Why IT outsourcing to Brazil?
Recently, Sunbytes has expanded our dedicated team to Brazil, the biggest country in South America in order to leverage our talent pool as well as to better serve our clients in America. Let’s find out the reason for why outsourcing IT to Brazil.
An emerging software outsourcing locationAccording to a report by consulting firm Kearney on The Global Services Location Index (GSLI) outsourcing locations in 2021, Brazil ranked among the Top 5 best locations for IT outsourcing in terms of financial attractiveness, people skills and availability, business environment, and digital resonance. Fascinated by these incentives at first sight? Keep reading to learn more about what Brazil has to offer your organization, and you could be celebrating Mardi Gras with your employees sooner than you think.
Overview of Brazil
|Area of land||8.5 million square kilometers|
|Population up to 2021||212.6 millions|
|GDP of 2021||1,445 billion USD|
|GDP growth rate of 2021||4.6%|
Situated in South America, Brazil is the largest country on this continent and is home to over 212 million people. Brazil ranks 6th in the most populous countries by area and is home to big urban hubs such as Brasilia, Rio de Janeiro, and São Paulo. The official language of this country is Portuguese.
In addition to being a member of the G8+5, G20, WTO, Paris Club, and Cairns Group, Brazil is also a candidate to become a permanent member of the Organization for Economic Co-operation and Development (OECD).
The surprising figure; Brazil has the 13th-largest economy in the world. However, it is not an exception from those affected by the Covid 19. The pandemic forced Brazil to unprecedented health, social and economic challenges, leading to a 4.1% GDP drop in 2020. Fortunately, a bounce-back in demand, both domestic and external, and an increase in commodity prices are expected to lift the GDP growth to 4.6% in 2021, estimated 1.5% in 2022, and 2% in 2023, according to the IMF.
Why IT outsourcing to Brazil?
Apart from obtaining the 13th largest economy in the world, Brazil also has an emerging IT market and rich human resources. Together, Brazil, Chile, and Costa Rica have become the top leaders in technology, compared to their South American counterparts. Let’s find the reasons why IT outsourcing to Brazil below:
1. A Growing software industry
According to the Brazilian Association of Software Companies (ABES) in 2020, investment in the IT sector saw considerable growth. The significance of this interest in IT positioned Brazil to reclaim its 9th place in the international software and service market ranking, with overall employment rates of 1.8%. Of the US$22.9 billion market value for software and services, the software development industry generated 55% of revenue, with foreign markets accounting for 79.6% of output and about 2.8% of GDP.
Software and Services World Market Size in 2020 analyzed by the Brazilian Association of Software Companies (ABES) in 2020
Refining Connectivity with 5G investment
Last October, Brazil’s 5G spectrum auction was held and raised approximately US$ 8.5 billion. 5G spectrum winners are expected to provide coverage to 26 capital cities and the federal district by July 2022.
5G will become a crucial asset to the growth of contemporary societies by increasing connectivity and financial prospects to places that have been living in a hypothetical stone age until now (according to most Gen Zers).
The main targets of Brazil’s 5G spectrum are:1. To provide 5G coverage to all cities/towns with >30,000 inhabitants by 2029
2. 4G coverage to all towns with >600 inhabitants by 2028;
3. To deploy an optic fibre network backbone or backhaul networks to municipalities with >20,000 inhabitants by 2025 and to municipalities with <20,000 inhabitants by 2026.
According to a recent analysis by the Brazilian Association of Communication and Information Technologies Companies (BRASSCOM), business 5G and Edge computing investment would certainly increase once 5G network services are available.
Datacenter investments are set to go up by 17%to BRL$ 4.3 billion (US$ 850 million), indicating robust demand for key Internet and e-services infrastructure. BRASSCOM also predicted investment of around US$ 86 billion in mobile and connectivity areas between 2021 and 2024, strengthening the score of Brazil in the ranking charts of those questioning why IT outsourcing to Brazil.
Edge computing has become the favored technology for pushing process automation across different sectors. This cutting-edge computing adds new opportunities for efficiency, leading to lower prices. With Brazil’s highly fluid culture and working structure, this technology is expected to develop solutions for the migration, integration, and automated management of applications and data in cloud installations, both on-premises, and off-premises. BRASSCOM has established that the Edge Computing industry in Brazil would increase at a rate of 16% per year between 2019 and 2023.
Connecting and administering several cloud services will become one of IT’s most demanding operational responsibilities, which is why it’s critical to improve the management of hybrid and multi-cloud environments. Brazilian businesses have expanded their operations in application renovation in order to maximize cloud utilization and accelerate the development of new digital goods and services. Brazil’s public cloud infrastructure (IaaS) and platform (PaaS) spending is expected to reach US$3.0 billion by 2020, representing a 46.5% increase over 2020. In addition, the private cloud market is expected to grow at a rapid pace, reaching $614 million in 2021. The biggest growth comes from private clouds as a service (DCaaS), which was estimated to increase by 15.5% compared with that in 2020.
Brazilian software and service market size in 2020 by Brazilian Association of Software Companies (ABES)
Legal and Government Support
The government has made a number of steps to boost Brazil’s ICT sector and overcome roadblocks in the implementation of the Digital Transformation Strategy. National strategies such as the National IoT Strategy, National Defense Strategy, National Cybersecurity Strategy, Digital Governance Strategy, and National Artificial Intelligence Strategy have been built and developed to harness the full potential of digital technologies to boost Brazilian productivity and competitiveness.
2. Human Resources with a large and qualified base
Countries with the best developers ranking in 2016 by Hacker Rank
The labor force is always an important key when looking for reasons why IT outsourcing to Brazil. The country currently produces over 500,000 programming engineers, with a comparatively low turnover rate of 20% compared to India’s 40%. According to the IT human resource market study produced by BRASSCOM in 2021, between 2021 and 2025, the IT human resource market in Brazil is expected to welcome around 237,000 people into the workforce from 123 scientific and technology institutes and 400 incubators operating across the country.
Academically, a number of Brazillian colleges and institutions are ranked among the finest in the world. The University of Sao Paulo (USP) has the second-highest score in Latin America and is among the world’s top 90 engineering and technology institutions, according to the QS Rankings while USP is the top Brazilian university for computer science and information systems.
In the ranking, the Campinas State University (Unicamp) is also listed among the top 150 engineering and technology schools in the world, and the sixth in Latin America. Computer science, computer engineering, and information systems are all available as undergraduate majors at Unicamp, as are master and doctoral degrees in computer engineering.
Other Brazilian universities that have achieved international recognition in rankings and produce some of the best Brazilian developers are including but are not limited to: the Federal University of Rio de Janeiro (UFRJ), Paulista State University “Júlio de Mesquita Filho” (UNESP), the Federal University of Minas Gerais (UFMG), the Catholic Pontifical University of São Paulo (PUC-SP), the Federal University of Rio Grande do Sul (UFRGS), and the Federal University of Ceará (UFC).
Brazillian students and professionals in the IT field even can benefit from other programs, including Hack Station administered by Facebook and Start-Up Brazil by the government, which connects accelerators with software firms.
Coursera Global Skill Index in 2021
Young and highly qualified dedicated developers
According to a StackOverflow developer poll, which included a variety of questions on computer science education in schools and accessibility to coding, a handful of Brazilian developers stated that they began writing their first lines of code when they were 16 years old. They also reported that the average number of years of coding expertise among the Brazilian developers surveyed was 11.5 years. This young demographic of programmers has a significant opportunity to be a leading generation of software developers for years to come. Brazil was ranked as the 38th best developer country in the world by Hacker Rank in 2016.
In Coursera global skill index, programming, and technology of Brazillian developers are also highly evaluated compared with other Latin American counterparts, especially in Cloud Computing and Software Engineering.
Brazilian developers are also quite active in unofficial coding challenges on popular development sites such as TopCoder and Hacker Rank. According to Top Coder data, Brazilian coders are among the most responsive competitors, ranking 13th in all-time first-place finishes in challenges.
Best Developer Rank by Country by HackerRank 2016
In terms of the most prevalent programming languages used by Brazilian developers, the analysis from Hacker Ranks 2016 showed that Java, C#, Python, SQL, and Ruby are the most popular.
High-end developers for a lower price
Developer Skills Report by HackerRank 2021
Even when we factor in the recruiting and incentive costs, employing Brazilian developers strike value financially and technically when compared to hiring professionals in the United States. According to statistics in the Developer Skills Report by HackerRank 2021, a Brazilian developer’s average yearly pay is approximately $40,000 per year, or around $3,300 per month, compared to roughly $9,000 per month and $110,000 annually for a developer in the United States. When it comes to software outsourcing in Brazil, the hourly pay for a Brazilian developer may range from $20/hr to $60/hr+, depending on programming talents, languages, and seniority, and this can be a major benefit.
3. Time zone overlap with the United States
The United States East Coast is only one hour behind Brazil. Because of the time zone overlap, hiring Brazilian engineers helps you to incorporate them into your present team. This allows for real-time meetings and schedules. It also means that if you have an emergency during the workday, you’ll be able to get a quick answer from your Brazilian colleague, and if you do need to come to Brazil to meet in person, the cost is low, and you won’t be affected by the notorious jet lag.
Brazil’s business workday is arranged similarly to that of the United States. Business hours are typically 8:30 a.m. to 5:00 p.m., plus an hour or two for lunch. The average workweek ranges from 40 to 44 hours, depending on whether workers work five or six days a week.
For the above reasons for why it outsourcing to Brazil, Brazil is a great option for outsourcing and this country has put a target to compete against the competitors in India by developing and implementing a stronger IT infrastructure, investing more into talent and education while the other factors such as timezone and culture are supporting this aim. To sum up, the key benefits to do IT outsourcing in Brazil are:
- Strong IT infrastructure. Hiring Brazilian developers, you do not have to worry whether they are familiar with the most advanced technologies such as cloud computing, and edge computing because the fast growth and big size of IT and software market in Brazil allows this country to become one of the leaders in the world technology sector.
- Highly qualified developers. Brazil’s tech education has been a high priority for its government and private sector focusing on TCEM, in Portuguese, emphasizing technology as a critical factor for digital transformation, meaning: Technology, Science, Engineering, and Mathematics. Software developers are trained in more than 100 institutes and students are exposed to the most advanced technologies such as Cloud computing, edge computing, 5G, etc. Developers in Brazil are experts in Java, C++, React, Python, Node, Ruby on Rails, and more.
- Real-time collaboration. Working with developers located in Brazil means that much of your workday will overlap. You can seamlessly integrate your Brazilian employees into your current team without the frustrations involved in trying to communicate across distant time zones.
- Lower cost. While taxes and the need to hire experts who are familiar with Brazil’s employment regulations add to the raw cost of hiring Brazilian developers, it’s still a bargain compared to hiring US-based developers. Even given the perks and markup, you can generally hire software developers from Brazil at half the price of equally skilled developers in the United States.
- Strong IT infrastructure: By hiring Brazilian developers, you do not have to worry whether they are familiar with the most advanced technologies such as cloud computing, and edge computing.
- Brazilian software and trend market 2021 by Brazilian Association of Software Companies (ABES) – Download the report here
- ICT – Information and Communications Technologies, and Telecommunication by International Trade Administration, 2021
- Demand for ICT Talents and Strategy for TCEM by Brazilian Association of Information and Communications Technology Companies (BRASSCOM) – You can download the report here
- Coursera Global Skills Report 2021 – Download the report here
- Developer Skills Report 2020 by HackerRank – Download the report here
- Which Country Would Win in the Programming Olympics? by Hacker Rank
- Kearney on The Global Services Location Index (GSLI) 2021
- GDP Growth forecast by IMF office in Brazil