It’s been called “Silicon Valley South” and is one of many locations to be nicknamed “the Silicon Valley of Brazil.” Although Curitiba differs from the original Valley in several key ways – less traffic, for instance, and more trees – it does share one essential similarity: a concentration of technology expertise and software development experience.

Curitiba is capital of the state of Paraná, which is home to more than 260 software companies and six software clusters. Those providers embody more than 50 areas of business intelligence and more than 30 areas of IT specialty. Clients of Curitiba include ExxonMobil, HSBC, Nokia, and Wipro. IBM, Dell, and HP were among the first international tech companies to set up operations in Curitiba.

Click on the image to read the E-book

One of those six clusters is particularly focused on taking Brazilian development skills to a global clientele. Curitiba Offshore is home to 14 software companies, providing services from R&D to application development to systems integration and infrastructure management. The Curitiba Technopark connects IT companies with R&D centers and the area’s many universities in an effort to boost collaboration and innovation. And the city’s emphasis on sustainable urban planning has helped it attract an educated group of people looking for a better quality of life.

KPMG referred to Curitiba as one of the world’s most attractive business locations, and Gartner called it one of the world’s leading IT and software destinations. Find out what’s attracting IT providers and IT buyers to this green Brazilian city in the new e-book, Curitiba, Brazil: A Higher Vision for IT Exports. You can download it here.

São Paulo: Making Manhattan look cheap.

By Filipe Pacheco

High costs are one of the prices international companies must pay for doing business in Brazil– especially when it comes to the services industry. Now one of the most plugged-in financial institutions in the world, the International Monetary Fund, has released numbers that demonstrate what many suspected anyway: The cost of living in Brazil in 2011 rose to slightly higher than that of the United States.

Considering a list of 150 emerging economies, Brazil is basically the only one that had an expected GDP forecast for last year based on purchasing-power-parity (PPP) lower than the real GDP – which means the prices converted to American dollars are higher than in the United States.

The IMF estimates that the Brazilian GDP was US$2.51 trillion, which makes the country the 6th biggest economy in the world. Emerging economies typically have a higher PPP GDP than their real GDP, which means that, even though they might produce less than the United States, the same amount of money can buy more within their boundaries.

Brazil is essentially the only exception. Here, you can buy less than in the United States with the same amount of money. The other BRIC countries – Russia, China, and India – are all cheaper in the same comparison. Just four other emerging economies had results similar to those of Brazil, according to the IMF, but the comparison is not quite fair. They are St. Vincent & The Grenadines, a small archipelago in the Caribbean; Zimbabwe, with a hyperinflation economy that has destroyed the national currency; and the oil-rich regions of Kuwait and the United Arab Emirates.

What brings the prices higher in Brazil is the cost of services, since they cannot be imported. If national industry comes up with high prices for goods or machinery, for example, there is the possibility that competing goods or machinery can be imported, even though there are taxes that fall upon them. Those prices have become considerably lower recently, due to a depressed economic situation in the rich countries and China producing lots and lots of everything.

The Real Problem

Added to that is the value of the Brazilian real – today traded at about R$1.80 to every US$1. That price is affected by the exportation of commodities – Brazil is among the biggest exporters of iron ore in the world, for example – and the large inflow of foreign money that enters the country to take advantage of the high interest rates that still prevail here and the good prospects for the local economy. Another reason pointed to as an explanation for the high cost of living is a problem that is also considered a barrier for the IT industry as well: the high rate of taxes.

“This inversion shows that things here do not fit the normal pattern, because the currency rate is completely out of synch with historical activity, with a huge valuation in the past few years,” Armando Castelar, economist at Fundação Getúlio Vargas, one of the most recognized economic institutes in the country, told the newspaper O Estado de S.Paulo.

“Either Brazil gets cheaper and improves its productivity or we will become a services economy at an early stage,” argues Júlio Sérgio Gomes de Almeida, director of the Institute of Studies for Industrial Development (or Instituto de Estudos para o Desenvolvimento Industrial). He warns there is a risk of Brazil becoming an expensive country based only on a services industry, and without a strong industrial base.

Office Space Deluxe

Research done this month by the consulting company Cushman & Wakefield South America has shown that renting a business office in Itaim Bibi, in São Paulo, or in the charming neighborhood of Leblon, in Rio, is often more expansive than in fancy commercial areas of Manhattan or Washington DC.

In Leblon, the price for a square meter of commercial rental space is US$69.4 a month, while in Midtown Manhattan, a square meter may cost around US$63. In São Paulo, in the business regions of Avenida Faria Lima, Jardins, Avenida Paulista, or Chácara Santo Antônio, the average price for a square meter is about US$60.

In the past year, Brazilian office-space prices have risen 22.6% in comparison to the same period of 2010, according to Cushman & Wakefield. Even though the prices are high, the vacancy level is quite low – in Itaim, only 0.9% of the offices are vacant.

When it comes to services, a few other examples can give you a good sense of how expensive some things can be in the big Brazilian cities. Going to work out at a Rebook Center gym in São Paulo costs R$690 (US$385) per month with an annual membership, while in New York, the average price for the same chain is around R$382 ($US210).

Going to the movies costs, per person, R$28 (US$16), while in a good movie theater in New York, that would be R$24 (US$12). A cheeseburger with soda at the local unit of PJ Clark’s is around R$37 (US$21), while in the States that would be about R$32 (US$18). On your way back home, a ride from Avenida Paulista, in the heart of the city, to the International Airport at Guarulhos may cost R$108 (US$60), one dollar more than going from Manhattan to JFK – R$107 ($59). The numbers are drawn from research done by O Estado de S.Paulo.

“São Paulo scares me more and more each time I am here,” Raphael Quintella, who has lived in New York for five years, told the newspaper. “Going to a good restaurant in the city costs me more than going to one of the same level in New York. That is applicable to a good Japanese restaurant or to a churrascaria [typical Brazilian barbecue house].”

On the record: Brasscom, Tivit, Neoris point to some immediate requirements

By Felipe Pacheco

With the World Cup just around the corner, the world waking up to it’s formidable economy and the expanding demand for sophisticated IT services – Brazil is just now entering a powerful new era. To get some perspective on the year ahead, and to hear what Brazil’s technology service providers need to do and deliver to help their outsourcing customers succeed, we talked with five prominent members of the Brazilian IT scene.

André Frederico, corporate development director at Tivit

Benjamin Quadros, CEO and founder of BRQ IT Services

Frederico Vilar, country manager of Neoris

Paulo Pichini, CEO and founder of Go2neXt

Antonio Gil, president of Brasscom

Q: What will be the main challenges for Brazilian IT and services providers and their customers in 2012?

Andre Frederico

André Frederico, from Tivit: The perspective of growth for the Brazilian IT and services market in 2012 remains above 10% – almost 7% higher than the outlook for the Brazilian GDP – which, naturally, generates big challenges for IT service companies. I believe that 2012 will continue to be a challenging year for those companies in some aspects already recognized in the past few years. The biggest of them is the employment of qualified workforce. 2011 was already a very competitive year in that respect, due to the growth seen in industry and the situation with the Brazilian labor market in general.

Frederico Vilar

Frederico Vilar, from Neoris: Our industry will have to keep up with the growth of demand for services and be able to use new technologies in order to deliver services that go beyond the “commodity model.” IT providers will have to be able to aggregate value to the client’s business. The adoption of processes based in cloud computing and Software as a Service will be intensified, just as much as new technology solutions such as in-memory HANA [High-Performance Analytic Appliance], from SAP.

Besides that, it is fundamental for the market to create mechanisms to deal with the lack of professionals, especially for certain platforms. In Brazil today, professionals in certain positions at IT companies are very highly paid, which of course affects the cost of doing business and has an impact on their ability to be more competitive, especially when they aim to widen their participation in the Brazilian market and in the exportation of IT services.

Paulo Pichini

Paulo Pichini, from Go2neXt: I think that 2012 will be a year when many projects that were just being planned “on paper” will be effectively executed. The proximity of the great events in Brazil [the Soccer World Cup in 2014 and the Olympic Games in 2016] will demand sensible and fast investments and implementations to renew the networking infrastructure, the information wires, which are already overwhelmed. Besides that, the process of consumerization of the use of IT is already under way and will not stop, so IT companies will have to reinvent themselves to offer scaled-down services to small and medium-size businesses.

With this aggressive growth in the IT world, IT service companies will have plenty of new job possibilities and new commercialization models. Obviously this scenario points to big growth in the use of IT as a service, which will leverage the use of cloud computing in a wide manner. Cloud will be a new outsourcing model for corporations, and without doubt will be the greatest focus of attention by the big providers, such as telecom operators and datacenters. These providers don’t know yet how to sell this new model, but they are seeking advisors to support them and help create shortcuts to quickly launching the biggest number of IT solutions in the cloud.

Benjamin Quadros

Benjamin Quadros, from BRQ: IT is more and more important to companies both from the innovation and the efficiency perspective. The challenges of the industry are: gain scale to offer more choice of services at a more competitive cost, and to specialize in the segments in which they provide services that offer relevant solutions to their clients. In most parts of the country’s economic segments there is a lack of qualified workforce, and in IT, a market in constant growth, that is no different.

There are three technologies that are transforming the industry, and the companies that are able to support their clients with these technologies will be very successful next year. Those technologies are:

• Cloud computing, which will make it much easier for businesses to consume technology without demanding large teams and infrastructure facilities to support them (especially in applications such as e-mail, collaboration, and CRM).

• Agile methodologies, which are transforming the way IT projects are executed, forcing clients and IT companies to work more and more together to achieve better and faster results.

• Smartphones and other mobile devices, which are starting to change the business process of almost every company, and offer enormous opportunities both in terms of innovation and efficiency.

Antonio Gil

Antonio Gil, from Brasscom: Brazil has four main challenges for the development of its IT industry, and some of the recent announcements made by the federal government demonstrate the progress that we have achieved in each of those fronts. They are:

• Labor costs. They represent 70% of the costs of the IT companies, because it is an industry that uses workforce intensively. With the recent passage of the law that provides discounts on payroll taxes, that problem has been addressed. The taxation will go from 20% over the payroll to 2.5% over a company’s income. This will reduce the labor costs of IT companies, and will help to formalize employment in the sector, in a most transparent, ethical, competitive, and productive way.

• Workforce qualification. Even though the IT industry employs 1.2 million people, the segment still faces a serious problem of lack of qualified workforce. Projections point that, for this year, the deficit is almost 92,000 professionals, a number that might be as high as 120,000 in 2012. We need to educate a technological workforce with knowledge of English to incorporate 750,000 new professionals in the market in the next 10 years, with 450,000 working in the domestic market and 300,000 focused on exporting activities. The resolution of that problem might happen with the implementation of Pronatec [Programa Nacional de Acesso ao Ensino Técnico e Emprego], launched in April by the federal government, and which has already been approved in the Senate.

• IT infrastructure. Brazilian broadband is slow and suffers from low quality. We need to invest in networks to support the high data traffic, need to grow the penetration of data services, and need to improve the quality of broadband. The PNBL [Programa Nacional de Banda Larga] has been effective in the expansion of access to broadband, but the low quality and high costs are still a challenge for companies and their development in Brazil.

• Innovation: Brazil still has to meet the challenge of innovation, and incorporate innovation into the DNA of its companies. The program Science Without Borders, a project of the Ministry of Science, Technology and Innovation, will offer, until 2014, 100,000 scholarships to students of different levels to attend 50 of the best foreign universities, promoting expansion and internationalization of Brazilian science and technology. Our talented professionals will participate in the process of technology transfer, experience, and knowledge.

This article was originally published on Sourcing Brazil

Rogerio Oliveira, former president of IBM Latin America, talks about the evolution of the IT vendor relationship – and how the CIO has become far more influential within the executive boardroom.

By Edileuza Soares

Amazon will soon start offering cloud computing services to small and medium-size businesses (SMBs) in Brazil, using basically the same model it employs in the US. The company has already hired an executive to lead the operation and is quietly creating its team in Brazil.

The official date for opening the Amazon office in Brazil is still secret, but rumors say that it will happen soon, possibly by the end of December. The executive chosen to lead the operation is José Nilo Cruz Martins, a Brazilian who was local director of sales for Google, worked for Sun before its acquisition by Oracle, and he also worked for Promon.

Martins was hired in May as the director of Amazon Web Services (AWS), the unit’s cloud computing company. Since then he has been trying to structure the operation. He would not reveal details about Amazon in Brazil, but said the service launch strategy will be announced at the right time by executives at company headquarters in the US.

Negotiations are still going on between Amazon and Oracle Brazil to offer ERP applications to Brazilian SMBs on a software-as-a-service (SaaS) basis. Amazon will also work with other partners to broaden its cloud computing offerings.

Renting Its Infrastructure

It’s not clear yet how Amazon will price its model of cloud computing services in Brazil. But presidents of local data centers say that the company does not have its own infrastructure as it has in the US, or at least not yet. To save time, Amazon will start serving customers using third-party data centers.

According to market sources, Amazon has closed an agreement with TIVIT, a Brazilian company that provides IT services, infrastructure, and BPO and is controlled by the American investment fund Apax Partners.

There are also rumors that Amazon is talking with Terremark, a provider of IT infrastructure and cloud services that is linked to the American telecommunications carrier Verizon, which operates in Alphaville, a metropolitan region of São Paulo.

“Amazon has bought equipment from Cisco and will operate in Terremark with a co-location model,” says an executive of an IT company serving the Brazilian market. He says that Amazon can launch their cloud computing offerings in Brazil at any time.

Negotiations are still going on between Amazon and Oracle Brazil to offer ERP applications to Brazilian SMBs on a software-as-a-service (SaaS) basis. Amazon will also work with other partners to broaden its cloud computing offerings.

None of the companies would comment on their possible agreements with Amazon.

“It’s no secret that Amazon is already in Brazil,” says the president of a data center, located in São Paulo, that sells cloud computing services to SMBs. This same executive, who prefers to remain anonymous, says that the next big company to come to Brazil with cloud services will be Microsoft.

Microsoft confirms that it intends to bring its cloud computing services to Brazil to compete for SMB clients. Its argument is that the Brazilian market is strategic for the company and that it has a project to provide IT services in the country. However, it has no forecast of when it will be arriving and if it will have its own data center or use infrastructure from a Brazilian partner.

Counting On Cloud Growth

Fernando Belfort, industry analyst at Frost & Sullivan in Brazil, notes that cloud computing still represents a small slice of IT spending, but will tend to expand over the next year. Gartner estimates that this kind of service grew in 2010 to 3% of all investments on IT, and that by 2014 this share will rise to 19%.

Currently Brazil is the seventh largest information technology and communications (ITC) market in the world, with approximately $130.6 billion dollars of revenue in 2010, according to Gartner. The annual growth rate is projected to be about 10% by 2014. The IT services business should follow this pace of 10% and jump from approximately $15 billion dollars in 2011 to about $23 billion dollars in the next three years, the research consultancy predicts.

Amazon and other international players want to explore the IT services market in Brazil because of the potential for business growth, Belfort says. There is strong demand for outsourced services driven by the momentum of the economy, he says. The choice of Brazil to host the World Cup and the Olympics should also heat up these businesses.

The biggest buyers of cloud computing in Brazil are SMB enterprises that do not have their own IT departments and have limited budgets. Government estimates indicate there are more than 5,000 companies of this size in Brazil in various segments of the economy, many of which lack technology to integrate operations and improve business management.

The cloud computing model of buying infrastructure and software can be a cheaper alternative way to consume ERP, BI, CRM, corporate e-mail, and other business IT solutions. It is this market that Amazon wants to get a piece of in Brazil.

Amazon will increase the local IT services competition — but Brazilian providers contacted by Sourcing Brazil say they aren’t worried. “Their arrival in Brazil should not impact our business,” says Marcelo Safatle, director of HostLocation, which has two data centers in São Paulo and specializes in cloud offerings for SMBs.

David Shpilberg, co-founder and CEO of CPM Braxis Capgemini, considers the entry of Amazon in Brazil as positive. He says he thinks the competition with the US company will strengthen the local market and help position Brazil as a global player in IT services.

This article was originally published in Sourcing Brazil

Cesar Gon at CiandT: For Brazil to produce value in global IT – it must embrace the future, not the past.

By Filipe Pacheco

Santos, Brazil Country Manager, GFT

GFT is a German company focused on technology services and consultancy for the financial industry. So why would Mr. Ulrich Dietz, global CEO who founded this company in 1987 in the middle of the Black Forest, be so interested in the Brazilian market?  If there is one industry in which Brazil stands out as one of the best models in the world in terms of innovation and professionalism, it is the financial business. Marco Santos, who is the country manager for GFT in Brazil, agrees that local competitors are highly qualified and the industry is well established — but he says there is quite a lot of room to grow for those who offer IT solutions in niches or application areas that are not yet adequately addressed. Mobile banking systems would be one good example.

“Many times, we Brazilians tend to think we are good at something already and there is nothing else to learn,” Santos says. “That is not correct. There are many solutions abroad that can be replicated here.”

Santos has been in the post with GFT since June, and says “but already it feels like it’s been two years.” He previously worked for some technology heavy-hitters: Tata Consultancy Services, CPM Braxis, and Oracle. Among GFT’s clients in Brazil are some of the world’s biggest global banks, like HSBC, Deutsche Bank, and Santander, besides a few of the biggest Brazilian commercial and investment banks (which he prefers not to mention by name). The Brazilian branch of GFT is also responsible for all the support and maintenance and a few innovation projects for Deutsche Bank`s operation in the United States.

In a recent ranking published by Brasscom, the association of IT and communications companies that operate in Brazil, GFT appears as number 10 in the list of the biggest IT exporters in the country.

Mainframe Orientation

Most of the national banks still work with mainframe systems created by their own tech teams, who also handle maintenance and daily operations. But that is a model that has been changing both in Europe and in the United States, Santos says, because it is too expensive otherwise. Banks and brokerages in those regions are tending to switch to standardized platforms that are easier to maintain and also cost less, like SAP models.

GFT, he says, has the experience from working abroad to help Brazilian institutions overhaul their technical environments, customize systems to meet the demands of clients, and be able to offer services, updates, and maintenance sold as services afterwards. “At a certain point, Brazilian banks will have to switch somehow to cheaper models, and we are ready to offer them opportunities that they do not expect,” Santos says.

GFT has already been working with unnamed Brazilian clients (including “one of the biggest national players”) to develop systems for “higher trade frequency,” processing transactions at extremely high speeds without any human intervention. National banks have their own methods for doing this, but they are not yet as efficient as those used in Europe or in the US, Santos says.

Brazil stands as GFT’s hub of operations for the continent, and one of its main exporting centers

Innovation and “Boutique” Style

GFT has its offshore development center in Sorocoba, a city located about an hour away from São Paulo and, from there, it develops applications and sells IT services to its Brazilian clients, to other Latin American countries, and to United States. Its main office is located in Alphaville, much closer to São Paulo. The company has about 170 employees.

Santos explains that, besides being able to deliver the usual kinds of services and products expected from an IT provider — like Internet applications, SAP, Java, and .NET solutions, mainframe adaptations and maintenance and support services — innovation also has to be a top priority for them. Hence, a great part of the company’s work in Brazil is focused on coming up with mobility solutions for financial institutions.

GFT considers itself an “IT and consultancy boutique,” not strictly a service provider or product seller. “We have to deliver more,” he says. Recently, Santos says with apparent pride, GFT had about 100 of its analysts working on a project to realign its internal systems so that it could better provide mobility solutions, like being able to access, with the highest standards of security, a bank account from an iPhone or a tablet of any kind.

The company has developed its own platform that is adaptable to a bank’s operational criteria and can be used to develop services to connect bank systems with mobile devices, like Android, Symbian, or iOS. “That is the kind of service that we develop here and that we export,” he says, “and we are ready to do it on a much broader scale.”

Mobility has been such a big deal for GFT that the company is (along with Ernst & Young, Fujitsu, Deutsche Mess, and Bitkom) sponsoring a contest that will reward with 25,000 euros and a two-year training program the person who comes up with the best mobile application for financial institutions. The winner will be announced at Cebit 2012, one of the biggest IT events in Europe.

Crisis? What Crisis?

Asked how much pressure they feel here in Brazil from a parent company that has its headquarters in one of the regions that is struggling economically nowadays, Santos says that operations in Brazil have not suffered dramatically from the world financial crisis, nor are they being pressured to work more. “Actually, this has been a great year for us, and we expect 2012 to be even better.”

Santos would not say how much GFT Brazil is expected to increase revenue this year. But he said he believes that focusing on the domestic market while also seizing the opportunities to export IT services and solutions, it is possible to achieve better results next year than in this one. “They are complementary things,” he says.

In the first three months of this year, GFT global operations have earned 67.30 million euros in IT services and solutions for the financial industry, 24% more than the year before. Just the services segment that operates from Brazil and Spain was responsible for 28.89 million euros, or about 42% of the total results. For the year 2010, GFT`s global earnings were around 248 million euros.

Meanwhile, Brazil stands as GFT’s hub of operations for the continent, and one of its main exporting centers. Santos indicated no definite plans to expand but confirmed that the company continues to have ambitions hopes for its Brazilian branch.

This article originally appeared in Sourcing Brazil

Chris Snyder, CIO, Hulcher

Ever wonder what really distinguishes nearshore from offshore?

By Chris Snyder

I like to imagine an IT vendor selling the first screwdriver. “It can also replace the hammer, if you use the head of the screwdriver to hit the head of a nail. You also won’t need a knife for butter anymore because it will replace that as well. Crow bar… gone. Car keys… a thing of the past. A screwdriver will replace them all and you can finally standardize on one platform (the screwdriver) and reduce costs across the toolbox.”

The “right tool” approach to the organizational structure of an agile software development project mitigates cost by using arbitrage to achieve lower costs, while minimizing risks from misuse of resources – like using the screwdriver when you really need a hammer.

There are three tiers – offshore, nearshore and local, and then there is a cross-functional, cross-project sub team – the Ninjas – but we will get to that later. The balance of resources between the tiers depends upon the project, the teams, aversion to risk, the company culture and the experience within the teams.

Offshore

Offshoring software development was certainly once touted as the uni-tool. “Send us your development, your call centers, your business processes. Move it all offshore!” And after really trying to make it work, things started moving back home. Offshoring is neither the end-all solution, nor is it dead. But where is it best used in software development?

First, let’s distinguish offshore from nearshore. Nearshore involves similar time zones, allowing for agile development. Offshore is dissimilar enough in time zones that live coordination of the customer and the development team cannot be done without rearranging schedules from standard work hours. And I’ve tried the night shift in offshore models and my experience was similar to everyone else’s that I have talked to – don’t do it. No one should have to deal with high turnover on a “B” team.

There is an unspoken rule to distinguish nearshore from offshore. If you really really do not want to go visit the team at their location, they are offshore. Mumbai – offshore. Anything in Costa Rica or Brazil – nearshore. This doesn’t mean that New Jersey is offshore – they still have to be in a different country.

So, what is the offshore team well utilized for? The answer is non-critical path waterfall development: waterfall because the time difference precludes agile development; non-critical path because delays in communication add unpredictability which can upset the timeline. These delays will occur, and with the time difference, the few exchanges necessary to resolve the situation can take days. Components within this area should still fall into the guidelines for waterfall development – that is that they are highly definable and based off of established business processes not likely to change.

This analysis has been used for entire projects to determine the methodology applied for the process; I am proposing to apply it at the component level. If parts of the project can be developed at a lower cost utilizing waterfall methodology without impact on the whole project’s timeline and with minimal risk, then those components should be sent offshore.

“English-speaking” is a relative term. I can order a beer in German and ask where the bathroom is, but that is about it. By no means do I consider myself “German-speaking,” but there are nearshore vendors who would.

Nearshore

Nearshore development costs fall between the costs of local development and offshore development. It should be obvious that if nearshore development is cheaper than offshore and the quality is in line, then there is no need for offshore. Conversely, if it is more expensive than local development, there is usually no need for nearshore. Also, if waterfall method is used exclusively, a lot of the appeal of nearshore disappears.

The decision factors for balancing nearshore development with local development is not as clear when to send components offshore. Corporate culture, infrastructure, if the company has (or is trying to gain) a presence in the county, exchange rates and numerous other factors play into the decision. There is some residual resistance to nearshoring from bad experiences with offshoring, despite the differences between the two. Generally speaking, if nearshoring is accepted as an option, is fiscally sound and there is infrastructure to support remote workers, then the balance becomes one of comfort level with the development done remotely. In other words, what isn’t sent offshore and what isn’t done locally should be done utilizing nearshore.

When dealing with nearshore vendors, know a few things. First: “English-speaking” is a relative term. I can order a beer in German and ask where the bathroom is, but that is about it. By no means do I consider myself “German-speaking,” but there are nearshore vendors who would. Nearshore development is not identical to remote development, even with every fancy piece of collaboration software and hardware. There are cultural and educational differences, holidays, difficulties in procurement and staffing, economic fluctuations, irrational government regulations and so on. Where these issues exist in local development, they are amplified in nearshore development.

Local

There is a psychology to software development. Local development allows developers to understand local and corporate culture, establish bonds with product owners and other employees, participate in ad hoc conferences and lunches and so on. The degree to which the influence of proximity holds varies between organizations and between projects. Some view programmers as only interfacing with project managers – these people will be more comfortable with more offshore and nearshore development than one who organizes more in a cross-functional pod-like manner.

My personal preference is to keep project management and analysis local, and then to create cross-functional teams comprised of local and remote members. Having local management and some local development presence keeps the team aware of the corporate environment while mitigating costs. The question that comes is “What is the proportion between the two types – nearshore and local?” 80/20. Just kidding, the reality is – this is one of the toughest decisions managers are paid to make. Do not expect to employ empirical data to arrive at a solution, but instead rely on xperience and knowledge of the company and the project.

The Ninjas

Finding and keeping highly valuable “Ninjas” will form the bedrock to your success. It is not enough to be a senior/experienced/excellent programmer to become a Ninja. People skills are required, because the Ninjas deal directly with customers, program managers, end users and so on. Ninjas can be coupled with or act as a temporary stand-in for business analysts and project managers. Need more testers? Throw a Ninja in there. Project off track? Ninja will fix it. Everyone should have Ninjas.

Ninjas are rare, and by no means does everyone have the ability and desire to be one. They are strategic, tactical, multi-talented, affable and analytical leaders. Their presence provides mentoring to developers, stability to managers, insight to analysts and project managers and a sense of security to the customers. They should be well paid and taken care of, lest they become someone else’s Ninja. They need to be kept from entering management, lest they become “Freecell” Ninjas.

Conclusion

The best tool for the task at hand. And Ninjas.

Chris Synder, CIO at Hulcher, will be appearing at the Nearshore Nexus Conference, April 2012, in New York City. Follow NSAM (@NSAmericas) for regular updates.

Filipe Pacheco

In the past decade, Brazil has transformed itself into one of the fastest growing economies in the world, doubled its middle class, and taken on a fight against massive poverty. So now the big questions are: Is all of this growth sustainable? How far can it go? And what about the IT industry — will it keep pace?

Those questions were brought up during the Brasscom Global IT Forum in São Paulo recently, where one of the themes was Brazil in the year 2022. Sourcing Brazil asked a few industry leaders and experts attending the conference to look ahead: “What do you expect of Brazil and its IT industry by 2022, and what does the country have to do to become a global technology power?” Their responses included:

• Diminish poverty and improve education
• Evolve beyond “stone age” thinking of software development as an industrial activity
• Discuss and develop a clear strategy of action for the IT sector
• Make sure innovation and the industry can scale up
• Develop technology to serve the needs of an aging population

But everyone agreed: There is much work to be done.

Marco Stefanini, CEO and founder of Stefanini IT Solutions

"We have to improve education."

“I hope to see the country become a global potency. And I believe IT is a strong element in this Brazil of 2022 that may actually accelerate the productivity standards of the country. Because, for a country to become rich and not lose market share, with the salaries, all of the costs growing, you have to have compensations. How do you compensate for that? With more productivity, with more education, with more IT, more technology… these are elements that I see that can be improved. So what do I see in 2022? That we will make reality of all of these dreams… And that the country will keep some of its best qualities. It is a peaceful nation that has a neutral image in the world.

“And, not trying to dream too much, I hope that we keep diminishing the poverty around here. That would be what we call ‘win-win.’ At the same time we make those basic improvements to people’s daily lives, it also boosts all the other segments of the society. And, of course that for all of this to happen, we have to improve our education levels. We are on the way. I`ve never seen Brazil like this… So now we have to know how to use all this money that we have earned. In that sense, we need to learn with Asia and be far away from the Latin spirit of ‘being accommodated.’ It would not be nice at all to miss this timing.”

A profile of Marco Stefanini

César Gon, CEO and founder of Ci&T

Brazil has to stop thinking of software development as a "repetitive industrial activity."

“I would like to see Brazil take advantage of the opportunities that are presented to it today. The country has to face directly its central problems to build up real growth. There is hope that the next decade will be determined by the countries of the world that at other times were considered peripheral. Now they are becoming more relevant, actually the inductors of global growth. China is, obviously, the great example of this whole scenario. But Brazil, for its natural and human resources, has the conditions to assume a much bigger and relevant participation in the world.

“When it comes to IT…. Our industry, at the same time it is at an apogee in terms of how it is seen in the society – with all the influence of gadgets and the social networks in our daily life – has to elevate itself to a higher level. The IT segment in Brazil, in a certain way, still lives in the stone age, trying to develop software as a repetitive industrial activity. Which does not make common sense if you realize that software, more and more, is a collaborative thing, a social thing. It makes no sense for Brazil to be just another country doing what has been done since the beginning, competing with the current leaders of that segment. We have to use all we have learned so far to improve our software development processes and come up with better solutions.”

Interview with César Gon

Benjamin Quadros, CEO and founder of BRQ IT Services

"We have to have a clear strategy of action."

“We have two huge events coming our way in the next few years [the FIFA World Cup in 2014 and the Olympic Games in Rio 2016], which will demand lots of investments, naturally. Part of that growth has already reflected directly in the real estate prices all over the country, which is an example of how the economy is inflated. I believe that, after the events, there will be a natural downfall in the prices of real estate, for example, as it might do in other segments.

“The IT industry itself has conquered a space in the national agenda that it has not ever had in the past, and that can be already seen very clearly in the President’s actions and priorities. Dilma has positioned IT as an important industry that is supposed to give support to the growth of the whole society, as an strategic segment. We intend to be among the five biggest IT economies, but for that to happen, we have to have a clear strategy of action, and discuss it broadly around here.”

Profile of Benjamin Quadros and BRQ

David Tapper, vice president of Market Research, Offshore and Outsourcing at IDC

“I don’t want to predict the potential of the market size, or anything in that respect…. I think what will start to happen is that you will start to see the stress of the system because the opportunities will start to wriggle. The problem is: Will countries that used the traditional models start to become the referrals to these new ones? Your revenues might be growing, but your market may be shrinking. The best example I can give? The mainframe market. Most players got out of it. The only ones that remained, I believe there are just two, and IBM is the primary player. The second I believe would be Hitachi. So do you think that would be a market? So is that the way you want to go to?

“Sometimes you get positioned eventually in the long term, but the legacy does not. Your revenues can continue to grow, but then at some point it falls off because there are no more opportunities. I don`t want Brazil to be in that position. I want it to be the legacy country, so no other would come to you and drive you in any different direction. There is innovation in Brazil, but not in a scalable model, and you need scale to change a country.”

David Tapper interviewed by Nearshore Americas re: LatAm Sourcing

Antonio Gil, president of Brasscom

With fundamental changes, "Brazil will be among the top 3 IT economies."

“Brazil is on its way to be one of the five biggest economies in the world in 2022. And this brings to the country a series of demands. The first is a change of the current mindset: What does it mean to be one of the five top economies in the world? It demands us to analyze how we are going to position our economy as a whole.

“When it comes to IT, the demands are even more aggressive. In 2022 Brazil will be, probably, the 4th largest IT economy in the world, and for that we will have to go through a lot of changes. It will also be an older country – people will be older, and consequently, the country will have expanded the economically active part of the population. This is a window of opportunity. In a certain way, it will be a moment of great technological motivation that is being born right now: with cloud computing, mobility, broadband, clean technologies, social networks… all of them change fundamentally the way we do business today. In that way, with technology more accessible and cheaper, you will start to work with the demands of a population that was not considered before, with services of health, education, and banking, for example. That involves a whole different scenario to be explored.

“What do I expect for the country? Not to be among the five biggest IT players, but within the top three. We are big, we are good, we have been using IT in very smart ways in the past few years, and we are positioning ourselves in a very good way to improve it even more.”

Antonio Gil gives an insider’s look at Brazil’s IT plan

 This article originally appeared in Sourcing Brazil

Brasscom Global IT Forum Super Panel, last week in Sao Paulo: Corbett, Dreyfuss, Tapper, Vashistha and Laughlin.

By Filipe Pacheco 

Brazil’s ascendancy as a major center for global IT services will be engineered in a uniquely Brazilian way, and should in no way aim to reproduce the model crafted by India over the last twenty years, concluded a ‘super panel’ of  global outsourcing experts at last week’s Brasscom Global IT Forum  in Sao Paulo.

Brazil is in a class by itself, the panelists recognized, in confronting and leveraging an entirely different set of unique circumstances compared with its “BRIC” nation counterpart, India. For instances, Brazil is experiencing a colossal economic boom – taking giant strides forward to become one of the top six economic powers on earth. (India has yet to officially crack the top ten group of leading economies).

Furthermore, Brazil faces a confounding mix of bureaucratic red tape, tax hurdles and IT labor demands that combine to put added pressure on senior executives in the Brazil IT sector to creatively overcome these hurdles to produce – as César Gon, founder and CEO of CIandT, noted during the panel, a country where Brazilian professionals can “act as aggregators in multicultural processes”. In other words, Brazil has – unlike any time in history – been presented with a very important opportunity to distinguish itself among other giant IT-focused, powerhouse nations.

Sitting on the panel were Cassio Dreyfuss, Vice President of Research at Gartner; Michael Corbett, President of IAOP; David Tapper, Vice President of Market Research and Outsourcing at IDC; and Atul Vashistha, CEO of NeoGroup. Kirk Laughlin, Founder and Editorial Director of Nearshore Americas and Sourcing Brazil, was invited to moderate the conversation. Audience members included country managers, CEOs, CIOs and members of domestic and foreign companies invited by Brasscom.

Competitive Advantage

The word that dominated discussion was “competitiveness”. Laughlin kicked off the panel by reviewing the tremendous momentum of the Brazil IT economy, a sector that has virtually no unemployment and has shown a great deal of vertical industry IT solution maturity over the last decade. Still, the country received mixed reviews  from the World Economic Forum, in its annual competitiveness index. The report applauded Brazil’s innovation and ‘technology readiness’ (outperforming all the other BRIC countries), but pointed out that oppressive government’s burdens are stifling its potential.

Dreyfuss, who is based in Brazil and has had close contact with the local industry for years, pointed out that the amount of foreign interest in Brazil, and nearshore outsourcing in general, is reaching unprecedented levels. As a result, Brazil-based IT firms have to continue to sharpen their value proposition. “Companies here need to learn that it is more and more necessary to offer unique solutions and approaches to the clients, no matter in which area they are. They have to adopt more of a consulting posture,” he said.

Tapper stressed that Brazil Inc. needs to define its own model for growth, knowing that India is not a practical model to emulate. “Brazil is not in the same pace as India. It is just like a small supermarket chain trying to beat Wal-Mart. It is not going to happen. Companies here need to do what they are good at,” he said.  As an example, Tapper presented the case of Apple. “Look at Apple and what Steve Jobs did. His intention was not to beat Microsoft, he knew that would not happen. But he created products that made people dependent on them.” (For Tapper’s take on why Latin America hasn’t won more outsourcing business in the US – see this excellent interview.)

Vashistha stressed that the domestic industry has to pay more attention to scalability. “In the long term, you are not going to have 4,000 players, but just a few one them that will be very good players, that is the point. Companies need to gain in scale and be effective at it.”

Next Gen Thinking

An over-riding theme of the panel debate was around Brazil’s ability to create – and the export – solutions for the next-generation of global IT requirements, from the data center to the mobile handset.   Corbett stated that national companies should focus on areas that tend to drive the growth of the industry in the next few years, such as cloud computing and the outsourcing possibilities that are derived of it. And he agreed with Vashistha when the topic is exportation. “Brazil has such a developed economy, and that has to be seen as an advantage both considering the domestic market and the foreign clients,” he said. (Atul posted an outstanding analysis of the Brazil sourcing opportunity, in June in Nearshore Americas.)

It is a fact that the country has recently been in the international spotlights. “A few years ago, I’d answer a phone call once every two weeks with people asking me what was going on in Brazil. Nowadays, I have a few of those phone calls daily,” said Dreyfuss during the conversation. “It is now or never. The country either takes advantage of this in the next two or three years or it is simply not going to happen again.”

The Uniqueness Play

But is the national industry capable of meeting such demand? There was consensus that Brazilian IT professionals have different characteristics from those in foreign markets, but how to train those professionals is still a challenge for employers.

It was calculated by Brasscom that in 2011 alone there is a lack of about 90,000 Brazilian IT professionals, and that number is expected to increase to to 700,000 by 2020, considering the current pace of industry acceleration.

Vashistha pointed out that most mature and growing economies have policies to attract foreign professionals and incent them to remain in the country – something that is still not done effectively in Brazil. He mentioned that many entrepreneurs go to work or study abroad and go back home with a lot of knowledge to be put into action, but the bureaucracy for foreigners to enter the country is still too wearing and expensive.

For Tapper, there is the potential for growth of venture capitalism and investment, “That is important to create and foster new ideas and models,” he contended. When the subject of company training programs was raised, most of the panelists considered that the training done currently is incipient to what would be necessary for a young professional to know in order to start working. Considering that, Dreyfuss, at that moment, pointed out that, “Brazilian services are already too expensive, most companies simply don’t have enough money to invest in education.” For him, actions taken by the government, such as the tax incentives on payroll recently enacted under Plano Brazil Maior are a good alternative to lower costs of these companies as a whole.

After being questioned about the talent of the Brazilian professionals, and how they can contribute to different, creative and unique models of IT and outsourcing services provided by national companies, Tapper was one more time very emphatic. Holding a biography of Steve Jobs, he repeated, “We should always have him in mind and as an example.” It is a good example of how to think outside of the box, or maybe outside of the borders.