Gartner’s Dreyfuss says Brazil Made ‘Fatal Mistake’ Trying to Compete with India

During the Gartner Outsourcing Conference in Orlando last week, Cassio Dreyfuss, Gartner Vice President, questioned Brazil’s long-term viability as a sourcing destination, and observed that some Brazilian providers, like Ci&T, are looking to branch out of the local market, by developing a delivery model, such as exporting to the US from Argentina. “Latin America,” he declared, “is not on a rollercoaster as we were 20 years ago, but we are not as stable as we should be.”

The appreciation of the Brazilian Real against “everything” decreased the cost benefit of doing business in that country, but it possible to be profitable again thanks to recently implemented tax breaks. However, “The longtime viability is questionable,” even though Brazil is a big market, offering the “Latin touch” and ability to find anything in reasonable amounts, a company cannot scale-up very fast, says Dreyfuss.

That said, CIOs are looking at Brazil as a viable alternative to India given its responsiveness and partner-like approach. To illustrate this, Dreyfuss recounted the thoughts of the CIO of a North American multinational who “used two software factories, one in Brazil and the other in India. ‘The Indians are perfect,’ he said, ‘if you send something overnight you will get it back in the morning perfect. If you send something stupid, you will get back something perfectly stupid. On the other hand, when working with Brazilians, the response will be driven around trying to make changes and improvements.'” It was a “fatal mistake” on the part of Brazil, Dreyfus explained, to try to do what India was doing. Now they have a second generation strategy.

When it comes to scalability, Dreyfuss finds that, “If you talk to a CIO in Brazil today, they will say they can’t fill openings.” Even though there is a drive by the federal government to fund IT training, it is not as efficient as it is in Chile or Colombia.