An Overview of Latin American Talent March, 2011 This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Zinnov
Scope Objective This report is intended to provide location and talent pool information across key cities in Latin America (highlighted in the map). More specifically, the report looks at following key dimensions for analysis Location insights Business landscape Regulations Government Initiatives Incentives Infrastructure & Connectivity English Proficiency Geopolitical environment Quality of life, Cultural compatibility & Cost of living Risks Talent ecosystem Overall talent pool availability (at a country level) Talent pool across specific domains including IT Services, Product development (Hardware & Software), BPO and Tech support Talent pool distribution by innovation and support activities Heredia, Costa Rica Panama City, Panama Santiago, Chile Bogota, Colombia Eldorado del sur, Brazil Campinas, Brazil Buenos Aires, Argentina PREVIEW REPORT The current document is a preview to the complete study and covers one city, Campinas (Brazil) on the location and talent pool aspects Support Center Support / Innovation Center
Agenda Location Analysis Buenos Aires (Argentina) PREVIEW REPORT The current document is a preview to the complete study and covers one city, Campinas (Brazil) on the location and talent pool aspects Panama City (Panama) Campinas Sao Paulo (Brazil) Eldorado Porto Alegra (Brazil) Santiago (Chile) Bogota (Colombia) Heredia (Costa Rica)
Campinas (Brazil) Campinas, the third largest city in the state of Sao Paulo in Brazil, is a major economic and commercial hub Overview City Overview City Statistics City Population 1 (2010 Census) 1,080,999 Population Growth Rate 1 1.8% City Area 1 795.6 KM 2 Official Language 2 Portuguese GDP (Campinas Metropolitan Area) USD 42 Billion Campinas is one of the major cities in the state of Sao Paulo and the 10th richest city in Brazil It represents 0.96 percent of all Brazilian GDP 2 The literacy rate of Campinas city is around 95.01 percent and Human Development Index is 0.852 which is considered quite high The city concentrates around one-third of industrial production of Sao Paulo state 6 Campinas' main economic activities are agriculture, auto, machinery, telecommunications, e-commerce and services 4 The prominent services sourced from Campinas include hosting, application support & development and customization 4 Portuguese is the official national language, and thus the primary language taught in schools. But English and Spanish are part of the official high school curriculum Campinas has a large number of educational institutes as well as technical schools. The University of Campinas (UniCamp) produces 1,935 graduate and post -graduate students every year and is also ranked as the institution producing the highest number of patents in Brazil 5 The region around Campinas is known as the Brazilian Silicon Valley due to the presence of a large number of research centers, universities (13), high tech industries and MNCs 5 Source: Map www.holidaycity.com/brazil 1. Brazilian Institute of Geography and Statistics, 2. CIA World Fact Book / Brazil, 3. Zinnov Research and Analysis 4. KPMG Global Frontier Report, 5. NaiGlobal, Global Market Report (Campinas), 2008 6. http://wn.com/campinas
Campinas (Brazil) The city boasts of having a number of prominent high-tech MNCs such as IBM, Cisco etc., thanks to recent government initiatives to promote the outsourcing industry Qualitative Analysis Business Landscape The region hosts more than 10,000 medium and large companies, many of which are among the 1,000 largest and best in Brazil 1 The Campinas Metropolitan Region is home to many national and international high-tech industries, including IBM, Motorola, Freescale, Lucent, Nortel, Compaq, Celestica, Samsung, Alcatel, Bosch, TI The largest companies have a global turnover of more than USD 80 billion, larger than many Latin American countries 1 Measuring Business Regulations 4 Brazil is ranked 120th worldwide (2011 ranking) for ease of doing business at the country level (high ranking indicates the regulatory environment is more conducive to starting and operation of a local firm) In terms of starting a business, its world wide rank is 125 while it s 148 when it comes to paying taxes Government Initiatives Incentives Campinas boasts the largest number of high-tech business incubators and industrial parks (a total of eight) The Secretariat of International Cooperation (SMCI) was created with main goals as the following: Attraction - and facilitation for the arrival of new investments to the city Expansion of activities of companies that are already established in the city Perpetuation of the relations between the city, its international community and partners Sao Paulo / Campinas offers local tax incentives for IT firms to set up offices. The following are some of the benefits offered: Reduction in social security contributions up to 50 percent 1 PIS/Cofins tax exemption for products purchased for export Reduction in tax rates on services to two percent 3 Reduction in amount of Annual Real Estate tax from 30 to 50 percent 3 Exemptions from fees and emoluments 3 Note: Ease of Doing Business Ratings are done at country level Source: 1. Wiki Encyclopedia / Campinas 2. ww.campinas.sp.gov.br 3. KPMG Global Frontier Reports 4. Ease of Doing Business World Bank 5. Zinnov Research and Analysis
Campinas (Brazil) These MNCs were attracted by the excellent infrastructure support from the city and availability of English speaking talent pool Qualitative Analysis Infrastructure Campinas is a major transportation and telecommunications hub for the State of Sao Paulo, as it is located on the major highways that connect the capital to the Northwest and Northern parts of the State Campinas has 1 five-star hotel and several other four-star hotels in the city, with a total of about 3,900 rooms 3 A scientific and technological park has been planned in Campinas, and is intended to be a hub for R&D activities and also offer incubation facilities for technology companies 4 Connectivity The highway road system in Sao Paulo is one of the best in Latin American cities with a length of around 34,650 km More than 90 percent of population dwells within 5km of a paved road Traffic congestion is common during peak hours in some parts of the city 3 Viracopos International Airport is located 14 kilometers (8.7 mi) from downtown Campinas and 99 kilometers (62 mi) from the city of São Paulo, and can be reached by the highways 2 English Proficiency English language skills are limited but education in English is being encouraged 3 The official language is Portuguese, though Spanish and French are also commonly spoken languages 2 English is often studied in schools and increasingly in private courses. It has replaced French as the principal second language among educated people 1 Geopolitical Environment The violence and crime rates are particularly high in the Campinas City including robbery,kidnapping and cargo theft. In 2006 the Campinas government partnered with Bosch and put in a security system with around 270 CCTVs to keep the crime rate under check 3 The state of Sao Paulo witnessed criminal attacks against the police and some civilians in May 2006,which led to several casualties 3 Source: 1. Wiki Encyclopedia / Campinas 2. www.campinas.sp.gov.br 3. KPMG Global Frontier Reports 4. University of Campinas, website 5. Zinnov Research and Analysis
Note: Cost of living index provided is relative to New Yorl City (NYC), which means that for New York City, each index is 100(%) Source: 1. Mercer Quality of Living Survey 2. Numbeo Database for Cost of living worldwide 3. www.campinas.sp.gov.br 4. Zinnov Research and Analysis 5. KPMG Global Frontier Reports, 6. http://www.ige.unicamp.br Campinas (Brazil) In addition, low cost of living & a truly cosmopolitan culture has helped attract professionals from other locations turning the region into a breeding ground for quality talent Talent Pool Catastrophic Risks Some parts of the city are prone to floods, especially in summer 5 On February 17 th 2003, a storm caused by a cold front impacted a large area of Southeastern Brazil and in Campinas this event was the second severest in 120 years according to the Ins-t i tuto Ag ronômi co de Campina s 6 Quality of Life Sao Paulo has a quality of life ranking as 119 th 1, 11 th in Latin America according to the Quality of Living survey by Mercer According to a study from Getúlio Vargas Foundation, this is the best city to work in the country 3 Key Highlights of Campinas Cost of Living Index 2 The cost of living in Sao Paulo is one of the lowest among global cities. It ranks 161 (of the 241 cities) according to the Cost of Living Survey by Mercer. Consumer Price Index (Exc. Rent): 92.35 Rent Index: 33.80 Groceries Index: 53.93 Restaurants Index: 64.03 Local Purchasing Power: 56.38 Cultural Compatibility Sao Paulo is home to the largest Asian population in Brazil, as well to the largest Japanese community outside of Japan itself 0.9 % of population in Campinas is Asians 3. 75 percent of the population comprises of whites 3 Languages used in Campinas are Portuguese, English and Spanish The city does not have many places for tourist attraction unlike other Latin American cities 3
Campinas (Brazil) Hi-tech companies can tap talent from the sizeable working population (country level) of whom nearly two-thirds are employed in the services sector Talent Pool Filter 1 Population above the legal age Filter 2 Employed Population in Organized Sector Filter 3 Sector analysis Labor force distribution 1 Service: 66% 203.4 million 149.9 million 103.6 million Brazil s Total Population Legally Employable Population 1 Working Population Industry: 14% Agriculture: 20% Demographics Legal Environment Resource Details Sao Paulo's population is growing at 1.8 percent The legally employable age in Brazil is 14 years Unemployment rate is around 9.3 percent 1 More than 70 percent of Brazil s total population is legally employable Extensive social security and labor regulations govern employer/ employee relations Over 60 percent of the working population is employed in services industry 1 Note: The above data is country specific. City specific research is in progress, 1. Legally employable population constitutes of the total population >14 yrs of age 2. Working population constitutes of the total labor force in urban areas of Brazil (2010est.) Source: 1. *CIA World Fact Book / Brazil 2. **http://www.taxrates.cc/html/argentina-tax-rates.html 3. Zinnov Research and Analysis
Campinas (Brazil) Talent Pool The talent pool in Sao Paulo has a large concentration of BPO and IT services professionals due to the opportunity presented in the domestic market in addition to other geographies Mapped Domains IT Services Product Development Software Hardware Total BPO Tech Support Total* Talent Total Talent Pool* (2010) 92400-97020 18600-19530 25100-26355 43700-45885 150800-158340 57500-60375 344400-361620 Sao Paulo Talent Pool Distribution (2010 est. ) Tech Support BPO 17% 44% PD ( H & S) 12% 27% IT Services Total Talent = 344400 Talent Base: Sao Paulo / Campinas has the largest base of BPO talent that is growing at a fast pace Attrition: Sao Paulo has 10-15 % higher attrition when compared to country average People costs: The total annual cost per FTE for IT centers for Sao Paulo is USD 51,000 to 53,000 which is higher than for Curitiba in the range of 43,000 to 45,000 Salary levels in Sao Paulo are on an average 10-15% higher than the rest of the country Business Opportunity City Level Highlights A number of IT-BPO companies setting up centres in Campinas are looking to exploit opportunities in the large domestic market for IT services in Brazil Unlike IT Services, BPO & Tech Support domains that are clustered in Sao Paulo/Campinas, Product Development is predominant in Tier II and III cities Technical Support in Sao Paulo is mainly dominated by the MNCs Note: 1. Total talent refers to the average total value taken across the mapped domains 2.. Total Talent as in the entire city of Sao Paulo / Campinas,Makati City and Ortigas Source: 1. www.campinas.sp.gov.br 2. KPMG Global Frontier Reports 3. Zinnov Research and Analysis, Primary Interviews
Talent Pool Note: Above numbers are determined by estimations and hence must be seen with a tolerance of -10% to +10%, Sao Paulo s population is close to 11 million Source: Zinnov knowledge base, Primary Interviews Campinas (Brazil) The number of BPO and IT professionals in Sao Paulo has been rising steadily and is only expected to gain further momentum in the coming years Talent Pool 500,000 Sao Paulo Talent Pool Distribution 450,000 449500 400,000 CAGR: 14.2 % 393300 72,900 350,000 344400 64,800 300,000 264500 302000 51,000 57,500 197,600 250,000 45,500 172,600 200,000 132,000 150,800 150,000 100,000 50,000 115,000 21,000 15,500 67,500 23,000 17,000 79,000 25,100 18,600 92,400 27,500 20,300 108,100 30,200 22,300 126,500 0 2008 2009 2010 2011 2012 IT Services Software Product Development Hardware Product Development BPO Services Tech Support Services
Campinas (Brazil) The following is a list of key companies mapped for the Campinas/Sao Paulo talent pool analysis Major Companies Unisys Adobe Innovation Centers TCS Avaya Softek Autodesk Atos Origin Lenovo Microsoft Mahindra Satyam HP Support Centers IBM TCS Accenture Gemalto CPM Braxis Atento Teleperformance Telefutura Note: Innovation and support centers include the functions mentioned in the initial overview Source: Zinnov Research and Analysis, Company Websites
Campinas (Brazil) Politec is Brazil s largest privately owned IT services provider with 6,000 employees Case Study Establishment in Brazil Facilities in Brazil FTEs ramp-up (Brazil) CEO Partners Background and Business Description 1970 Bahia, Minas Gerais and Rio Grande do Sul, Belem, Sao Paulo 6500 Dalton Luz NA Scale of Operations The company provides a broad range of applications and infrastructure services, and has operations in China, Japan, Europe, and the US Politec signed a memorandum of understanding to collaborate with Chinese vendor Neusoft, and is planning a stock market flotation in order to fund the expansion of its offshore business Key Groups Talent Insights Support services offered: Business Process Services, HR, CRM, F&A, Training, Learning & Recruiting, Supply Chain Management, Support & Maintenance, Call Center Innovation Services offered: IT Services, Application Development, Application Management, Industry Focus: Banking, Finance, Communications Support Services Innovation Services Employees provide technical expertise and service excellence for customers around the world The company is certified by the highest IT standards such as CMMI level 5, MPSBr level A and ISO 9001, and has a strong delivery model and scale capacity. Source: Zinnov Research and Analysis, Politec company website
Additional Information The full report provides location and talent pool information across the following other key cities in Latin America Buenos Aires (Argentina) Panama City (Panama) Eldorado del sur (Brazil ) Santiago (Chile) Bogota (Colombia ) Heredia (Costa Rica)
Zinnov s Global Talent & Location product empowers HR and Engineering leaders with location and talent specific data to make strategic, operations and transformation decisions Full report on the Latin America Talent Hotspots can be accessed through the Zinnov Talent & Location Portal Global Talent & Location Product Sign Up today for your free trial account http://zinnov.com/us/demo_signup.php 1. Locations: 80+ Countries, 400 Cities 2. Talent: Installed (5 domains, 31 functions and 155 skills) & Fresh University talent 3. Cost : Across cities, domains, functions and experience levels including productivity tax 4. Monitor: Pro actively monitor key trends, risks and other parameters by city and country Snapshot of Zinnov s Talent & Location Product For more information, visit http://zinnov.com/us/index.html 5. Peer Group: Benchmarking Information on over 7,000 companies Through this tool, companies can access data across any combination of the above mentioned categories.
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