Brasscom president Antonio Gil discusses the benefits and challenges ahead

BY FILIPE PACHECO

ANTONIO GIL WAS THERE. As a top representative of Brazil’s IT industry, he had a front-row seat as President Dilma Rousseff initiated Plano Brasil Maior as a major priority of her administration.

Gil is the president of Brasscom, the Brazilian Association of Information Technology and Communication Companies, and was directly involved in the meetings and negotiations that resulted in the new rules and regulations that will directly affect IT companies that do business in Brazil.

In an exclusive interview with Sourcing Brazil, Gil said that President Rousseff was the one who pushed the hardest for the plan to be established. “It was clear that it was a priority,” Gil says.

It took four to five years to come up with the Plano proposals and clarify the fine points that were announced on Aug. 2 as high priorities for the country. Discussions were already happening during President Lula’s government (from 2002 to 2010), but it was clear that when Dilma stepped up at Palácio do Planalto, Brazil’s White House, “things started to become a priority as never before,” Gil says.

For Gil, Plano Brasil Maior attacks four important points for Brazilian IT companies (and ultimately their customers) – and also represents a few challenges too.

High costs of labor

“Brazil has one of the highest payrolls in the world, and that makes it hard for us to compete internationally,” Gil says. He explains that, due to the high costs of employing a professional regularly, companies sometimes seek alternatives — “informal” workers. In that category would be included the people who work as “Pessoa Jurídica” — a much-debated category of service providers who serve one employer exclusively (similar to some independent contractors in the U.S.). But because they are not officially employees, the employer does not have to provide things like benefits.

But often, when that person’s contract or period of work ends, he or she can go to court and accuse the company of illegality after the contract ends, and often the person wins. As a consequence, the companies can end up having problems getting loans and financing lines, Gil explains.

PBM attempts to resolve that situation by making it less expensive to hire full-time employees. IT companies will receive a tax reduction on INSS, a sort of social security tax collected by the government on payroll. Instead of paying 20%, businesses will pay a flat rate of 2.5% over their income. This should encourage firms to hire full-time workers rather than rely on temporary contractors.

“That was one of our main victories,” Gil says.

Main challenge: That tax incentive is valid only until the end of 2012, with the possibility of being postponed for a longer period of time. For Gil, the companies will have to lower their final costs as well by then, otherwise there is a great chance that the government will not keep the new policy. “We have been in conversation with the companies to show them how important that is,” he says.

Education and a qualified work force

For a long time the shortage of trained IT labor has been another big complaint about Brazil’s tech sector. Gil says that by 2020 the country will lack about 750,000 IT workers. Plano Brasil Maior offers the “Pronatec” project as one way to solve this problem.

Its aim is to make available educational financing lines to young professionals and students recently graduated from school. “Many times we have people interested in studying different kinds of tech courses. But they do not have the money to do so,” Gil says. “Therefore, those financing lines will be very important to improve their education.” The goal is to qualify 4 million people by 2014, in different areas of technology.

According to Gil, IT companies will be able to save a considerable amount of money that they currently have to spend every year to qualify workers they already have, so the Pronatec news was very welcomed by them.

Main challenge: Pronatec determines that the financing lines would be available only to schools, educational institutions, and universities authorized by the Ministry of Education and Culture. Gil explains that many tech centers are currently not able to be classified that way. “There has got to be a few changes to that requirement,” he says.

Infrastructure

This is a delicate point. Brazil is growing fast, but there are many parts of the country that still do not have good broadband coverage, for example. And besides, the number of mobile devices with Internet access is also growing at a fast speed — even though most of the 210 million cellphones in the country today are pre-paid and are hardly ever used to access the Internet.

“Our main infrastructure for broadband, for example, is not very well distributed, it’s of low quality, and it’s very expensive,” Gil says. “The big sporting events [the World Cup in 2014 and the Olympic Games in Rio in 2016] will demand a lot of technology infrastructure, and we need to be ready for that.”

Gil cites as a positive factor another huge plan established between Lula’s and Dilma’s goverment. Plano Nacional de Banda Larga aims to deliver good broadband connections all over the national territory at affordable prices.

Main challenge: Very little has been done by the government so far to establish regulations for other new technologies that are more and more demanded by IT companies and others, like cloud computing. Brasscom is already organizing a seminar in alliance with official institutions to discuss these matters.

Innovation

Gil was quite emphatic about this: Innovation should be the main priority for the years to come. “For the long term, that is definitely the most important one,” he says.

Brazil’s creation of plans like Growth Without Borders and Science Without Borders are mandatory to boost innovation and education in the country. Both of them are intended to make society recognize how important it is for the country to have its own workers involved in developing innovation and technology advances.

“One of our researchers can go to MIT in the U.S., expand the value of his knowledge, and come back to the country to produce new technology here. That is important for us. It is direct transfer of technology,” he says.

Main challenge: Transforming a lot of research done at Brazilian universities into patents is going to be a big ongoing task. “We have extreme difficulty doing that,” Gil says. Another goal, he adds, should be to make the resources needed for R&D and innovation available in different parts of the country, “to homogenize it throughout all Brazilian territory.”

Source: Sourcing Brazil