São Paulo is Brazil's bustling economic and financial center. São Paulo has a metropolitan population of about 20,500,000 (2009 est.). It is the world's third-largest city and the largest in South America. This city is also the most prosperous in Brazil, with the highest per capita income and overall standard of living.
São Paulo has evolved from a small village into one of the world’s top cities. Its proximity to the United States makes it distinctly more accessible than more distant Asian locations. São Paulo, therefore, qualifies as a "near-shore" location for the US market, along with Canada and various Caribbean countries.
São Paulo is Brazil's most important business center. With the country's best infrastructure and a highly skilled labor force, it can be called the "Brazilian locomotive," that drives the national economy. Almost every major industry in Brazil is based there, and 15 percent of Brazil's gross national product is generated in here. The city currently has almost 60 percent of call center positions in the country.
São Paulo with its ideal location and growing economy has become a big draw for many foreign investors. The Economic Commission for Latin America (ECLAC) says Brazil is the top recipient of FDI in Latin America.
In November 2010, Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, announced that it is growing its BPO footprint in Latin America with the expansion of its delivery centers in the Campinas region of São Paulo.
São Paulo has the greatest number of higher education and research institutions in the country. The city has 3 state and 3 federal universities, aside from a number of private institutions. As a result, São Paulo features a great number of skilled and highly qualified professionals capable of developing the most complex applications. The city’s solid technological base also enables professionals to deal with technological innovations. São Paulo has one of the highest concentrations of software university graduates in Latin America.
Brazil—with its 250,000 IT professionals, 23,000 annual IT graduates, and infrastructure capable of supporting double-digit growth—is at the heart of the IT services supply chain in the Southern Hemisphere.
In fact, most major U.S. players including HP, Accenture, and Unisys have an escalating presence in Brazil, which has been largely unaffected by the recent global economic slump. In June 2010, IBM announced plans for its first South American research center in Brazil, as part of its strategy to sell technology and services to large, fast-growing emerging nations.
Indian outsourcers such as Satyam, Infosys and Wipro have been aggressively expanding in Latin America. Tata Consultancy Services (TCS), for example, has 3 global delivery centers, including an Oracle center of excellence and more than 1,500 employees working in Brazil. EDS, Deloitte, Motorola, Intel, Nortel Networks, TIBCO, Stefanini IT Solutions, Kaseya, Politec, and Nokia have offshore centers in São Paulo.
Intel's Latin American headquarters, Intel Brazil, is located in São Paulo and is primarily focused on sales and marketing. The Intel office in São Paulo is the largest Intel sales office in Latin America.
According to the Brazilian Association of Information Technology and Communication Companies (BRASSCOM) Brazil's offshore outsourcing market hit $1.4B in 2008, rising 75 percent in a single year. Brazil's recognition as one of the most promising and rapidly emerging economies makes it a natural destination to evaluate for IT services.
By 2020 Brazil hopes to be one of the world’s top 4 in offshore IT, turning over $20B. But to achieve that goal the country will need to overcome a number of challenges—one of which is to train 300,000 IT specialists in the next 10 years to reduce the cost of labor.
High rate of student dropouts from IT graduate courses and high taxes are other barriers. There is an imbalance between supply and demand. The professional graduate does not meet company demands, because he enters the work market unprepared. “We need to produce professionals on a large scale and quickly with a curriculum that meets company needs. Today firms are in great need of programmers costing less. As they are unable to find them they hire specialized graduates, which in turn drives up labor costs. An average programmer earns between R$ 1,000 ($576.5) and R$1,800 ($1037.5) while a graduate earns between R$2,500 ($1,441) and R$4,000 ($2,305.6). Training capacity is a large bottleneck of Brazil. There are companies that are stopping exports because they are unable to find skilled labor,” says Rafael Moreira, from the Ministry of Development, Industry and Overseas Commerce (MDIC).
The country’s objective is to increase its income six-fold from software exports and tech services that amounted to $3B in 2009. That means an increase in the IT contribution to national GDP from 3.5 percent in 2010 to 5.3 percent.
In 2008, IT-BPO market of Brazil turned over $59.1B, including exports and in-house IT. Brazil's IT-BPO sector is among the strongest and most mature in the world. Combined with the communications sector it accounts for about 7 percent of Brazil's GDP. Large Brazilian and multinational companies have been part of the country's economy for decades. As a result the country has a strong IT labor pool with deep industry specific know-how. Revenue comes mainly from IT services, with 73 percent related to development, a higher proportion than in other countries.
The Brazilian government aim to increase IT-BPO exports from $2.2B in 2008 to $3.5B by 2010 is close to being achieved. To help drive development they have implemented numerous initiatives, including: favorable tax reductions, government-sponsored venture capital funds, and IT education support.
Brazil's economy boomed at a 9 percent annual rate in the first quarter of 2010, its fastest pace in at least 14 years. Economists now see Brazil's gross domestic product expanding more than 7 percent this year, putting it among the fastest-growing in the world.
With brisk growth and considerable natural resources, the country is becoming a global heavyweight.