Outsourcing – Features – Samba nation plays the right tune
Posted on September 6, 2011 by Atul Vashistha
Samba nation plays the right tune
June 13th 2011 – Atul Vashistha & Sudeep Misra take a look at sourcing trends, traps and opportunities in BrazilDiversify your stock portfolio – this is a mantra we have been hearing for ages. Well, it is now ringing true in sourcing too! As global sourcing continues to grow, so does the interest in new locations. Companies are interested in new locations to diversify risk but also to better serve their own diverse operations or diverse needs.One of these rising destinations is Brazil. The nation is emerging as an alternative or complementary location to other offshore locations, with an interesting combination of characteristics that are similar but also very different from the traditional low-cost locations, such as India and Philippines. Brazil has a very a strong economy domestically, which was one of the least affected in the world by the economic downturn. Many of its Latin American neighbours are also experiencing strong growth in their GDP. The Latin America services market will reach US$31 billion in 2010, with a 10.4% CAGR through 2013. Brazil comprises about 40% of this total, with an expected growth rate that is higher than the regions average.Growth Rate Forecast for IT Spending 2009-2014 - Latin America Leads Spending GrowthSeveral US and European based suppliers are active in the country. IBM, Unisys, HP-EDS, Accenture, Capgemini and TelePerformance have offshore centres in Brazil. Even Indian firms such as TCS and Infosys are present here. More importantly, several strong local firms seem to have a head start, such as Stefannini, Tivit, BRQ, CPM Braxis, Ci&T and Politec to name a few. TRENDSThe IT services market in Brazil is characterised by the emergence and growing maturity of local service providers, continuous investment in Brazil-based operations, the growth of all major global providers participating in the Brazil market, and the arrival of the leading Indian players into Brazil notably TCS, Infosys, Wipro, and to a lesser degree HCL and Cognizant.All these players have always expressed that they could not afford to be absent in the promising Brazilian market. In fact, Capgemini’s recent partial acquisition of CPM Braxis and Chilean IT Company Quintec’s plans to merge with Brazil’s Politecis a clear signal to Brazil’s and LatAm’s potential. The various players have also indicated that they expect a solid, steady growth of the internal market in the next one to two years, with a long-term perspective that more-decisive support from the government will make service costs more competitive abroad.
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