Nearshore Americas

Recife IT Incubator Model Rolling Out To Other Cities

Despite turbulent political and economic conditions in the country, Recife, the capital of the Northeastern Brazilian state of Pernambuco, is still making a name for itself as a tech hub, thanks in large part to its Porto Digital initiative. The growing IT community, which was first seeded almost 15 years ago, is rolling out the successful components of its models to other small cities in the area.

Local developers have benefited from the sector growth and the interest from international clients over the years. Eduardo Cruz, a software developer in Recife, who was a board member of Porto Digital between 2011 and 2014, said that the Brazilian crisis is on the minds of developers in the city. He, like many in the area who have chosen a freelance path, has however carved a niche for himself.

Freelance Growth Focus

“Since 2013 I started working as a remote freelancer for companies in US, UK and Canada. They pay me less then they would pay to a local developer, and I receive more then I would from a local company. Good for both sides of the deal,” he said.

He cited Porto Digital, which is marking its 15th anniversary, as core to realizing the potential of the city. Its focus is on improving the IT ecosystem in Recife – but it is also starting to roll out the Porto Digital model in other cities in the state, hoping to repeat the success that the initiative has achieved. “They have had an incubator since 2010 and now they launched an accelerator here in Recife as well,” Cruz added.

Prof Vinicius Cardoso Garcia of the Computing Science Department of the Federal University of Pernambuco, said that the IT sector in general is going very well in Recife. He, too, pointed to the Porto Digital initiative as core to the growing IT ecosystem in the city. Porto Digital’s largest tenant is the business incubator and innovation center, Recife Center for Advanced Studies and Systems (C.E.S.A.R).

“We have an heterogeneous profile in terms of IT areas: games, education, software factory, patterns recognition, entertainment, mobile apps and services, cloud infrastructure (Storage as a Service, Datacenter as a Service, PaaS, SaaS), Internet of Things, and IT infrastructure,” he said.

“They [Porto Digital] also just launched innovation structures in new cities. They are calling them ‘Armazem da Criatividade’ (which means Creativity Warehouse in Portuguese). These are basically a mix of incubator and co-working spaces in smaller towns trying to work with local innovation beyond Information Technology,” Cruz said. The Porto Digital initiative is hoping to achieve similar success to that it found in Recife.

A Different Vision

Not everyone in the Recife IT community, however, subscribes to the Porto Digital model. Cruz explained that, on the other hand, you have communities like Manguezal, created by people that do not necessarily agree with the way Porto Digital uses their resource and what they focus on. “So they created another community with younger entrepreneurs and start-ups who are also trying to get the best of the IT community here,” he said.

Local start-ups like Guava Software, a Web development company, and MobiPass, mobile payment start-up, have joined Manguezal, hoping to leverage the promised benefits of increased visibility touted by the community. The people behind Manguezal are also behind the Startup NEXT, a tech event from the same creators of Startup Weekend. All of these seek to expand and growing the burgeoning start-up culture that is emerging in the city.

Visibility is a key challenge. Cruz emphasized that although he still sees potential in Recife as an IT community, it is not even near the potential of a city such as São Paulo. “We do move forward in the direction of creating an ecosystem of IT companies that try to have a world class level,” he said.

International Interest

Despite that international companies have staked their claim on the Recife IT market. One of the core employers of developers in the city is Accenture, which opened its third point of presence there and now has about 1,000 employees in Recife, a figure it expects to double by 2017 according to local news. The continued investment in the city by Accenture points to the faith that the company has in the IT talent and the value proposition of its offerings.

Other local players include Manifesto Games, which Cruz said is “always attending world class events showing their expertise in game development.” One of the key issues is that while Sao Paulo is very well-known in international circles, Recife remains relatively obscure to that community despite a consistent track record of sector growth over a 15 year period and interest from a number of leading IT players.

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Cruz explained that one of the core issues is that while there is an older generation of larger companies, 50, 100 or more companies that are working on government contracts, and of course private sector contracts also, there is less of an emphasis on new blood. “I think that the fresh air is coming from small 3 to 5 startups that are trying to mimic the examples of other places like California, New York and so on,” he said, indicating that Recife needs to embrace that culture.

Crux remains optimistic that recipe will continue to grow and establish itself as a leader in the field. “I think Recife — and many other Brazilian cities —  have the potential to become excellent technology service providers but they still need to break the cultural barrier that separates them from other markets,” he said.

Economic instability is less of a concern for the sector, although it does have an impact. Garcia explained that although the country as a whole is in a complicated economic and political moment, things are going well in the IT market. “In terms of weakness we have all the political stuff, tributes, and so on, that sometimes aid to kill a lot of initiatives and early business projects,” he added.

Bianca Wright

NSAM Managing Editor Bianca Wright has been published in a variety of magazines and online publications in the UK, the US and South Africa, including Global Telecoms Business, Office.com, SA Computer Magazine, M-Business, Discovery.com, Business Start-ups, Cosmopolitan and ComputorEdge. She holds a MPhil degree in Journalism from the University of Stellenbosch and a DPhil in Media Studies from Nelson Mandela Metropolitan University.

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