n arcane tax system and the lack of a qualified workforce have so far stifled
Brazil’s ambitions to become a force in the global business process and IT outsourcing
market. But that’s changing, as Latin America’s most populous nation attempts to
claim a bigger portion of an outsourcing market annually worth some $45 billion,
according to McKinsey & Co.
In 2007, Brazil hopes to tally $800 million in outsourcing
revenue, compared with $600 million in 2006. Its goal for 2010 is $5 billion, says
Antonio Gil, chairman of the Brazilian Association of Software and Services Export
Companies, a trade organization in Sao Paulo.
No single nation dominates the outsourcing industry
in the Western Hemisphere, and Brazil is eager to claim the title. It ultimately
wants to compete with India, which claims 70 percent of the international business
process outsourcing market.
Brazil is making important gains, drawing Whirlpool
Corp. and Gap Inc. as outsourcing clients for tasks ranging from IT services to
back-office work. Meanwhile, IBM, Accenture and Electronic Data Systems are expanding
and hiring more employees in Brazil to accommodate projected growth.
Gil says Brazil has several advantages over India. For
one, it is in similar time zones and in closer geographic proximity to North American
companies that offshore their operations. The U.S. also shares more cultural similarities
with Brazil than India or other outsourcing nations in Asia, he says.
"The countries share many cultural references—music,
movies, television shows, etc.," says Carlos Diaz, vice president of Pan-America
and global accounts officer for Meta4 and an expert of HR issues in Latin America.
"You wouldn’t have to explain who Mickey Mouse is to a Brazilian, but that may not
necessarily the case when it comes to somebody from India."
"Outsourcing is not just about completing a project;
it is also about having a relationship with a vendor that you know and trust," Gil
says. "This becomes much trickier when your outsourcing partner has different cultural
sensibilities and is on the other side of the world."
Outsourcing to Brazil is costlier, given high taxes
and a relatively strong national currency. Still, the expenses may be offset by
relatively low turnover rates, ensuring project consistency and cutting the risk
of mistakes. Gil says Brazil’s turnover in the outsourcing industry is roughly 20
percent, compared with India’s rate of about 40 percent.
Outsourcing to Brazil makes sense, according to Alexandre
Brandao, manager of business support center for Exxon Mobil in Sao Paulo. He says
Brazil is particularly strong in IT and business processing. However, handling customer
support services via domestic call centers may be a challenge because of a lack
of English speakers in the field.
Brazil faces a major hurdle in its need to produce a
sufficient number of workers who have both the appropriate language skills and the
technical training to keep the country’s outsourcing plan on pace for 2010. Gil
estimates that 100,000 additional workers will be needed. Currently, there are 10,000
Brazilians working in the outsourcing industry.
Gaining ground on competing nations won’t come easy,
says Bruno Laskowsky, a partner at consultancy A.T. Kearney in Sao Paulo. "This
is not a game for kids," he says. "Brazil is going to have to invest significant
resources if it is going to achieve its goals." What’s more, the private sector
and the government will have to work in tandem.
It appears that this is already taking place. Government
officials and the Brazilian Association of Software and Services Export Companies,
which includes 29 companies, meet regularly. They retained A.T. Kearney to deepen
their fundamental knowledge of the global outsourcing industry and to create a plan,
Laskowsky says.
The association, the Ministry of Labor and the Ministry
of Sciences and Technology are funding several initiatives, including a pilot program
that includes six months of e-learning and classroom technical training to be followed
by intensive English-language studies. Some 8,000 individuals in 14 cities are enrolled
in the pilot program, Gil says.
Gil also is meeting with government officials to lobby
for lower taxes for multinationals.
"An increasing number of people realize the country
needs to modernize its tax system in order to compete effectively in the global
marketplace," Gil says. "There is growing momentum and I think we can succeed."
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