The Brasilian Ict Market 9 10 Nov. 2005 Milan

Entroducing the Brasilian ITC market to
evaluate potential sinergies with Italian
players

Meeting with the Italian Banking system

Milan, November 10th 2005

Executive summary

Brasil GDP grew 4,9% in 2004 and 2005 forecasts seem very good, with
inflation and unemployment under control and the country risk at its historical
minimum

ICT investments will grow at a 9% yearly rate up to 2008

ICT worlwide giants are already present in Brasil and the ICT market is daily
tested also from the biggest Italian companies

Brasilian financial system is a top reference in the world in terms of efficiency
and reliability, the biggest world players (p.e Citibank, HSBC) already entered
the market while the correspondent ICT solutions have been exported through
the entire South America and to USA

From an offer point of view, brasilian market is based on small companies with
up to 24 professionals

Brasil is considered one of the best offshore location in the world

2
© B&D Business Development - All rights reserved

Agenda

Macro overview

ICT companies and personnel

Where to outsource

Contacts

3

Macro overview


Where to outsource

Contacts

4

Brasil is fastly growing while going to reach its 2005 goals in terms
of inflation and unemployment rate
Country risk at the lowest
level in the last seven years

Inflation rate and unemployment rate (%)
GDP accumulated rate in the last four quarters
(variation vs. same quarter of previous year - %)

7 14

6 12

5 10

4 8

3 6

2 4

1 2

0 0

2004 II° 2004 III° 2004 IV° 2005 I° 2005 II° 2003 2004 2005e 2006e

Agricolture Industry Services GDP Consumer Price Index Unemployment

Source: IBGE Source: ICE and Bank of Boston as of August 2005

5

ICT relevance is costantly increasing
ICT market/GDP 2004: 0,79%

IT spending (US$ millions) PC penetration (households - thousands)

CAGR ‘03-’08: 9% CAGR ‘03-’08: 9% 13.003
12.434
14.110
11.690
13.167
10.904
12.278
11.434 9.843
10.601
8.498
9.280

2003 2004 2005e 2006e 2007e 2008e 2003 2004 2005e 2006e 2007e 2008e

Source: Sofitex and IDC Blackbook 2004

6

The Brasilian Government is strongly supporting the broadband
expansion both in public and private sectors

Digital inclusion as % of population Broad band penetration (households - millions)

12% 40% 5,8
CAGR ’03-’08: 42%

4,7
6%
3,7
3%
2,7
9%

1,6
10%
1,0

2003 2004 2005e 2006e 2007e 2008e
• 2004 • Natural • PCs • Schools • Other • 2015
growth

Source: Sofitex, Brasil Government, IBGE and IBSG Source: Sofitex and IDC Blackbook 2004

7

The most important ICT companies in the world are well present in
Brasil..

8

..like the biggest Italian companies

9

Brasil is a worldwide reference for the Payment System and for the
e-government

1 The Brasilian Payment System is a worldwide reference in terms of efficiency and reliability
• More than 80% of the brasilian banking transactions are processed automatically through ATM, call center or
Internet banking (source: Central Bank of Brasil)
• Founds are transferred on line and in real time trough different banks in different countries
• More than 140 thousands ATMs in 2005 (almost 800 ATMs per million of persons - like in UK - vs. 680 in Italy)

2 Elections and referendums are managed on line
• 10 hours to count the votes of Presidential elections in 2002 (more than 115 millions of voters, around 5.700
cities, 19.000 candidates for 1.700 vacancies)
• HD and SW solutions exported to USA, Mexico, Argentina and Uruguay

3 e-Government
• 97% of income tax declaration filled via WEB
• Almost 2.000 services available via Internet
• 35 millions pages accessed each month
• Car licenses annual review via ATM

10

The Brasilian banking system faced in the last ten years - due to
privatizations and M&A - the entrance of the biggest world players
Total assets ranking 1994 (US$ millions) Total assets ranking 2004 (US$ millions)

1. Banco do Brasil 33.005 1. Banco do Brasil 108.643
2. Caixa 23.238 2. Bradesco 84.057
3. Banespa 11.789 3. Caixa 67.175
4. Bradesco 9.141 4. Itaù 59.245
5. Itaù 6.777 5. Unibanco 36.068
6. Bamerindus 5.891 6. Santander Brasil 31.642
7. Nacional 5.782 7. ABN - Amro Bank 28.012
8. Unibanco 5.021 8. Safra 17.505
9. Real 4.190 9. Votorantim 16.617
10.BCN 3.359 10.HSBC Bank Brasil 15.625
11.Safra 3.444 11.Nossa Caixa 14.206
12.Economico 3.410 12.Citibank N.A. 9.980
13.Nossa Caixa 2.691 13.Bank Boston 9.628
14.Credireal 2.311 14.BNB 5.985
15.Banrisul 1.817 15.Banrisul 5.512
16.Banestado 1.773 16.Pactual 3.833
17.BNB 1.732 17.Alfa 3.455
18.Boavista Intern. 1.578 18.BNP Paribas 3.077
19.Looyds TSB Bank 1.530 19.JP Morgan Chase 2.978
20.Santander Noroeste 1.530 20.Fibra 2.961

11

Around 40% of the Brasilian banking system IT expenditure is for
software development

Brasilian banking system - IT expenditure (US$ billions - 2004)

0,3 4,5
0,8

1,0

0,4

2,0

Software 3rd
Hardware TLC Software int. Other Tot.
development parties
development
Source: Sofitex

12

Macro overview


Where to outsource

Contacts

13

The Brasilian ICT market is very fragmented in terms of players and
largely based on small companies (80% with up to 24 professionals)

• More than 5,500 companies for
• More than 150,000 professionals
hardware manufacturing and
• Around 24,000 IT graduated every
Companies
Personnel
software development
(2005) year
(2005)
• More than 10,000 IT service
providers

Companies distribution for range of personnel (% - 2003) Personnel distribution for range of personnel (% - 2003)

100%
0,4% 100,0% 13,8%
1,7% 0,7%
3,4%
11,4%
14,0%
31,4%
14,4%

15,1%
51%
18,2%

15,6%

8,9%

<9 10-24 25-99 100-199 200-399 400-999 >999 Tot.
<9 10-24 25-99 100-199 200-399 400-999 >999 Tot.

Source: Sofitex

14

The Brasilian banking industry suppliers are larger than the average
and with more than fifteen years of market experience

Market experience of Brasilian banking industry
Distribution of Brasilian banking industry suppliers
suppliers (foundation year - 2003)
for range of personnel (2003)

100,0%
12,5%
100,0%
15%
12,5%
2,5%
7,5%
35,0%
12,5%

45,0%

40,0%

15,0%

2,5%

<1990 1990-1994 1995-1999 2000-2005 Tot.
<9 10-24 25-99 100-199 200-399 400-999 >999 Tot.

Source: Sofitex

15

Macro overview


Where to outsource

Contacts

16

Brasil is one of the top offshore location in the world ..
Offshore location scoring

7,3

6,2 6,2 6,1
2,3
5,8 5,8 5,7 5,7 5,7 5,6
1,3 1,2 5,2
1,1 1,0
2,1 1,1
1,5 1,1
1,4
1,0
People
Environment
1,6
1,8
1,9 1,6 1,6 Cost
1,4
1,7 1,1

2,3
2,5
2,6

3,4
3,1 3,1 3,1 3,1 3,1
3,0 2,9

2,0
1,8
1,5

lia
il

ia
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ia

o

es

a
ic
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n
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ar
d

s
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ra
ra

in
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hi
a

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ex
In

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an

pp
t
B

Ir e

C
un

us

p
M

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C

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ili
H

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C

Source: “Where to locate - Selecting a country for offshore business processing” - ATKearney (2003)

17

.. also due to its services rate that allows up to 60% of discount vs.
USA fees
International services rates
200%

180%

160%

140% United States

120%

High
100% Average
Low

80%

60%

40%

20%

0%

Central and Western Europe Eastern Europe Asia/Pacific Asia/Pacific Rest of World
South America industrialized emerging
Source: Gartner (2005)

18

Macro overview


Where to outsource

Contacts

19

Contacts B&D Business Development

• Gianluca Donnini

Socio Consultor

Tel: +552181120050

+393357882262

e-mail: gianluca_donnini@yahoo.com.br

20

The Brasilian Ict Market 9 10 Nov. 2005 Milan

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