Kirk Laughlin is the founder and editorial director of Nearshore Americas, a web site that has now spun off a new title called Sourcing Brazil. IT Decisions caught up with Laughlin at the recent Brasscom Global IT Forum in São Paulo and asked him for his view on what is happening in the Brazil sourcing marketplace.
“Brazil has enormous opportunities and complexities, but is operating as the number one player in this market. [Brazil] has the largest economy, largest export growth and many other industries,” Laughlin said.
“What does this leadership mean for Brazil? Being innovative internally with IT resources? Growing mobile banking solutions or other solutions that can be developed here then exported? The mistake for any IT firm here is to just try repeating what India did, so we need to find out what will be the future shape of the industry for Brazil,” he added.
We asked Laughlin for his views on cost reduction – something that appears to still drive most outsourcing and yet it is difficult to find lower cost resource in Brazil.
“I have wondered why international CIOs would come to Brazil, but I have talked to CIOs here and they say that it’s all going well for them in Brazil. Sometimes we talk about culture and [business] compatibility as soft issues, but if the cost is within a certain range then these soft benefits really help,” he said.
IT Decisions would support this view. Outsourcing to a supplier in India may well achieve a further saving above what can be achieved in Brazil, but it’s not acceptable to continue calling compatibility and culture soft issues because they really do add cost to a sourcing program. If those elements are largely removed by working with a Brazilian company then the real costs of doing business are much closer.
This compatibility with the American or European way of doing business is one of the key value propositions for IT companies in Brazil, but it is taking some time to get this message across to the potential overseas buyers. As can be seen on the video, even someone who knows this market as well as Laughlin struggles to try distilling the value proposition of Brazil into a single line.
This is an issue for Brazil. If the message about world-beating resource and industries is not being broadcast to CIOs, then Brazil will be endlessly compared to India or China – just another supposedly low-cost offshore outsourcing location. But as Nearshore Americas’ boss mentioned in the above video, the shape of the Brazil IT industry is very different to a typical offshore destination.
We don’t quite know the direction Brazil IT is going to go in the next couple of years, but the future remains bright because of the very strong domestic demand. If international buyers start to see the real benefits of Brazil beyond cost alone then it will be even brighter.
Photo by Tom licensed under Creative Commons