Can Brazil Become a Global Competitor
Can Brazil Become a Global Competitor in the Information Technology Outsourcing Business? 1. Use the theories of international trade and investment that have been presented in this chapter to help explain Brazil’s intentions and actions regarding the international information technology sector. The IT Service industry has expanded rapidly. Many companies worldwide have made the decision to outsource this industry to offshore companies. Worldwide demand has increased growth to 40 to 50 percent on an annual compounded rate basis.
Many developing nations like Latin America and Asia have made an attempt to obtain some of the IT offshoring business from countries like the United States because it is seen as not only a source for skilled labor but an opportunity to improve the economy. Brazil has steadily become a strong competitor in the IT offshoring sector for a number of reasons. Brazil is the 11th most powerful economy in the world and has a high-rated and technologically advanced telecommunications system and network services infrastructure.
Can Brazil Become a Global Competitor Essay Example
In fact it has been rated higher than even China in terms of reliability. Brazil also has many solid engineering schools, which are producing many quality tech graduates. Brazil also boasts a sophisticated banking sector along with an effective marketplace for IT software and support services. Real Estate is also quite affordable for corporate undertakings. Brazilian wages are typically 40 percent of those for the same positions in the United States, but the country boasts a lower turnover rate compared to countries like India as an example.
The operating costs are lower across the board for infrastructure, taxes and incentives and labor in comparison to other nations. Another strong advantage is that of time. The time zone difference from Brazil to time zones within the United States is minimal and provides Brazil with a huge advantage to competitors who may be dealing with a much wider time gap. This allows for greater coordination of requests and a much more productive work schedule.
Brazil’s culture and values are also much more Westernized and when you are dealing in business that may not make a difference to some, but to others, it can be critical to being able to relate effectively with their new “team” members and subsequently increasing efficiency. The aggregate total of these strengths have meant that large US based corporations like IBM, Accenture, Hewlett-Packard and many more have expanded their IT offshore activities to Brazil. 2. What recommendations would you give to the Brazilian government and its outsourcing industry in order to improve their prospects for success in building a strong international competitive position in the information technology outsourcing business?
Brazil does have some weaknesses that need to be addressed in order to effectively sustain growth in this fast-growing market. I would suggest that attention and subsequently, investment be given to the country’s sources of electricity generation. There have already been many issues with electrical failure resulting in brownout and even blackout in some areas. There should be free classes offered in English for their potential IT candidates as well in order to increase the chances of success in this market.
Experience in dealing with international markets and clientele is also needed. I would suggest some training classes that allowed for these issues to be addressed in addition to some hand-on, travel based training to see first-hand the sectors and markets in which they will be doing business. The government can also help this industry to continue to prosper by passing laws which favor labor. Additionally, the government needs to address the problems of rampant crime and inequality by working to create a safe and equitable social climate and environment.