Inside the ‘Career Company’ Mindset of CPM Braxis

 What really gets CIOs and sourcing decision makers excited about Brazil? The two issues that come up repeatedly among those doing business there or who are inclined to have services delivered from Brazil are – capacity and capability. Scale counts for a lot and Brazil is increasingly built to respond to the tall orders of CIOs whose India-based experiences will continue to be used as points of comparison when they go shopping in Brazil.

One of the many notable rising stars out of Brazil that is trying very hard to live up to this CIO-driven reality is CPM Braxis, formed in 2007 when separate operating companies CPM and Braxis merged. A key architect behind the creation of CPM Braxis is David Shpilberg, a co-founder and vice chairman of the organization, whose headquarters are in Sao Paulo.

Shpilberg himself has quite a deep career resume in IT services, banking and finance, including his days as a vice chairman at Ernst and Young where he appointed Gabriel Rozman, Nearshore Americas’ Top Ranked Influencer in our 2010 Power Rankings to run LATAM operations, before Rozman left to spearhead TCS’s huge expansion into South America.

Shpilberg stands out in one sense from virtually any other Brazil-based IT outsourcer – he and his senior-level colleagues make it explicitly clear that CPM Braxis is going for the gold by striving to become one of the top outsourcing providers in the world. The goal will require some aggressive tactics and growth with a capital “G.” Does CPM Braxis really have the horsepower to jump into the ranks of TCS, Wipro, Genpact, Infosys, Accenture, HP and Dell and other world-beating heavyweights?

Shpilberg’s mission is partly inspired by trying to separate his firm from the pack of other Brazil-based providers who, in his eyes are “still like US companies were ten years ago.”

For Shpilberg the fuel to get CPM Braxis to that lofty plateau is sourced from within. ““We designed this company from scratch four years ago. We wanted an employee based company that is destined to be a top ten player in the world,”  Shpilberg says. The CPM Braxis brainstrust puts a lot of emphasis on creation of a “career company” where employees (5,500 of them currently) are actually hired and legally put on the payroll, instead of the alternative route – practiced by many outsourcing providers in the region – where workers are contracted for certain durations based on workload and then made expendable when the project ends.  This is a key priority for several reasons says Shpilberg, who says labor liabilities are problematic under the contractor route and that in order to attract private equity funding, accounting practices around managing human capital have to be clean.  “The level of sophistication of the Brazil IT professionals is very high, because of how accustomed they are working in mainframe technology,” Shpilberg adds. Brasscom reports that Brazil has an IT workforce approaching 1.8 million people.

Jump in Revenue

In a recent Gartner report, CPM was identified as having the “highest growth” from 2008 to 2009 among what the firm has identified as “the top 20 IT services providers in Latin America.” CPM Braxis was reported to have experienced revenue increases from $286 million in 2008 to $403 million in 2009, a 40%-plus spike. Some of the company’s growth is clearly attributed to its increasing roster of banking and finance organizations, especially in the U.S. “We have a very happy, highly satisfied client base, with 50% in financial services; 20% is telco and 15% manufacturing,” he says.

Shpilberg’s mission is partly inspired by trying to separate his firm from the pack of other Brazil-based providers who, in his eyes are “still like US companies were ten years ago.” He identifies multinationals like IBM and Accenture as more appropriate peers because his firm competes with them regularly and most, including his firm, have established quality standards like CMMI Level 5 as well as ITIL, COBIT and ISO 14001.

One of the biggest hurdles for Brazil Inc. to overcome of course is cost, especially when compared to its Latin America neighbors. (Currency risk is no picnic either as Senior Editor Tarun George explores in this revealing report.)  “It is true, in certain areas, Brazil is more expensive than Mexico and Argentina,  specifically in areas of application development,” says Shpilberg.

But for this executive, cost  competitiveness is not what defines the CPM Braxis’ expansion strategy  – instead the current global services market is very much about being in the right place for the next outsourcing tidal shift. In Shpilberg’s view India “will always be dominant” but that being in the Nearshore and leveraging the fundamental advantages of time zone plus culture, value is going to spill out to those CIOs who open there eyes southward.

.