markets are based on reciprocal arrangements. You can’t expect overseas markets to welcome Brazilian firms if Brazil does not welcome foreigners.

Our readers appear to be proud of the innovation taking place in the Brazilian IT sector, but are very much aware that short-term fixes – like trade bans – won’t help in the long-term.

---

Many respondents to the survey gave us their thoughts, in English and Portuguese, and we are grateful for that. We will publish a follow-up article that details some of these more detailed observations direct from the readers in September…

Photo by Kenn Wilson licensed under Creative Commons

Analysis Comment Economics M&A acquisitions, brasil, brazil, brazilian, company, control, government, indra, investment, IT, ito, m&a, mergers, outsourcing, ownership, politec, software, survey