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Labor Shortage Drives Brazil as the ‘New India’ of the Technology Sector: Discover How the Country Became the New IT Paradise

Escrito por Alisson Ficher
Publicado em 19/10/2024 às 16:29
Brasil se torna polo de tecnologia mundial com offshoring. Escassez de mão de obra e aquisições movimentam o mercado!
Brasil se torna polo de tecnologia mundial com offshoring. Escassez de mão de obra e aquisições movimentam o mercado!
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Brazil Shines As A New Global Tech Hub, Driven By Acquisitions And Labor Shortages. With Growing Demand For Talent, Large Companies Invest And Seek To Expand Their Operations.

Recently, a surprising phenomenon has been gaining traction: Brazil is becoming a true paradise for foreign companies in search of talent in the technology sector.

The global labor shortage and the growing demand for developers have transformed the country into a strategic center for IT offshoring, a change that promises to impact the market impressively in the coming years.

Recently, Japanese giant NTT Data announced the acquisition of the Brazilian tech services company Aoop, reinforcing the trend that Brazil is positioning itself as the new India in the technology sector.

According to Daniel Milanez, COO and Co-Founder of IGC Partners, this shift is part of a broader movement where Brazil stands out as an attractive destination for companies looking to outsource their IT operations.

The Impact Of Acquisitions

In the past four years, over 20 acquisitions of Brazilian companies in the technology sector have been made, totaling nearly R$ 9 billion.

IGC Partners, for example, facilitated about 75% of the operations in this sector, including the sale of Aoop.

According to Rafael Frugis, partner at IGC, by early 2025, more transactions are expected to occur, with at least two operations already in due diligence.

The Pandemic As A Catalyst

The COVID-19 pandemic acted as a true catalyst for this transformation.

While Indian service providers faced difficulties in their deliveries, Brazil began to be seen as a viable alternative.

In addition to the quality of Brazilian labor, the cultural affinity with American and European companies, combined with a smaller time zone difference, contributed to this change in perception.

Offshoring has transformed into “near shoring” or “friendly shoring,” according to Frugis.

Growth Of Tech Companies

Historically, technology service companies in Brazil have always been cash generators, but were not highly valued by investors.

However, the growing need for digital transformation, driven mainly by the emergence of digital banks, has made companies like Tivit, CI&T, and Stefanini stand out.

In 2019, for example, Itaú acquired Zup, a company with 900 employees, for R$ 575 million, exemplifying the pursuit of technology talent by large corporations.

The New Wave Of Acqui-Hire

Currently, the Brazilian market is experiencing a new wave of strategic hiring, with large companies like Boticário, Ambev, and Alpargatas conducting acqui-hires, where they pay multiples exceeding R$ 1 million for development teams.

This movement reflects a significant change in the sector’s dynamics, with international investors seeing Brazil as a promising destination to establish operations.

The Geopolitical Scenario And International Presence

Brazil also benefits from a transforming geopolitical landscape.

The war in Ukraine and the fragility of the Indian sector during the pandemic have opened up space for the country in the technology market.

Global companies, such as the Indian Marlabs and the Argentine Globant, are expanding their presence in Brazil, demonstrating the growing interest in hiring local talent.

NTT Data, for example, not only acquired Aoop but is also seeking to expand its operations in Brazil.

The Future Of Offshoring In Brazil

Meanwhile, Brazilian startups, such as the Santa Catarina-based Indicium, are internationalizing.

After receiving an investment of US$ 40 million from Columbia Capital, the company now operates from New York, exporting services developed in Brazil.

CI&T, which went public on Nasdaq in 2021, has seen its revenue internationalize rapidly, reinforcing the trend that Brazil is an important player in the global technology landscape.

IGC Partners, a merger and acquisition specialist, is expected to mediate more than 20 operations this year, with over 70% of these transactions involving the sale of medium-sized Brazilian companies to foreign investors.

The outlook is promising and points to an increasingly integrated future for Brazil in the global technology market.

With all these changes, the question remains: will Brazil become the new heart of global technology, surpassing India and Russia? What do you think of this transformation?

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Alisson Ficher

Jornalista formado desde 2017 e atuante na área desde 2015, com seis anos de experiência em revista impressa, passagens por canais de TV aberta e mais de 12 mil publicações online. Especialista em política, empregos, economia, cursos, entre outros temas e também editor do portal CPG. Registro profissional: 0087134/SP. Se você tiver alguma dúvida, quiser reportar um erro ou sugerir uma pauta sobre os temas tratados no site, entre em contato pelo e-mail: alisson.hficher@outlook.com. Não aceitamos currículos!

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