IT outsourcing in Brazil: market landscape, benefits, and prominent hubs

According to the 2021 Kearney Global Services Location Index, Brazil is 5th best IT outsourcing destination worldwide regarding people availability and skills, as well as financial attractiveness, business environment, and other factors. 

In this article, we will try and answer the following questions:

1. What economic factors make IT outsourcing to Brazil a viable choice?;
2. What are the key advantages of outsourcing to Brazil?;
3. What are the most prominent IT hubs that promote Brazil's IT outsourcing industry?  

Brazil’s IT outsourcing industry and business environment

With a GDP of $1.87T, Brazil is the largest economy in Latin America and the ninth economy worldwide. The country has a fairly stable political climate and a growing economy – the two factors vital for attracting foreign investments. 

In fact, in 2019, IT investments made up 2.3% of the country’s GDP, with analytics, cloud computing, and artificial intelligence solutions becoming increasingly popular. Investment in SaaS solutions increased by 48.7%, while PaaS solutions increased by 55.4%. Hardware, software, and services experienced 18.7% percent growth overall.

Over the years, the local government has been working on strengthening the business ecosystem and boosting the country’s IT outsourcing industry. Let’s take a closer look at it. 

The state of IT outsourcing in Brazil

On par with the overall state of the economy, local Brazil IT outsourcing is also standing strong. According to Gartner Market Databook, 2Q22, the country’s software development market was estimated at $9.3M, being the largest in LatAm. What’s more, it is foreseen to grow to $13.3M by 2025.

Brazil’s IT outsourcing industry is based on a solid technology ecosystem. Some of the biggest companies in the technology industry have branches in Brazil, including Apple, Samsung, Facebook, IBM, Google, Microsoft, Oracle, Dell, Intel, Cisco, Tecban, Nokia, and Huawei.

The primary services that businesses outsource to Brazil are application development outsourcing, administration outsourcing, web hosting, and infrastructure outsourcing. The picture below shows the revenue forecast for these areas of expertise up to 2027, according to Statista. 

As you can see, the revenue is expected to increase by 40% in the future. This means that the experts see the potential for further investments in the country's IT outsourcing industry. 

Read more about outsourcing to Latin America 

The skills of local talent 

According to the Brazilian Association of Software Companies, the country has approximately 750,000 tech professionals. In fact, experts engaged in Brazil’s IT outsourcing are some of the most skilled worldwide. Local professionals scored well in the TopCoder ranking, earning 13th place worldwide. In addition, according to educational platforms such as Coursera, Brazilian professionals ranked high in evaluations on cloud computing (98%), computer programming (64%), data management (59%), and software engineering (57%). The high ranking scored by Brazilian developers shows their expertise and ability to handle complex projects. 

Brazil's tech talent pool continues to grow, also due to strong tech education in the country. Let’s view it in more detail. 

Tech education in Brazil

Brasscom (Brazilian Association of Information and Communication Technology Companies) reports that around 46,000 students got ITC degrees in 2019. This includes graduates in computer science, information systems, and software engineering.

Due to the ongoing demand for tech talent, many Brazilian workers are studying at reputable universities such as the University of Sao Paulo and pursuing careers in the industry. 

According to the 2021 QS Latin America University Rankings, the top-ranked university in Brazil is the University of São Paulo (USP), ranked 2nd in Latin America. Other Brazilian universities that ranked in the top 10 in Latin America include:

• Universidade Estadual de Campinas (UNICAMP); 
• Universidade Federal do Rio de Janeiro (UFRJ); 
• Universidade de Brasília (UnB).

Each of these universities has a strong reputation for academic excellence and is highly regarded in the tech industry in Brazil and internationally. Altogether, the country has 2,457 higher education institutions that ensure constant talent inflow for local vendors. Speaking of which:

The size and industry focus of Brazilian vendors

Brazil is home to the second-largest number of IT vendors you can partner with to outsource to Brazil. More than 258 local software development firms are listed on Clutch as of March 2023. Regarding industry focus, many providers of IT outsourcing in Brazil specialize in consumer products and services, as well as finance, e-commerce, education, and many others. 

The main areas of expertise in Brazil software outsourcing are IT strategy consulting, custom software development, cloud computing, SI, and IT managed services. So, if you need these services, opting for IT outsourcing in Brazil is a reasonable choice. 

Understanding the business climate is vital to make an informed decision on whether or not to do business in a certain country. But there are more important factors to Brazil's outsourcing than just business climate. Let’s now take a look at the key advantages of outsourcing to Brazil. 

Advantages of outsourcing to Brazil

In this section, we will overview the country-specific factors that make Brazil IT outsourcing a great option for your business. 

1. Legal and government support 

The government has taken a number of steps to boost Brazil’s ICT sector. For instance, they have implemented a Digital Transformation Strategy comprising several smaller policies. Here are some examples:

• National IoT Strategy. The four core verticals of this plan are smart cities, healthcare, agribusiness, and manufacturing. Estimates show that IoT-related businesses could bring up to $200M to the Brazilian economy by 2025. 
• National Cybersecurity Strategy is an important instrument that supports government planning in relation to improving the security and resilience of critical infrastructure and national public services.
• Digital Governance Strategy is an initiative by the federal government, coordinated by the Ministry of Science, Technology, Innovation, and Communications, and aimed at embracing digital transformation as an opportunity for the nation to leap forward.
• National Artificial Intelligence Strategy aims to establish supervisory mechanisms to monitor the use of AI for public security activities, draft the law on data protection applied to public security, and more.

These programs have been developed to make the country a prominent tech hub and boost the productivity and competitiveness of Brazil's IT outsourcing.

2. Established on the state-level security policies

E-Ciber, Brazil's National Cybersecurity Strategy, introduced in 2020, guides cybersecurity, cyber defense, critical infrastructure, and protecting confidential information. With E-Ciber, cybersecurity vulnerabilities and risks are identified and assessed based on the US National Institute of Standards and Technology (NIST) Cybersecurity Framework for Critical Infrastructure. All industries require cybersecurity solutions, which presents a valuable opportunity for international companies. Security is also moving to the top of priorities of tech decision-makers in Brazil: spending on that front should reach $1,3B in 2023, up 13% in relation to last year. So, Brazil outsourcing is a viable choice to keep your data secure.

3. Easy to get location and time zone overlap

Opting for IT outsourcing in Brazil, US-based businesses can work with teams in the same or adjacent time zones. Additionally, Brazil is geographically close to the US, making potential business trips much faster and more convenient. Here is the image of available connections from major US cities to Brazil. 

4. Local talent collaborates well with US-based professionals

According to Hofstede Insights, Brazil scored 38 in terms of individualism and is considered a collectivistic society. It means that Brazilian professionals are prone to a long-term commitment to the member “group,” be it family, friends, or, most relevant in this case – the work environment. So, they are good team players, which is vital for successful IT outsourcing to Brazil.  

IT outsourcing hubs in Brazil 

Brazil boasts an impressive IT infrastructure, with 74 tech parks that generate employment opportunities for software developers and offer innovation possibilities.

Since the mid-1990s, software development outsourcing in Brazil has been growing exponentially. The country has heavily invested in developing tech hubs throughout its territory. Today, the cities considered significant tech hubs and innovators in the local IT market are:

1. São Paulo: As the largest city in Brazil, São Paulo is the country's economic hub. Since Campinas State University was founded, the city has become a generator of qualified professionals such as engineers, physicists, chemists, computer science majors, and more. So, the city is fueled with new talent. That is, in fact, one of the reasons why many multinational corporations such as HP and Samsung have opened offices in the area. 
2. Rio de Janeiro: This city is the second-largest in Brazil and has a thriving IT industry. It is home to tech accelerator Bio-Rio. It invests primarily in local biotechnology companies for their development. Also, the third-best-ranked university in Brazil and the ninth in Latin America in the QS ranking, the Federal University of Rio de Janeiro (UFRJ), is located here. UFRJ offers computing, information engineering, and nanotechnology degrees, as well as computer and systems engineering and computer science programs to ensure the talent inflow for Brazil IT outsourcing.
3. Porto Alegre: Porto Alegre is the capital of the state of Rio Grande do Sul and has a vibrant IT industry. The Pontifical Catholic University (PUC) located here is one of Brazil's most significant generators of tech professionals. Many of its graduates in the Porto Alegre campus go on to join companies in the local technological park, which is home to more than 120 small- and medium-sized companies, as well as a large portion of researchers and innovation specialists.

Read more about nearshoring to Latin America 

Why hire tech experts in Brazil with N-iX?

1. N-iX has offices in the USA, Sweden, and Malta and development centres in Poland, Ukraine, Bulgaria, and Colombia. We hire across 25 countries in Latin America and Europe, providing you access to the talent pool of 1M+ experts;
2. Founded in 2002, N-iX has formed strategic partnerships with various global industry leaders and Fortune 500 companies, including OpenText, Fluke Corporation, Currencycloud, Office Depot, Seeking Alpha, and many others; 
3. Also, N-iX partners with such American tech giants as Microsoft, OpenText, AWS, and GCP, providing our clients with consulting and development services;
4. With a vast internal talent pool of 2,200professionals, N-iX offers solutions in software engineering, cloud-native services, data analytics, embedded software, IoT, machine learning, and other tech domains.