As Brazil's Economy Grows, So Does Managed Services Opportunity

Brazil’s growth among world economies continues to grab headlines. And as the country’s economy expands so does its market for managed services. Indeed, the London-based Centre for Economics and Business Research (CEBR) in December 2011 ranked Brazil as the world’s sixth largest economy in the economic consultant’s annual World Economic League Table report. Brazil, with a gross domestic product of $2.5 trillion, passed the United Kingdom on its way to sixth place in the standings, CEBR noted.

Brazil’s economic prospects for 2012 look encouraging. Guido Mantega, Brazil’s finance minister, recently said he expects GDP growth between 4 percent and 5 percent in 2012. The country’s central bank, meanwhile, forecasts growth of 3.5 percent.

The general IT services market is forecast to outpace that growth. The SourcingBrazil website, citing Frost & Sullivan research, suggests the market will grow around 9.9 percent in 2012 to hit $12.9 billion. One factor fueling demand for IT is Brazil’s hosting of the 2014 World Cup, which is expected to spark infrastructure investment.

Within the IT sector, managed services -- or serviços gerenciados in Portuguese -- appears poised for growth. Areas of activity include managed print services and managed security services. Photizo Group earlier this year projected the managed print market in Brazil to grow at a 49 percent annual growth rate through 2014. Only India has a faster growing print market, according to Photizo.

Brazil and Columbia lead the way in the Latin American managed security services sector, according to Frost & Sullivan. The company reported that those companies have the highest growth potential in the short term. Frost & Sullivan forecasts Latin American market for managed security services will hit $455.4 million in 2015 compared with $189.4 million in 2010.

Cloud computing is expected to ramp up in Brazil as well. In December, Amazon Web Services kicked off its new South America Region in Sao Paulo.

MSPs in Brazil

A mix of international IT players and local firms offer managed services in Brazil. HP and IBM are among the former. Local companies include Arcon, Fabrique, ISH, Netbr and Telsinc.

Brazil may not be a traditional geographic expansion step for U.S. companies. But its potential for expansion, ongoing infrastructure investment, and vast SME segment make for an interesting opportunity.
TAGS: Financing
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