‘Brasil Carinhoso’ will benefit two million Brazilian households reducing the number of children under the age of seven years old living in extreme poverty by 62 percent 

Brazilian President Dilma Rousseff this week launched a ‘Brasil Carinhoso’ initiative as part of the National Poverty Alleviation Plan (Brasil sem Miséria). Announced on May 14, the plan is expected to immediately enhance the quality of life for the Brazilian population currently living in extreme poverty. Currently 13.3 percent of Brazilian children under age seven are living in extreme poverty; the new plan is expected to reduce this to 5 percent.

Coupled with health and education initiatives aimed at early childhood, Brazil’s Family Grant Program ensures a minimum income of R$ 70 per person will be granted to extremely poor families who have at least one child up to six years and 11 months of age. This program will lift participating families above the poverty line, which is defined by the Brazilian government as a monthly income per capita of less than R$ 70. Investments in the initiative will total R$ 10 billion by 2014, including the expansion of the Family Grant Program and additional investments in health and education.

This strategy will initially benefit over two million households and 2.7 million children. The funds will begin to be transferred in June to each card holder of Bolsa Família, the federal government’s income transfer program, in accordance with the program’s payment schedule. Each family with children under the age of seven living in extreme poverty enrolled in the Bolsa Família national registry will automatically be included in the Brasil Carinhoso program. “The government will work to ensure the program is reaching all children and families in need,” said Brazil’s Minister of Social Development, Tereza Campello.

Health – Brazil’s School Health Program (Programa Saúde na Escola – PSE) will be extended to daycare centers and preschools in order to promote healthcare and prevent diseases in early childhood. By 2014, the program’s goal is to assist all PSE-participating daycare centers and preschools that have 50 percent Family Grant Program beneficiaries among their students.

As early as June 2012, a total of 20,374 private pharmacies and 554 government-network pharmacies will participate in an initiative to distribute free asthma medications in healthcare facilities as part of the Popular Pharmacy program.

In August 2012, the Ministry of Health will also extend the distribution of vitamin A doses for children between six months and five years of age at healthcare facilities and as part of vaccination campaigns. This initiative, currently being implemented in 2,048 municipalities, aims to prevent vitamin A deficiency in early childhood.

Education – Brazil’s National Poverty Alleviation Plan (Brasil sem Miséria) will increase the transfer of resources per school to children who are Family Grant Program beneficiaries in public or accredited daycare centers by a total of 50 percent. Today, the Fund for the Development of Basic Education and Valuing of Education Professionals (FUNDEB) transfers R$ 2,725 a year per student enrolled in a daycare center. Family Grant Program children will receive an additional amount of R$ 1,362 per year. The federal government will further increase, by 66 percent, the amount received for school meals for all children enrolled in public and accredited daycare centers.

Additional Brasil sem Miséria actions that have already been implemented:

• A 45 percent increase in the variable benefits of the Family Grant Program awarded since March 2011 for children and youth up to 15 years of age.

• Extension of Family Grant Program, which has incorporated 1.3 million more children and youth, by increasing the variable benefits for families with up to five children under 15 years of age, instead of three.

• Establishment of a benefit for pregnant women, which is paid in nine monthly installments starting from pregnancy registration within the Ministry of Health’s prenatal care system.

• Creation of a benefit for nursing mothers, which is paid in six monthly installments starting from the child’s inclusion in the Unified Registry of Federal Government Social Programs at birth until six months of age.

Large Latin American companies are more open to cloud computing than their peers in Europe or in the United States. This might sound a little bit strange at first, but it is a statement based on the results of worldwide research conducted by Tata Consultancy Services (TCS) with 600 IT managers throughout the globe, all of them from companies with annual revenue over US$ 1 billion.

According to the results from TCS, large Latin American companies are those that have the biggest number of applications (39%) hosted in the cloud, in which data are hosted in virtual servers and are accessed through the web. The Asia-Pacific region follows, with 28% of the total companies worldwide that give cloud platforms a chance. Then come North American and European companies, with 19% and 12% respectively.

The same study shows that the number of corporate applications based on cloud computing have a tendency to grow on an average of 18% a year until 2014. Until then, the expectation is that Latin America will continue to be in first place in comparison to other regions when it comes to the use of the cloud, with 56% of them using the cloud in some way, with Asia coming closer, to 50%, and the United States and Europe remain at 34% and 24%, respectively.

“We have reached an important point in the adoption of the cloud computing, and this is a way without a return. Applications hosted in the cloud are a considerable part of the IT infrastructure within big companies, and the benefits of it are too significant to be ignored. There is an enormous margin for growth, both in the developed markets and in the emerging economies. We believe that cloud computing will continue to generate new opportunities for the organizations through different functions,” said Mr. N. Chandrasekaran, world CEO of Tata Consulting Services.

The companies consulted pointed out that flaw in security are the main challenge for the adoption of cloud solutions in the corporate market, especially when it comes to public clouds. Only 20% of the American and European companies would host their critical mission applications in public clouds, according to the data collected. When it comes to private clouds, this number jumps to 66% in the USA and 48% in Europe.

The research also shows that, differently from what many CIOs of smaller enterprises might think, the reduction in costs is not the main reason for the transfer of applications to some model of cloud computing, but the necessity of simplifying and accelerating the processes within the company.

In the United States and in the Asia-Pacific region, companies have mentioned the standardization of software applications and business processes as the main competitive advantage for the migration of applications to the cloud. In Europe and in Latin America, the capacity of adding or removing systems in a faster way has been pointed as their principal motivation to choose the cloud.

Marketing, sales and services areas respond for at least two fifths of the budget in the cloud among the four regions researched. When it comes to the industries that most take advantage of the cloud, the leading ones are the health and services industry, followed by the automotive and hardware industries, in that order.

Exinda is another global IT player that is arriving in Brazil. Seeking to take part in the development and the increased demand for broadband internet throughout the country, the North American company specialized in WAN (Wide Area Network) optimization and solutions has just opened a new office in São Paulo. The official perspective given by the company is to reach revenues of about US$ 8 million in the first year of activity, and US$ 25 million in three years.

Before the launch of the operations in São Paulo, Exinda operated in Brazil through commercial partners, responsible for the sales and the technical support of the solutions sold by the company. This is its first office in Brazil – Exinda already has corporate facilities in Toronto, Canada, and an expanding research and development facility in Melbourne, Australia, and clients spread through 80 different countries.

“The decision of opening a branch in Brazil was motivated by the maturity of the country as a center of dissemination of technologies for wires optimization. Today, the demand for more intelligent solutions focused on the control of critical applications, and also on web traffic data, has become bigger than the demand for high speed data,” said Maurício Ribeiro, regional director of Exinda. He explained that Exinda has been averaging global growth of 70% annually in the past few years, achieving a growth of 102% in 2011. “We want to have the same performance in Brazil,” he said.

By the end of 2012, Exinda expects to have 40 clients in Brazil, and the outlook is to have the local branch responsible for 60% of the revenues in Latin America. “We will focus our management in the verticals of telecommunications, finances, industry and government, since those are segments that traditionally use WAN optimization solutions, but that seek more advanced solutions, such as those we can provide,” outlined the country manager.

To consolidate its name within those segments, the company will replicate locally the global model of 100% sales focused on implementing partnerships with local vendors, providing them training, certification and offering commercial sales on a regular basis. Currently, Exinda works with two distributers and more than 15 retailers around the country, and plans to expand those numbers from now on.

“Working with partners is strategic to reach our potential clients, and to present our innovative portfolio to them. Our services are focused on the optimization of the use of applications through the intelligent acceleration of traffic, generating growth of productivity and, mostly, looking for efficiency within the business created,” he reinforces. Other characteristics that the company says it is bringing to its Brazilian clients are the scalability of its solutions, the integration of functions and the visibility of data traffic control.

This is a good moment economically for Brazil, and for its tech industry. In the South American giant, this is a segment mostly dominated by multinationals and a few national names that are actually able to compete with them, like Totvs. But this might be a good moment for smaller players to think higher – or beyond Brazilian borders, better said. 

Since the beginning of May, a national entity linked to the Ministry of Science, Technology and Innovation called Finep (or “Financiadora de Estudos e Projetos”, that can be literally translated as “Financing Studies and Projects”) is helping Brazilian tech companies interested in expanding outside of the country or or that have plans to invest in technology research and development outside of Brazil.

According to Mr. Glauco Arbix, president of Finep, the goal of the entity is to boost the participation of Brazilian players in the tech area that are related, somehow, to areas that are considered priority for the government itself — such as the health industry, national defense, information technology and oil & gas. For such companies, the government intends to facilitate the access to international markets, for purchase of technology or to develop research and development, for example.

“The focus [of the funding lines] is on companies that seek to develop new products or that are trying to approach areas in which they are not yet capacitated. We expect them to be able to build productive units that will have the ability to compete in the domestic and in the foreign markets,” Arbix told Agência Brasil, the national public agency.

Finep plans to participate in every phase of installation and functioning of the companies to which it will provide funds. “When a company comes to us seeking technological solutions, often times it also needs operational funding, and has a need to expand and to export. We will provide the whole tech industry with that,” he explained.

The entity has not revealed how much money it has available to the Brazilian IT industry as it will depend on the future demand for funding before a final amount can be determined. According to their predictions, the expectation is that each project will apply for funding between R$ 100 million (US$ 52 million) and R$ 300 million (US$ 158 million).

The disbursement of the installments will be done at the maximum over 12 years, with interest rates ranging from 4% and 5%, depending on the modality of the contract and the area of investment.

Another public agency focused in the expansion of the Brazilian IT companies abroad is Apex-Brasil. This entity, supported by the Ministry of Development, Industry and Foreign Commerce, is focused on developing the competitiveness of Brazilian companies worldwide in different fields, while also helping foreign companies interested in entering the Brazilian market.

MARCO STEFANINI IS PRETTY WELL KNOWN for those who closely follow the developments of the IT industry in Brazil, and he was recently amongst some of the most important world leaders.

In March Stefanini represented the national IT industry at the CEO Forum in Washington, DC. Also present at the White House were Dilma Rousseff, president of Brazil, and president Barack Obama. During the meeting, 10 top executives from the United States and from Brazil, from different areas and segments of both economies, gathered to discuss the challenges for commercial partnerships between the two biggest economies in the Americas.

“The event was very meaningful. It became clear, by watching the talks between Ms. Roussef and Mr. Obama, that both of them are committed to boost the alliance between both countries. It was very positive,” Stefanini told Sourcing Brazil in an interview. A month prior to that, he attended the corporate caravan that accompanied Rousseff to CeBIT, in Germany, where she met German prime-minister Angela Merkel.

The CEO of Stefanini IT Solutions had a specific role at the CEO Forum in Washington: he was responsible for bringing up projects in the areas of education and innovation. “And this is where Brazil can learn the most from the United States,” he said.

According to Stefanini, a lot has been done in Brazil in the past few years to approach problems when it comes to education in the IT sector and in innovation as a whole. One example of that is the Federal program known as “Science Without Borders,” launched last year by the ministry of Science, Technology and Innovation that will allow close to 100,000 Brazilian researchers to go abroad for studies; and Pronatec, which is aimed to qualify young professionals within technical areas.

“Still yet, there is much to be done,” pointed out Stefanini. “The United States is the most innovative country in the world, it is healthy to keep this good contact,” he said.

He points out that the private sector is quite responsible for much of the innovation brought up in the United States, but also reinforces that the military industry in the country is also very important when it comes to creating different solutions and discoveries in the tech field as a whole.

In Brazil, on the other hand, much of the innovation comes from within universities, many of which are public. According to Stefanini, it is necessary for the country to come up more and more with public and private partnerships — widely known in Portuguese as “PPPs,” Parcerias Público Privadas.

In such alliances, companies partner with a public institution to invest in research and development in different areas. “Brazil needs a good model of PPPs, there are many projects using that model that need to be replicated,” Stefanini said.

It is necessary to recognize which areas the current Brazilian industry is most competitive in and improve investments in them, explained Stefanini. At the same time, the country cannot neglect other areas in which it is far behind from other countries.

From Washington to Cartagena 

Right after meeting Rousseff and Obama, Stefanini attended the first Forum of the Americas in Cartagena, Colombia, along with leaders of countries from South, Central and North America. “It was a good moment to boost the contact between Latin American players, and especially to do networking. That is how businesses are born,” added Stefanini.

Despite its huge economy in comparison to others in the region, Brazil is very distant from its Latin American neighbors, Stefanini pointed out. Countries such as Peru, Chile and Colombia have historically had much wider interaction. “We are still somehow isolated,” he said Stefanini. For him, the different languages and cultural traits have kept Brazil and its neighbors apart.

But the current moment might represent a turning point in such relations. “All of them are interested in becoming close to Brazil. We want to understand each other. The results come with time, and we actually have already begun to see some.”

Softtek has plans to expand its operation in Brazil. The company plans to grow its current Global Delivery Center (GDC) in the city of São Paulo in 30% of its capacity over the next two years. According to an announcement released past week, Softtek aims to develop, in the GDC, products segmented by technology areas — such as mobility, for example — that later can be offered to Brazilian companies. Additionally, it also plans to improve its capacity in support services and maintenance (AMS).

“We will use the infrastructure to create products and services in the country and to replicate them, afterwards, in other units of the company,” said Francisco Lara, CEO of Softtek in Brazil, at the time of the announcement.

The company already has a global excellence SAP center located in Brazil. “There are already a few global offers that have been developed and tested here, but still in a small scale. We will use all of our potential to expand them,” said mobile applicLara.

SAP services are indeed one of the main interests of the company in Brazil. In March of this year, its local unit received an SAP Award of Excellence in the category of best sales partner of licensed software. Its Brazilian clients include Banco Mercantil, Banco Bonsucesso, Lupatech, Sanofi-Aventis, and Camargo Corrêa.

Currently Softtek has 1,200 employees in Brazil. To support the new operations, 300 new employees will be hired in the country by 2013.

And parallel to the growth project for São Paulo`s GDC, the service provider also plans to boost its operations in Rio de Janeiro and Minas Gerais, both located in the Southeast region. Recently, Sofftek announced the integration in the country with LPJ IT Consulting, from Minas Gerais, which provides consulting SAP services.

The plans of expansion in Brazil are part of a broader project to boost operations of other GDCs, such as those in Aguascaliente and Ensenada, Mexico. After that the one in Saint Louis, Missouri, US will undergo the same changes.

Brazilian music goes way beyond “The Girl from Ipanema.” That song might be the most well-known abroad when it comes to Brazilian music, and it does represent a moment of the “Bossa Nova Brazil” movement from the late 50s and early 60s, and a country ready to be developed and anxious to show the world its potential and expectations. Almost six decades have passed and girls in Ipanema are still as beautiful as they have always been, Bossa Nova continues to influence artists here and abroad and Brazil has changed drastically — for the better, let`s say.

Sourcing Brazil chose four names of the Brazilian music scene today, all of them quite different one from the other, but who represent by their own histories what the country has been through and what it is now. Turn up the volume and enjoy it.

Chico Buarque

He is one of the most recognized Brazilian composers of the past few decades, along with big names such as Tom Jobim and Vinícius de Moraes. Popularly known just as “Chico” and born in a traditional family of intellectuals from Rio, he became one of the main names of what came to be known as the “Brazilian resistance artists” during the military regime (1964-1985), for his protest songs that are widely known among different generations of Brazilians. At that time, he spent years in exile, but was always in tune with what was happening in the country. After the regime ended, Chico returned to Brazil and resumed his career. This past week Chico finished touring the country; he is still writing and singing just as much as used to do in the past – which his fans appreciate. Chico represents a traditional Brazil that has adapted itself so as not to be forgotten over the years.

VIDEO:

http://www.youtube.com/watch?v=xbH2E1XfscA

Bebel Gilberto

Also born in the middle of the Brazilian artistic royalty, she is the daughter of João Gilberto and Miúcha, and the niece of Chico Buarque. Bebel grew up not just listening to Bossa Nova, she was in the middle of it: her dad gave the voice to the “Girl from Ipanema,” and made it internationally known – and had a direct influence from some of the best names of the national cultural scene. She was born in New York and spent most of her life in the US, where she is widely recognized for singing both in Portuguese and English — but always associated with Bossa Nova and Brazilian beats. Bebel plays a “Brazilian Bossa Nova” that is always portrays the lounge-music-sophisticated-atmosphere seen in movies, and is usually associated with a “trendy” Brazil. Bebel represents an image of what foreigners, especially Americans, believe the country to be.

VIDEO:

http://www.youtube.com/watch?v=VdLuTVp7qy0

Ivete Sangalo

She is one of the biggest celebrities in the country today — and of the past few years. With her very “Brazilian” physique, Ivete came from Bahia and brought its typical “axé” rhythm to the rest of the country, and internationally. She sings what the masses like to hear when it is time to party: some of her songs have become the biggest hits of Carnival for years. Right afterwards, she became a “cross-media” artist, participating in movies, TV series and all kinds of shows. With her deep and strong voice, always accompanied by energetic body language, it is hard to remain standing still when her music is playing. In 2010 Ivete arrived in New York where she played her first show at Madison Square Garden, to a full house. She represents the Brazil from the masses that is expanding and crossing borders, in a way never imagined before.

VIDEO:

http://www.youtube.com/watch?v=aAoEWB_j0rY

Michel Teló

This is the youngest and freshest name of this list. The 31 year-old Brazilian from the state of Paraná became a sudden world hit in less than one year, with the song “Ai, se eu te pego!” (or simply “Oh, if I catch you”). It has none of the political or social background of the songs of Chico, the Bossa Nova tune of Bebel or the “Axé” soul of Ivete. It is just music with an involving melody with little, or nothing, to say — about a guy in love with a girl he has just seen at a nightclub. But it spread throughout the world as fast as it was created.

The reason is quite simple: a few soccer stars, like Neymar, Cristiano Ronaldo, Marcelo Viera and other sports, like tennis player Rafael Nadal, enjoyed the music and celebrated goals and points with its “official choreography.” The world saw it and, within a few months, the music was played on international radio stations and translated into as many as 20 different languages — people all over Europe and Latin America, mostly, tried to sing it without having an idea of what it actually meant in its original Portuguese. Teló became a star at the same time domestically and abroad, and nobody understood exactly why. He represents a globalized world that watches Brazil and its trends from up close, but that really doesn’t understand what it says or means.

VIDEO:

http://www.youtube.com/watch?v=hcm55lU9knw

LAST WEEK’S BLOOMBERG LATIN AMERICA INVESTING CONFERENCE in New York City was a sobering reminder of Brazil’s precarious economic balancing act hinging on foreign investment, consumption, government stimulus, and inflated commodity prices. Yet, despite mixed signals over the future macro outlook, Brazil’s IT services industry will continue to rage forward. Antonio Gil president of BRASSCOM shrugged off pragmatic panel concerns with confidence, reassuring the audience that IT will expand aggressively at ten percent annually, to reach $210 billion USD by 2020.

We believe Antonio’s assertion is correct: Considering this country’s infrastructural challenges and consumption-driven expansion, the public and private sectors will turn to information technology to squeeze greater efficiency out of their operations.

This year’s Bloomberg Latin America Investing conference showcased the top brass of LatAm policy and investment experts, including our very own Alvaro Uribe who keynoted Nearshore Nexus 2012 the week prior. Two camps developed with pariah states Argentina and Venezuela in one corner, and tiger economies Mexico, Chile, and Colombia in the other. The “Nascent Giant” Brazil took center stage driving the conversation around macroeconomic stability and domestic market investment opportunities across the region.

Brazil’s Long-Term Macro Outlook Uncertain

An overvalued real was the major source of debate as investors wondered how long Brazil’s recent local bond rally can last. “The six interest rate cuts [Banco Central do Brasil] since July of 2011 proved to be a risk that paid off,” explained Chris Garman, Latin America Director at Eurasia Group, referring to a steadfast inflation rate. Despite the positive short-run returns on Brazil’s debt market, the country’s fundamentals were put into question. Brazil GDP grew only 2.7 percent in 2011 compared to 7.5 percent in 2010. Panelists and audience inquiries also challenged Brazil’s trade balance with the US, which swung from a $6.4 billion surplus in 2007 to an $8.2 billion deficit last year, as the real rallied and growth in Brazil spurred demand for imports. Moving beyond the impacts of monetary policy, attention swung to government spending and the deep-rooted infrastructural challenges facing Brazil.

“The long-run problem for Brazil is structural and nothing that short-term monetary policy can fix,” argued Joaquin Cottani, Chief Economist for Latin America at Citi Investment Research and Analysis. There is not enough investment in infrastructure, education, and health care.” Brazil is expensive relative to other emerging economies which puts a premium on the cost of labor, impacting the competitiveness of its manufacturing and professional services sector.

An overvalued real – arguably driven by US fiscal policy and quantitative easing – brings down the cost of imports sending Brazilian consumers into feeding frenzy. While China is an export economy, Brazil’s growth feeds on domestic consumption spurred on largely by a growing middle class and government programs targeting poverty reduction. Any fundamental change to fiscal policy is also unlikely, as long as economic growth is perceived as strong. “The Brazilian people have a positive and trustful relationship with government,” expressed Ernesto Araujo Minister Counselor of Economics at the Embassy of Brazil – which puts into question Dilma Rousseff’s ability to make hard choices when it comes to corporate taxation, public infrastructure spending, and direct subsidies for the country’s poor.

High Costs Will Drive IT Automation and Innovation

According to Antonio Gil of BRASSCOM, “pressure on enterprise to bring cheaper and better products to market will fuel IT demand for the foreseeable future.” Brazil’s expensive operating environment will propel IT as an enabler of enterprise agility. In a high cost and consumer-driven market like Brazil, companies look to cut costs across supply chain, back office, and procurement. Government will also look to IT to make health care delivery, education, and transportation more affordable to the masses. Brazil’s high labor costs also leave less room to ignore the value of IT-driven automation and operational efficiency. “Every week I have international IT investors coming to our offices inquiring about new acquisition targets and new market opportunities,” explained Gil.

Cate Ambrose Executive Director of the Latin America Venture Capital Association (LAVCA) also pointed to consumer-focused verticals for new market opportunities. “Anywhere where there is a direct connection to the consumer is where we see new companies and new applications for IT.” Ambrose pointed to retail, health care, and education as the hot sectors with the most startup and innovation activity.

Not Out of the Woods Just Yet

Brazil finally appears to be on the right track toward sustained economic expansion, even if GDP growth rates slumps below Wall Street investor expectations. By all accounts, the days of rampant hyper-inflation seem to flicker in the review mirror. This new epoch of stability should keep IT investment dollars flowing. Yet, Lawrence Goodman, Founder of the Center for Financial Stability warned to never underestimate the power of global economics and the impacts of external shocks. Will China’s slowdown prove to be a hard or soft landing and how will that impact Brazil’s commodities exports? Will Argentina’s takeover of YPF kick off a new wave of government takeovers in Latin America and send foreign investors scurrying? Will a growing European crisis derail global economic progress?

THE PROJECT “CIENCIAS SEM FRONTEIRAS“, MEANING “SCIENCE WITHOUT BORDERS” in English, and considered by president Dilma Rousseff as crucial to improving the qualification of science and tech professionals in the country through international partnerships, has a new concern: what will those young students do when they come back to Brazil? The main preoccupation is that some of those professionals will prefer to remain abroad instead of coming back to the country.

To avoid that, the federal government will conduct research and make a list with “job positions of technological value,” focused on the students that have gone abroad with scholarships funded by the program. That way, instead of going to the market to seek jobs, they would have privileged access to the positions the government has sought for them.

According to an interview of the minister of Sciences, Technology and Innovation, Marco Antonio Raupp, aired by Empresa Brasileira de Comunicações (EBC) last week, the objective is to “organize the allocation of the students in adequate positions.” According to Raupp, the main goal of the project is to permit the development of their personal knowledge through the experience abroad, and the further step is to employ them in a company operating in the country (either in the public or private sector), or in research centers spread throughout Brazilian territory, especially those that may create technological innovation.

“There is not a country that has developed itself without incrementing research,” Raupp outlined during the interview to the show “Bom Dia, Ministro”, of EBC. He also defended that there is plenty of posts for qualified professionals of the technological industry in the country today.

Even though the minister has publicly stated the concerns of the federal government, the conversations for the creation of the “job list” are still preliminary and being done within Palácio do Planalto, the Brazilian equivalent to the White House. The program involves the ministries of Education, which now is overseen by Aloízio Mercadante (the former Science and Technology minister who was on duty when the project was launched in 2011); Science, Technology and Innovation, run today by Raupp, and by two different entities of inceptives to research and development, Capes and CNPq.

The first round of students that received scholarships within the program went to the United States, the preferred country, in January of this year, and they are expected to return to Brazil in early 2013.

At the moment, the program has vacancies for applications to seven different countries. According to Raupp, from the 36,000 students who applied for a scholarship during the program’s last round, which ended on April 5th, 5,000 of them were pre-selected. “Applying to the program is easy, the main difficulty is in the selection process,” the minister said during the interview, referring to the high level required in exams such as Enem, the Brazilian equivalent to SAT. The total number of scholarships that will be given was not disclosed

Besides a good grade on the Enem, students can also benefit in the selection phase from a high qualification in the Brazilian Olympic Math Competitions, done within the public school system, and known as “Obmep”. According to Raupp, who has a solid formation in Mathematics and has been an academic teacher in that area for years, “it is necessary to stimulate students in Math.” For him, “if students do not have a good motivation, it remains the impression for them that math is quite futile.” The minister defended a more dynamic of the discipline, and stressed that math improves the scientific thinking of the students. “The scientific way of thinking is crucial for the country to engage with a sustainable development,” he added.

Expanding abroad has been a tendancy for Brazilian IT companies in the past few years. When many of them plan their entrance into international markets, they don’t only consider rich and developed nations, or traditional clients such as Europe and the United States – this is the time to look at other emerging nations, such as India, the Middle East and Asia as a whole. That is what Módulo, a Brazilian IT software and consulting company specialized in information security and solutions for Governance, Risks and Compliance (GRC) has done.

Founded in 1985 as an IT services consultancy firm, Módulo began operations in India at the beginning of 2012. The intention is to market its main product, Modulo Risk Manager, to local clients through a network of local partners, and get most of its revenues through the sales of the security package. “This is a project to open new markets for us, it is a big market and very competitive, but we are ready for it,” said Sérgio Thomson-Flores, CEO of Módulo, in an interview with Sourcing Brazil.

In Brazil, Módulo has been successful with a series of information security projects. It participated in the local elections which are done solely through electronic balloting; in the delivery of annual taxes through the internet and in the Pan-American Games of 2007, which took place in Rio de Janeiro. In all cases, the company offered its main product, which is the focus of the expansion in India today. The buyers of the security package in the Asian market represent potential clients for consultancy services in the future, explained Thompson-Flores.

All research and software development for Modulo’s main product is done from Brazil, where the company garnered 80% of its 2011 revenue. Within the country, 80% of the total operations are represented by services provided mostly to the financial, telecommunications, energy, industry/retail/services and government sectors, explained Thompson-Flores. Among its clients in the country are HSBC, TIM (from telecom), Inflogobo (media), IBM, BASF, and the State of Rio de Janeiro.

The Indian office is the third one outside the country for Módulo, after those in London (which serves the European market, Middle East and Africa), and another in Atlanta, Georgia which is focused on the North American Market. In the United States, where Módulo has been operating since 1998 through a partnership with Fortress, the company has local directors and 20 employees responsible for supply services and products to local clients. The list of US clients includes giants such as Hershey’s, NYU Medical, Sloan Kettering, Beaumont Hospitals, Penn State University and the College Board for SAT.

“Even though we have been in the States in the past 15 years, the growth in the country has grown considerably in the past three and a half years, and had 100% growth last year. It is an important market for us today,” said Thompson-Flores, explaining that, today, half of the operations in the country are focused in the supply of information security services. The North American operations represent about 60% of the foreign revenues for Módulo. Currently, it has 600 active clients worldwide, including those in Brazil.

The North American results are considered a model for the rest of the company abroad, with solid investments that are now beginning to show results — the tendency is to keep investing outside of Brazilian borders to grow. In 2010, the investments in the operations outside of Brazil totaled US$ 3 million; in 2011, they were about US$4 million and, for this year, the prediction is to invest US$ 6.5 million for the external growth, focusing on the sales of its main product and marketing. “With such high rates of growth, we are not thinking about acquiring foreign companies,” added Thompson-Flores.

When it comes to worries about a global crisis that has shown most of its consequences in the rich nations and developed countries, the CEO is quite emphatic. “In the market of GRC and continuous monitoring, in which the spheres of technology are more and more integrated, companies need to rely more and more on compliance. The biggest challenge is not to collect information, but to treat it in a good way and find out what is happening within your own environment and which solutions need to be taken from that. In those terms, the market is more and stricter when choosing their systems,” outlined the CEO. The prediction for the global operations in 2012 is of 50% growth.

IF YOU ARE THE MANAGER OF A MULTINATIONAL COMPANY thinking about starting operations in Brazil, forget an office in Rio de Janeiro, surrounded by palm trees, white sand beaches and the entire tropical image foreigners have of the country – they might become part of your holiday time, but not of your daily life. That is because there is a great chance that you and your office will be located in São Paulo, the economic heart of Brazil and Latin America today.

According to a research done by the consultancy company KPMG, in partnership with the Brazilian business magazine Exame, in a list of 22 different metropolitan areas worldwide São Paulo has ranked 4th among those that most received foreign investments – behind London, Shanghai and Hong Kong, in that order. Today only New York City has more headquarters of multinational companies than the Brazilian city within the Americas, according to the same research. In 2006, foreign investment into São Paulo totaled US$609 million, while in 2011 that value jumped to US$8.4 billion, or almost 14 times more – the second place in that category of research goes to Bogotá, in Colombia, that went from receiving US$316 million in 2006 to US$2.9 billion at the end of last year.

To narrow down those numbers, Exame and KPMG consulted 74 different companies that acted globally in different areas. Among them, 68% said that they kept a decision unit of their business dedicated to the region of Latin America. Within those, 44% had their headquarters installed in São Paulo. Right afterwards comes Buenos Aires (12%), then Santiago de Chile (6%), Rio de Janeiro (6%) and Miami (2%).

In numbers of projects that were funded by foreign investment in the past few years, the São Paulo hosted totaled 470 of them, comfortably ahead of Mexico City (267), Buenos Aires (229) and Bogotá (171), in that same comparison. The reason to come to São Paulo, given by 69% of companies researched, is the proximity to the local market, followed by its importance as a financial center (13%) and other reasons (18%).

“Until a few years ago, the foreigners that wanted to act in Latin Americans would open an office in Miami. Today, the ones that do that are considered strange,” Saskia Sassen, globalization and urbanism professor at the University of Columbia told Exame.

Some examples of companies that moved their local headquarters to São Paulo, or launched a completely new office for Latin America in the city recently are the Swedish Ericsson; the Americans GE and Pepsico; the Japanese Panasonic and the French Alston. Traditionally known as a financial hub in Brazil and Latin America, two major international players are moving to the city right now: HSBC and Citibank.

Among companies from the tech and IT industry which have their local headquarters in the city are IBM, Google, Facebook, Yahoo, Motorola, Samsung, Sony Ericsson, Intel, HP, Huawei, Microsoft, Symantec, TCS, CPMBraxis, Capgemini and Accenture, among others. Most of them are located in the district of Vila Olímpia, in the southern part of the city.

Such international importance and interest brings more and more foreign employees to the city, especially high qualified executives. According to an inquiry done by the Canadian consultancy company Brookfield Global Relocation Service, with 118 companies that are present in more than one country, Brazil was the ninth destination in the globe for expatriated employees at the end of 2011, an increase of 11 positions in comparison to 2010, when it was in the 20th position. “Brazil today is the center of Latin America, and São Paulo is the center of Brazil,” said Marienne Coutinho, partner of KPMG who was responsible for the research.

The numbers show well how much attention the city has brought from international players in the past few years. If you are the next one to arrive, be patient. There is a line of about 100 multinational businesses waiting to an office vacancy to establish operations in the city, according the real estate consultancy company CBRE. Remember: infrastructure is one of the main challenges for the general growth of Brazil today, and that is a clear example of that.

Second, be patient again with the typical problems of a metropolis of an emerging country, with over 11 million inhabitants and in which public services and infrastructure is far different from those in American, European and Japanese cities — but with prices that can be even higher than those found in a first world capital. From those companies that have chosen to establish their local headquarters in the city, 38% of their top employees consider as the main inconvenient in the city its high cost of life, followed by its horrible traffic, with 34% — São Paulo has only 70 km of metro lines, while Santiago de Chile has 100 km and Mexico City, 200 km.

But do not worry. From the “Paulista” capital, you can flee on your holidays to the main destinations in the country and in the whole region. Its airports have flights to all over the region, and the city is separated basically by the same amount of hours of New York and London (about nine hours flying). To Rio, it is just about 50 minutes in a plane, or four hours driving.

There you can enjoy the tropical life always associated with Brazil – and very distant to that of a daily routine of work in São Paulo.

Whenever you come to the city of São Paulo, the economic heart of Brazil, you will definitely hear a lot about this part of town. Avenida Paulista, or simply “Paulista,” as it is referred to by the locals, can be considered the heart of São Paulo, the main cultural, social and business corridor that injects the necessary “urban blood” to feed the entire city — and it is quite a big one, with 11.2 million inhabitants. It is definately worth spending time exploring Paulista and experiencing the essence of this bustling city all within a few blocks.

“Paulista” is the adjective given to anyone born in the State of São Paulo — for those who were born in the city itself, the right name is “Paulistano.” The avenue, about 1.75 mile long (2.8 km) which is served by four subway stations and several bus lines, is in one of the highest areas of the city, and basically divides the old downtown region (where the first settlers established the village that created São Paulo back in the 16th century), to the area towards Rio Pinheiros, a river that used to be one of the boundaries of the city and now runs through the  middle of it.

Its official inauguration was in 1891, with the aim of expanding a residential neighborhood into a then unexplored area. Before then only farms existed around it. In 1909 it became the first asphalted road in the city of São Paulo — with asphalt brought all the way from Germany, and at that time it was a novelty even by North American and European standards. Until the ’50s it remained exactly as it was initially designed to be: a fancy residential area, with “palacetes,” or little palaces inhabited mostly by coffee barons, typical of the Paulista upper class of that time.

But over time development started to arrive and it has brought the signs of urbanity with it. The decades of 1960 and 1970 marked the beginning of the construction of the skyscrapers that can be seen today on the avenue; most of them averaging 30 floors. The wide side walks that can be enjoyed today were also built at that time.

Since then, Paulista has become one of the most important business regions of São Paulo. Some of the main banks have important offices within the avenue, like the Brazilian Central Bank (Banco Central do Brasil), Caixa Econômica Federal, Banco do Brasil and Banco Real, that was recently bought the the Spanish bank Santander, and other international concerns, such as Citibank and the Japanese Sumitomo Mitsuo.

Located in the middle of Paulista is the industry federation of the State of São Paulo, the biggest industry “lobby” in the country, Fiesp. Paulista is also the home to important consulates, such as those from Italy, France, Switzerland, Japan, South Korea, Chile, Argentina and South Africa.

But it is not just about money, work and business. The Museum of Arts of São Paulo, which is suspended within two rectilinear arches, is considered one of the strongest icons of São Paulo. Right in front of it is Parque Trianon, a welcome green oasis within the concrete jungle.

Cinemas, cafés, movie theaters, art galleries, shopping malls,  restaurants for all budgets and many different types of nightclubs can be found throughout this area. Starting from the district of Consolação, towards Paraíso, you will find to your right the fancy and sophisticated district of Jardins, which has some of the most expensive square meters in teh city – and in the country. On the opposite side of the avenue is Consolação and Bela Vista, areas that used to be upscale but which are charmingly decadent today. The restaurants and Italian “cantinas” are well-worth a visit.

Rua Augusta, that crosses Av. Paulista closest to Rua da Consolação, used to be a ”red light” district, but in recent years it’s become part of the Paulista soul, with clubs, bars and theaters bringing all kinds of people to heart of São Paulo. Traffic at Augusta can be worse at 3:00 a.m. on a Saturday as compared to 3:00 p.m. any week day. Be patient.

And if you are lucky enough to be in São Paulo on a clear Sunday afternoon (it rains quite a bit in the city, mostly from October through June), go to the avenue and do it just like Paulistas do: walk all the way through it. There are many street artists, antique vendors and craft stalls selling things you have never imagined you would need.

Have lunch at one of the nice restaurants and Rua Bela Cintra, close to Consolação; stop by Conjunto Nacional to check an art exhibit; watch a play at the theater inside Fiesp and finish your afternoon with a true Brazilian coffee at Casa das Rosas.

If you didn’t enjoy it, don’t tell a local. They love this part of town, and are very proud of its mix of business and culture, of money and art. If you did like the ride, be assured that you are  always welcome to do it again exactly the way we do here.

FreeSoft is one of the main IT service providers in Hungary, and for the first time the company is sending some of its executives to participate in the Brazilian Cebits, which will take place in the southern city of Porto Alegre, between May 15th and 17th. The intention is to come closer to Brazilian clients and potential partners and, with Brazil as the starting point, expand FreeSoft’s contacts in Latin America, particularly Argentina.

Their interest with this initial visit is to start approaching a segment in which Brazil has much to offer: “legacy modernization.” When it comes to Brazil, FreeSoft is mainly focused on providing services to migrate Adabas database management systems to Java – which essentially means “to adapt old IT platforms and databases into a lot less complicated environment.”

“The specialty of our project is that, during the migration, all the application investment and IP rights will stay protected, but at the same time will be set free for further innovations,” explains Veronka Vaspál, marketing assistant for Free Soft. She is based at company headquarters in Budapest, and is here organizing the company’s mission to Brazil. She explains that FreeSoft also provides migrations of other sorts of legacy applications into Java, always selling services, and not tools directly, but the main attraction in Brazil would be to work with Adabas/Natural legacy modernization.

The country has a huge market for such services. Almost all the governmental databases in Brazil are in Adabas, including those of BNDES, the national public bank in charge of development; Banco Central, the Brazilian equivalent of the Fed; Dataprev, the public database company of the federal social security entity (Previdência Social); and Serpro, a company kept under the Finances ministry, related to the management of public revenues and expenditures.

Other big Brazilian players, such as Banco do Brasil, the biggest public bank in Brazil; Bradesco, one of the main private Brazilian banks; and Brasil Telecom, one of the main telecommunication companies in Brazilian territory, are also based on Adabas/Natural. Those names are just a few of huge potential clients for any IT company that is interested in serving them for legacy modernization on a small or large scale. To FreeSoft, such context is worth at least the trip to Porto Alegre.

The company, commanded by Vilmos Vaspál, is listed in the Budapest Stock Exchange and already has quite a considerable international presence, with units in the United States, Australia, and the United Kigdom. Among its current American clients is the pharmaceutical firm Aventis. In Europe, they provide services to Bayern, the car rental company Sixt and the travel agency chain Tui.

Among the other segments in which the FreeSoft operates worldwide are development and implementation of specific, custom-made software systems, business intelligence, and other general IT services. Worlwide, FreeSoft has alliances with Oracle and Fujitsu to provide services, and those could be valuable when it comes to Brazil as well.

Advancing in the Brazilian (and Latin market) makes sense more than ever, given the pessimistic macroeconomic context seen in Western Europe in the past few years. “As far as we know, Brazil is one of the largest markets for us regarding Adabas/Natural users and we would like to target those companies and other users, of the governmental sphere for example, who might be interested in modernizing their legacy systems with us,” says Veronka Vaspál. Cebits is supposed to be the right place to meet clients and potential partners at the same time.

So the next step is to open a unit in Brazil? “Not in the short term,” she answers. Vaspál explains that the Australian subsidiary of FreeSoft, called CCA, is already a partner of the Brazilian 3CON Consultoria e Sistemas, “and we are looking forward to additional partnerships in Brazil at first.”

According to what she told Sourcing Brazil, the natural path for the company would be to go even more toward the south – Porto Alegre is the southernmost capital in Brazil – and arrive in Argentina, a market of plenty of Adabas users as well. “Sooner or later they must also change to modern application environments, just like everyone else,” she says.

IDC says there are a few factors that help explain the rapid rate of sales in Brazil: the bigger portfolio of devices offered by phone manufacturers, better packages of data made available to clients by the phone service companies, and the considerable subsidies provided by the operators. The four biggest phone operators in Brazil today are Vivo, Claro, Oi, and TIM.

As the country’s economic situation has improved, more Brazilians have better jobs, and a considerable portion of society is able to buy a smartphone and pay the bill. Many of those smartphone buyers do not even consider having a landline phone anymore. Today there are 126 cell phones for every 100 Brazilians, while the proportion of landline phones is 43 for every 100, according to Teleco, a telecommunications consulting company. There are, today, 247,618 million active mobile phones in the Brazil, counting all types of devices.

Even though the raw number itself is impressive, that does not mean all those Brazilians are spending lots and lots of money on phone services. About 82% of those active mobile phones are using a pre-paid cell phone, for which broadband services are hardly ever sold. Many of those phones are used just to receive calls – in Brazil, whoever dials the call, no matter from what type of line, will be the one paying for it. There is no statistic about how much those users spend a month, but is certainly not as much as those with post-paid lines. Many of the smartphones included in the IDC numbers might be used simply to make quick phone calls or to take pictures, things that a good regular cell phone could do as well, but costing a lot less.

“Today there are several devices with more accessible prices, data packages even for pre-paid phones, and a high demand related to social networks and mobility. That boosts the sales of smartphones and the migration from regular phones to smartphones, which means that we will have a very heated market in that segment this year,” says Bruno Freitas, market analyst at IDC Brasil.

Soon to Be Number 4

The company predicts that, in 2012, there will be 15.4 million smartphones sold, a number 73% higher than last year. “In 2011, Brazil has gone from 16th in world ranking for the sales of smartphones to the 10th position. According to our studies, in 2016 the country will be in the 4th position on this list,” says Freitas. Devices that use Android as the operating system were, in 2011, half of the total smartphones on the street, while in 2010 they accounted for only 15%.

For a post-paid cell phone, depending on the plan made with the operator, and how much the client is willing to pay on a monthly basis in data and voice services, the smartphone may cost nothing. But Brazil is known for its high prices when it comes to technology: a new iPhone 4Sm 16 GB, for example, has an average price of R$2,199 (US$1,120), a Nokia N8 may cost R$817 (US$441), and a BlackBerry Bold 9700 averages R$899 (US$485).

For the next few years, IDC predicts that this market will continue to show impressive numbers and growth rates. Investments in 4G services, which permit much faster exchance or data, are planned for 2012 and 2013 and probably will contribute to the whole mobile market throughout the country. In 2014 a few capitals that will host games of the Soccer World Cup should already have 4G services available.

Besides that, IDC says, the government intends to include smartphones in a program of tax incentives. This could attract the interest of manufacturers and stimulate the local production of such devices, as has been done recently for personal computers and tablets. There is no forecast as to when those benefits might appear, though.

Currently Grupo Assa has operations in another location in São Paulo (Chácara Santo Antônio) and in Curitiba, which provide services to about 10,000 users in the country.

The company anticipates 35% revenue growth in Brazil this year, but what is the rationale for targeting São Paulo? “Because we are expanding to where our clients are. Even though the city is considerably expensive, it is worth it for us to grow here,” says Marcio Caputo, the firm’s vice president for Brazil. It is important for the group to grow in the city and the region that is the economic heart of Brazil, and where it finds the best infrastructure available.

According to Caputo, clients in Brazil are divided basically into three categories: 1) multinationals that have operations in the country, such as Johnson & Johnson, KraftFoods, Electrolux and so on; 2) Latin American corporations that have expanded to different regions, such as Vale and Camargo Correa; 3) local national clients, like the retail chain Lojas Marisa.

“Currently, about 70% of the domestic earnings are derived from clients we have had for more than two years. We know how important it is to keep them,” he says.

Outside of Brazil, Grupo Assa also has operations in DF, Mexico, and in Tandil and Buenos Aires, Argentina. The company has clients in 30 different countries, and had revenues of US$105 million in 2011. Besides the new delivery center in São Paulo, which will provide about 100 jobs to start, the firm also plans to simultaneously open a similar one in Cape Town, South Africa.

“We are a Latin company. It is not fair to say Grupo Assa is a company from Argentina. We are Latin, operate in Latin countries, and have Latin clients,”  Caputo says.

SAP and Oracle

Recently the company announced a strategic partnership with SAP to offer financial services from Argentina, Chile, and Mexico to clients across the region. The main products offered permit the interconnection between front office operations and back-office systems.

Grupo Assa offers application management services to more than 40,000 final users of SAP and Oracle J.D. Edwards in different parts of the world. Among the global clients are AstraZeneca, Pfizer, Kraft Foods, PepsiCo, Bayer and Amcor Rigid Plastics.

Brazil, according to Caputo, will remain strategically vital to the firm’s overall growth. For him, the challenges the provider faces are similar to those confronted by the entire industry when operating in Brazil: basically shortage of tech professionals, infrastructure, and high costs. “But what we have to consider the most is how to attract and to retain our clients; that is something bigger than anything else. I cannot make mistakes with my clients.”

This could be considered the “second part” of the plan, which was first presented last year as part of a broad program to boost the national industry in different areas by Dilma’s government – which involved directly the ministries of Finance, Foreign Trade and Development and Science and Technology.

The Information Technology segment had already been included in the first phase of the plan – the 20% taxation over the payroll was then exchanged for a 2.5% taxation over the total revenue of the producers. Now that percentage was lowered to 2% for IT service providers, call centers and software producers. According to data from the Finance Minister, Guido Mantega, the new rules determine savings in the order of R$ 1 billion to the whole IT industry in the country.

Labor Costs a Big Challenge

Costs of labor has long been indicated as one of the biggest challenges for IT service providers and manufacturers in Brazil. Due to the high costs of legal employment, which are based on the regime called CLT (Consolidação das Leis do Trabalho) that rules the internal labor market, many of the employers choose to hire “contractors” for multiple functions within the businesses.

Popularly known as PJs (or “Pessoa Jurídica” in Portuguese), they basically do the same work done by CLT workers, with the difference that they cost less for the companies, since they do not have to deal with the burden of some costs such as health insurance and paid 30 days vacation once a year.

Brasscom, an organization that represents domestic and international players of the IT industry, considers that about half of the 1.2 million professionals in IT today are PJ – and with the new rules, the expectation is to bring 80% of them to CLT contracts.

To Sergio Pessoa, market development director at Brasscom, the measure is especially important to small and mid-size companies, those that suffer the most with high costs of payroll. “They are the ones that struggle the most with those costs,” he told Sourcing Brazil. On the other hand, the bigger IT corporations tend to benefit from lower juridical liabilities that are consequence of contracts with PJ’s.

In Brazil, an ex-employee who feels like he has been damaged from an ex-employer can go to court and demand a review of benefits and salaries paid. Since many contracts do not mention clearly, and with legislation that historically has benefited workers, most times the professionals win the court battle over their old companies, which end up meaning a costly consequence for the ex-employers.

“This is an important issue for these companies, and the tendency is to lower the percentage of PJ contract’s as a whole,” he says. Pessoa explains that, within the members of Brasscom, many already discuss how the costs can be passed to the clients, even though there is not data that show how much of that has been done already.

Time for Innovation

But in his opinion, most of the IT companies in the country have the opportunity that, with the money “saved” from the changes in taxation, it is the right moment to tackle another point that is critical to the Brazilian IT industry: innovation. “In Brazil, we do not have a tradition to produce innovation within the corporations, like it happens in the United States, for example. Many times, our new ideas come up from the academia or research centers. That is a good moment to change that,” says Pessoa.

To the companies that intend to leave Brazil due the high costs of production, to which the changes of taxation simply are not enough to keep the strategies for the company, Pessoa has a clear message: “we have a very sound economic context in which different segments are expanding. More and more global clients arrive in the country each day seeking for IT services. And there is also the big sport events (the Soccer World Cup in 2014 and the Olympic Games in 2016), which will count on massive investments from the government.”

Extending the Plan

The extension of Plano Brasil Maior comes at a moment when the domestic manufacturing industry has been extremely unsatisfied with the strong currency in comparison to the dollar — 1 real is worth basically US$1.80  today, which make the costs of production in the country considerably expensive in comparison to other emerging markets.

In the past few quarters, the industrial production has been falling considerably, while the consumption rates keep going higher – which means people are buying more and more, and feeding inflation that way, but the products they buy are mostly coming from abroad. “We will do whatever is necessary to protect the national currency and the national industry,” said Minister Mantega at the time the extension of Plano Brazil Maior was announced.

Other measures taken within the plan are incentives to exporting companies and new funding lines from BNDES (Banco Nacional de Desenvolvimento Econômico e Social), the national bank for social development.

Batista is the head of the EBX Group and the agreement that has been under the spotlight of the local market last week involves the selling of 20% of SIX Automação, a subsidiary of SIX Soluções Inteligentes, the technology branch of the EBX Group. SIX Automação is a technology provider specialized in systems for the utilities and marine sectors.

The Agreement

According to a joint communique issued by IBM and the EBX Group, the “strategic partnership” has three main purposes:

1) IBM’s investment in SIX Automação;

2) The creation, within SIX Automação, of a development center for tech solutions and research and development (R&D) focused mostly in the infrastructure and natural resources segments; and

3) The outsourcing to IBM of operational activities of the EBX Group over a 10-year period.

SIX Automação was created in October of 2011 after the acquisition of AC Engenharia, a company that was active in the Brazilian IT industry for over 18 years. IBM’s contribution to SIX Automação should be mainly focused in the Oil and Gas, Mining, Naval Engineering and Ports sectors.

According to the terms of the agreement, IBM will provide IT services for the EBX group until 2022, which include operational and support services and development of new IT solutions for the group. The partnership also previews the creation of an industrial solution center for clients from four Latin American countries (Brazil, Chile, Colombia and Peru) — the location of the center was not disclosed, though. The EBX Group which currently employs around 20,000 people, will invest approximately US$ 15.5 billion over 2011 and 2012 in the Brazilian economy through its different business. For the next ten years, the group expectsto invest more US$ 50 billion in its operations.

He Says, They Say

“Partnering with one of the largest technology companies in the world offers EBX Group a broad portfolio of modern IT solutions,” Batista said in a statement. “IBM, in turn, will expand its presence in one of the most promising markets in the world, working with a group that has a significant presence in strategic sectors.”

“The broad knowledge of the business of EBX opens significant opportunities to participate in the development of markets inside and outside of Brazil. IBM will bring innovation and high technology that will contribute to the development of the country,” said Ricardo Pelegrini, president of the Brazilian IBM unit.

This is the second “billion-dollar” deal announced by EBX in 2012. In March the Mudabala investment fund, owned by the government of Abu Dhabi, announced an investment of US$2 billion in EBX, through the acquisition of about 5% of the shares of the group.

According to Gartner’s latest IT spending forecast, emerging markets, including Brazil, will account for 31% of global IT spending in 2012. Latin America will collectively spend up to US$326 billion on IT during the year, the research firm predicts.

Brasscom has started a series of studies with a few associate companies to get a better understanding of the difficulties the industry faces here, according to Sergio Pessoa, Market Development Director at the organization. “We understand the importance of service desk services for the IT industry in Brazil, and we want to identify problems and discuss solutions for it,” he tells Sourcing Brazil.

The segment today employs about 300,000 people in Brazil – and that number clearly has potential to grow within the next few years, Pessoa says.

According to data from HDI Support Center Practices & Salary Survey, the potential growth of the segment worldwide in 2012 is about 32%. However, there are no detailed numbers for Brazil separately.

Brasscom’s intention is to dissect as much information as possible in order to figure out how to help develop the local call center business. “Our intention is to draw an X-ray of the segment as a whole, and from that, discuss possibilities of growth,” he says.

Natural and Acquired Skills Required

According to Pessoa, Brazilians have a tradition of being good providers when it comes to human services, and for being quite patient and helpful when it comes to call center operations. “Brazilians are quite easygoing when they conduct conversations as a whole. The perspectives are quite good,” he said.

Working in a call center can be a good “porta de entrada,” or a starting job, for those interested in building a career in the IT industry. The lack of qualified workforce is one of the biggest problems in the country today – not just in IT – and the considerably good salaries represent an enticement for young professionals who seek a first job opportunity.

Attracting those kinds of workers is one of the main challenges for the industry as a whole, Pessoa says. “Besides attracting professionals, it is necessary to equip them well within the demands of the industry, which is one of the points on which the group is focused.” Brasscom already has a partnership established with IAOP, the International Association of Outsourcing Professionals, to improve the skills of the Brazilian workforce.

Although training young tech workers in English is an important objective. Pessoa indicates that about 35% of service desk tasks can either be done by e-mail messages or online chats, which is advantageous for Brazilian professionals, who have a tendency to work better with written rather than spoken English.

“Many times Brazilians are accused of not speaking English. But we have to remember the scale of Brazil. We have more English-speaking professionals than any other country in the region,” he says.

From April 22nd to the 27th Brasscom representatives will attend the 22nd HDI 2012 Conference & Expo, in Orlando, Florida, in partnership with Apex-Brasil, the national agency for the promotion of exports and investments.

A FEW CHANGES ARE GOING ON INSIDE THE LATIN AMERICAN headquarters of one of the biggest IT consulting and outsourcing companies in the world: Tata Consultancy Services (TCS). Now, instead of having a country manager for Brazil for different countries in Latin America, TCS will apply a policy similar to what is does in different parts of the world, with ten different vice-presidents (VPs) responsible for different areas.

According to a report recently published in Valor Econômico, the biggest Brazilian economic and business newspaper, the changes were implemented within TCS in January, with the aim to boost the growth in Latin America as a whole. According to Ankur Prakash, COO of the company for the entire region, “if you have a local ‘president’, or country manager, he is interested in only expanding the local operations.”

Latin America as a whole was responsible for about 4% of the total earnings of the TCS group in 2011, which totals about US$328 million – the company arrived in Brazil to start its local operations a decade ago. “We want to grow faster in the region, but we also have to consider that we have been groing for ten years and we have to have the correct strategy,” Prakash told Valor.

Building Bridges

One of the objectives of the structural changes is to bring clients closer to top executives in the company – no matter where the clients are located in the region, there will be some VP “looking after” him in the company. The ten new job posts will be located in different parts of LatAm, and will all report to Prakash.

TCS has about 1,400 employees in Brazil, and expects to hire 200 more in one year. Currently, the local division serves about 30 different clients. The numbers in the country are considerably humble when compared of those in the world: it has operations in over 50 countries and employs about 116,000 people. The company operates two development centers in the Brazilian territory – one located in Tamboré, in the greater São Paulo area, and another in Brasília. And two of the new VPs are located in the country: Bruno Rocha, with a post similar to a Chief Financial Officer, and Tushar Parikh, who is Indian and will be responsible for the global clients in the region.

Focused Growth

In Brazil, TCS is focused in the growth in companies from the following sectors: finances, telecommunications, manufacturing, energy, retail and “punctual opportunities” within the government. But when it comes to growth, Prakash said, selection will be a priority. “We do not to go after every single possible client, but the right opportunities,” said Prakash.

The broader region, called “Iberoamérica,” which aggregates operations in 14 different countries, including Mexico, Central and South America, Spain and Portugal, counts on about 5,000 collaborators spread through seven delivery centers that together serve over 150 clients.

Diversifying Presence

Since the beginning of its expansion in the region, which started about nine years ago, TCS decided to locate its centers in different parts of the continent. The SAP center of excellence, for example, was established in Buenos Aires, Argentina, and is responsible for implementation and maintenance for more than 20 clients within the region. the Oracle Center is located in São Paulo; Montevideo, Uruguay is the base for the web technologies operations, and the Business Process Outsourcing is delivered mostly out of Santiago de Chile, while IT infrastructure services is supplied from Queretáro, Mexico.

COMPANIES SEEKING TO LOCATE NEW OUTSOURCED OR SHARED SERVICES centers to offshore or near shore locations typically focus their exploration on factors such as price, local government support and incentives, cultural affinity with the target market, unemployment rates, labor pool, language skills, etc.

But are companies really taking the necessary time to explore, assess and discuss their own points of differentiation as they are perceived by the local population? Beyond providing a basic salary, what contribution can the business make to the lives of the people who will be employed? These cultural considerations should be an important component of the due diligence process as they are crucial to the long-term sustainability of the business. Unfortunately, they are too often overlooked.

Act “Corporate,” Think “Local”

The most effective way to select a successful and sustainable market, community and location to facilitate an operation is to spend time on the ground with local community leaders and prospective employees, using the language skill with which you expect services to be delivered. In a sense, this is a grassroots and tourist approach to the region, building on a foundation of previously completed market analysis, research and the corporation’s strategic vision.

Understand the demographics of the region. What is the average employable age and are they male or female? What is the current make-up of the population interested in the BPO industry?

Before investing in a destination, many basic requirements “on the ground” should be fully identified. These are easily gained through market analysis and research and by speaking directly with economic and government groups within the country/region of choice. The following check list can serve as a starting point:

• Local government investment and support

• Technology and infrastructure

• Education

• Safety and security

• Tourism

• Like industry success

• Transportation

• Labor pool

• Education level and graduation rates

• Language skill–English bilingualism

• Skills learned (preferred)

• Customer service orientation

• Affinity to Western culture

• Employable population–demographics

To truly test the likelihood of success, spend time on the ground in the community. Ask questions, document observations and understand the community from which you will hire and where you will be a corporate citizen:

• Understand how education works in the destination. Is it public or private? Is it mandatory? What is the local government’s degree of engagement in the education system? How do people get to school? Is there an emphasis on learning English/other language?

• Assess the rates of school attendance.

• Visit a school, university or community college. Build relationships.

• Determine who are the economic and community development supporters and funders in the community. When do they meet? Who are the members? Do they live in the community in which they serve?

• Attend a meeting of these community development supporters. Take notes and make observations about interactions and behaviors such as tone and pitch in conversation; gender based interactions; non-verbal communication such as eye contact and handshaking. These observations will help you adapt your body language and mannerisms to put people at ease when interacting with the local population.

• Discover the cultural customs of the local community including holidays, events and religious ceremonies. This knowledge will help when managing your new workforce.

• Understand the demographics of the region. What is the average employable age and are they male or female? What is the current make-up of the population interested in the BPO industry? Are they well-educated males or single mothers? Are they second income earners or primary breadwinners?

• Investigate local restaurants, shopping facilities and tourist hot spots. Eat at local favorite restaurants. Attend a local customary event, read the tourist brochures and spend time in the recommended areas. This will tell you what the local people are proud of within their country. Knowing exactly what gives a person pride can also act as a motivational tool. This can allow you to better identify with the needs of the people that the corporation will employ. It will allow the opportunity to learn, understand and place value on what is important to the team.

• Learn how local services are facilitated and distributed. Are these services valued and utilized? How does the role of the family contribute?

• Research health care, child care, transportation, etc. This will help provide a more comprehensive view of total costs. It will also help you “design the differentiators” that I referred to earlier to strengthen your value proposition as a “glocal” employer, and can help you in “positioning” your corporate philosophy to your future employees.

Integrate Cultural Components with Business Goals

By integrating the “softer”, cultural components of the destination you are reviewing with that of your strategic business objectives and long term priorities, your answers to questions like those below will become far more informed and accurate.

• Is a local staffing agency required to help launch the business?

• Does it make sense to place the business in the duty free zone or is an urban, centralized location more feasible?

• What type of community participation and recruiting event will need to be held?

• What aspects of the corporation should be advertised? What are the value added benefits for employees that will matter most? What are your differentiators as they relate to the community?

On the surface these concepts are relatively simple, logical and one would assume being facilitated, however, this is not the case in many situations. Cross-cultural communication and a grassroots approach is not often practiced for a wide variety of reasons. These include the assumption that knowing the statistical facts about unemployment rates and government incentives is enough to be successful, aggressive timelines, low price points driving a quick transition, lack of regional expertise within the organization or simply an attitude that cultural considerations are an “after thought.”

To truly minimize new geo risk, not only should the selection team conduct the formal process, but drive the due diligence from a grassroots perspective and through a cultural prism. Once this knowledge and, more importantly, experiences are gained, the transition or execution team should act as the “cultural interpreter” for the enterprise. This is crucial to see a new operation through to success.

Heather Littlejohns, Director-Operations at Aditya Birla Minacs and also an independent consultant, is responsible for strategic Country and Site Leadership and Client Relationship Management. She also serves as Partner & Contract Liaison, Implementation & Launch Project Sponsor and Government Point of Contact. Heather brings 16 years of rich and varied experience in directing, developing and implementing effective near shore and offshore BPO global service delivery solutions. Heather.Littlejohns-Brown@minacs.adityabirla.com