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Brazil's IT sector eyes share of global outsourcing market
(EFE News Service Via Thomson Dialog NewsEdge) Though many of Brazil's 3,000 information technology firms are tiny operations being run out of someone's garage, leaders of the industry say they hope to make their country one of the top five suppliers of software and IT services by 2010.
The executive director of the Brasscom exporters association, Ricardo Saur, said that figures compiled by his group indicate that Brazil's IT sector will grow between 14 percent and 20 percent this year.
In 2006 Brazilian exports of IT services brought in some $800 million, he said.
Brasscom strategy is to develop this high-value-added activity so that by 2010 Brazil can export the equivalent of $5 billion annually, "but it is a hope that will depend on many factors and incentives," acknowledged Saur in an interview with Efe.
Among the factors that condition and limit this scenario is the strength of the Brazilian real against the dollar, the high tax rate that currently hurts competitivity and labor costs significantly higher than the international average among developing nations, he said.
Despite the negative factors, however, Brazil has a cutting-edge knowledge of the business and its own human resources, plus a large internal market that has allowed it to compensate for its flaws and achieve strong growth, the executive said.
Brazil also wants to promote the attractions of its geographical and cultural proximity to the European and U.S. markets and increase its international presence with new associations.
Brasscom's goal is to attract interest in this project from government, Congress, the media, academia and businessmen.
Institutionally the first step is the first Rio de Janeiro International Software & Services Outsourcing Conference, which will take place here March 1-2 with the presence of experts from Brazil and abroad, Saur said.
The event will delve into IT strategies and trends and has the backing of the Ministries of Development, Industry and Commerce, and Science and Technology, as well as that of state and municipal governments.
According to Brasscom statistics, the world market for software and IT services was worth some $36 billion in sales during the year 2006 and is expected to reach $110 billion by 2010.
India currently dominates 70 percent of that business, followed by China, Russia and Malaysia.
Brazil plans to enter these ranks but needs incentives similar to those of competitors like Malaysia, the Phillipines and Mexico, Saur said.
If by 2010 India's share of market has declined to 60 percent due to other countries catching up, the remaining 40 percent will be distributed among the more highly populated countries where there will be no sudden escalations in wages due to a scarcity of workers, according to his analysis.
Brazil, with more than 180 million inhabitants, has about 3,000 software and IT service companies working out of the proverbial garage.
But the standouts with export capabilities currently number no more than 100, Saur said.
Copyright 2007 EFE News Services (U.S.) Inc. Source : Financial Times Information Limited.
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