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(Last updated: 26 Mar 2008)
Trends and opportunities
The market
The Brazilian IT market is by far the largest in Latin America and is projected to grow at a compound annual growth rate of 11 per cent over the 2007-2012 period. According to Business Monitor International (BMI), the total value of spending on IT products and services should pass US$20 billion in 2008 and US$30 billion by 2012.
The overall economic outlook is constructive for growth in IT spending with BMI projecting that the economy should expand by approximately 4-5 per cent on an annual basis throughout the forecast period (2007-2012). This growth is lifting millions into a middle class for whom computers are no longer beyond reach.
Key market indicators:
- Ambitious government plans to spend US$23 billion on science and technology programmes as part of its Growth Acceleration Plan.
- Programme to equip 119,000 public schools with computer labs by 2010, from 27,000 currently.
- Strong investment by banks expected to continue, with the financial sector spending accounting for around 20 per cent of all IT spending and growing at around 15 per cent a year.
- Despite soaring sales in the PC sector in 2007, a PC penetration rate of less than 25 per cent indicates plenty of room for growth.
- Despite a new buoyancy about corporate spending in 2007, Brazil’s company IT spending is still thought to lag behind global peers.
In terms of verticals, public and financial sectors, healthcare, telecoms, utilities and SMEs are seen as the ones with the most growth potential. The financial vertical should be a strong source of opportunity, with banks moving to integrate their IT systems and look to enhance their ability to launch new products and services rapidly, as well as ensuring good recovery plans and security. The industrial and services sectors have also seen high growth.
As a result of government initiatives and spending guidelines, there is a significant drive towards opensource software, motivated by a desire to save money and encourage local developers. Increasingly, Brazil's government ministries and state-run enterprises are abandoning Windows in favour of 'opensource'or 'free' software, like Linux, and the government is studying a draft decree which, if approved, would make the change compulsory for federal departments.
Banking sector promises lucrative opportunities for IT, telecom services and security providers
Given their huge infrastructure and wide portfolio in terms of branches, ATMs, back-office systems, and Internet, the banking sector accounts for the largest share of total technology investment and telecom expenses, says Research & Markets analyst firm. New technologies such as IP-based solutions, digital certification and signature, wireless LAN, and mobile data transmission, among others, find large potential on specific application of specific market segments, and are expected to raise the overall level of technology investments by the Brazilian financial market.
The concept of Internet banking continues to grow in Brazil and 70 per cent of retail as well as 50 per cent of wholesale banks now offer Internet banking services to their clients. As a result, the ever-increasing volume of online banking transactions, along with constant losses provoked by hackers, are fostering a rush towards banking security applications.
Telecoms, broadband
According to market indicators, as of October 2006 there were more than five million broadband subscribers in Brazil for all types of technology. To face the rising demand for broadband services, telecom carriers increased investments in 2007 and adopted WiMax technology and Internet protocol connections to replace dial-up service at a more attractive price for lower income populations.
E-commerce
There are approximately 28 million Internet users in Brazil, a figure that places Brazil among the global Internet elite. Use of the Internet continued to grow in 2006 and Brazilian users ranked even higher than Europeans in terms of time spent and relative usage of audio-visual content, e-banking and e-commerce. Brazilian teenagers spend an estimated 14 hours per month on the web, more than the time they use to read newspapers or go to the movies (Source: Focus Brazil).
The largest companies in the e-commerce market are online Brazilian retailers Americanas and Submarino. The two companies held about 57 per cent of the online retail market share in Brazil in 2006 and sell everything from computers to jewellery, wine and groceries.
The most popular products on the Internet are books/newspapers/magazines (18.4 per cent), CDs/ DVDs/videos (15.9 per cent), electro-electronics (14.3 per cent), informatics (8.4 per cent), beauty and health (7.9 per cent).
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