By Filipe Pacheco

Stefanini IT Solutions, one of the biggest players in the IT and Outsourcing industry in Brazil, has just made another move towards expansion in Latin America — this time, towards the southern part of the continent. The company founded and managed by Marco Stefanini has now bought Top Systems, one of the biggest producers of core banking software in Uruguay.

The Montevideo-based firm is focused on IT services for financial institutions and already had the Brazilian company as an allied partner. Its main product, called Topaz, is used by financial institutions of different sizes, mainly banks, microcredit institutions and compliance departments. Topaz uses Service Oriented Architecture and Java technology.

“Even though the company is based in Montevideo, their products are utilized throughout Latin America, including Central American countries. For us, it is a strategic move to get closer to clients we do not have today,” Marco Stefanini told Nearshore Americas. The CEO did not disclose how much was spent in the acquisition of Top Systems, which has about 120 employees working from Uruguay today. According to him, the conversations that culminated in the deal lasted for about six months.

Initially, Top Systems will continue to operate with its original name but will use the colors and the logo of the Stefanini.  “But we might change that in the future, we have not thought about it yet,” said Mr. Stefanini, who is in the United States today. He did not disclose financial details of the transaction.

Top Systems was created in 1987 with the aim to generate “innovative technological solutions” for its clients, it is an ISO 9001 certified company. Besides its headquarters in Uruguay, the company also has an office in Lima. Its main competitor in the domestic market is Bantotal.

“With expertise in this market and with the 20 biggest Brazilian banks as clients today, Stefanini complements its offering in core banking, providing access to institutions of any size,” says Marcos Monteiro, Business Consulting director at Stefanini. Today, financial markets represent 33% of the revenues of the company, and more than 90% of the private banks in Brazil are served by the firm.

On April 26th, Top Systems announced a partnership with Stefanini to serve a Brazilian client called Banco Coperativo Sicredi – a financial organization focused on cooperation entities that is very strong in funding in the Southern States of Brazil, especially Rio Grande do Sul, which borders Uruguay.

The Uruguayan perspective

“This is an important move for the Uruguayan software industry as a whole,” comments MarioTucci, partner in MVD Consulting, a boutique business consulting firm that specializes in change and operations management, as well as globalization strategies for multinational companies.

He explains that even though the banking industry is considerably small in comparison to that of Brazil, the local software companies have specialized themselves to provide core financial systems technology in many Latin countries, and are quite a reference when it comes to financial software production in the region.

Another positive point of the acquisition says Tucci, is the strengthening of the Latin American market as a whole, and the closer contact between regional companies to develop the regional software market, “that way they can compete with Indian and American peers,” he adds.

“Just recently foreign investors started to consider players in the Uruguayan market, which has always been formed mostly by local companies. But there is a moment when they need scale to grow, and these investments are welcome for that,” Tucci said in an interview with Sourcing Brazil.  “At the same time, Brazilian companies seek to expand abroad, they need to.”

Another positive point of the acquisition says Tucci, is the strengthening of the Latin American market as a whole, and the closer contact between regional companies to develop the regional software market, “that way they can compete with Indian and American peers,” he adds.

Ready for new acquisitions

“We are currently in conversations with other potential companies that can be purchased around the region. Those talks are always happening,” said Stefanini.  This is the second company from the IT financial sector that Stefanini has bought in less than six months. At the end of last year, the company bought Orbitall, the IT branch of Itaú, one of the biggest private banks in Brazil.

Within one year between 2010 and 2011, Stefanini acquired two firms in the United States (TechTeam and CXI), and one in Colombia (Informática & Tecnología).  “Moments of crisis are the best ones to grow, when the really good opportunities come up,” remarked Stefanini in an interview with Sourcing Brazil in May, 2011.

With the acquisition of CXI, Stefanini expanded its capacity to offer American clients services in staff augmentation, turnkey IT solutions, end-to-end ERP services, and functional sourcing. It also reinforces the alliance with SAP that CXI has had since 2006, which makes Stefanini a SAP certified partner in the United States.

The United States is Brazil’s main client when it comes to exportation of IT and BPO services, according to data from the research firm IDC and a new study done by Brasscom. The report also reveals that US -based multinational companies in Brazil are in the top ranks of exporters, with IBM, Accenture, and HP being the three biggest revenue earners — followed by homegrown success stories Stefanini, T-Systems, and Ci&T. Last year Brazilian IT and BPO companies exported US$ 2.4 billion worth of services, a figure projected to grow by 11% this year. After the U.S., Brazil IT providers’ biggest customers are in Latin America, followed by Europe.

While Brazil’s overall ICT market had revenue of US$165.7 billion in 2010, Brazil’s IT/BPO sector contributed US$85 billion to that total. The country is the eighth biggest domestic technology market in the world. For a bit of global perspective: Worldwide, IT/BPO services produced US$1.4 trillion in revenues in 2010, according to AT Kearney. Outsourcing services accounted for US$769 billion.

Brazil’s IT export revenue derives mostly from services like development, maintenance and support, body shop, integration and consulting, and infrastructure management. The financial industry is a large client, not surprising considering Brazil’s expertise in that domain. Manufacturing, telecommunications, mining, and oil/gas are also major consumers of Brazilian IT and BPO services.

One big thing customers continue to turn to Brazil for is Cobol development. There are a lot of major companies that still use this language-that-will-never-die, plus there’s a significant financial industry operating in Brazil for which Cobol, “the business language,” is essential. The country also has one of the world’s largest Java communities, and there’s a major contingent of SAP solution developers.

“In-house IT,” in which a company or government agency develops its own solutions or systems (to manage operations, for example) is responsible for 46.4% (or US$39.5 billion) of the domestic industry. Hardware (servers, storage, peripherals, network equipment) makes up about 23% (US$19.8 billion) of the market, followed by services (15.6%), software (only 6.3%), and BPO (2.8%).

The new research finds the Brazilian IT market to be the second largest of emerging nations, with China first.

“Brazil has the capacity . . . to double the industry’s revenues and become one of the world’s top five centers for IT by 2022,” write Brasscom officials Antonio Gil and Rogerio Oliveira in the introduction to the new report.

Ranking of IT-BPO exporters in Brazil (by total revenue)

1. IBM

2. Accenture

3. HP/EDS

4. Stefanini

5. T-Systems

6. Ci&T

7. CPM Braxis

8. DTS

9. BRQ

10. GFT

11. Tivit

12. Deloitte

13. TOTVS

14. Softtek

15. Tata Consultancy

16. CSC

17. Sonda Procwork

18. Grupo ASSA

19. HCL

20. AtosOrigin

21. Cast

22. Unisys

23. Resource

24. Politec

25. Satyam

26. Neoris

27. Bull

28. Lógica

29. Algar

30. Oged

Source: Brasscom, IDC

This article appeared originally on Sourcing Brazil

One CIO’s experience vying for talent and finding ‘much, much better’ results than India

By Dennis Barker

Imagine trying to staff up for an offshore project and every time you think you’ve got someone about to join the team, that person decides to take a job somewhere else.

That was the biggest and most annoying problem Chris Snyder ran into while working with a Nearshore IT provider. Snyder, director of IT services and CIO for Hulcher Services, getting the team from 80% to 100% staffing was the thing that kept him awake at night. “It might sound like a minor thing,” he says, “but it happened a number of times where we’d have a candidate we really liked tell us near the end of the hiring process, ‘Sorry, I’m taking a job with someone else.’ And that someone else was usually the government.”

“It became a problem because we’d have the team nearly fully staffed but couldn’t get that final person hired. It took much longer than I had expected,” says Snyder, a 20-year IT vet. “We were raring to go, our provider was raring to go, but this held us up for four to six weeks.”

“One thing I like about outsourcing is that I can generally get people quickly. I’ve never had this problem locally or with India,” Snyder says. “But I did have this problem with Brazil.” Most of the candidates he liked ended up taking jobs with the government. (In the U.S., this would be like a software developer taking a job with the San Jose city planning commission instead of going to work for Google.)

It’s No Myth

We hear a lot about Brazil’s shortage of IT workers, but Snyder’s experience indicates that this shortage is no myth. Demand for talent is high, and some workers have their pick of jobs. And it wasn’t like Snyder’s offshore provider was a minor player. Hulcher had partnered with Stefanini IT Solutions, one of the premiere technology companies in Brazil as well as all of Latin America.

CIO Snyder says time zone is a big deal

Snyder and Hulcher—a 47-year-old services contractor that works with the railroad and other industries—turned to the Nearshore after working with providers in India. “The logistics of software development with someone 12 hours off, it’s as difficult as you’ve probably heard,” Snyder says. High turnover was also an issue. “Trying to get people there aligned with our team here in Dallas, you get the night shift in India, and no one ever says, ‘Woo-hoo it’s midnight, I get to go to work!’” Consequently, people fall off the radar and it becomes too difficult to manage, Snyder says. “You’re always bringing people up to speed. We realized we needed something in our time zone.”

After checking out a number of firms in Brazil, Hulcher decided on Stefanini for several reasons. Stefanini “looked the best in terms of catering to a company our size,” Snyder says. “Most of the providers that had what we needed only wanted to work with huge operations, not someone our size with 750 employees. Stefanini looked like they could work with us and in our market.”

Hulcher’s work with Stefanini has mainly involved “custom software to correlate logistics, where vehicles are, focused mostly on dispatch apps.” Emergency response is part of the scenario, and that means you can’t be fooling around when it comes to software quality and accuracy. Snyder says that although it took junior team members in Brazil a while to get up to speed, “quality was about where I expected. By the time we got to user testing, we ran into a few bugs, but it was about on par with local development, and much, much, much better than India.”

Price, Pushback, and Process

We asked Snyder about other criticisms you sometimes read about Brazil. Too expensive, for instance. Stefanini’s pricing “was about where we’d want it to be,” he says, and was not adjusted as a result of real-vs.-dollar currency fluctuations.

Snyder also saw no evidence that Brazilian developers are passive or won’t point out problems when they see them. “Our team down there was flagging design errors,” he says. “They were involved in the architecture. It was a thousand times better than working with India, where I could come up with a bad idea and no one would say anything.”

Snyder adds that this more active relationship with the Stefanini team could have been a result of his having visited them in Brazil. “I never traveled to India,” he says. “But I think because I went to Brazil, on a kind of social call, and got to know the team as people, and they got to know me as a person, that really helped. I told them, ‘If you have an objection to something, let me know.’ I wanted them to understand that they should not be quietly obedient.”

In one case, the client wanted some last-minute changes. The next release was a week away. The Stefanini team said, “Okay, we can make those changes, but it will mean not implementing some other things,” Snyder recalls, so “we explained the situation to the client and negotiated around that. They agreed they shouldn’t be making those kinds of changes at the end.”

Whereas Indian companies are famous for being masters of process, Nearshore companies are sometimes criticized for being more ad hoc. That can be good and bad. “Stefanini doesn’t impose their scrum methodology on you, which can be good news because [scrum] requires a very flexible framework,” Snyder says. “But it can be bad news if there’s an aspect of development where you’re not mature or there’s a gap. They’re not there to fill in that gap with their processes. We ran into this with change management, so we developed our own CM process.”

Snyder advises anyone considering a Nearshore provider to “travel to that country and get to know the people.” Hulcher brought someone from Stefanini up to Texas to get to know the company. You have to include that kind of travel as part of the process and the expense.

He has one last piece of advice for anyone new to offshoring. “One other thing is vital: Collaboration tools,” he says. “Since you can’t just walk down the hallway to talk to someone, you need the software and hardware to do that. You have to have screen-sharing capability, whether it’s Webex or something more sophisticated. A webcam, videoconferencing, that’s extremely important because you can then associate a face with a name.”

Although the Brazilian government threw a wrench into the works, Snyder says he has so far been “quite happy” with Stefanini and the team in São Paulo. “Excellent-quality apps, no language problems conveying concepts,” he says. “When I get an e-mail from someone down there, I know I don’t have to take a deep breath.”

Meanwhile, any company sourcing from Brazil had better keep in mind that the hiring process could take longer than expected.

Sao Paulo — Marco Stefanini, founder and President of Stefanini IT Solutions, a global provider of solutions for the IT market, will be representing the information technology sector in the next meeting of the CEO Forum, to be held in Brasilia on March 19 and 20.

Along with CEOs of companies like Citibank, Coca-Cola, GM, Intel, Motorola, Cummins, and Gerdau, etc., the newly elected President of Brazil, Dilma Russef, and the President of the United States, Barack Obama, will be attending. The goal of the CEO Forum, created in 2007, is to foster trade integration between Brazil and the United States with representatives of the government and the private sector of both countries.

The focus areas of the Forum are the promotion of trade, industry and investment; the improvement of competitiveness; cooperation in education and human resources development; the promotion of technological exchange; and support for the free movement of goods.

Along with Motorola’s representative, Marco Stefanini is responsible for the area of education and human resources development and submitted a draft bill that encourages investment in education by the private sector through tax waivers (educational credit), a model similar to that of the Rouanet law. The project is currently under consideration by the Brazilian government.

“It is an honor to represent the national industry of technology in this forum and to present to the world the dynamic economic market, the vibrancy, and the creativity of Brazil,” Stefanini said.

SAO PAULO – December 13, 2010 – Stefanini IT Solutions Group today announced the completion of its tender offer to acquire the outstanding shares of TechTeam Global, Inc, resulting in a merger of the two companies to form a new subsidiary, Stefanini TechTeam.

The newly-formed subsidiary brings together Stefanini’s traditional strength in areas like application outsourcing and software development with Tech Team’s expertise in service desk and BPO.

With the addition of TechTeam employees, the Stefanini IT Solutions Group will now have nearly 12,000 employees worldwide and revenues of $600 Million USD.

The acquisition builds on Stefanini’s existing relationship with TechTeam as a client and partner, which is expected to ensure a smooth and efficient integration of the organizations.

“As our two companies worked together, it became clear that our geographic footprints and service portfolios were highly complementary, and we realized that Stefanini and TechTeam share similar customer-oriented cultures that will enable us to more effectively address emerging opportunities in global outsourcing,” said Marco Stefanini, founder, president and CEO of the Stefanini IT Solutions Group.“Stefanini’s acquisition of TechTeam and the formation of our new Stefanini TechTeam subsidiary aligns with several major trends driving growth in outsourcing: globalization, flexible and comprehensive services, rightsourcing and the emergence of Brazil as an economic powerhouse.”

Stronger Global Presence

The addition of TechTeam’s offices in Europe and Asia Pacific complements Stefanini’s strong and growing position in Latin America and North America, giving Stefanini direct presence in 27 countries. Stefanini TechTeam will have a broader global reach and a combined 20 global accounts worldwide.

More Comprehensive Suite of Services

The acquisition of TechTeam brings together Stefanini’s offerings in application outsourcing and software development with Tech Team’s strengths in areas like Infrastructure Outsourcing and BPO. TechTeam has been an IT outsourcing and BPO provider for large and medium-sized businesses, with offerings like service desk, technical support, desk-side support, security administration, infrastructure management and related professional services. In 2009, the Black Book of Outsourcing ranked TechTeam number one globally in help desk outsourcing across both Tier 1 and Mid Tier customers, as well as number one globally in IT infrastructure outsourcing for Mid Tier customers. The acquisition will allow Stefanini to offer TechTeam clients and its own customer base a more comprehensive suite of services to meet IT priorities and/or to scale into new areas as their needs evolve.

Reinforcing Brazil’s Economic and Outsourcing Influence

The acquisition of U.S.-based TechTeam by a Brazil-based company is evidence of the growing influence and power of Latin America in global business. Brazil in particular is increasingly recognized as an emerging force in business and the global economy.

“The Stefanini IT Solutions Group’s goal is to become a $1.2 billion company by the end of 2013, and we feel this acquisition of TechTeam will be a major contributor in our work toward that objective,” said Marco Stefanini. “We are confident that the formation of Stefanini TechTeam will enable us to improve the support we provide our clients –with a more comprehensive portfolio of services and a broader global reach – and create more opportunities for our employees to grow and prosper.

Founded in 1979 and headquartered in Southfield, MI, TechTeam has approximately 2,200 employees across the world, providing IT support in 32 languages.

To read Nearshore Americas’ earlier commentary on this merger, click here.

FORT LAUDERDALE, Fla. – December 7, 2010 – Stefanini IT Solutions (www.stefanini.com), a global provider of onshore and nearshore IT consulting, integration and development, and outsourcing services, today announced that Hulcher Services Inc., a nationwide services contractor to the railroads, general industry and government, has selected Stefanini to provide nearshore outsourcing Software Development and Testing utilizing SCRUM.

This assignment is one of many SCRUM and other Agile software development engagements Stefanini has launched in the past several months, which allow for the real-time collaboration required in SCRUM software development. With the SCRUM approach, development teams need to be in direct contact on a daily basis, and having an IT services provider in similar time zones in Latin America make this interaction between teams easier and more efficient.

“The quality of service and location are two of the main reasons we decided to move our development team from India to Brazil,” said Christopher Snyder, CIO of Hulcher Services Inc. “We feel that Brazil offers better quality services and better customer support, and the similar time zones enable our staff in the U.S. to work side-by-side with Stefanini’s developers in Brazil in real time. SCRUM development requires that teams meet daily and we can do that with Stefanini because they are working on the same schedule as we are every day.”

SCRUM is an agile approach to software development that leaves process decisions up to the development team rather than providing complete, detailed descriptions of project processes. SCRUM relies on a self-organizing, cross-functional team, with project details and issues decided by the team as a whole. In a SCRUM environment, everyone contributing to development of a feature from idea to implementation is involved in all activities, an approach that requires daily meetings to review the team’s progress through the process.

In support of the Hulcher Services SCRUM engagement, Stefanini will provide a team from its Sao Paulo development center, where applications in .NET and SQL Server will be developed.

“Stefanini has seen a dramatic increase in interest in SCRUM and other Agile development processes, due in large part to our expertise and our nearshore capabilities that align with this approach to application development,” said Fabio Back, business development executive, Stefanini IT Solutions. “Nearshore outsourcing to Latin America provides many benefits, and this is particularly true with SCRUM development, because of the advantages of geographic proximity. Travel and communications that are often part of SCRUM projects are much easier and less expensive with a partner in a similar time zone. In addition, the commonalities between the cultures and the presence of partners that speak the same language, make nearshore outsourcing the best choice for companies looking to move to SCRUM and other Agile development processes.”

By Tarun George

Today’s acquisition announcement of TechTeam Global by Stefanini IT Solutions was not entirely unexpected given the increasing indications by Nearshore players that they plan to bulk up onshore.

Stefanini, one of the largest IT services and consulting firms in Latin America, will benefit greatly from TechTeam’s BPO and IT support and help desk capacity. But there’s a bigger trend taking shape here than simply two companies merging capabilities to expand services. TechTeam is US-based. Stefanini is a Brazilian heavyweight. Remember all the talk about ‘the coming wave of onshore’? In a sense, the wave starts here.

Back in June, Nearshore Americas ran an article titled The Onshore Outburst in which we predicted high profile movements in the following months by Nearshore players onto US soil. We expected that “acquisitions will be led by Latin American providers with a focus on BPO and IT services, that are determined to be closer to potential customers and put their project managers in the client’s backyard”. This acquisition of TechTeam, a prominent US player with global headquarters in Michigan, is indicative of the effort by Nearshore providers like Stefanini to increase their onshore footprint.

Add this to the aggressive marketing campaigns by US states competing for quality investment, the availability of low cost rural sourcing options, and the arrival of large offshore players like TCS and Infosys – and it’s clear that the United States has become an important part of clients’ sourcing portfolios.  We expect more deals of this nature (offshore players buying US firms) in coming months and years. (Infosys in fact may be turn out to be the most pivotal player as its healthcare practice expansion may be predicated on ‘keeping’ some activities onshore, therefore providing added incentive to expand a onshore base.)

TechTeam Global also has a significant reach in continental Europe, which Stefanini  will look to leverage. The two-part acquisition will merge TechTeam with a US subsidiary of Stefanini for a total value of around $93.4 million. Stefanini has made a ‘tender offer’ to buy all outstanding common shares of TechTeam at $8.35 per unit, and the entire transaction is scheduled to be approved and completed before the end of 2010. Stefanini has approximately 9000 employees around the world, while TechTeam employs 2100.

Stefanini officials were not able to comment on the deal as the tender offer must still pass through review by the SEC.

Read more details of the acquisition here.

(Press release) Sao Paulo, September 2010 - Stefanini IT Solutions, the largest national service provider and a leading global technology solution, has just opened another consulting office in Mexico.  The 41st consulting office is located in the city of Guadalajara and has already started operations as part of a strategy to offer more personalized service to its customers based in the region. The firm intends to serve a market that is the third largest in the country, after Mexico City and Monterrey.

The performance of Stefanini has been gaining attention in Mexico and grew in 2009, 90% over 2008.  The previous year the growth had reached the milestone of 100% over 2007, driven especially by increasing its activities in the financial market.  In 2010, the Operations Director, Marcelo Ciasca, has an expectation to grow 50% of sales organically.

“It is because the consultancy have vast knowledge and experience in banking, not just the technical issue, but also in the customer’s business.  We have agility and competitive costs, which makes a significant difference,” says the executive.  Stefanini today serves some of the major banks in Mexico: HSBC, Santander, BBVA Bancomer and Banamex.

Among the major projects developed in these banks are Software Factory, corrective maintenance and evolution of applications, analysis and application design, consulting SCRUM (Agile) projects in various price closed systems, and support to areas of technology and datacenter.

Stefanini Mexico maintains more than 350 professionals working on projects in these four banks.  “Among the competitive advantages include the proximity to the U.S., the expense of Brazil and the large number of professionals with fluent English,” he says.

The expansion of consulting on Mexican soil began in 2000.  Since then, the market is one of the fastest growing within the company.  There are now three offices and a center for software development.  Ciasca mentions that the expectation is that in 2011 the new branch will represent at least 25% of total sales in the Mexican Republic.

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Rio de Janeiro: Will domestic Brazilian IT firms, multinational giants or new entrants from India claim leadership in the fast growing IT services market? David Tapper, IDC’s top outsourcing analyst, tells who he’s betting on. (Filmed during Brasscom Global IT Forum 2011.)

By Dennis Barker

In 1925, the intrepid English explorer Percy Fawcett journeyed once more into the jungles of Brazil to try to find the legendary ancient City of Z. Did it ever really exist, or was it lost to history? In 2010, this reporter set out to answer a much simpler question: Are Brazilian outsourcing companies developing cloud-based services?

And by cloud services, we mean: A business service or process that’s provided via the Internet, in real time; can be scaled up or down; features service-level agreements (SLAs); and can be accessed on demand, like a utility, on a pay-per-use basis. Of course that definition could be broadened to include other characteristics, but you get the idea. We don’t mean things like providing hosting services in a data center.

Cloud services and outsourcing would seem to have a natural affinity. Being able to give customers what they want on a granular, scalable basis — whether it’s BPO or infrastructure — would be advantageous to both provider and client. After all, the cloud is all about getting what you want, when you want it, however much you want, from whatever location you like.
Brazil Needs to be the Leader

And if Latin America is to thrive as an offshore destination, LATAM countries need to be right there with competitors in offering advanced, adaptable, on-demand technologies. Brazil, being the largest player in the region, would be the most likely candidate to get into the role of cloud-services provider. When you consider the country’s reputation for having developed sophisticated banking technologies during the past decade or so, it’s not much of a stretch to expect that Brazilian service providers could do the same in the cloud.

“There are Brazilian companies offering infrastructure services, but they have to take the next obvious step in maturity and offer managed services. Don’t just offer people, human resources, but provide things like SLAs, complex pricing models, and advanced cloud-based services.” - Ross Tisnovsky, Everest Research

However, when we set out to discover just what’s going on with cloud services in the nearshore region, the response from Brazilian outsourcing companies was not exactly enthusiastic. Perhaps it was a matter of timing, but nearly all the firms we contacted were either not ready to discuss their plans or appeared to have no plans. As one exec told us: “We currently don’t have a cloud offering, but  are waiting for the market to take shape.” He added that Brazil “has a strong and mature business process market and is certainly poised to be a relevant player.”

Brazil Not Known as First Mover

Figuring out how the market will shape up makes sense, as does finding one’s niche in the cloud and figuring out what customers will pay for. But what other things might be keeping Brazilian providers from jumping into cloud services?

One big factor, says Ross Tisnovsky, vice president at Everest Research Institute, is that “Brazil has never been a first mover in IT services. They’ve been very late to the market in terms of outsourced infrastructure services, whereas India has been doing this for 3 to 5 years.” One of the “curses for IT services in Brazil,” Tisnovsky says, is heavy internal demand. “Companies can build a good business focusing just on local customers. That healthy internal demand creates a healthy competition for resources. India never had to deal with that level of internal demand until recently.”

The other side of that internal situation, the blessing, is that Brazil “has a good legacy of doing complex infrastructure and serving large, powerful, internal clients, like some of its banks and financial corporations.”

What Brazil needs to do, Tisnovsky says, is decide to evolve to the next level. “There are Brazilian companies offering infrastructure services, but they have to take the next obvious step in maturity and offer managed services. Don’t just offer people, human resources, but provide things like SLAs, complex pricing models, and advanced cloud-based services.”

Still, Tisnovsky says he is “bullish” about Brazil. “Brazil as a country is well-positioned to offer cloud services. They have the necessary electricity and telecommunications infrastructure. And they have the talent.”

Don’t expect any big breakthroughs in 2010, Tisnovsky adds, “but Brazil will be the first Latin American country to make a serious move into cloud services. It makes sense for them to do it.” Chile is targeting BPO services, but “they don’t have the scale to compete with Brazil. Other countries, like Argentina, claim they can compete with Brazil, but they can’t really.”

Playing Leapfrog

Frances Karamouzis, research VP with Gartner Research and Advisory Services, sees Brazil as being in a good position to capitalize on cloud technology, once the technology becomes more mature and comes out of “the hype phase.”

“Many service providers are in a good position to act as an intermediary for certain cloud services, but the more savvy ones will be able to add their own intellectual property or value,” Karamouzis says. “Brazilian or South American providers are in an interesting position because there’s a lot of technology there that is dated or legacy stuff, such as laptops and servers, so they can leapfrog to the new technology instead of making a gradual transition. What is really interesting about Brazil is that service providers there have some of the best banking expertise in the world. Fifteen or 20 years ago, when Brazil was facing difficult times financially, IT helped the country implement faster cycle times. Service providers in Brazil had to create a new level of banking technology, and you see that technology today all around the world.”

Brazil, Karamouzis says, has had to solve some difficult IT problems out of necessity and “can parlay those technology skills into the cloud.”

But technology skills don’t necessarily eliminate the fear, uncertainty, and doubt that providers and their clients might feel about cloud-enabled services. “What’s different about the cloud right now is that the technology requires a different mindset,” she says. “You need to invest more upfront, like a pharmaceutical company investing in development of a new drug. Typically service providers don’t work with that kind of business model. Some of the core Latin American enterprises they’re used to dealing with are not first movers. They tend to be more pragmatic. That’s why you don’t see this unbounded cloud-is-everything attitude. They and their customers can see something like a certain application taking hold and respond to that, but in the cloud, you have to have a more pro-active mentality. It’s sort of a ‘build it and they will come’ approach.”

And that requires a lot of homework, she adds. “The investment and knowledge required upfront can be a big disruptive thing for service providers. Most of Latin American providers are not large, so they have to be careful about pursuing new technologies. But if they pick the right ones, they have a lot of opportunity.”

Karamouzis says Gartner has seen some “interesting pilot projects” that will shed  light on what types of cloud services Brazilian companies might start offering in the next year or two, but for now, “it’s all fairly embryonic, and they’re keeping much of it under the vest.” More will be revealed in 2010, she says. It’s a good bet that the focus will be infrastructure services, followed by applications. “Those tend to be the biggest areas where there’s a lot of mining for new opportunities.”

Stefanini Is There Already

One Brazilian company that is not waiting to move cloudward is Stefanini IT Solutions. Renato Mendonca, service delivery manager, says the company has a long-term strategy to offer cloud-based solutions and has invested half a million dollars to prepare development teams, forge strategic alliances with SaaS providers, and develop the technical infrastructure to meet demand. “Today we have an excellence center for R&D in cloud computing, dedicated to specialized technologies like SalesForce, Microsoft Azure, and Google,” he says. “Currently we have 30 professionals working in this center, where 40 percent are specialists in some cloud computing platform.” Besides developing SaaS projects, the company is also exploring platform as a service (PaaS) solutions, which can provide customers with a software development system without them having to buy and manage the necessary hardware and software.

“The investments we’ve made so far will provide us with returns in the short term and the long term,” Mendonca says. He describes cloud computing as “mature from a technological viewpoint,” but concedes that it bumps up against certain “cultural paradigms,” such as clients “believing it is more secure to keep data at home.”

Stefanini hopes to start more partnerships with other service providers and increase its number of cloud-savvy developers. The goal, Mendonca says, is to “position itself as a company with technical and business expertise to fulfill the future demands in all countries where we do business.” (That number of countries is currently 16, and besides Brazil includes the U.S., the U.K., Canada, and Latin neighbors Chile, Colombia, Peru, and Panama.)

Meanwhile, big players from beyond Brazil’s borders are already working in the cloud from within Brazil. Capgemini has a team working on what they call “cloud BPO.” David Poole, who heads up Capgemini’s Latin American operations, told us in a recent interview that the group has a “BPO sandbox” where they’re working with clients to create cloud-enabled services to offer back-office processes on a pay-per-use  basis. This is particularly relevant in the nearshore region because “companies are quite happy to invest hugely in call systems but not in HR systems, for example, so they can access these kinds of services from a vendor like us.”

And then there’s the Big Blue giant. IBM’s BPM Cloud, which it describes as “business process management as a service,” is offered in Brazil and nearly every other country around the world. Users pay on the basis of CPU time.

IBM opened one of its Cloud Computing Centers in Sao Paulo in 2008, with an emphasis on helping businesses build “massive-scale collaboration systems.” (Other locations include Bangalore, Seoul, Hanoi, and Shanghai.) IBM announced last year that it’s working with the Association for Promotion of Brazilian Software Excellence (SOFTEX) and its hundreds of local ISVs to come up with strategic plans for using cloud technology. And while the company isn’t your usual outsourcing provider, it’s likely IBM will play a role in the development of cloud services in Brazil.

Wipro Stakes New Ground

As Everest’s Ross Tisnovsky pointed out, India has a several-year jump on Brazil in terms of offering IT services, and one company in particular has been staking out turf in the cloud. Wipro chief technology officer I. Vijayakumar said recently that the firm is investing heavily in the development of “offerings for enterprise migration to the cloud.”

In a 2009 report on global IT infrastructure outsourcing,  Forrester highlighted Wipro as “being notable among the India-based service provider firms” for its aggressive cloud strategy. According to the report, Wipro is “planning on faster cloud services growth than its more traditional services” and is working on cloud-enabled storage, backup, and computing services, among others.

Cloud computing sometimes gets a bum rap for being all hype, no substance. But cloud-enabled services are being validated by companies at the forefront of business technology, and it’s just a matter of time before other providers in Brazil are doing what Stefanini is doing and figuring out the best ways to offer their services from the cloud. As Tisnovsky said, it makes sense. Whether they make the move in time is another question.