THE EVOLUTION OF THE OFFSHORE OUTSOURCING INDUSTRY: BRAZIL VERSUS OTHER BRIC ECONOMIES

Resumen

Brazil has expressed an intention to compete with India in offshoring. This paper examines theoutsourcing industry in Brazil. First, we analyze how Brazil’s well-developed domestic IT market,its manufacturing prowess and export orientation have generated interorganizational as well asintraorganizational externalities or spillovers for the offshoring sector. Such externalities take variousforms such as knowledge spillovers, learning curves, brand loyalty, availability of tools andresources, knowledge about quality and value perceptions of consumers as well as productionexternalities. The entry of foreign IT firms in Brazil has also generated externalities in the forms ofindirect economic impacts on local organizations. Second, we investigate how factors related to offshoringskills, cultural compatibility and physical proximity to major markets are related to closenessto the needs of clients in terms of experience, expertise, culture and geographic reach. Finally, asmaking a contract complete represents a high degree of complexity and costs for parties involvedin an offshoring agreement; we explore the importance of regulation and regulatory institutions.Key words: Offshore outsourcing, Brazil, industry structure, BRIC economies, exportability, externalities