This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 12/6/2017

The Brazilian market for Information Technology (IT) is considered the seventh largest in the world, with a positive outlook for the coming year with projected investments of US$74 billion, a growth of 2.5 percent compared to 2016. Global IT investments are also projected to increase 2.9 percent and reach US$3.4 trillion.
 
Gartner projections for 2017 indicate that the device segment (including PCs, tablets, mobile phones, and printers) in Brazil is expected to reach a total of US$14 billion, an increase of 5.3 percent over 2016. Expenses with Data Center systems will total US$2.1 billion, down 1.4 percent over 2016. Software expenses will reach US$4.5 billion, up 7.8 percent. Expenditures on IT services will reach US$17.3 billion in 2017, an increase of 6.3 percent compared to previous year.
 
Despite the forecast for limited growth of the Brazilian economy over the next few years, the Brazilian IT market is expected to grow 2.5 percent in 2017, according to IDC-International Data Corporation. Data communication in mobile devices, security (cybersecurity), cloud computing, IoT – Internet of Things, infrastructure for cloud-based services, and investments in big data and analytics are also trends for the coming year.

Challenges

Although Brazil’s growing market presents opportunities for exporters, foreign companies may still face market access challenges, including:
Government procurement law: Although price is to be the overriding factor in selecting suppliers and the Brazilian government may not make a distinction between domestic and foreign-owned companies during the tendering process, when two equally qualified vendors are considered,the law’s implementing regulations provide a preference to Brazilian goods and services. Brazil’s regulations on the procurement of information technology goods and services require federal agencies and parastatal entities to give preferences to locally produced computer products based on a complicated and nontransparent price/technology matrix. However, Brazil permits foreign companies that have established legal entities in Brazil to compete for procurement financed by multilateral development bank loans.
 
Data protection and privacy: The data protection and privacy draft legislation currently under consideration in the Brazilian Congress is modeled on the European Union’s framework and could present challenges to U.S. companies.Current data protection and cybersecurity initiatives—including Decree 8135 that sets cybersecurity standards for government procurement—have the potential to force companies to use local data centers in order to comply with actual or de facto requirements. In August 2016, the Ministry of Planning announced its intention to revoke the decree in favor of approved hardware and software solutions for government entities, but it has not yet issued an alternative measure.
 
Taxes and Tariffs: The Processo Produtivo Basico – PPB (Basic Production Process) requires a minimum level of local content. As a result of the tax advantages granted to domestically produced equipment that conforms to PPB specifications, foreign software and IT products can face significantly higher taxes in comparison to domestically developed software or IT products; putting U.S. ICT producers at significant price disadvantage. This process is currently being challenged at the WTO, and a decision is expected by the end of 2017. Brazil is also not a signatory to the WTO Information Technology Agreement, meaning that foreign ICT goods are subject to high import tariffs in Brazil. Finally,various policies and licensing rules establish local content requirements for software and hardware procured by Brazilian service providers.
 
 Leading Sub-Sectors


Digital transformation will continue to gain space in new business models. New applications will be designed to run on the cloud, with great attention to the customer experience (anywhere/anytime).

  • Investments in security will increase and may reach US$360 million in 2017 with new projects in the areas of IAM – Identity Access Management, IoT, BYOD – Bring Your Own Device, among others.

  • New technologies such as augmented reality, virtual reality, holograms, 3D prints, drones and wearables, among others, will generate interest in the coming years, however, they are niche markets and should not move large volumes. According to IDC, the Brazilian augmented/virtual reality (AR/VR) market will double in unit volume, surpassing 100,000 units. Major consumer manufacturers are expected to develop and launch AR/VR devices for the Brazilian market.

  • The IoT – Internet of Things market is expected to double by the end of the decade and reach US$13 billion in Brazil. Equipment suppliers and developers of platforms, software, and industrial solutions will migrate from traditional applications to the IoT paradigm. According to IDC research, ten percent of the households interviewed had an Internet-connected device (game console, smart TV, air conditioner, security camera, etc.) other the PC and smartphone at home.

  • Mobile payments will gain critical mass, exceeding 30 percent of all financial transactions. Among electronic media, mobile devices have gained prominence. According to Brazil Central Bank, 60 percent of the Brazilian payment transactions were carried out on non-presence channels, such as the Internet, mobile phones and call centers.

  • An increasing number of companies are seeking information and knowledge on cloud computing. Demand for international collaboration, security, CRM, storage, and productivity will accelerate in the coming years. Virtualization and consolidation of infrastructure investment will continue as a priority in business. New solutions will lead to a profound change in the operation and delivery of IT solutions, as suppliers release specific and targeted offers for the cloud environment, with the rapid proliferation of platforms as a service (PaaS) and infrastructure as a service (IaaS). Public cloud is expected to grow above 20 percent per annum until the end of the decade. In 2017, the public cloud computing segment is expected to reach US$890 million.

  • The proximity between IT and line of business, will continue leveraging big data and analytics projects. A better understanding of organizational needs will intensify the cases and expansion of business areas. Analytics is projected to increase 4.8 percent reaching US$848 million in Brazil.

 Opportunities

The majority of computer distributors in Brazil are national companies, but in recent years, foreign distributors have entered the market and have joined with Brazilian dealers/reseller channel partners to become more competitive. In most cases, to sell to the government one must have a local presence and/or partner to be allowed to participate in the bid process.
A strong financial partner is important for computer hardware/software distributors in Brazil; therefore, many Brazilian distributors are collaborating with banking partners to solidify their financial position. The increased financial resources of these distributors allow them to offer better financing and improved payment terms to their resellers. In Brazil, due to high interest rates on loans, this ability is a distinct competitive advantage.
As the number of resellers, value-added resellers (VARs), and agents grows and their portfolios expand, more distributors will adhere to local distribution models.


Web Resources 

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Brazil Information Technology Services Market Access