Nearshore Americas

Blogging Live Brazil ITO-BPO: New Delivery Models, Tax Burdens and Competing with India Inc.

The US-Brazil IT-BPO Summit (sponsored by the Brazil-American Chamber of Commerce) kicked off this morning at the W Hotel in Midtown, Manhattan

LUMIX ONE 02710:45 AM A Panel Discussion with several Brazil-based providers, analysts and advisors focused on the upward migration Brazil’s BPO sector is taking to drive higher value for clients and developing competencies in new delivery areas, such as cloud and managed services.There is an increasing emphasis on “domain-led” expertise, where providers have developed specialized talents which directly relates to their value and, in turn, makes them more marketable to major corporate clients.
John McCarthy, vice president, Forrester Research: Clients are looking closely at where to go and how to manage the ratios.  Everything is on the table as companies rethink our strategies in the wake of the economic crisis. It’s not just a low cost body story anymore.


Marika Lulay, Chief Operating Officer, GFT: We learned over time that working in Brazil involved an “extra tax”  and it took us a while to figure out how to deal with that. Lately, there is a perception that the taxes have been reduced. I must say the tax thing is something that is difficult. It’s a problem and it’s complicated.
McCarthy: Physical security is a concern. It’s a issue clients mention to us all the time. You see aspects of it when you are there.
David Tapper, VP outsourcing and offshore services, IDC: Companies need to incent aggressiveness, when trying to compete with India-based providers.
McCarthy: If Brazil is going to become part of the top three worldwide players, there needs to continue to be an expertise-driven story. Cost is not the appeal of Brazil, it’s the technical domain-skills.
Tapper: I would like to go to Bangalore and see a Latin American company in Bangalore. That is what’s going to get people’s attention.
McCarthy: I think you going to see a lot fewer ITO companies in Brazil in three-to-five years as part of massive global consolidation, driven around new delivery models.

9:45 AM An executive  from  Equaterra, who is one of the event’s attendees commented about taxes: “My observation is that taxes  imposed on the government on services are  extraordinarily high, especially if they come from India,” he said. “This is a huge imposition on Brazil companies and puts enormous pressure on cost structure if you compare it to other countries worldwide.”
Antonio Gil: “We are looking very closely on the impact to Brazilian companies. We are looking to find ways to reduce this tax burden. The tax burden is too big. It’s impacting our success.”
9:09 AM:
imagesGIL“We are now running for second or  third place in the worldwide outsourcing race,” said Antonio Gil, president of Brasscom, in characterizing the emergence of Brazil as a major worldwide player in offshore services. With India taking the lead position, Gil believes Brazil and the Philippines will battle for second place worldwide. He dismissed China and Russia as not having the technical leadership and talent levels to match the potential performance of Brazil and the Philippines.
He commented on the frequent criticism that Brazil does not have the English-language skills of many of its Latin American competitors: “We need to invest in English skills,” he said.
“Brazil is investing in English and hopefully when we are good at that,  you will be able to understand us on the telephone,” said Gil, jokingly.

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Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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