BRAZIL - IT

1. BRAZIL - IT Software solutions and services provider outlook

2. Agenda • Brazil and the ROW • Brazil and South America • Brazil and BRIC • Brazil’s economic indicators • Brazil’s innovation indicators • Brazil’s cultural DNA • Brazil’s IT environment • Why Brazil is competitive

3. Brazil and the Rest of the World Countries with area > 4 million km² Countries with population > 100 million Bangladesh Nigeria Russia Pakistan USA Indonesia Brazil Australia China India Canada Japan Mexico Spain Netherlands France Italia UK Germany South Korea Countries with GDP > US$ 500 billion

4. Venezuela Guiana Suriname Colombia French Guiana Ecuador Brazil Brazil Peru Bolivia Paraguay Argentina Chile Uruguay Paraguay Brazil and South America Facts and figures: • Borders with 10 countries • 50% of South America surface • More than 8 million Km2 • 50% of South American Population • 184 million people • 50% of South American GDP • US$ 690 billion • 8th largest in the world (PPP*) *Purchase Power Parity

5. Brazil and BRIC Largest transports infra-structure among BRIC countries 67 Airports and 75 million people transported every year 31.000 Km railways (11th in the world considering transported cargo) 1.7 million km of roadways (3rd in the world) 54 Maritime Ports

6. 688 603 561 506 486 459 Dec/02 Jul/03 Dec/03 Jul/04 Dec/04 Jul/05 Brazil’s Economic Growth Sustainability GDP – Accumulated 12 months US$ Billion Solid bases: Inflation control – inflation rates converging to the target Budgetary control – primary surplus

7. Diversified Exports Portfolio 1,9 % 29,3 % Basic Products Semi-manufactured Manufactured Special Operations 12,3 % 57,6 % Increasing Integration to Global Trade

8. Increasing Integration to Global Trade • Brazil is : • The 5th largest population in the world, • The 11th largest economy in the world, • The 4th largest aircraft manufacturer in the world, • The 8th largest automotive manufacturer in the world.

9. Increasing Integration to Global Trade • Brazil has: • The 2nd largest commercial air fleet in the world, • The 2nd largest agriculture vehicles market in the world, • The 3rd largest market for TV sets in the world • And the consumer may choose from: • 450 different car models. • 87 different typs of tomato sauce. • 120 different brands of beer • 180 different tennis shoes models

10. Innovative and Technological Environment Investments in education More than 8,000 doctorates graduated in 2003 2006 forecast: 10,000 doctorates Investments in trainning and technical education Stimulation to scientific and technological innovation

11. FRIENDSHIP Brazilian’s cultural DNA Brazil´s characteristics Respect to democratic institutions and to international laws Peace promotion – Brazil has historically friendly, peaceful relations with all its 10 neighbours Brazilian people´s characteristics Flexibility Sense of humor Affectivity Hospitality

12. SOFTEX – Brazil’s National Software Export Promotion Program • Non-profit organization • Around 1,300 software companies associated • Integrates government, academia and private companies efforts to support software and services competitiveness • Focus on business generation, quality, industry statistics and support to government policies • 21 Offices, 21 Cities, 13 States Belém Fortaleza Campina Grande Recife Salvador Brasília Belo Horizonte Uberlândia Vitória Juiz de Fora São Carlos Rio de Janeiro Campinas Londrina Petrópolis São Paulo Maringá Curitiba Pato Branco Joinville Blumenau Florianópolis Porto Alegre

13. Special quotes about Brazilian’s ingenuity • Alice Amsden - MIT: “The information technology production in Brazil is one of the best-kept secrets of the world.” …“Even unknown abroad, the Brazilian software is becoming a treasure.” • Craig Barrett - Intel: “Now you have to focus on software and services.” • The Economist: “Brazil is not far behind and score more highly in other areas” (regarding offshore) • Java World Community: “Brazil holds the two biggest Java communities in the world, just behind the USA.”

14. Key Message • If you are looking for software solutions and IT services... ...will find in Brazil a source of world class suppliers

15. A background on Brazil IT

16. Canada China Brazil India Singapore Mexico Poland Malasia Phillipines CzechRepublic Domestic Software and Services Market($MM – 2003 IDC data)

17. Brazil IT environment • 98% of Income Tax filled through the Web “Survey findings indicate that government is seen as a more important driver of e-commerce in Brazil than in the rest of the world. For example, the Brazilian government influences internet diffusion by requiring taxpayers to use online services” Prof. Nick von Tunzelmann SPRU, University of Sussex, UK Source: TSE [Supreme Electoral Court] Final Reports, 2004

18. Brazil IT environment Digital Inclusion – % of population Broad Band Penetration – million Number of household with Broadband in Brasil National Program of Digital Inclusion drives Internet users growth Estimated Increase of Internet Users in Brazil Source: Gov of Brazil data, IBGE and IBSG projection Sources: IDC Blackbook 2004 v.3

19. Brazil IT environmentBanking • The Brazilian banking system is a worldwide reference in terms of technology and uses • SPB – Sistema Brasileiro de Pagamentos (Brazilian Payment System) • On-line transfer of funds among any financial institutionanywhere in the country • Security and reliability: reduction of risk of irreversible credit of payments • 80% of 30 billion bank transactions are made automatically (ATM, phone, fixed and mobile, Web...) Source: Banco Central do Brasil (Central Bank of Brazil)

20. Brazil IT environmentBanking

21. Brazil IT environmentElections – Electronic Balloting • General elections for president, governors, senators, and legislators in 2002 • Carried out in electronic ballot boxes specially designed (HW and SW) • Total number of voters: 115 million throughout 5,657 cities (18,880 candidates running for 1,654 vacancies) • Period of time to count the ballots: 10 hours • Solution exported to Mexico, Argentina, Uruguay Source: TSE [Supreme Electora Court] Final Reports, 2002

22. Brazil IT environmente-Government • Over 1,700 services available on the Internet • More than 23,000 links installed • Over 35 million pages accessed per month • More than 6,000 auctions made • Citizens Portal • Car licenses annual renewal through ATMs • Almost 13% of Brazil’s population utilized some sort of e-Gov service in the last 12 months

23. Why is Brazil Competitive?

24. Software solutions and IT servicesBrazil’s competitive advantages - Sustainability Brazil economic background (before 1994) Qualified demand Multi cultural country

25. Constant economic instability and changes established a solid DNA for: • Fast understanding • Creative solutions • Efficient process implementations • Technology constantly updated • Current global IT environment reflects same conditions with shorter innovation cycles Software solutions and IT servicesBrazil’s competitive advantages - Sustainability Brazil economic background (before 1994)

26. GartnerBrazil: strong points as a source of global IT services • Trained professionals • 200,000 graduated IT professionals • 23,000 additional/year • Extremely flexible and adaptable task force • Good fine tuning with the client • Creativity, easy acceptance of innovation (young population) • Good technical abilities

27. Software solutions and IT servicesBrazil’s competitive advantages - Sustainability Qualified demand • The most representative multinationals are present in Brazil

28. Software solutions and IT servicesBrazil’s competitive advantages - Sustainability Multi cultural country Easy understanding and adaptation to any culture

29. Software solutions and IT services overviewQualified human resources education Universities* Graduation Courses - 875 Enrolled – 159,984 Graduates – 18,279 Masters* Masters Courses – 29 Enrolled – 2,467 Dissertations defended - 847 Doctors* Doctoral Courses – 11 Enrolled – 560 Theses defended - 80 (*) Annual Average

30. Software solutions and IT services overviewExport volume and growth The size of Brazilian IT industry was US$ 12 billions in 2005. It ranked the 6th largest in the world. Exports of software and services accounted for only about 3% of the total industry The Brazilian IT industry has been growing at 10%/yr since 2001 and is expected to grow at approximately 8.3%/yr in the next three years +US$ 315 million US$ 100 million 2001 2004 Softex estimate

31. Scope re-evaluation “Demand Generation” was not a major issue The real issue was “Organizing the Offering” • Revised plan: • Segmentation by verticals • Value proposition by vertical • Targeting and promotion by vertical (w/ few exceptions)

32. Brazilian SW Industry Positioning • Value Proposition – “Resolutiveness” (Capacity to effectively deliver solutions to resolve problems) • Differentiators: • Innovation and updated technology • Specialization • Pro-activity in creating solutions with emphasis in the western culture affinity and cultural plurality • Geographic convenience and time zone proximity • Qualification Indicators: • Competitive costs

33. Financial Services IT Security E-Government Education & e- Learning Areas of ExpertiseVerticals Telecommunications Enterprise Applications

34. Areas of ExpertiseVerticals Electric Power Airline Operations E-Commerce Healthcare 2.378.279

35. New Government Programs • International buyers financing: BNDES Prosoft Exportation • Duty free regimen for exportation companies: companies that export 80% or plus of their software or services revenue are free of taxes • FCHS: to prepare HR for software and services industry

36. New Government Programs • Programs to Increase the Quality of Software and IT Services Process Development • CMMi – Capabilitiy Maturity Model integrated • MPS.BR – Melhoria dos Processos de Software Brasileiro: Brazilian version for CMMi, sponsored and funded by Interamericam Development Bank

37. Thank you!