Selling smarts: Brazil's information technology business should have gone global years ago. It's catching up.

Author:Prada, Paulo

Brazil's information technology industry faces a quandary: Its world-class skills aren't known in most of the world. Despite boasting state-of-the-art systems and software providers, the country has not been able to export, its know-bow or products to many markets beyond its vast borders.

Instead, it's playing catch-up as the bulk of the world's information technology outsourcing goes to rivals in India and other developing nations. "Brazil is a hidden gem in the world of information technology," says Rodrigo Leite, business director for Eccelera Gestao de Participacoes Societarias, a Sao Paulo venture-capital company that invests in technology companies throughout Latin America. "There are companies here with a lot of potential but, historically, they have not been able to export."

Brazilian companies by necessity have developed some of the most advanced software in the world in recent decades. An unstable economy and runaway inflation meant Brazilian banks needed sophisticated software merely to keep up with the value of their assets. Local developers arose to supply them and in the process have garnered enough skills to create complex systems ranging from security and encryption applications to telecommunications and e-government platforms. The country, for instance, boasts one of the most widely used online income-tax programs on the planet.

But what has traditionally been a plus for Brazil's info-tech sector--the size and potential of its home market--has also hindered its ability to expand on a global scale. Sales growth fueled by domestic demand has kept Brazilian technology groups from learning how to sell their wares in the United States, Europe, and elsewhere.

The Brazilian tech sector last year generated revenues of nearly US$8 billion, according to the Society for the Promotion of Excellence in Brazilian Software, a Sao Paulo industry group. But only about $100 million of that came from exports.

"It's peanuts given the size of the market," says Antonio Carlos Gil, chief executive of CPM, a software and systems developer in Sao Paulo and president of the Brazilian Association of Software and Service Exporting Companies, a recently formed industry group that is working on ways to better promote the sector abroad.

"Companies didn't learn to export in Brazil because of the size of demand here," says Gil. "You didn't look for growth abroad because you had it in your own backyard."

But domestic growth can only go so far. As they began...

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