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NEWS FROM COMMERCE
THE BRAZILIAN
IT MARKET
THE LARGEST AND MOST DYNAMIC IT MARKET IN LATIN AMERICA
by Tim Miles
Information Technologies, Trade Development
Brazil is the leading infor- the energy crisis that Brazil endured software solutions that will help them
in 2001, and further substantial deval- to reduce costs and increase profits
mation technology (IT) uation of the real. Brazil’s computer through automation of their industrial
market in Latin America, hardware market should be buoyed and commercial processes. The soft-
up by the private sector’s ongoing ware packages that will continue to be
accounting for one out of modernization of its operations and the in the highest demand among business-
every two dollars spent on Brazilian government’s commitment to es in Brazil are those for customer
providing Brazilians with electronic relationship management, networking
IT products and services in government (e-government) and and communications, database
this region. After a dismal 2001, expanding computer and Internet use management, electronic document
Brazilian IT demand is expected to throughout the country. These efforts management, and enterprise resources
improve this year as Brazil’s economy should translate into significant sales planning. Corporate security concerns
returns to a more vibrant growth rate. opportunities for U.S. suppliers of should result in heavy spending on IT
International Data Corporation (IDC), servers, desktop and notebook personal security solutions such as encryption,
a U.S. market research company, pre- computers (PCs), handheld computers, anti-virus, and firewalls. Brazilians have
dicts that IT spending there should and even used PCs in the future. The also shown a keen interest in solutions
increase 3 percent to nearly $13 billion rising tide of systems purchases should developed around the Linux operating
by the end of 2002. Computer also benefit U.S. peripheral equipment system and Java applications develop-
hardware demand should decline firms. Best prospects include scanners, ment tools. Desktop PC applications
slightly while networking equipment printers, disk drives, and digital for use by small and medium-sized
should recover. IT services should have videodisc players. Demand for high- enterprises (SMEs) and more affluent
the most pronounced turnaround of end data storage devices should be homes and educational software for
any IT spending category, however. particularly strong as well, given secondary schools are good opportuni-
Packaged software purchases may be increased concern in Brazil about data ties as well.
even higher than they were in 2001. security and disaster recovery following
the terrorist attacks in the United States Brazil should be an excellent market for
SIGNIFICANT PROSPECTS last September. networking equipment, benefiting
The long-term outlook for IT sales in from the continuing expansion of the
Brazil is extremely good, because the The Brazilian packaged software mar- telecommunications infrastructure and
Brazilian economy is expected to have a ket has enormous potential for U.S. corporate interest in establishing
growth spurt of more than 3.5 percent companies as long as Brazil makes intranets and extranets. Greater PC and
annually over the next few years. The meaningful progress in combating Internet use in education and health
only factors that might adversely affect intellectual property rights violations. care should also lead to the spread of
this forecast would be another down- Brazilian manufacturing and services networking on university campuses, in
turn in the global economy, a return of corporations have a significant need for schools, and among hospitals, clinics,
12 EXPORT AMERICA September 2002
NEWS FROM COMMERCE
and other medical facilities. In- important parts of their IT budgets,
Stat/MDR, another U.S. market but they should boost these invest-
research group, believes that Brazil ments substantially in the wake of last
holds immense promise for wireless September’s terrorist events in the
local area networks. United States.
IDC forecasts that spending on IT A WIRED POPULATION
services in Brazil will overtake invest- Brazil has the most PCs installed and
ment in computer equipment by 2003 the largest Internet population in Latin
and increase very rapidly thereafter. A America. However, the use of PCs and
growing number of cost-conscious the Internet is still confined to the
Brazilian businesses have been out- wealthy due to various structural and
sourcing their systems and network socioeconomic barriers. The Brazilian
management and data processing activ- public and private sectors have
ities to IT services suppliers over the launched efforts to deal with these
past several years and should continue problems over the past few years. The
to do so. Public sector agencies and Brazilian government has projects
corporations engaged in a large number under way to provide schools and
of modernization programs have a communities across Brazil with PCs
great need for IT consultants and and Internet access, to revamp the
system integrators to install, program, national health care system and give all
and connect servers to legacy systems, Brazilians medical care service through access. The Yankee Group, a U.S.
to integrate front and back offices, and the use of IT, and to improve govern- market research firm, forecasts that the
to provide education and training to ment services and ensure that every number of Brazilian Internet users will
alleviate Brazil’s acute shortage of qual- citizen has access to them through triple to 42 million by 2006.
ified IT personnel. Finally, corporate electronic government. It has also been
executives have always considered data working diligently to bring down the Brazil experienced the same high-tech
warehousing and IT security services costs of PC ownership and Internet shakeout that occurred in the United
BRAZILIAN IT SPENDING, 2001–2006
Hardware Packaged Software in millions of dollars
per year
IT Services Networking Equipment
8,000
7,000
6,000
5,000
4,000
3,000
Source: U.S. Department of Commerce
2,000
1,000
0
2001 2002 2003 2004 2005 2006
September 2002 EXPORT AMERICA 13
NEWS FROM COMMERCE
States and in many other developed Although broadband is in its infancy and petrochemicals); electronic mar-
nations from late 2000 onwards. The in Brazil, Brazilian users, especially ketplaces operated by automotive,
number of Internet service providers SMEs and upper income residential chemical, agricultural, and construc-
(ISPs) fell 50 percent to fewer than customers, will increasingly demand tion companies to trade goods and
700 by mid-2001. A handful of Internet connection through this services within their respective indus-
players now controls this market, and high-speed service. Businesses in tries; and vertical portals for transac-
further consolidation of Brazil’s ISPs is remote areas where wired telecommu- tions among industries participating in
expected in 2002. Improvement in the nications are not yet available may opt one supply chain. However, finance
fortunes of ISPs is likely in the near for satellite service. Wireless Internet and retailing continue to lead B2B
future as Brazil’s economy picks up access for homes and businesses e-commerce. Most companies are in
and Internet use spreads among the through wireless applications protocol early stages of e-commerce develop-
middle class, small businesses, and and other services should grow sub- ment, since more than half use the
schools. As a result, there will be stantially. Wireless may also be much Internet only for e-mail and informa-
numerous potential opportunities more viable than wired access for tion gathering purposes.
for U.S. suppliers. The expansion of home users, considering the low PC
electronic commerce (e-commerce) penetration and the popularity of Brazil also leads Latin America in on-
and e-government will undoubtedly cellular telephony there. line retailing. It profits from the most
create significant demand for the serv- advanced e-commerce industries and
ices of companies that can design and E-COMMERCE the largest Internet population in the
develop Web sites, provide content for Brazil has the most networked econo- region, a wide range of Portuguese-
them, and host them. Involvement in my in the region. IDC predicts that language content providers, and a
e-commerce may also stimulate many Brazilian e-commerce may quadruple sophisticated home banking system
firms to outsource their entire Web to over $20 billion by 2004, with busi- with state-of-the-art equipment. More
and interconnection needs rather than ness-to-business (B2B) trade still than 3 million Brazilians purchased
taking on the burden of costly invest- accounting for most of this activity. on-line in 2001, but the number of
ments in telecommunications, net- Various e-commerce initiatives have active buyers represented less than 20
work, and computing infrastructures, emerged over the past two years percent of all Internet users in Brazil.
as well as in-house personnel required focused on electronic procurement of More widespread use of business-
to run these operations. basic supplies (e.g., telecommunications to-consumer e-commerce is limited by
14 EXPORT AMERICA September 2002
NEWS FROM COMMERCE
E X P O RT I T
U.S. COMPUTER EXPORTS TO BRAZIL ExportIT Reports
1,000 millions of dollars
The ExportIT reports are a series of
in-depth studies focused on foreign IT
800
and Internet markets. They describe and
analyze the trends, key issues, and events
600
in telecommunications, the Internet, and
Source: U.S. Department of Commerce
e-commerce in regional markets. These
400 reports help create a framework from
which U.S. small and medium-sized
200 enterprises (SMEs) can make educated
business decisions about entering
these markets.
0
1995 1996 1997 1998 1999 2000 2001
Analysis focuses on the status of telecom-
munications liberalization, competition in
a lack of disposable income among the firms in entering international markets.
majority of Brazilians, consumer con- The ExportIT report on Brazil updates telecommunications services, and the
cern about on-line security, and an a June 2000 study on Latin America in deployment of new telecommunications
inadequate transportation infrastruc- and is available on the home page of technologies, and how these changes are
ture that restricts delivery of products the Office of Information Technologies affecting the adoption of the Internet and
bought over the Internet. (http://exportit.ita.doc.gov). ■ e-commerce.
Brazil does not currently have any specif-
ic legislation that regulates e-commerce. Economic, cultural, historical, and
Bills that address the particular legal political factors that influence the
issues raised by it and stipulate regula- spread of information, Internet, and
R E P O RT S
tions supporting its development in this e-commerce technologies are also vital
country have been under consideration pieces of these reports. Suggested
by the Brazilian Congress for some time.
market entry strategies for smaller firms,
Most of the legislative action has been
directed toward digital security. as well as U.S. Department of Commerce
and other resources to assist U.S. firms in
NEW MARKET RESEARCH market entry endeavors, are provided.
FOR EXPORTERS
In its efforts to provide small and Feedback is welcomed, particularly on
medium-sized enterprises (SMEs) with
regions or countries you would like to see
high quality foreign market research,
the U.S. Department of Commerce analyzed in future reports.
recently released an ExportIT report on For additional information on this
Brazil. The 40-page report is the latest market report contact: Look for reports on Japan, Western
in a series that analyzes trends, issues, Europe (France and Germany), and China
Tim Miles
and events in information technology, to be released in the coming months. All
(Timothy_Miles@ita.doc.gov),
telecommunications, the Internet, and Office of Information Technologies; reports are available on the ExportIT Web
e-commerce in various countries to
help SMEs make educated decisions Dava Kunneman
site: http://exportit.ita.doc.gov.
about exporting. These reports also (Dava_Kunneman@ita.doc.gov),
highlight market opportunities and Office of Telecommunications
provide possible market entry strate- Technologies; and
gies, including descriptions of
Arrow Augerot
Department of Commerce export serv- (Arrow_Augerot@ita.doc.gov),
ices as well as a list of key U.S. and Office of Electronic Commerce.
overseas contacts who can assist U.S.
September 2002 EXPORT AMERICA 15
