IT Superpower Brasil

Brazil IT: Regional Leader, Global PlayerValue Beyond Expectations

CeBITMarch 2011

Agenda

1. Brasscom: Objectives and Agenda

1. The Brazilian IT-BPO Market

1. Brazil’s Value Proposition

2

About Brasscom

VISION Position Brazil as one of the top 3 key global IT centers

MISSION Spread the excellence and innovative capabilities of IT to other economic sectors, increasing their productivity and quality

3

Brasscom’s Agenda

INSTITUTIONAL

Competitive, fair, and ethical IT-BPO sector environment

REGULATORY HUMAN RESOURCES& EDUCATION

INFRASTRUCTURE & INNOVATION

MARKETING & EXPORTSPROMOTION

Educational programs aligned with the IT-BPO sector

Strategic programs to support the the IT-BPO sector growth

Promoting Brazil’s potential in the IT-BPO sector

Institutional Relations Strategic Plans Public Relations

VISION Position Brazil as one of the top 3 key global IT centers

MDIC MCT

Productive Development Policy (PDP) Growth Acceleration Plan (PAC)• Industrial and Technological Development and Trade Policy• Investments in innovation for sustainable economic growth• Strategic areas: ICT, Energy, Healthcare, Biotechnology, Nanotechnology, Defense

• Investments in infrastructure for sustainable economic growth• US$ 300 B – 2007 to 2010; US$ 200 B – 2011 to 2013• Strategic areas: Energy, Transportation, Housing, Sanitation, Digital Inclusion (PNBL - National Broadband Plan)

Mega Events: World Cup 2014 and Olympic Games 2016

4

The Brazilian IT-BPO Market

Source: Brasscom, IDC TOTAL ICT SPENDING ACCOUNTS FOR 7% OF BRAZIL’S GDP

US$

BIL

LIO

N

0

1

2

3

4

5

6

7

8

9

10

ICT MARKET

0

1

2

3

4

5

6

7

8

9

10

5

IT Spending 2009 US$ 31 Billion

0

1

2

3

4

5

6

7

8

9

10

The Brazilian IT-BPO Market - OffshoreUS

$ BI

LLIO

N

Application Services 73%Infrastructure Services 16%Others 11%

IT-BPO EXPORTS

6Source: Brasscom, IDC

The Brazilian IT-BPO Market vs LATAM

Source: Gartner – Emerging Market Analysis, IT – Brazil – July 2010 7

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

EXPERIENCE AND CAPACITY TO INNOVATE

SET BRAZIL APART

Finance Inter-banking fund transfers in real time Sophisticated solutions in automation, internet banking, operations via mobiles, and ATMs Sound and dynamic electronic payment system 514 million cards in the market 5.3 billion transactions

Manufacturing, Retail and Services Responsible for the greatest volumes of IT investments Intensive use of ERP, BI, SCM, R&D systems, CRM and e-commerce

E-Government Electronic Voting System, Online Tax Returns

Energy, Food & Commodities

Telecom, Healthcare

8

The Brazilian IT-BPO Market

Brazil’s Value Proposition

9

BRAZIL’S VALUE PROPOSITION

FAVORABLE BUSINESS ENVIRONMENT

STRONG RESOURCES AND INTELLECTUAL CAPITAL

CULTURAL AFFINITY

TOTAL COST COMPETITIVENESS

Brazil – Economic Strength and Political Stability

Industry PowerTop multinationals have been in Brazil for decades – IBM: 1917; GE: 1919; J&J:19334th largest manufacturer of aircrafts; 7th largest manufacturer of automobilesWorld’s top 5 in regulation of securities and exchanges30+ Brazilian companies in the Fortune Global 500 / Forbes Global 2000 – Petrobras, Vale, Embraer, Itau/Unibanco, Bradesco, Banco do Brasil, AB Inbev, CSN, Gerdau, Aracruz, Suzano, Brazil Foods, among others

Food and Energy PowerWorld’s leading exporter of soy beans, beef, poultry, sugar, orange juice, iron, and ethanolA global reference in the production of renewable energy: biofuels and hydroelectric powerWorld’s 10th largest oil reserves: Petrobras set the record for largest ever public offering: US$ 70 billion

Sources: Economist Intelligence Unit, IMF, World Economic Forum, Gartner

8th Largest Economy in the World and 1st in Latin America2009 GDP: US$ 1.5 T 2010 Forecasted GDP Growth: 7.8%2009 FDI: US$ 25.9 B 2010 Forecasted FDI Growth: 13.3%Strong and diversified IT market: World’s 8th largest domestic IT market

10

Brazil – Emerging Market Innovation

Brazil – Case Studies

12

Highly Skilled Workforce 1.7 million ICT professionals Recognized for their knowledge, commitment and flexibility 100,000 new professionals / year

Educational Programs 2,281 Universities among Federal, State and Private (MEC, 2006) 6 million students (MEC, 2006) 1,714 academic programs related to ITO-BPO sector More than 250 new public technical schools will be created by the end of 2010 (MEC, 2008)

17

10

92

13

12

1416

15

6

4

5

111

83

187

1

2

3

4

5

6

7

8

9

Campinas

Porto DigitalTecnopuc

Sao LeopoldoAlfa Tech

PetropolisUnivap

ValetecParaiba

10

11

12

13

14

15

16

17

18

Londrina

Rio de JaneiroUberaba

SergipeSao Carlos

IptecItajuba

Brasilia

Curitiba

Infrastructure Human Capital and Education Technology Parks

Strong TelecomCountry wide network access184 million mobile phones (2010)15 million broadband (2009)

Strong EnergyBest among emerging countriesLeader in renewable clean energy: biofuels and hydroelectric power

Strong TransportWorld’s 2nd largest in airports - 34

international / 35 domestic881 weekly-international flights (2009)

Sound Infrastructure and Human Capital

Growth Acceleration Plan (PAC) US$ 300 B - 2007 to 2010US$ 200 B - 2011 to 2013

Brazil Ranks 17th in Scientific Research Worldwide

13

92.7 million

Afro-Brazilians

18 million

German-Brazilians

15 million

Hispano-Brazilians

10 million

Arabic-Brazilians

1.8 million

Polish-Brazilians

1.6 million

Japanese-Brazilians

25 million

Italian-Brazilians

Cultural Landscape

High Productivity Industry / Business knowledge Cultural compatibility Low-turnover rates

High Quality Low levels of rework

Total Cost Competitiveness

Optimized On-Shore / Offshore Ratio Timezone: Real-time communication Nearshore: Lower management / travel costs

15

Government Support

Strategic for the Brazilian Government, the IT sector has direct incentives in payroll and income taxes, and also in human resources’ qualification programs

Law 11774: reduction of social security contributions on company payrolls by 50% Law 11908: income tax deductions of 200% of the amount spent on staff training and R&D Tax deductions on technology transfers, licenses and royalties Fiscal incentives for special projects, such as reduction of Property Tax and Service Tax North and Northeast regions: from 40% to 60% of the research-focused staff’s salaries subsidizedTraining programs’ financing, increasing certifications and innovation

16

Thank You

sergio.pessoa@brasscom.org.br