Brasília – Brazilian information and communications technology companies want to make use of the scenery of global crisis to export more. However, they are stumbling on state bureaucracy for regulation and on the lack of sector nomenclature, pulverized in micro and small companies.
A study by consultancy company A.T. Kearney, at the request of the Brazilian Association of Information Technology and Communication Companies (Brasscom), showed that sector exports rose from US$ 800 million in 2007 to US$ 1.4 billion last year.
The study also shows that Brazil occupies the fifth position worldwide as a destination for "offshore outsourcing", a modality in which services are produced outside the country of origin. This placement represents significant growth when compared to 2005, when the country was in 10th place.
Businessmen, however, believe that the country can export more. "The study shows that we are on the right track for insertion in the international market. Why not? What is lacking is awareness. And what is needed is not just Brasscom awareness, or awareness of just one government sector. It must be something broader to start happening," explained Ricardo Saur, the Brasscom director. "As it is essentially a people’s market, 80 % of the cost is personnel, and it is a market that does not pollute, one that is green. It generates employment, income and has no side effects."
"A crisis is never good, but the IT sector has more chance for growth during this crisis than retraction. In the case of IT, it opens certain perspectives, as companies in other sectors have to take greater care of their productive processes to overcome their deficiencies. Nothing increases a market’s efficiency more in a market of global competition than being well informed and having an efficient structure based on IT. In this context, the IT sector has a part to play for reduction of certain costs," said Saur.
Export does not correspond to the largest part of Brazilian production. A large part of what is produced is turned to the domestic market, which is large and growing. Although India has gained special attention on the international market since the 1990s, since then Brazil has managed special attention in the production of software turned to the financial sector.
"As the need for more complex programs arises, with interaction with the Internet, Brazil has differentiated itself. The Brazilian banking system is the most advanced in terms of IT. Nobody has a payment system like the one we have here, which allows for electronic transfers. This did not come for free. It came from years of investment in personnel training. We have noticed that we are competitive," said Saur.
Businessmen agree that for Brazil to compete with countries like India regulation forecasting tax breaks of two kinds is necessary. One allowing companies to discount double their investment in personnel training and another reducing labour costs.
"Worker salaries are not cut, but taxes on the payroll are," said Saur. The businessmen hope the sector gets the same tax cuts as the hardware sector got last year. They want to convince the government that the area will develop and the volume should compensate revenue losses. "The grey hardware market has gone. The government now has greater revenues, charging less than before," explained Saur.
The incentive law was approved last year due to the Industrial Policy announcement, but it needs regulation to be enacted. Science and Technology Minister Sergio Resende has not specified a date for regulation, but recognized the need for the law to be enacted. "Regulation of the law is taking a while, but it should take place soon," he said.
Resende explained that the government is concerned with the sector and is taking measures to inject funds as well as recommending company mergers to make them stronger.
"We have already done important things. Now the BNDES [Brazilian Development Bank] has been playing an important part in stimulating the merger of companies. The objective is to have larger companies in the technology area. This is very important to grant them greater competitiveness on the global market," emphasized the minister.
Activities of the BNDES for the technology sector, according to the minister, should be geared at granting privileges to companies that merge. Another activity should be the use of BNDESPAR to become a partner in a new company originating from a conglomerate. BNDESPAR is the BNDES arm that invests in several Brazilian companies through share purchase.
Sergio Rezende guaranteed that the main funds for development of technology have not been cut by the government. "They are funds that grant companies economic possibilities. The Finep [Studies and Projects Funding Body] is now closing a call to tender, for a 450-million-real (US$ 201 million) grant. These are funds granted to the sector, non refundable. The software sector is contemplated," he said.
To the minister, the Brazilian lack of competition on the foreign market is due to the lack of investment of previous governments in an industrial policy with development of its own technology.
"Brazil started conceiving industrial technology in 2003 and one of the areas chosen was software. We spent some decades without an industrial policy. Apart from that, when Brazil had an industrial policy, in the 1960s and 1970s, the policies did not take into consideration the development of national technology. It is not only necessary to produce here. It is necessary to allow technology to be acquired here, with our intelligence," said the minister.
*Translated by Mark Ament
