Brazilian technology

The information technology sector in South America's biggest nation is booming.

According to a report by the international consulting firm Frost & Sullivan, Brazlian IT service industries alone enjoyed some $11 billion (8.3 billion euros) in turnover in 2011. That represented a rise of 12 percent compared with the previous year.

Average economic growth in Brazil runs at around four percent, making the IT sector one of the most attractive areas for investment in the country. Brazil has particularly specialized in banking technology. That goes back to an initiative, begun seven years ago at the Latin American IT trade fair Ciab Febraban, to create a so-called "space for innovation" in the country.

The focus is on improving IT security for banks.

"It's a crucial issue for financial transactions," Descartes Teixeira, Executive Director at Brazil's Instituto de Tecnologia de Software, told DW. "The Brazilian financial sector is one of the most advanced in the world in terms of using information technology. And we're intending to put that on display at this year's CeBIT."

Investment hurdles

Such growth and innovation has, of course, attracted the attention of foreign investors, and the Brazlian Trade and Invstment Promotion Agency is actively trying to pursuade IT businesses to come to the country.

The interest is such that the former Vice President for Latin America of the chip manufacturer AMD, José Antonio Scodiero, has set up a consulting company devoted to advising foreign IT firms on how to do business in Brazil.

He says that government regulations can make it difficult for outsiders to gain a foothold.

"Companies are most attracted by our domestic market," Scodiero told DW. "But to take part in it, production must be located in Brazil, and by law companies have to reinvest part of their profits in research and development. To take advantage of tax incentives, production means not just assembly, but actually building individual parts."

Silicon Valley, Brazil

But Scodiero says many foreign IT companies have found Brazil an attractive business location.

"Firms are investing in science and technology centers throughout the country," he explained. "There's basically a pre-paved path for foreign businesses."

One of those centers is "Porto Digital" in the northeastern city of Recife, which has become known as the "Brazilian Silicon Valley." But Sílvio Meira, a founder of the IT cluster and one of Brazil's most respected software engineers, says the comparison should be taken with a grain of salt.

"Porto Digital employs around 7000 people in nearly 200 companies with an annual profit in 2011 of around 420 million euros," he told DW. "Silicon Valley has hundreds of companies that achieve these sorts of profits every year on their own."

Nonetheless, Meira sees a bright future for the Brazilian IT sector and hopes that foreign companies will continue to invest in it.

"Our goal in 10 to 15 years is to increase profits to three or four billion dollars and to employ between 20,000 and 25,000 people in the surrounding area." Meira said.

With a total population of 200 million, Brazil's economic importance looks set to grow and grow. The IT sector is likely to be a major motor of that growth, representing an opportunity for investors who can get their foot in the door.

Author: Edson Perin / jc
Editor: Gregg Benzow