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UK Technology Firms Need the Samba Beat of Brazil for Success

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Brazil's economy has now officially overtaken the UK. So says economic research group, the Centre for Economics and Business Research (CEBR) in a recent report. In fact, the Economist Intelligence Unit has predicted that by the end of this decade the new international economic order will be China, the US, India, Japan, and then Brazil.

Not a single European nation will be in the top five (measured by GDP) any longer, and it also contains three of the famed BRICs nations - only Russia misses out and who would want to place a bet that they are not going to be in at number six anyway?

All of this economic jockeying means that British companies - and in particular for this section of the Huffington Post, British technology companies - need to think about who it is they are doing business with. Lord Digby Jones was speaking to British business leaders on BBC radio recently and he warned them that to keep focusing on Europe would be a terrible idea in the present economic climate - if they want to succeed they need to explore new markets where growth is still a reality. That means exploring the BRICs.

Brazil is of particular interest to me because I am British, but I live in São Paulo and I now get actively involved in working with the local technology leaders in Brazil, but also work extensively with UK Trade and Investment (UKTI) to help British firms work out what is going on in Brazil. But with growth of about 7.5% last year and a predicted 3.5% this year, it would be foolish for any technology company in Europe to not be exploring partnerships in Brazil.

In short the reasons for any foreign ICT organisation to enter Brazil are compelling. Brazil is presently the seventh largest ICT market in the world, with $165.7bn spent on ICT in 2010, and expected to become the fourth largest before long. Software and IT services alone in Brazil was worth $85.1bn last year. The domestic market for IT is the eighth largest in the world, and only $2.4bn of IT services were exported.

Think about this for a moment. Fast approaching $200bn spent on ICT in a single market, but about 99 per cent of that spend remained inside Brazil. The Brazilians are not exporting IT services in a similar way to India with their armies of software developers, all cutting code for foreign clients. In Brazil there is an enormous demand for ICT that is mainly being delivered locally, with hardly any exports to foreign clients in countries such as the US.

There are some very interesting exceptions to this rule, like the work CI&T has been doing for Johnson & Johnson and analysts do expect IT exports to grow, but on the whole there is an enormous amount of work being done in Brazil for Brazilian clients.

This growth and demand for technology means that there are some great opportunities just sitting there waiting to be explored. UKTI has identified several key areas of interest where British technology companies have proven expertise and Brazilian clients are looking for that knowledge:

• Communications and broadcast technologies
• Digital media
• Software and IT
• Embedded software design
• Smart grids and cities
• eHealth software and IT

And beyond these business areas, there are some other reasons to take a look at Brazil. The market is accessible, foreign players can come along and try their luck by growing organically, or even buying an incumbent supplier. You don't need to ingratiate yourself with local politicians to make an acquisition become a reality. And in this decade, the next FIFA World Cup is coming to Brazil in 2014 along with the next Olympic games after London, at Rio in 2016.

The opportunities for technology companies in Brazil to work with technology companies in the UK is enormous and exciting. British firms from other industrial sectors, such as HSBC, Rolls Royce, Diageo, and JCB, are all doing well in Brazil.

It's time we saw many more technology firms following the lead of BT - who recently announced hundreds of new jobs in their Brazil operation. Dip in a toe, after all it's the middle of summer over here right now!

I'm speaking at the embassy of Brazil in London on January 20 about hi-tech opportunities in Brazil and the opportunities for UK-Brazil technology partnerships. For more information and free registration click here.