Módulo: Expanding Abroad Within Emerging Markets

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.