IN THE FACE OF SO MANY uncertainties, it is already possible to detect a consensus about the evolution of the information technology (IT) market in the short and medium run in Brazil: the sales of software and services related to the increase in productivity and the improvement of performance of the companies should not be reduced due to the global financial crisis and economic retraction, which affect certain countries. The investments will not stop, just the opposite, they will continue presenting expressive growth rates, according to a study conducted by IDC Latin America consulting firm and published at the end of November. The local clients evolve rapidly in information control, the improvement of processes and management, optimization of infrastructure and outsourcing – and so far, no one bets on this tendency receding. What is actually expected is that it will increase even more, with new efforts for the reduction of loss and waste and pursue more intelligence in the operation and in the business to overcome the traps of a global market consuming less. Nowadays, a good part of the investments in IT has become strategic and is related to the competitiveness of the business. "On an average, we have gained approximately 200 new clients a month and so far, we have not felt any drop in sales ", affirmed Wilson de Godoy Soares, vice-president for software development management of Totvs, the largest national supplier of integrated management (ERPs) software, which grew 30% in the last quarter. Totvs, a joint stock company, has resisted the stock market oscillations and its stock has valued in a sustainable manner. "In Brazil, the small and mid-sized companies are only now creating the maturity necessary to use IT tools in management and there is still much to be explored." The same way that the ERPs, other tools and solutions that contribute to the improvement of the performance of companies of all sizes will not have their sales threatened much. Investments that are related to the increase of efficiency and optimization of resources are now the top priorities of the clients. The shortage of credit, the main factor limiting the growth of business, may even cancel a few IT contracts, but many programmed investments, on the wave rationality and gain of productivity, may be converted into defrayal.

BMC Software, the supplier of solutions for critical applications of business, does not foresee great disturbances in its sales. "We do not foresee a delay of investments, we’ve even had anticipations ", revealed Celso Chapinotte, general director of BMC in Brazil. The company has been growing at rates greater than 40% in the current fiscal year and his forecast for the next fiscal year, which begins in March, is an expansion of 25%. Doing more with the available resources, or even with fewer resources, is the management mantra in this new era. "With the crisis, the companies will improve their infrastructure management mechanisms in order to improve its availability and productivity ", said Chapinotte, adding that BMC provides tools that enable the reduction of infrastructure management costs by means of automating the processes. IDC’s survey revealed that the Latin American market will be one of the less affected due to the global economic retraction and that Brazil, the largest market in the region, will maintain growth rates close to double digits, as was projected before the crisis that fully affected the United States and several European Union countries. If the former scenario before October had permitted growth projections of 13,7% of the sales of IT systems, services and equipment in 2009, after the financial slump, the percentage was lowered to 7,8%. The perspectives of expansion of the Brazilian market also shrunk from 14,4% to 9,1% — a lower reduction that the average in the region. The investments will not drop equally in all segments. While the investments allocated for hardware, PCs and servers, for example, will remain below half of what was predicted, which was of 15,3%, is actually of 6,6%; in the case of software and services the reduction will be much lower: from 12,1% to 10% in the first case, and from 10,7% to 8,6% in the second. "Each country in the region has its own dynamic, and Mexico for example, whose economy is more attached to the economy of the United States, tend to suffer more ", affirmed Ricardo Villate, research and consultancy vice-president of IDC. The growth rate of the Mexican IT market, which had been estimated at 11,7%, will be of 5,2%.

When asked by IDC about the investments and expenses with IT services they intend to maintain, the companies in the region demonstrate that the priorities are the integration of systems, the management of operations and outsourcing, always considering the gains in scale and efficiency. In terms of software, the investments in productivity and business intelligence will be less affected, followed by Customer Relationship Management (CRM) and ERP projects. In the case of hardware, an important reduction in PC and server sales is expected, but the projections are more optimistic for network and storage equipment. "There is a infrastructure consolidation movement in Latin America, which will not be interrupted because of the crisis ", says Villate. Juniper Networks, a supplier of network solutions, exemplifies this positive investment cycle well, directed towards the improvement of management and gain in productive and commercial efficiency. The company is currently involved in 56 new negotiations in Brazil, and in all cases, the clients seek for solutions that involve the performance optimization of capacity infrastructure and planning.

The global financial crisis did not postpone any negotiation initiated by Juniper. They all advance at a normal pace and 20% of them are being developed in an accelerated manner. "One of my greatest uncertainties is that the Internet will stop growing ", affirmed Claus Troppmair, director for Juniper’s corporative market. "The other is that the companies will continue to demand more network capacity and integration service of the supply chain." What Troppmair sees in his business is more competition and the opening of opportunities in niches that hadn’t been explored before. The company, which should grow between 20% and 25% this year in Brazil and R$ 160 million in sales, practically handled only telephony service operators. Four years ago, it began to provide network and security solutions, as well as small and mid-sized equipment for the corporative market – a niche that already guarantees a quarter of its sales, and presents the greatest expansion potential for Juniper.

Sustentation

The investments in IT are, more than ever, associated to the sustentation and increase of competitiveness among companies. In certain cases, these investments are the best way to minimize the effects of the crisis, with gains in organization and intelligence in an environment of uncertainties. The development of corporative governance also intensifies the use of IT and demands the integration of systems, in order to facilitate the good flow and transparency of the information. Outsourced solutions are the order of the day because they contribute for the reduction of costs and the efficiency of the operation. Alog Data Center, the national market leader in managed hosting, with a base of 900 clients, not only disregards a reduction in business because of the crisis, as well as predicts an increase of 30% in the demand for its services. The reasoning of the company’s commercial director, Eduardo Carvalho, is precisely of competitiveness and the advantages of outsourcing. "The corporate market in general will seek for reductions in costs and new alternatives such as the hiring of companies specialized in supplying aggregated hardware and services. We are sure that this demand will increase considerably because we can provide servers, redundant infrastructure and even reduce maintenance and electric power costs for the client." "Cimcorp’s main concern has been in helping the IT manager to have more control over the operations ", affirmed José Roberto Rodrigues, director for channels and alliances of Cimcorp, a supplier of system integration services, outsourcing an d BPO (Business Process Optimization), also provided by the vigor of outsourced business. "Instead of thinking of it as an investment, it is more advantageous to treat IT as a large service with a monthly cost." Many companies decide to reduce or eliminate their investments in the purchase of equipment and increase their expenses with the defrayal of services that represent two thirds of the total property cost of a server. The hosting of the systems and the infrastructure management is transferred to third parties; you pay for the development and implementation of a complete business solution and the IT is transferred to specialists.

Offshore

Outsourcing is not giving signs of cooling, neither in the internal market nor in the main offshore routes, which means that the Brazilian service providers will have new opportunities abroad. A factor that begins to favor Brazilian IT service providers is the exchange rate. With the devaluation of the Real (R$), labor costs in the country become more attractive and are able to compete with certain Indian providers. According to Antonio Gil, president of the Brazilian Association of Information and Communications Technology Companies (Brasscom), the outsourced services will continue to grow at an accelerated pace, at rates superior to 40%, according to a recent study published by the Gartner Institute in China. "The offshore outsourcing services will generate approximately US$ 70 billion in transactions this year and Brazil, the eighth IT market in the world, still has a small participation in the business ", he said. Brazilian exports of services and software, according to Brasscom, will reach US$ 1,3 billion in 2008 and it projects that it will reach US$ 5 billion by 2011. The expectation, besides the increase in numbers, is a greater presence of national companies providing offshore services. Currently, the subsidiaries of multinational companies in Brazil, such as IBM, dominate these exports, but local suppliers can conquer more markets. To Gil, due to their vast competence in IT, added to the competitive edge of the exchange rates, more outsourcing contracts for Brazilian companies would be attracted. Regarding the future of the market in general, he said that Brasscom is moderately optimistic. "During moments of crisis, the companies tend to control and reduce costs and expenses, and IT is the most adequate tool to achieve this ", he affirmed. "Despite the economic blow, the investment should continue.”

Source: Razão Contábil Magazine