IT End-User Spending in Brazil Will Reach $101.3 Billion in 2010

IT end-user spending in Brazil will reach $101.3 billion in 2010, representing 9.6 percent of the country's real gross domestic product (GDP) according to Gartner, Inc. This IT-spending-to-real-GDP-ratio is above the average of 6.1 percent for Brazil, Russia, India and China (BRIC). IT spending in Brazil is more than double that in Russia and exceeds IT spending in India by 33 percent (see Table 1). Brazil is now the tenth largest global economy and second-largest IT market among emerging economies after China.

The new realities facing the IT industry were highlighted here today at the opening of Gartner Symposium/ITxpo, which is being held through September 16 at the Sheraton Sao Paulo WTC Hotel. Peter Sondergaard, senior vice president and global head of research at Gartner, discussed the key issues facing IT leaders today.

"As a percentage of GDP, IT spending in Brazil is increasing faster than in Russia, India and China because IT is pervasive among large organizations, small and midsize enterprises, government and all segments of consumers," Mr. Sondergaard said. "This is different from other BRIC countries, such as India, where IT spending is primarily concentrated on IT services, and in China, where IT spending is focused on large central government IT projects."

"Investment in technology will enable Brazil to attain its economic goal of long-term sustainable growth. However, to continue this pace of growth, Brazil will require an improved legal and regulatory environment that supports the pervasive use of IT, substantial investment in the development of IT skills, and the accelerated adoption of IT in the public sector," Mr. Sondergaard said.

Table 1 BRIC Countries IT End User Spending Estimates (Billions of Dollars)

	2009	2010	2011	2012	2013
Brazil	88	101	111	120	128
IT/Real GDP Ratio (%)	8.6	9.6	9.9	10.2	10.3
Russia	35	37	38	40	43
IT/Real GDP Ratio (%)	4.1	4.1	4.1	4.2	4.4
India	59	67	74	81	89
IT/Real GDP Ratio (%)	5.3	5.6	5.8	5.9	6.0
China	205	217	228	244	261
IT/Real GDP Ratio (%)	6.1	5.8	5.6	5.6	5.5
Total BRIC	386	422	452	486	522
Total BRIC IT/Real GDP Ratio (%)	6.1	6.1	6.1	6.1	6.2

Note: Statistics have been rounded.
Note: IT end-user spending includes telecommunications.
Source: Gartner (September 2010)

"Cost optimization efforts in IT have been successful; IT has trimmed its own costs through better management of assets, selective outsourcing, better vendor and contract management, and a host of other techniques," Mr. Sondergaard said. "However, to continue on the path toward improved IT and business efficiency, two things need to happen:

"First, IT needs to work more effectively with business leaders and the CFO to optimize business processes, and the IT systems that support them, across the firm. During the next few years, these cross-functional optimization efforts will be more attractive to organizations than the traditional siloed approach of optimizing specific business functions and business processes using IT systems," Mr. Sondergaard said. "Second, cost optimization needs to be developed and treated as an enterprise discipline, not a one-time activity that is done only when business conditions shift."

While the economy has negatively impacted the IT industry in many countries, IT spending in Brazil is on pace to grow 15.7 percent in 2010. In the Gartner report "Emerging Market Analysis: IT, Brazil, 2010 and Beyond," Gartner examined the current state of the IT industry in Brazil, as well as the outlook through 2014.

"Brazil is a robust emerging market, and its sustainable accelerating economy and technology adoption make it an outstanding market for technology and service providers seeking opportunities for global expansion," said Luis Anavitarte, research vice president for emerging markets research at Gartner, and co-author of the report. "Brazilian organizations embraced the global recession as an opportunity and looked to technology as a key enabler, which helped the country recover rapidly and had a positive impact on IT demand and growth."

Including telecommunications, Gartner expects IT end-user spending in Brazil to grow during the next four years, to approach $134.2 billion in 2014. This represents a compound annual growth rate (CAGR) of 7.3 percent from 2010 through 2014. The software and IT services markets are expected to achieve double-digit growth through to 2014.

"There is increased service demand for external service providers, as Brazilian enterprises seek out core IT expertise, as well as more-sophisticated IT solutions and new technologies, such as cloud and virtualization," Mr. Anavitarte said. "Levels of IT adoption are changing dramatically in Brazil, as buyers mature and prices become more competitive."