Offshoring Software Development with Brazilian Companies

Author: Ari Himmelstein

 

       Software development is no longer the domain of Silicon Valley or Israeli tech start-ups. Its increasingly essential to companies big and small, across all industries and around the world. They all are faced with the reality that quality software, thus superior software development is as essential to their success as excellence in sales is.

       Software and design talent is a defining rare resource. Obtaining talent is hard particularly if your company is a nontraditional software employee. So established companies should think how to use outsourced assets to their advantage, even because software talent may come from a different background than company’s traditional employee.

      At the same time Israel has been raising impressively venture capital funds to support internet and software initiatives. It means that all this initiatives will have some sort of pressure to speed up the flow of new products and applications, so how do we build the software development muscle needed?

      All this companies should carefully look to their software road map and evaluate between a group of suppliers. Also any help mediating potential informational or transactional asymmetries to get a better collaboration and compliance with their quality requirements will be extremely necessary in any offshoring process. The future is about smaller teams, shorter time frames, and full stack technology expertise with active customer involvement accomplished by agile software development methods, increasing the ability to handle customer priorities, productivity and reducing risks.

      Considering that the world IT investment average growth, Brazil remains in the list of countries that had higher sectoral growth keeping the seventh position in the world ranking of IT investments. The domestic market for Information Technology, which includes hardware, software and services, handled 60 billion dollars in 2014, representing 2.6% of Brazil’s GDP and 3% of total IT investments in the world, almost the same result pointed out in the previous year. Of this amount, 11.2 billion came from the software market and 13.9 billion from the services market, and the sum of these two segments continued to exceed 40% of the total IT market, maintaining the trend of transition of the country to the group of economies with higher maturity rate that focus solutions and systems developments. The software industry grew by 12.8% over 2013. In the other hand, the services sector showed a more modest growth, with an increase of 7.3% over the previous year.

 

      In the overall, software and services grew by 9.7%, above the vast majority of other sectors of the Brazilian economy, and above the country’s GDP, but one of the smallest growths of the historical industry series in the last decade. In 2014, the use of computer programs developed in the country grew 19.1%, a rate well above the 11.5% identified growth in the use of foreign developed software, reinforcing the upward trend that has been identified since 2004. In terms of participation, the local production reached almost 25% of the total market.

     There are about 12,660 companies dedicated to the development, production and distribution of software and the provision of services in the domestic market, from which almost 55% have their main activity focused on software development, production or service providers. Nearly 50% of the user market consists of companies in the sectors of Finance, Services and Telecom, followed by Industry and Retail.

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      So at this moment Brazilian software development companies could represent a value asset to be outsourced by Israeli companies with the following capabilities and advantages:

  • Already sourcing for Brazilian market size and sophistication.

  • Proven capability offering world class solutions to specific verticals like financial, retail, telecommunications and government.

  • Business and automation culture similar to target markets like USA and Europe.

  • Part of better business environment if compare with Indian or east European markets.

  • Better Internet and Telecommunications infrastructure than China and India.

  • Strong management.

  • Cost competitive.

 About the Author:  Ari Himmelstein is the Executive Director of CodeV.

  For more information - ahimmelstein@codevhub.com

  

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