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Brazil: the country of the future

by Stuart Wilson, Monday 10 August 2015

In his latest column, Dagoberto Hajjar, CEO at Advance Consulting, explains how Brazil’s IT market defies the country’s economic issues. DISTREE Brazil & Latin America 2015 takes place this September in Sao Paulo.

Brazil: the country of the future

"Last week, several American friends of mine called me asking what was going on in Brazil. Our current president and two former presidents are being investigated for possible crimes related to corruption and the misuse of public funds. The presidents of the Senate and Chamber of Deputies are also being investigated on corruption charges. CEOs and top executives of several companies have been arrested for corruption.

If all this were happening in a developed country, the reverberations within the economy would be devastating. In Brazil, this agitated political scenario is simply evidence of the maturing process of country’s democracy and, although substantial, its impact on the economy has been relatively restrained. This maturing process has involved changes, all of which have been made in strict accordance with the Constitution.

This process is essential so that Brazil can get rid of old-school politicians, drastically reduce corruption, and demonstrate to the population the importance of political awareness and intelligent voting.

By the end of this year, the country’s GDP will have dropped by approximately 2%. Companies have been firing staff, retailers are closing stores, consumption has fallen, and default is skyrocketing. This is part of the price we have to pay.

The information technology (IT) market segment is an oasis in this desert, having ended 2014 with a growth of approximately 12% and an expected growth of 6% for 2015.

In the second quarter of 2015, around 25% of IT companies grew by more than 15%, hiring staff, investing in marketing and sales, expanding into new markets, and attracting new clients. 18% of companies say that the marketplace in which they have been working is quite promising for 2015 and 2016. At the other end of the spectrum, 17% of IT companies experienced a drop of more than 15% in sales and have been firing staff and struggling to hang onto clients, evidence that the crisis is causing money to change hands. IT companies that have a good plan and a timely execution are ’stealing’ market share from those that don’t.

Investment opportunity

International companies are once again turning their attention to Brazil as an excellent investment opportunity, particularly at this moment when the local currency is cheap.

Brazil is the world’s seventh largest economy and draws on 200 million technology-enthusiastic consumers. We have a total of 283 million mobile phones in use, with growth rates of as much as 4% in 2014, a year in which the overall economy experienced a 1.5% recession. This is a fertile field for software and mobile devices, as well as cloud applications. By the end of 2014, 14% of IT company revenues was related to cloud products or services. That figure is expected to reach 33% by the end of 2016.

The Brazilian government is requiring more and more automation from companies, as they have to provide federal agencies with data related to accounting, taxes, human resources, and production on a monthly basis. Thiss data is immediately cross-matched so as to identify errors or evidence of tax evasion. This has led to growth rates of as high as 20% per year in sales of management, fiscal, tax control and business intelligence software.

The Brazilian financial market is a standard in automation, but other sectors of the economy still lag behind. Approximately 2.4% of the Brazilian GDP represents investments in ICT, whereas developed countries invest 4%. Brazil has therefore a great ICT growth potential.

Today, Brazil has 15,000 companies with 5 or more employees that sell IT products and services. For 10 years, the IT industry has been the leader in mergers and acquisitions, demonstrating that the market is maturing and leading companies toward continuous growth and toward becoming better prepared to serve the vast Brazilian territory (the fifth largest in the world).

To put it in a nutshell, we should not confuse the news disseminated about the country’s political crisis with the growth and investment opportunities that the country offers, particularly in the IT area."

DISTREE Brazil & Latin America 2015

Dagoberto Hajjar is a confirmed speaker at DISTREE Brazil & Latin America 2015 and will run a workshop session during this year’s event. Vendors, distributors, retailers, e-tailers, resellers, speakers and press wishing to participate at DISTREE Brazil & Latin America 2015, can register their interest HERE

Media Partnership

We are pleased to confirm that Channel LatAm is an official Media Partner for all DISTREE events in 2015, including DISTREE Brazil & Latin America.

DISTREE Brazil & Latin America 2015, which takes place from September 16-18th in Sao Paulo, Brazil, gathers together hundreds of senior executives from the region’s leading ICT & CE e-tailers, retailers and distributors. Readers requiring more information about DISTREE events in 2015 should contact events@channelemea.com.

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