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Brazil

Global Project Rajkumar Subaschandra

Prof: Dr. Timothy H Greer

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Olá!(Hello!)

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Highlights of Brazil

Brazil

One of the BRIC countries

FIFA World Cup2014

Olympics 2016(Rio de Janeiro)

No. 5 in Top Internet Users

Swelling Lower Middle Class

Near shoring

19 million smart phones (9% of

total mkt)

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National Context

Facts

• Language: Portuguese• Population: 196.7 Million (2011)•5th largest country • Biggest country in South America

Major Cities

• Brasilia (Capital) – 2.6 m• Sao Paulo - 11.6 m• Rio de Janeiro – 6.3 m• Salvador – 2.7 m

Major Industries

• Agriculture• Services• Mining• Manufacturing• Hydroelectric power• Petroleum

Key Figures

• Interest Rate: 8.8%• Unemployment: 6.8%• Inflation: 4.5%• GDP Per capita: $11,210• GDP: $2.47 Trillion (6th largest)• Currency: Brazilian Real (BRL)

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Key Findings

• Brazil's economic footprint, combined with having the largest domestic IT consumption in all of Latin America, as well as its status as a BRIC nation make it a natural short-listed choice when evaluating potential destinations for IT services.

• Brazil needs to align government priorities with academia and the commercial sector to harness all its strengths to drive the transition from BRIC promise to practical reality. The window of opportunity is small, and the country must act quickly.

• Brazil's challenge is to be able to plan and execute to meet demand at the pace of offshore growth rates, with key skills at the right place, time and price (not necessarily the lowest price).

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PART 1

Global Project - Brazil

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Technology Characteristics

• The presence of computers in Brazilian homes rose from 35% in 2010 to 45% in 2011

• Internet access was present in 38% of homes in 2011, an increase from 27% in 2010

• 19 million smart phones in Brazil – 9% of total mobile phone market

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Socio-Economic Characteristics

• Brazil’s urbanization reaches beyond the high profile poster cities of Rio de Janeiro and Sao Paulo.

• With 86.5 percent of the country’s population inhabiting urban areas, Brazil is one of the world’s most urbanized large countries.

• Including Sao Paulo and Rio, Brazil counts 15 cities with populations of more than one million people each.

• Comparison of Brazil and USA– Consumer Prices in Brazil are 11.39% lower than in United States

– Consumer Prices Including Rent in Brazil are 17.38% lower than in United States– Rent Prices in Brazil are 41.61% lower than in United States

– Restaurant Prices in Brazil are 28.70% lower than in United States– Groceries Prices in Brazil are 35.66% lower than in United States

– Local Purchasing Power in Brazil is 70.21% lower than in United States

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Political Characteristics

• Stable Political system• Stable political face levels of bureaucracy, taxes, crime and

corruption that typically are far greater than in their home markets• Low risk of Terrorist attacks• Brazil ranks among "the best one-third" of 178 countries, according

to the World Audit Organization (democracy 51, press freedom 56, corruption 57)

• The levels of political risk in Brazil are now far lower than a decade ago

• Foreign companies need to be aware of the high costs of labor and taxes in Brazil

• One of the main problems for foreign investors in Brazil is corruption in Brazilian government ministries

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Language Characteristics

• Portuguese is Brazil's official language.• English is the foreign language with the highest demand, but

schools fail to provide high proficiency levels, requiring complementary courses offered by private language teaching businesses, which are not affordable to all. This results in a relatively small English-speaking labor pool.

• French and Spanish are also widely taught. The strong presence of foreign colonies makes Japanese, Italian and German language capabilities also available.

• Though English is the primary foreign language, majority of them are not comfortable conversing in English.

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Educational Characteristics

• The literacy rate for people aged 15+ is 89%. Eight years of education are mandatory, but adults have an average of 4.9 years of schooling

• Approx 16.5% of the population attends college. Higher education enrollment has more than doubled in the past 10 years to more than 5 million each year.

• About 10% of the total educated labor force has completed higher education, and about 30% has completed secondary education. The deficiency in higher education availability is complemented by private IT technical high-school programs.

• The government spends 4.2% of GDP on education today, but has stated that it plans to raise this to 5.0% in 2012.

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Currency Characteristics

• Currency: Real (R$)• US$1 = R$2.04 (as of 11/11/12 – http://finance.yahoo.com)

• The Real has been appreciating steadily and now floats at around 1.7 per U.S. dollar. This represents a 25% increase in costs over two years for American buyers of Brazilian services

• Brazil has relatively competitive salary rates among the various countries in Latin America. Average annual salaries are: – IT Programmer: $20,000 to $40,000– IT Project Manager: $53,000– Software Engineer: $32,000– IT Manager: $77,000

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USA vs Brazil

Items USA Brazil

GDP $15.09T $2.477T

Economic Growth Rate 1.50% per year 2.80% per year

GDP – Per Capita (PPP) $48,386 $12,788

Median Age 36.80 years 28.90 years

Gasoline (1 gallon) $3.66 $6.66

Water (1.5 litre) $1.77 $0.98

McDonalds – combo meal $6.00 $7.45

Tomato (1Kg) $3.00 $1.47

1 Pair Levis 501 $40.00 $97.88

1 Pair of Nike shoes $75.00 $146.53

Apartment (1 bed) – City $900/month $488/month

Median Disposal Salary $3,000/month $732/month

All currencies are in US $

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PART 2

Global Project - Brazil

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Overview of Internet Use

• 79 Million Internet users (2011)• 9th in world on internet use• Top level domain - .br (dot br)• Online population:

– 39% of total population in 2011 – Expected 42% in 2012 and 48% in 2016

• 10% of households have access to internet• 18th place in e-Government (1st USA, 2nd Australia and 3rd New Zealand)

• In December 2011, Brazilians viewed more than 4.7 billion online videos, an increase of 74% in the past year

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Popular Activities on the Web

Brazil is becoming highly social, with social media penetration expected to reach 87.6% of internet users in 2012 - In 2012, 13.5% increase in Social Network users

Social Networking

Brazil will account for more than half of total B2C ecommerce sales in Latin America through 2013. In October 2011, eMarketer forecast that 34% of internet users in Brazil, or 23.2 million people, would make an online purchase in 2012.

eCommerce

The audience nearly tripled since July 2009. 16.5 million Brazilians visited travel sites in July 2012 from a home or work computerTravel Planning

In Brazil, there is a narrow choice of travel products, which has limited consumers to primarily domestic travel, according to an eMarketer report Travel Booking

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Social Networking websites in Brazil

Brazil is becoming highly social, with social media penetration expected to reach 87.6% of internet users in 2012

In 2012, 13.5% increase in Social Network users From 47.3 million users in 2010 to the expected growth of 79.3

million users in 2014 Social Networking Sites in Brazil by Total Unique Visitors

1. Facebook.com 36,098,000 (+192%)2. Orkut.com 34,419,000 (+5%)3. Windows Live Profile 13,301,000 (+13%)4. Twitter.com 12,499,000 (+40%)5. Vostu.com 4,901,000 (+338%)6. Google Plus 4,300,000 (-) 7. Tumblr.com 4,029,000 (+206%)8. LinkedIn.com 3,182,000 (-)

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eCommerce websites in Brazil

• B2C eCommerce in Brazil, the biggest economy in Latin America, is expected to total US$18.7 billion in 2012, according to eMarketer - a 21.9% increase over the previous year.

• Brazil will account for more than half of total B2C ecommerce sales in Latin America through 2013

• In 2012, there are 23.2 million online buyers and it is expected to grow to 31.6 million in 2015

• Top eCommerce websites in Brazil– MercadoLivre.com.br (eBay now owns it)– PeixeUrbano.com.br (a Groupon like coupon selling website)– Groupon.com.br (a subsidiary of Groupon.com)– Americanas.com.br (Electronics store)– Submarino.com.br (buy.com like website)

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Trip Planning websites in Brazil

• The idea is to promote Brazil tourism, especially in light of the 2014 FIFA World Cup and the Rio 2016 Olympic and Paralympic Games in the country

• Top travel domains by unique visitors, July 2012– Hotelurbano.com.br 3,137,000– Decolar.com 2,306,000– TAM.com.br 2,287,000– Voegol.com.br 1,952,000– Submarinoviagens.com.br 1,688,000

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Travel Booking websites in Brazil

• Online travel sales are expected to reach $11.68 billion by 2016• In Brazil, there is a narrow choice of travel products, which has

limited consumers to primarily domestic travel• Top Online Travel Agencies in Brazil, 2010:

1. submarinoviagens.com.br 40%2. DECOLAR.COM.BR 35%3. Priceline/Booking 6%4. Expedia/Hotels.com 6%5. Malapronta 4%6. Viajanet 4%7. Rapi10 2%8. Travelocity 1%

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Handheld Devices in Brazil

• In Brazil, non-computer devices such as tablets, mobile phones and gaming consoles accounted for 1.0% of all internet page views in August 2011, up from just 0.6% in May 2011.

• Out of this 1.0% of non-computer traffic, mobile phones accounted for the largest share at 59.8%. Tablets accounted for 36.5% of non-computer traffic, while other devices (which include iPods, e-readers, gaming consoles, etc.) accounted for 3.7%.

• Compared to the US and UK, non-computer traffic in Brazil skewed more towards tablets and less towards mobile phones and other devices.

• Apple's iPad led the tablet market driving 94% of tablet page views in August 2011 in Brazil. iPads now account for the majority share of traffic originating from Apple devices at 58.7%.

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Potential for Web Development

• Brazil’s Value Proposition:– Resolvability (the ability to solve problems effectively and efficiently)– Innovation and updated technology– Specialization– Proactive offer of solutions based on cultural affinity and plurality– Convenient both in terms of geography and time difference

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Brazil – Gartner’s Allie Young Interview

Nov 2012

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Best Web Development Companies in Brazil

Área DigitalFlorianópolis, Brazilhttp://www.areadigital.com.br

2006 <$250K

Ápice InternetMaringa, Brazilhttp://www.agenciamacan.com.br

2008 >$5M

RmwebPorto Alegre, Brazilhttp://www.rmweb.com.br

2000 $250K-$1M

WebVix Marketing VirtualVitoria, Brazilhttp://www.webvix.com.br

2001 $3M-$5M

Info Web DesignBento Gonçalves, Brazilhttp://www.infowebdesign.com.br

2003 $1M-$3M

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Conclusion

• For the last decade, Brazil’s achievements have been impressive. • The internet users and online shopping are continued to grow.• Brazil has been building talents in Information Technology to take

advantage near-shoring and similar time zone• Great exposure because of FIFA 2014 and Olympics 2016• But now, its barriers to growth, government corruption and low

education levels are catching up with it. To extend its prosperity, it needs to shift from relying on natural resources to developing human ones.

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References

• Gartner Research Report: Analysis of Brazil as an Offshore Services Location (2010, 2011)• Brazilian IT Industry Overview – Invest Tech• Electronic Government in Brazil – Global e-Government for Development Conference, University of Maryland• http://www.comscore.com/Insights/Press_Releases/2010/12/Colombia_Internet_Audience_Increases_31_Percent

_in_Past_Year_to_Rank_as_Fastest-Growing_Market_in_Latin_America• http://www.newmediatrendwatch.com/markets-by-country/11-long-haul/42-brazil • http://www.businessinsurance.com/article/99999999/NEWS040102/120309899 • http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=United+States&country2=Brazil • http://www.weforum.org/news/brazil-moves-global-information-technology-rankings-56th-place • http://www.brasscom.org.br/en/content/view/full/3315 • http://www.bnamericas.com/en/brazil • http://finance.yahoo.com • http://www.internetworldstats.com/top20.htm • http://www.sourcingline.com/top-outsourcing-countries• http://the-outsourcing.com/subpage.php?pn=features&aid=228&page=6 • http://brazil.topseos.com/rankings-of-best-web-design-companies-in-brazil