Report on Growth in IT Sector of Brazil

Can Brazil become a global competitor in the information technology outsourcing business?
Brazil is a large economy and comes at 11th place in the world. With the extent of resources Brazil possesses, it has not been fully utilizing its potential. Information technology still remains a booming sector and Brazil has the capacity to tap their resources into this sector and earn the outcomes that other countries like India and China have been earning for the past decade. Observing mercantilism, Brazil intends to maximize their imports, which in this case is its labor. In other sectors, exporting labor is a bigger problem but in IT sector the laborers can work in Brazil itself and it is one of the reasons why it is favorable to Brazil. Compared to India which can be considered a smaller economy than Brazil and less number of educated and suitable population fit for work in the IT sector. This way, Brazil tends to take advantage of their labor on the basis of the qualities its laborers possess. Before intending to invest in the IT sector, Brazil is observing the two factors of production which are labor and capital and has concluded that they possess both of these factors. After this analysis, there is a clear case of cost savings by investing in the IT sector but there is an observable lack of specialization.
The capital and resources that Brazil requires is real estate and labor. Another positive factor for Brazil is that Companies like Tata Consultancy Services and Infosys are entering India and observing their work and progress, Brazil can certainly learn a few tricks of the trade. Labor becomes a factor endowment in this situation there is skilled labor required in this sector which needs to improve. Communications (advanced telecom sector) and the infrastructure are two positive suits that are already developed for Brazil. The positive factors for Brazil are that it has allow amount of employee turnover, which is good because new employee have to be trained beforehand and the training expense will reduce due to the minimal employee turnover which is not a factor in India. This way, Brazil is considering that it has a considerable competitive advantage over countries like china and intends to invest in this sector.
In order to improve the prospects of Brazil, the weak factor need to be observed. It already has a strong telecom sector required for the industry and demographic factors are also an advantage but the weak factor are that aside from power over language and understanding, Brazil needs its labor to be skilled in the area of information technology and it also needs better infrastructure regarding electricity. For this, Brazil has to build Universities that provide robust IT knowledge as the amount people that have gained university knowledge are lesser than ideally required. Brazil can also take advantage of the BRICS alliance and set up a deal with India to gain knowledge regarding the IT sector and can return the favor by providing its abundant natural resources or allow smooth settlement of businesses for India. Regarding the weakness in infrastructure, Brazil needs to strengthen its facilities which provide electricity ensuring less number of Blackouts. There is also a need to improve the level of knowledge in English language and the development of those skills is an area to watch out for. Currency fluctuations are factor that cannot be resolved immediately and improvement in labor laws and international trade policies will smoothen the process.


Posted on

March 7, 2018

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