Question
Please go to pages 79-80 in your textbook. You will see the Minicase titled: Can Brazil Become a Global Competitor in the
information Technology Outsour
cing Business? Please read the information provided very carefully. Then answer the two questions that are provided at the end of the case.
zil Become a Global Competitor in the n Technology Outsourcing Business? Minicase: Can Bra As the world becomes increasingly dependent on informa- tion technology (IT) products and services, the outsourcing industry has expanded rapidly. Driven by global competitive pressures to reduce costs and tocus on competencies, corporations of all sizes have chosen to out- source and offshore many of their IT services. As a result, off- shoring of IT services has been growing at a 40 to 50 percent Brazil's IT outsourcing sector is small relative to India's but strong growth is projected based on the country's strengths sions. As the 5th largest country and 11th most powerful economy in the world, Brazil has a sophisticated telecommunications and network services infrastructure one that has been rated higher than India or China on such he alobal IT but stron along several dimen core key measures as network availability. Brazil has a tradition of dwide, India has established strong engineering schools, capable of producing high-quality T outsourcing market, technical graduates. With nearly 300,00 people employed in accounting for the largest share among countries. How IT services, the size of Brazil's domestic market for IT services IT sector, is comparable to that of world-leading India, although a much including increasing labor costs, inadequate physical infra- smaller level of IT services are exported. The country has one structure, and a daunting government bureaucracy, among of the world's most automated and sophisticated banking sec- strong leadership position in the I ever, challenges have begun to emerge for India's tors and a dynamic domestic marketplace for IT software and other factors. Many nations, particularly emerging markets in Asia, Latin America, and eastern Europe, have been attempt- ing to capture a share of the IT offshoring business because it is seen as a source of skilled jobs and a basis for improving overall economic development. support services. Brazil also offers a large base of affordable real estate for establishing corporate operations. Brazilian wage rates are about 40 percent of those for comparable hourly positions in the United States. Employee turnover is only about Although many people would associate the country with 20 percent, versus the 40 percent rate that has been plagu soccer or samba, Brazil has emerged as a global competitor ing Indian IT companies. Total operating costs, which include in a range of sophisticated technology sectors. Now, Brazil labor, infrastructure costs, corporate taxes and incentives rom most competing low-wage has launched an active campaign to build a strong interna- are lower than competitors f tional competitive position in the IT offshoring business, try and moderate to-high wage ing to attract bus other nations or regions. a single time zone difference to the East Coast of the United States and four time zones for the U.S. West Coast and parts of iness that might otherwise be going to these 59 Chapter 2 International Trade and Foreign Direct Investment
Explanation / Answer
1. International trade and investment becomes increasingly dependent on information technology (IT) products and services, the global IT outsourcing industry has expanded rapidly. Brazil intentions and actions regarding the international trade as it has been growing at 40 to 50 compounded annual rate. Many nations particularly emerging markets in asia, latin and eastern Europe has been attempt to capture a share of IT offshoring business because it Is seen as a source of skilled jobs and a basis for improving overall economic development.
Brazil’s IT outsourcing sector is small relative is small relative to india’s but strong growth is projected based on the country’s strengths along several dimensions. Brazil has a sophisticated telecommunications and network services infrastructure which is rated higher. Brazil has a tradition of strong engineering schools, capable of producing high quality, technical graduates. Brazil with an advantage compared to competitors in china or india in terms of access and coordination with clients and offshore project support team. Brazilian business cultures, values are more westernized than is common for nations such as india and china.
2. Brazil has problems in terms of crime and social inequalities, especially in big urban centers. It also suffers from regulatory climate, including inflexible labor laws. They should get changes in labour laws as labours safety comes first as good labour condition helps them to get motivated and work efficiently.