Stefanini Leading IT Integration and Development and IT Outsourcing Solutions in Brazil

Interview with Ailton Nascimento, Vice-President of Stefanini

Many IT companies in Brazil are facing difficulties because of the strong real, a shortage of qualified staff, and high overhead expenses. However, there are also opportunities; a strong real means that Brazilian companies have more money to export. How is Stefanini tackling these issues of risk and opportunity?

Stefanini is a very customer-oriented company. So to keep our best quality services for our customers here in Brazil and abroad, we need to be competitive, without losing our quality or our commitment to our customers. To tackle the issues of risk and opportunity, we are taking some steps in order to move our centers of development outside of the big centers like San Paulo or Rio de Janeiro. We are looking for opportunities to move and to grow in technology centers close to big centers but integrated with universities and cities where we can find good people to ramp up our operations and to complete their IT training. We have a program today to train more people, to bring people in from universities, to integrate our operations with universities. This will make us more competitive and create a best cost benefit for our company.

Our Brazilian government is doing its job, creating other benefits in order to reduce our Brazilian cost. Competitiveness is not an IT issue, it’s a Brazilian issue, and the government is doing its job to create the best environment and reduce costs, social insurance, and so on. The government and our president are doing a good job in this sense. Alternatively, we are developing more development centers and delivery centers in Latin America and we are combining them with other delivery centers we have around the world, like in India, Europe, Eastern Europe, or the Philippines, in order to produce the best cost benefit without losing our quality or capacity to deliver.

You provide a wide plethora of services like infrastructure outsourcing, application outsourcing, and knowledge solutions. Which services would you like to focus on, which are the most important for you today across geographic areas, and where would you like to see Stefanini growing?

I would like to point out our initiative to bring operational efficiency to our customers. Of course, we need to put more focus on applications: software development, maintenance, and application support. Applications is one of our best expertise. We focus on architectural applications in order to help our customers to create a lighter and better performing IT. However, to further grow in this direction, we also need to increase our expertise in infrastructure because if you are talking about operational efficiency, you need to cover infrastructure that supports applications.

Today our company is focused on business areas, and we have experts who are very skilled in their business domain, who help us in our programs on how to align IT and business, to complete our offering. Along with this we have an innovation center that was visitor-created, in which we combine IT and business expertise to create innovative solutions. Everything combined is our new offering. We optimize business and optimize IT for our customers. Brazil still represents 60% of our entire revenues, and 40% comes from international operations. We are investing more today in the international sphere and are projecting to have a balance of about fifty-fifty in a couple years.

The recent “Ease of Doing Business” ranking by the World Bank has put Brazil in the 120th position out of 183 economies, which is not very good and harms business in Brazil. However, in the study which measured creativity, Brazil ranked very well. Stefanini is an example of a Brazilian IT company that is going out into the world and competing with major companies around the world. How is the Brazilian business model different from what we see in the US, Europe, India, China? What cutting-edge aspects do you bring to the industry?

Our Brazilian model is being creative and flexible. Stefanini has discovered many years ago how to combine creativity and flexibility. Flexibility means you have to be able to integrate the services you are providing with the customer’s life style, positively impacting their business, their operational efficiency, their cost benefits and performance. This kind of flexibility that we have and know very well is one differentiating factor of ours. Stefanini is a very energized company; we are fast learners, fast decision-makers, so we move fast. This also differentiates us from our competitors.

You acquired two companies in the United States and you are setting up a center in China. What do you identify as a major challenge in your international expansion?

Our main challenge is how to manage and integrate our cultures. Culture is something that impacts any operation very strongly. We need to learn how to work in other cultures as well as how to bring our velocity to our international operations. We need to be flexible and know how to bring the strong relationship we create between our customers and our company to our international operations. This relation is not only because we are fast or flexible, but because our business managers have the DNA of the company, to be responsible for the entire business, from the proposal to the delivery. Plus, they are working with other teams and are always present for the customers. Our main challenge is to bring this to our international operations.

Last year you posted revenues of 720 million dollars and you are expecting growth of 35%. Your performance is excellent. Does this mean that IT outsourcing in Brazil is doing well and that customers are getting their money’s worth?

Outsourcing in Brazil is doing well but Brazil is also a very competitive area. You can find here around 6,000 IT companies and of course, most of them are small companies. Our business in Brazil is going very well because the company is very well-managed and we are always taking care about our efficiency and managing our costs in order to be competitive. We are a strong competitor here in Brazil. Even during crises, we look for opportunities. Crisis for us is a synonym for opportunity; an opportunity for a new kind of business that can bring to our customers a way to survive in the middle of a crisis and reduce costs. In a normal scenario, we have to be much more efficient because we are not so well-recognized yet in the world as a business company, but we will be. We are present in 28 countries on all continents and we want to expand in order to become global partners of our customers. We expect to have continuous growth internationally as soon as our trademark is recognized like it is in Brazil as one of the best business providers in Brazil.

What companies do you aspire to be like? What is your benchmark?

My previous boss used to say that you have to worry about who comes behind you – not who is in front of you. We must be careful about our competitors that are following us. Our benchmark is to be one of the five big players in the world. We follow the best practices available in different models. We have to recognize the good aspects of our competitors and try to be better. We don’t follow a particular benchmark; we follow good models and good workers.

How widespread is IT outsourcing? Do you still have problems persuading companies that it is a good way to go?

Our market is showing constant growth and is projecting a very good picture, so we are very confident that Brazil will be moving in this direction. The companies here in Brazil are changing their models to be more efficient. They are outsourcing more, reviewing their strategies to outsource, improving their business process, and are bringing more innovation. All these initiatives involve companies like Stefanini. That’s why – even during crises – we are following opportunities to make more business. Companies in Brazil are really taking opportunities to grow and to expand, and Stefanini is in the middle of this.

You don’t have any debts, correct?

Stefanini is very well-managed in terms of costs. We try to do our investments using our own financial reserves. That’s why we are a debt-free company, and are not taking any money to invest in our growth. But we are preparing the company to go public, we changed many things in terms of business processes, our infrastructure, etc. We had improved a lot in order to go public in 2008. Because of the global crisis we decided to postpone this and now we plan to go public in 2013, if the financial markets are good.

How many companies are already using outsourcing in Brazil, what is the size of the market?

The markets have grown in recent years, now it is a market of more than 40 billion dollars in IT services. IT services in Brazil last year grew 4.9%, so IT services is above the total of our GDP growth which was 2.3%. It’s a business in continual growth because companies are demanding more and are outsourcing more services. Last year we grew by 30% and now are projecting 35%. Usually we have grown at around 31% per year since 1999. Today, our international operations are responsible for 40% of our entire operations.

Is there anything you would like to add?

We have plans to invest close to 200 million dollars this year outside Brazil. This includes new acquisitions, consolidating new operations recently acquired, and introducing new services to our international portfolio.