Brazil, A Hotspot For Nearshoring

Updated: January 01, 2012

When considering the BRIC nations, Brazil is taking up its own space in outsourcing. Just as Eastern Europe, Russia and a host of other emerging players are getting their feet wet in outsourcing, so is Brazil. And for the right reasons. Brazil has an experienced IT history with about five decades of experience in the field. With so many IT experts, it is no wonder that Brazil is emerging as a strong contender for IT projects in outsourcing.

Moreover, with the concept of nearshoring taking more importance, Latin American countries, Mexico and Brazil are taking on the spotlight. These countries are close enough to North America to give them an edge on outsourced projects that require some degree of supervision by the host company. For instance, Brazil is close enough to the U.S. and Canada, so that firms can keep an eye on long term projects rather than offshoring to faraway destinations like India or the Philippines or even China.

Advances in Brazil's position in outsourcing were at play at the Latin America outsourcing summit that took place in place. Brasscom, Brazil's tech trade association sponsored the summit.

BRIC countries such as China, India and Russia along with Brazil are projected to make headway in outsourcing in the near future. However, analysts say that Brazil is not equated as a place of big business. But that preconception could change drastically. Brazil is one of the few countries that have come out ahead in the recession, unscathed by the economic downturn that roiled financial markets in 2008. Surprisingly, the country has achieved 9% GDP growth in the period April to June 2010. This is a huge improvement in comparison with western nations in Europe or the U.S. and Canada. This is a time when most global firms are still figuring out a strategy to combat the losses assumed in the recession and forge ahead toward recovery in the latter half of 2010. For Brazil, the 9% growth represents the biggest growth in 14 years.

One of the biggest advantages that Brazil has is the large-scale establishment of outsourcing in the country. Apart from that there is a broad awareness of business practices that exists. Brazil is also the fifth biggest country with respect to land mass and has had a historical presence in the IT industry with approximately 2 million staff currently working in the field. Along with that, IT firms in Brazil are thought of as widely flexible in comparison to those in other countries. In fact, most analysts would agree that Brazil itself is flexible, adapting and open to new ideas, which lends itself to innovation and progressive ways of doing business.

Nonetheless, there are also disadvantages that blemish Brazil's ideal outsourcing landscape. Due to the fact that Brazil has had a stable IT market, the country has been largely independent and has drifted from the global economy. This translates to companies preferring to do business in Portuguese rather than English. Another case in point is that there is no cost advantage in outsourcing to Brazil - this is in comparison to cheap labor costs in Asia. However, outsourcing to Brazil is still inexpensive when compared to running an IT department in the U.S. At this point, outsourcing to India and other outsourcing heavyweights like the Philippines and China remains the best option for cost savings.

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