1. "Soccer, Samba and... Outsourcing- IT?" IT Outsourcing Brazil By: Luke Billings, Brendan Bliss, Ana Fidantsef, Mallory Scholl, Chenqiong (Adeline) Tang Wall Street Journal, 2007

2. Demographics and Relevant Data Population: 182 Million Workforce: 83 Million IT Workforce: 250,000 Annual IT Workforce Inflow: 25,000 IT as % of GDP: 1.5% Internet Penetration Rate: 35% Political Structure: Stable Democracy Time-Zone Differential from US: 1 - 4 hours Geographic Location: "Near-shore" Inflation: 4.2% Literacy Rate: 90%, yet only 1/2 of the population completes high school Language: Portuguese

3. Geopolitical Environment Advantages: Time Zone one time zone east of New York ---> easier access, better communication and lower costs. Located in a time zone between North America and Europe. Working hours are quite similar, making contact between outsourcing companies and its clients much faster. Superior Infrastructure Brazil's infrastructure is already capable of supporting double- digit IT growth, and will be rapidly expanded in preparation for the 2014 FIFA World Cup and 2016 Olympics Low risk Brazil is a country that is historically untouched by natural disasters or terrorist attacks Stable Democracy Brazil has been a stable democracy for 25 years in 2002, President Luiz Inacio Lula da Silva and the Worker's Party has been showing his eagerness to attract foreign investors. Government Support Government is committed to increasing IT to 2% of GDP by the end of 2010 (GDP for 2010: $1.57 Trillion USD) August 2009, President Lula signed a bill reducing IT exporters tax contributions to social security by 50% Passed legislation to add 80,000 computer labs to public schools from 2008 to 2010 in order to ensure an ample supply of IT workers in the future (In 2008 only 27,000 existed in total) In May 2010, the Brazil government formally launched a National Broadband Plan (PNBL), which aims to triple access to broadband services by 2014. Disadvantages: Corruption Positive steps have been made, but political corruption is still an obstacle in Brazil Elections coming soon President Lula is not eligible for re-election in the 2010 presidential elections (which occur on Oct. 3rd) and the election of a more protectionist administration may hurt the IT export market.

4. Economic Conditions Advantages: Labor Pool Large Influx of IT capable professionals expected in coming years due to governmental investment in technology education Inflation Rate Brazil has changed a lot since the days of 2,000% inflation. Today the economy is stable, with 4.2% inflation rate Conservative Financial System Conservative financial system promotes steady and predictable economic environment Economic Freedom Wall Street Journal ranked Brazil ahead of China, India and Russia on economic freedom using 10 metrics including property rights, regulation, and corruption. Research and Markets Brazil's IT Services Market Is Expected To Continue To Grow Strongly In 2010, With Total Spending Of Around Strongly In 2010, With Total Spending Of Around US$8.9bn( 3)US$8.9bn Disadvantages: Labor Costs Brazil is cheaper than almost all other South American or European countries, with a 30% salary advantage cost over the US. However it is not the cheapest option, with Indian locations benefiting for an additional 30% cost advantage. The average salary for an "entry level" IT worker is about $9,000, while in China and India it's about $5,500. Currency Appreciation Unlike China, the Brazilian Real is not directly tied to the US dollar and is thus more susceptible to currency fluctuations 2009 Real/USD = 1.81 2010 Real/USD = 1.72 Transparency Complex and difficult to adhere to legal system Taxation issues Taxes at local, state, and national level for businesses "Ease of Doing Business" Brazil was labelled by the World Bank as one of the hardest countries to do business in due to its burdensome tax system and high cost of credit

5. Cultural Settings & Human Factors Advantages Westernized culture Brazil's business culture and values are similar to the US, lowering the risk of cultural issues and improving team. A "yes" is a "yes" In comparison to other outsourcing countries, Brazil has developed an IT culture that focuses on good work ethics and completing the work that they agree to undertake. Cultural Diversity Because of a mix of races and elasticities, the culture is less rigid and much more adaptable to US negotiations and project standards. Rio de Janeiro A beautiful city and a great lifestyle. Disadvantages Language Skills Not all of Brazil's IT industry is fluent in English, sometimes creating difficulty in collaboration with US companies and IT departments. High Crime Rate High rates of violent crimes and illicit drug use foster a culture of high crime in Brazil that creates unease with some US companies. Piracy Though Brazil managed to post a year-over-year decline of 1% in 2009, the software piracy rate still stands at a lofty 58%

7. Top 5 Brazil IT Vendors Five companies represented the Brazil IT at the IT Channel Vision Summit (Orlando, May 7th to 10th, 2010): BRQ, PX Solutions, Actminds, Stefanini and Politec. BRQ - BRQ is focused on services such as Software / Web Development, Corporate Portals, Staff Augmentation, Legacy Transformation & Migration, Large Databases Management and Application Maintenance (Onshore & Offshore). http://www.brq.com/offshore/brazil00.htm PX Solutions - Founded in 1992, PX Solutions offers a full-fledged family of Document/Knowledge Management software and has offices in New York and Rio de Janeiro. Its clients include Petrobras, Sony and Sodexho. http://www.wintility.com/com_pany.htm Actminds - Actminds is a consortium of Brazilian companies with US headquarters in Pennsylvania and focused on web applications development and R&D outsourcing. http://www.actminds.com/ Stefanini - Founded in 1987, Stefanini is a CMMi5 certified corporation, with over 4,000 employees in software development centers. Among its clients are Microsoft, Ford and Boeing. http://www.stefanini.com.br/us/home.html Politec - With over 6,500 employees and 11 technology centers, Politec offers ADM (Application Development and Maintenance), Systems Integration, Legacy Transformation and Distributed Monitoring, among others. http://www.politec.com.br/en-us/Pages/home.aspx

8. Vendor Maturity and Capabilities Brazil boasts a mature software and IT industry, and the nation's providers such as Politec, Stefanini IT, and ActMinds are keen to do more offshore business. These vendors have high capabilities and are experiencing rapid growth. While Brazil's vendors are overall mature and capable, more of these larger vendors are needed if they would like to compete on an international level. Another disadvantage, Brazil lacks a formal provider list, which makes finding the above statistics and other vendor information difficult.

9. Conclusion Brazil provides an excellent alternative to the traditional IT outsourcing powerhouses of China and India. While the cost of labor maybe be higher than in other locales, Brazil's government has made a concerted effort to push itself into the forefront of the IT sphere, and seems willing to make all necessary accommodations to corporations in order to reach this end. Brazil has an ambitious plan to become one of the world's top IT outsourcing destinations by 2010. This has manifested itself in the lowering of tax rates, expansion of education in technology and massive investments in infrastructure, especially considering the future Olympics and World Cup Games. Overall, the geographic location and cultural similarities make Brazil a unique and attractive location for IT outsourcing.

10. References Books and Articles: Business Monitor International, Brazilian Information Technology Report, April 2010 Reuters, Research and Markets: Brazil's IT Services Market Is Expected To Continue To Grow Strongly In 2010, With Total Spending Of Around US$8.9bn, 2010 http://www.reuters.com/article/idUS171053+13-Aug-2010+BW20100813 Foremski, T. (2010, June 10). Global IT Outsourcing: Here Is How Brazil Can Differentiate Itself. Retrieved September 19, 2010, from Silicon Valley Watcher: http://www.siliconvalleywatcher.com/mt/archives/2010/06/global_it_outso.phphttp://www.siliconvalleywatcher.com/mt/archives/2010/06/global_it_outso.php George, T. (2010, July 29). Brazil Currency Appreciation: A “Real” Concern? Retrieved September 19, 2010, from Nearshore Americas: http://www.nearshoreamericas.com/brazil-currency-appreciation/4808/ Lebeaux, R. (2009, August 27). IT outsourcing pros and cons for Latin, South America. Retrieved September 19, 2010, from SearchCIO.com: http://searchcio.techtarget.com/news/1366243/IT-outsourcing-pros-and-cons-for-Latin-South-America http://searchcio.techtarget.com/news/1366243/IT-outsourcing-pros-and-cons-for-Latin-South-America Wright, Christopher (September/October 2010). CFA Institute Magazine, The Country of theFuture. Retrieved from http://viewer.zmags.com/publication/774fb329#/774fb329/42 Indian Express Newspapers, Ltd. (December 2004). Brazil Making Progress On Software Export Drive. Retrieved from http://www.expressindia.com/fullstory.php?newsid=39253 Wood, Laura (2010, August 13). Research and Markets: Brazil's IT Services Market Is Expected To Continue To Grow Strongly In 2010, With Total Spending Of Around US$8.9bn. Retrieved from http://www.reuters.com/article/idUS171053+13-Aug-2010+BW20100813 Websites for Rankings, Company Information, etc.: Inflation Rate, www.indexmundi.com Paradigma Company Information, www.paradigma.com International Association of Outsourcing Professionals, http://www.iaop.org/content/23/152/2040/Companyhttp://www.iaop.org/content/23/152/2040/Company http://www.expressindia.com/fullstory.php?newsid=39253 http://www.prnewswire.com/news-releases