Can Brazil Become a Global Competitor in the Information Technology Outsourcing Business?

d. Rise of Internet-based global telecommunications networks has allowed some service enterprises to relocate some of their value-creation activities to different nations.

In 2004, Global Information Systems, Inc. began to put into motion the consideration of offshoring 3,000 jobs from here in the U.S to company locations in China, India and Brazil. These were highly compensated job positions. About half of GIS is separated into a division known as Global Services Divisions. A considerable portion of GSD’s business came from customers outsourcing their business process needs. GSD began to seek ways to cut costs and improve performance by “offshoring” certain activities in order to present the most attractive value proposition to potential customers.

This composition will examine the relationship between the United States and Brazil. Interactions and exchange relations between the two nations have been stressed. Trade barriers are the main cause for these tensions; specific exchange obstructions shall be discussed, potential effects of removing these barriers, and the implications it may have on the companies involved with the 2006 FAU Field Experience. The following notions have been deducted through researching materials listed in works cited and personal opinion.

By 2004, more than 80 percent of U.S. executive boardrooms will have discussed offshore sourcing, and more than 40 percent of U.S. enterprises will have completed some type of pilot or will be sourcing IT (information technology) services. In fact, some of the biggest firms in the United States have been seriously discussing outsourcing recently. One of these companies being IBM, the world's biggest computer maker, discussed saving about $168 million beginning in 2006 by moving thousands of programming jobs overseas, according to internal information provided. U.S. businesses, battered by the recent three year bear market in stocks and an economy struggling to find its footing, have already developed a taste for super cheap labor in developing countries, where workers are increasingly better trained especially if they've spent significant time working in the United States on temporary visas. The impact of overseas outsourcing could be significant; many economists doubt the trend is big enough yet to disrupt the broader U.S. economy. Imports of business services account for less than 1/20 of 1 percent of gross domestic product, the broadest measure of the nation's economy. At the least, it's not doing much to end the longest U.S. labor-market slump since World War II. More than 9.3 million people are

Brazil is one of the nations included in BRIC (Brazil, Russia, India, and China). In the past, Brazil’s outsourcing industry has been the smallest of the four BRIC nations. This is very surprising due to the close proximity to the United States and the current trend of “near-shoring”. However, due to recent governmental backing and inflows of capital Brazil has begun to improve and could possibly overtake Russia, India and China in the offshoring industry. The most promising sector in Brazil is their IT sector.

Brazilian’s are also very family oriented. Family is the base of their social structure and stability. In business, it is natural for family members to hire other family members, as it is looked upon as a primary importance to continue to make the family stronger. This would be another area where a local Brazilian partner could be beneficial; to incorporate the knowledge a local company has with

Before we examine market entry strategies for Brazil, it’s important to understand some basic characteristics of the country’s business environment.

The only means for the IT companies to maintain business and to have minimal losses was to transfer their services overseas to India. Nonetheless, many of the people who had lost their IT jobs saw this as a disadvantage since they were the ones who had to either find another job that matched their skills or had to obtain new skills. Along with this, they, along with the majority of the workforce, saw outsourcing as something harmful to the American economy and that it caused increase in cost (Easterls, 166). These outlooks are not necessarily true, however.

Since 2000, Brazil has significantly improved its economic performance. Strong global demand and high prices for its commodity exports resulting

According to (Douglas & Liu, 2011), Brazil’s business atmosphere benefits from open policies that embrace foreign direct investment (FDI), the government backing to infrastructure and innovative activities, and the advancing information and communication technology (ICT) industry. Brazil has an estimated population of over a two hundred and one million, earning it as the fifth most populous country in the world. Brazil’s most populated area is Sao Paolo followed by Minas Gerais and Rio de Janeiro. The labor force constitutes a hundred and five million people. The net migration rate stands at less than one per a thousand people. The birth rate and the death rate stands at 14.97 and 6.51 per

· Choose the right location: The type of work being outsourced will influence the location. India has gained a reputation for software development. Between 2003 and 2004 it has seen over a 30% growth in software and IT service exports, and by the year ending in March, 2004, Indian companies have earned $12.5 billion in technology exports. But India is not the only source of reliable but inexpensive labor. Countries such as China, the Philippines, Romania, Argentina, and even Ghana and Ireland are all centers for offshore operations of various

Growth of the manufacturing industry is now the largest contributor to Brazil’s exports comprising of 45%. The manufacturing industry and other large industries that contribute to Brazils exports have allowed for Brazil to increase GDP levels from 385Million in 1980 to 2.4 Trillion in 2010.

Poor roads and a limited rail network push up freight costs. High interest rates mean firms must over spend on financing; high crime adds heavy security costs to their overheads. A terrible education system makes Brazil the world’s second-hardest place for firms to find the skills they need, according to Manpower Group, behind only ageing Japan. Soaring labour costs, which have doubled in a decade as big hikes to the minimum wage set the tone for pay negotiations across the board, have added a new ingredient to the old recipe.

According to Corbett, trace back to the early 1990s, outsourcing came into practice for the first time. It was a time when severe depression covered around the U.S. and even those most competitive of its businesses suffered significantly. “Companies used outsourcing then to help streamline their operations and to regain their competitive strength. The result was an unprecedented period of economic growth during the latter half of the 1990s. as we enter the mid-2000s, today’s challenges may be even more pressing than those of a decade ago.” (Corbett, 15) It is the general result rather than a snapshot combined by a few specific evidences. This short revision objectively indicates that offshore outsourcing is not that threatening as proponent claimed. Organizations has benefited from this practice. And that is the reason offshore outsourcing continued and developed. History is a giant that people can stand on its shoulder. In the background of Globalization, information technology plays an important role. In the past, offshore outsourcing has contributed to the growth and development in the manufacture industry, as a sub category of offshore outsourcing, IT projects offshore outsourcing can also contribute a lot to the growth and development in the IT

As an emerging economy, Brazil has gone through tremendous changes in the business sector. The Country’s rapid development and capabilities makes it a very promising destination to extend business.