Despite Brazil’s sluggish economy, the country still attracts robust IT spending, with clients and investors attracted by its excellent software talent and thriving startup scene. Much of this activity is centered around the southern city of Curitiba. With a population of nearly 2 million inhabitants, the city is lauded for its innovative urban planning, lush greenery and thriving tech scene.
But insiders say the metropolis, the eighth-most populous in Brazil, has untapped potential as a talent sourcing hub. Despite its promising fundamentals, Curitiba still needs greater government support, more training programs and stronger English language instruction to establish itself internationally.
“I understand that there are a lot of companies looking to grow abroad,” said Julian Gritsch, the founder and CEO of EuroIT Technology, a software firm. But Gritsch would like to see the government take a more proactive approach to selling Curitiba as a tech hub. “I cannot say the city is doing a very strong job. The truth is, we need to do it ourselves.”
Euro IT is one of a handful of Curitiba-based companies with international operations. The company produces a car rental management software and has around 500 clients. These are mostly based in Brazil, although the firm also has a presence in the United States. Despite the negative impact of the Covid-19 pandemic on the sector, EuroIT has grown by around 14% this year.
Although Gritsch said greater coordination was necessary for Curitiba to become a global player, he believes software talent in the city is already at an elite level.
“In the past five years we have become much stronger than before,” Gritsch said. “We always have difficulties finding [talented people], but it’s not because they are not qualified. It is because they are well-qualified and well-employed.”
An End to IT Isolation
Once lauded for its impressive economic growth, Brazil endured a crippling two-year recession beginning in 2015, followed by another dramatic dip in the second quarter of 2020. These economic woes have forced its tech sector out of isolation, driving many local companies to pivot towards serving clients outside Brazil for the first time.
“It’s easier for us to sell our software outside because it’s cheaper for them contracting a software from Brazil than a software from the U.S.,” Gritsch said. “The cheapest software like ours costs about US$2,000 a month in the U.S. We can charge US$100 and it will still be more than what we would charge in Brazil.”
You can visualize the opportunity here,” said Hernani Martinez
At 5,681 Brazilian reals per month, the average salary for a software engineer in Curitiba is also competitive when compared to the U.S. or other major cities in the country. The depth of talent is impressive – with professionals experienced in Java, Microsoft, .NET, Python and the Internet of Things. Every year, new engineers are added to this talent pool, graduates from the city’s five excellent universities.
The city also has little trouble attracting new talent. “You can visualize the opportunity here,” said Hernani Martinez, global business developer at MJV Technology & Innovation, a consultancy and IT supplier. “It’s a big city but you don’t have the problems you see in Sao Paulo or Rio in terms of traffic, crime or the high cost of living.”
Currently, 588 IT companies have operations in Curitiba, employing more than 10,000 people.
In the past decade, a thriving start-up scene has emerged in the region. Curitiba is home to EBANX, a fintech startup. Last year, the eight-year-old company became Brazil’s youngest unicorn, or business with a valuation above US$1 billion. Other success stories headquartered in Curitiba include online marketplace MadeiraMadeira and Contabilizei, an accounting software startup.
The high-quality workforce has also drawn major players to set up operations in Curitiba. Accenture, Dell, IBM, HP, HSBC, Sykes, United Health Group and Wipro are among the firms with a presence in the city.
Local authorities have several initiatives to support the tech sector in the region, although there is room for greater support and funding. The municipal government runs the Vale do Pinhão program, an effort to trigger development through greater coordination between lawmakers, universities and entrepreneurs. The scheme also offers a fund of more than US$2.8 million to support local startups and facilitate scaling via research and development.
In 2018, Curitiba’s government re-launched the Technopark, an initiative to incentivize IT sector growth. As part of the program, technology businesses that set up in the city can enjoy a sales tax of 2%, rather than the standard rate of 5%.
Can Curitiba Keep Up?
While Curitiba boasts first-rate tech professionals, the scalability of this talent pool remains an issue. The IT industry throughout Brazil is facing the same challenge. By the end of the year, there will already be 25,000 unfilled IT vacancies across the country, according to data from the Brazilian Association of Information and Communication Technology Companies (Brasscom).
“We’ve been focusing on training people,” said Mauricio Jose Vianna, partner and CEO at MJV Technology. “We created a UX school for user experience designers. We created schools for developers. We are trying to bridge this gap. But we need more support from the government.”
Vianna said low levels of English language proficiency had also restricted software companies in Curitiba. This is also a nationwide problem. A 2013 study produced by the British Council found only around 5% of Brazilians said they had some knowledge of English.
The public school curriculum allocates limited time or resources to the subject. The federal government only made English language teaching compulsory for students aged 11 to 17 earlier this year.
Despite these challenges, Vianna said the opportunities to internationalize operations have never been greater. MJV’s portfolio is primarily focused on the domestic market, but around 15% of clients are currently based in the U.S., Portugal and elsewhere in Latin America.
“I think Covid-19 is likely to increase that percentage,” Vianna said. “In that sense, the pandemic helped because it has loosened the requirement of people being on-site. Nowadays, it doesn’t matter where you are.”
What does it take achieve great outcomes in Nearshore services? If you would like to share an exciting case study or news story drop me a note — Steve Woodman, Managing Editor