Despite Notorious Obstacles, IT Talent Seekers See Brazil as a New Frontier
Tech recruiters in Brazil are struggling. The talent market is a limitless competition for salaries, benefits and work-from-home offers. The country’s vast internal market pits its domestic rivals against each other, while Portuguese companies circle overhead, looking for top talent willing to outsource their workforce.
But more and more nearshore players, traditionally uninterested in engaging in the beauraratic and tax-heavy process of incorporating or hiring directly in the country, are also joining the fight, according to stakeholders.
Barriers that once seemed to take too long to mount with other markets more favorable to abundant foreign investment in Latin America and no longer appearing so great.
Isabela Lorenzi Tori, Technology Recruiter at Visionary, an international software development company based in Curitiba, is witnessing firsthand the entry of Nearshore players. While Portuguese companies remain the strongest competition, American companies are also in force.
“Recruiters can lose up to 50% of our candidates to Portuguese companies. For engineers who speak English, we lose one out of three or four,” Tori said.
A large local market
Brazil’s economic potential requires little explanation. The country’s population of 212 million, its vast and diverse geography and its GDP (PPP) of US$3.2 trillion – by far the highest in Latin America – set the scene.
But the strength of Brazil’s domestic market was such, along with the difficulties for foreigners to set foot in the country, that until recently, domestic companies and domestic talent had much less reason to push for Nearshore development.
The change happened slowly. As previously reported by Nearshore Americas, cities like Curitiba, the eighth largest metropolis in Brazil with a reasonable size of 2 million inhabitants, have been trying to position themselves as regional technological hubs for some years. A two-year recession in 2015 turned the heads of some tech leaders toward the export market for the first time. In 2020, the Covid-19 pandemic caused the country’s worst GDP drop in decades. Interest in working beyond Brazilian borders has increased.
With the talent shortage looming, the slow change has taken on a sense of urgency. Bernardo Carvalho Wertheim, CEO and Director of Happiness at The social bridgea global recruitment company and hailing from Brazil, has seen a huge jump in international interest in talent in its home country, as well as an increase in the number of people looking for jobs outside .
“It’s exploding,” he said.
On its database alone, The Bridge Social has approximately 120,000 Brazilian technology, data and design professionals. The company hires and outsources some 200 Brazilian profiles per month for clients across Latin America and the United States. The tech talent pool is huge and well-trained, Carvalho Wertheim points out.
“Brazil is an absolute gold mine in terms of talent,” he said.
The middle classes tend to dominate the tech industry, and English instruction is the norm in private schools. Brazil’s demographic history means that people can also speak Italian, Spanish or German, and some even hold passports for these countries. Global companies like IBM, SAP and Microsoft have used the country as their mainstay in the region for years.
Tedious tax, but useful for those who do
Barriers that have traditionally kept Nearshore away from Brazil remain, says Douglas David, COO of a Latin America-focused market entry company, Latin business center.
“Put simply, Brazil is just not that easy to get into. Brazil is still one of the most bureaucratic countries to start a business in Latin America,” he said.
Taxation is a problem that international companies must solve.
“Initially, foreign investors find it difficult to understand the entire Brazilian legal system, not just its tax aspects. It is important to mention that Brazil is a federation, divided between the federal government, the states and the municipalities. Each of the 3 federative entities has the power to institute its taxes in accordance with the federal Constitution,” explained David.
Incorporating a business takes much longer in Brazil than in other Latin American cities, and there are many unique legal restrictions that must be understood by businesses venturing there. Direct hiring doesn’t seem any easier. Despite all this, companies are getting into it.
“The pool of English-speaking talent is already drying up,” David said. “Six months ago, we needed a few weeks to find talent. Now it takes us months. Salaries are a big part of that. »
In Curibita in 2020, the average salary for a software engineer was 5,681 Brazilian reals (BRL) per month. The pandemic and the interest of international customers have had the same flattening effect on wages as elsewhere: although in 2020 wages in Sao Paulo or Rio de Janeiro would probably have been much higher, the difference between wages across the country are shrinking.
In 2020, the exchange rate was 5.1942 BRL for each USD. Today it is 5.0592 BRL for USD. However, wages are rising.
A senior React Native engineer will likely earn around BRL10,000 to BRL15,000 per month (approximately $1,980 to $2,970), while a mid-level engineer will earn around BRL10,000 to BRL12,000 ($1,584 to $1 $980). Project managers can earn between BRL 15,000 and BRL 20,000 ($2,970 to $3,960), estimates Lorenzi Tori.
And there’s a big difference for tech professionals working for global companies versus local competitors.
“Entry-level professionals working for international companies earn the equivalent of mid-level salaries in the domestic market. Middle levels earn higher salaries,” said Lorenzi Tori. “The dollar makes a big difference.”
No change for the Brazilian Nearshore BPO
The same increase in activity cannot be said for the Brazilian BPO industry. Never having been part of the Nearshore strategy but more focused on Portugal and to a lesser extent Spain, BPOs in Brazil remain on the sidelines.
Fluency in English is not a given in all sectors of society and salaries remain relatively high compared to other countries.
CX and technology analyst and writer Mark Hillary compares Brazil to China: “very focused on the big local market.”
“Brazil is not a low cost environment,” he said. “That may change for freelancers and on-demand, but traditional outsourcing from the US doesn’t seem that important.”
Brazil: part of the coastal puzzle
An industry that has long viewed Brazil as something of an outcast is now making its voice heard in the country. Whether this shift was born out of necessity or the realization that Brazil’s tech offering is too good to pass, Carvalho Wertheim has some advice for Nearshore players.
“Don’t think of Brazil in isolation, but as part of the puzzle, part of the strategy for Latin America. Yes, it’s a politically difficult market, but that’s the reality for most of the region. Brazil is more and more digitized and there is not as much red tape as before,” he said.