Author : Nick Krym

Pros and Cons of Outsourcing to Brazil

A couple months ago I was talking with Alexandre, a project / account manager from a mid-sized service provider based out of Campinas, an industrial city North of Sao Paulo, Brazil. Alexandre’s team did a great job on one of my past projects and we continue to stay in touch after the engagement ended. The question of Pros and Cons of Brazil outsourcing inevitably came up and I committed to writing this post after some follow with my network and learning a bit more about the destination.

Brazil, the first country in the famous BRIC acronym is not one of the first names that come to mind when you consider IT offshoring destinations. I am sure that overtime that will change and Brazil will gain a permanent spot on the list of top players in technology outsourcing. You would probably agree with me if you look just at the list of Pros of that destination; the Cons may affect your opinion but won’t dramatically change it.

Let’s start with Gartner rating for Brazil which I agree to some degree:

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English Skills. English is a very popular skill and not hard to find with technical professionals in Brazil. However, it’s no match to what you find in India. As a matter of fact when you focus on technical skills sooner or later you will find yourself compromising on English fluency.

Government Support. Very interesting topic. According to my connections in Brazil government is unusually supportive in developing IT outsourcing however results of it remain to be seen.

Infrastructure. Unless you partner with a very small provider located in a remote province city you will find infrastructure that meets reasonable expectations. In my / my network experience telecom and other aspects of the infrastructure are excellent.

Labor Pool / Access to Resources. Brazil employs one of the largest IT communities in the world. The IT work force is large and experienced. This is also a highly educated professional work force as Brazilian universities are fairly competitive to get into and rather inexpensive to stay in. Of course in sheer numbers Brazil falls far behind India and China. Finding top-notch technical resources in Brazil is not easy like everywhere else in the world, yet is possible, even when it comes to cutting edge technologies and methodologies.

Educational System. I can not completely agree with Gartner here, while education system in Brazil is not as stellar as in Argentina or Canada when considered from IT stand point it’s at least at par with Chile and Mexico. In my experience the quality of recent grads with CS degrees is very good and that’s rates high on my book.

Cost. Pure comparison of the rates with India or China puts Brazil in serious disadvantage. Based on a limited sampling of rates I had access to it is 30-80% higher than rates for comparable resources in India. The difference could be even higher if you try to take into consideration the tier of the city and vendor. On the other hand, as I mentioned numerous times, rate is only a guideline to cost, the total cost of outsourcing has a considerably lower difference.

Operating Environment. Air travel to Brazil is convenient and affordable. Sao Paulo is a 10 hour direct flight from Atlanta, GA. Small time difference and thus no jetlag make a huge difference in overall comfort of travel. Finding excellent and fairly affordable hotels, restaurants and other creature comforts is easy. With a little support from your vendor chances are you will stay in safe areas and won’t need to deal with crime which is unfortunately a serious issue in the country. Getting things done requires understanding of the system and is manageable. One of the big Pros of the country that came up many times in my discussions was absence of natural disasters

Nearshore advantage. When it come to US based customers Brazil offers nearshore model which is an advantage of high caliber especially for agile projects. Time difference, travel ease, low cultural barriers, etc. institute a huge Pro for Brazil which offsets its high rates to a large degree.

Cultural Compatibility. In my experience as well as according to everyone I checked with cultural differences are very easy to deal with. As a matter of fact when I asked around within my network I heard more about cultural similarities rather than differences. Of course the differences are there and they can not be ignored, here are just a few to consider:

  • First and foremost language issues makes a huge imprint on communications, watch out for idiomatic expressions and professional lingo.
  • Work / life balance. While many of guys in my Brazilian teams worked crazy hours the attitude towards work / career / life balance was quite different, and that is particular notable if there is a beach nearby.
  • In my experience working with Brazilian teams as I noticed that it developers very long time before they could to offer their opinion or disagree with USA team members. That was quite different from Indian “never say no”, it appeared more like fascination with US tech workforce and overly humble judgment of own abilities. Very similar sentiment came from my network as well.
  • Facts and technical quality of the solutions carried less weight with Brazilian team than perceived “authority” of individual. There was also much higher level of sensitivity towards “people feelings” than the one you would typically observe in the states; sometimes to determent of the project.
  • And, in my opinion, common for the entire region tendency to put very high emphasis on theory and academic values versus pragmatic business decisions.

Resource Quality / Technical Capability. IT outsourcing in Brazil doesn’t seem to be in the same cut-throat competition with other IT employers as in India. It seems that Brazil is still in a stage when working for outsourcing company considered prestigious and highly desired job. In that light getting your hands on top notch resources is still possible.

Turnover Ratio. Turnover ratio claimed by the vendors is low and that has been my experience as well. My limited scope survey gave very positive results with average about 13%. The attrition was also of general nature mainly family issues or education. Not too much of job hopping or inter-company transfers.

There is one more issue worth mentioning – finding vendors in Brazil is not as easy as it should be. Hopefully the latest efforts of several outsourcing vendors combined with the government support give us a solid provider directory which will help us in finding those perfect matches made in IT heaven. But for now consider these links as the humble beginnings – www.softex.br, www.brazil-it.com, www.actminds.com, and www.brasscom.org.br.

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7 thoughts on “Pros and Cons of Outsourcing to Brazil”

  1. Bom dia! Wow, what a fantastic article.

    Some analysis I would add is that Brazil is a leader throughout the world in government adoption of open source software. By presidential decree, all government agencies and state-owned firms must migrate to open source software. This set a precedent in the region and since then, a number of Latin American countries have passed similar laws: Ecuador, Venezuela, Paraguay, Bolivia.

    As a result, there are thousands of developers in these countries who have worked on government- and enterprise-level projects using Linux, FreeBSD, Apache, MySQL, Drupal, etc.

    It was out of this phenomenon that my company, North by South, was founded in San Francisco, California and São Paulo, Brazil — as a way to both support the amazing free software movement in Latin America and provide high-quality, lower-cost development for companies in the United States.

    We distinguish ourselves from other off-shoring companies in that all of our developers come from this open source movement and have substantial experience building large projects with free software. So, they are passionate and meticulous about code development and we have a strong states-side management team based in San Francisco that companies can work with.

    We also maintain the only English-language news site which documents the Latin American open source movement at http://news.northxsouth.com/

  2. Hi Nick,

    You pretty much nailed all the topics (really). I´d just like to point two minor things:

    1) The only Argentina stuff that is better than Brazil´s is the chouriço beef :P
    But, seriously, regarding IT Education, we´re at least at the same level

    2) Regarding the difficulty to express divergent opinions, maybe it has to do with some kind of “inferiority sentiment” towards US but it also happens in domestic situations. I think, because as latins, we use to talk around and around before making some critic statement. As you said, it´s not as extreme as Indians (or Mexicans, from my experience). Note: For me, when I started working with international customers, dealing with the “straightfowardness” of the americans was the biggest challenge. But, with time, you get used to it (in a given moment, I realized that it was just business :)

    Best Regards,

  3. Nick,

    I enjoyed reading your view on your recent experience with Brazil and agree with most of what you wrote.

    However, as dual citizen, Brazilian and American, or as I like to say, a dual cultural, having lived at different times, half of my live in each country, and becasue of that, can immerse easily in both cultures, and working since 1986 in the IT sector, there is what I call the “cultural DNA” advantage when it comes to offshoring IT services.

    Besides your comments, which I think are appropriate, there is another perspective, which is the fact that, because the Brazilian culture, literally, is the most mixed race on the planet, anyone can be a Brazilian (and this can be verified in the passport blackmarket, where the Brazilian passport is the most expensive one on the shelf), there are no cultural barriers, there are no cultural traditions or quibbles that prevents the Brazilian from committing or that get in the way when you need to negotiate.

    Brazilian cultural DNA transferred into work ethics basically translates to the fact that, most Brazilians are not tied to a 9 to 5 job, nor to a job description. They are committed to getting the job done, whatever it takes.

    Furthermore, Brazilian cultural DNA is embedded with great criativity (vis-a-vis soccer and carnaval), that they are able to bring automatic added value to the table, when looking at project requirements (have you compared a SAP implementation between a Brazilian team and any other country destination team?)

    Well, I am a permanent advocate for Brazil IT, so part of my mandate is to actually showcase what are these competitive advantages. And after all, we will always end up with the people (the rest is binary). And in this playing field, I am sure that Brazil is a hard act to follow.

    Cheers. when you get a chance check out http://www.brasilexportati.com

    1. Thank you sir. It has been a great pleasure to work with Brazilian teams and i am looking for opportunities to do it again. A few on-site visits would be great as well ;)

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