Brazil faces cultural challenges to break IT outsourcing

Continuing my focus on Brazil this week here is Angelica Mari’s third blog post from her visit to Brazil. This time she expalins some of the challenges facing Brazil if it is to succeed as an destination for offshore IT services.

Read her latest blog below.

Also see her first and second blog posts and her own blog.

Brazil blog 3, by Angelica Mari.

One of the main selling points of the Brazilian IT services industry is the culture, but yesterday I heard some interesting views around how some cultural traits here can work against local firms looking to gain an international foothold.

Talking to an IT buyer at a multinational firm based abroad, who requested to remain anonymous, some Brazilian companies have adopted the wrong attitude when attempting to do business overseas.

For example, he mentioned that Brazilian IT services companies do not offer a clear differentiator. He said that in all the requests for information where Brazilian firms were involved, their selling propositions looked exactly the same and as a consequence, they failed to move on to the next stage.

The executive in question also said that some of these IT services firms do not have a clear international strategy and instead of perfecting their knowledge around the needs of foreign clients – for example, legal requirements around information management in datacentres – their offices abroad “only serve the purpose of boasting about their little door in New York City and to put pictures up on their website.”

The Brazilian “flexibility” can also be detrimental when it comes to winning business. Another foreign IT chief told me that a potentially interesting Brazilian IT vendor failed to submit its bid for a tender on time – later, he found out said supplier did not submit the proposal at the specified date and time because “they did not want to seem too keen.”

An effective method Brazilian companies could be using in order to internationalise could be partnerships with firms based in low-cost locations offering innovative solutions that could provide synergies to their existing portfolios, the executive said. But again, culture could prove to be a major stumbling block.

“There are many IT companies in places like Israel, that are desperate to do business in Brazil, but do not have an integrator to partner with and that’s where the opportunity lies. Microsoft’s success came from partnering, so there is nothing wrong with that,” he said.

“But the problem is that Brazilians are way too proud. They want to do their own thing but you need local knowledge to thrive in a foreign market and that is an established fact and the companies here have to realise that in order to succeed.”