Brazil Is Selling Two of Its Public Sector IT Companies

The Brazilian government is set to privatize two of its IT companies as part of a broader asset-auctioning program aimed at reducing the fiscal deficit.

Data processing service provider Serpro and the social security IT agency Dataprev are now up for sale, with the government hoping to raise more than US$300 billion from auctioning around a dozen public sector firms.

It is not clear how much the IT companies could fetch in the open market. With more than 6,000 people on its payroll, Serpro serves as an IT consultant for many government agencies, in addition to maintaining tax-related information on individuals and businesses.

Among its clients are the National Treasury Secretariat, Attorney General, and the Federal Budget Secretariat.

DataPrev was established in 1975, and it is reportedly storing a large amount of sensitive data, such as the social security accounts of Brazilians. But it also serves a few private companies, according to local media reports.

Many labor unions are opposing the privatization plans. Still, the government is arguing that the IT companies have a long history of losing money and that there is no point in funding their operational expenses.

Moreover, employees at these IT firms are getting far larger paycheck than their counterparts in the private sector. “They are not as efficient as private sector employees either,” says a report from a federal auditing agency.

There are also reports that the government may even shut down the investment arm of the Brazilian development bank (BNDES). This is indeed bad news for the Brazilian IT industry because the BNDES is the largest seed and venture capital investor in the South American country, and it supported many domestic IT firms, including CI&T.