Capgemini has acquired a majority stake in CPM Braxis, Brazil’s largest IT oustourcing provider, for €233 million.
The acquisition will allow the European company to tap into the Brazilian market for IT services, it said. According to Brazil’s IT development agency BRASSCOM, the country’s domestic market for IT and BPO services is the eight largest world, totaling around $60 billion in 2009. This figure is expected to grow by 15% in 2010.
The deal represents a bid to tap growth economies as a source of business, not just a destination for cheap labour, Capgemini CEO Paul Hermelin said in an interview with EuroBusinessMedia.
“While we have 36% of our people from growth economies and new emerging economies, they are mainly servicing Western customers,” he said. “We want to take advantage of the huge potential of these economies.”
He said that Capgemini’s presence in Brazil had previously been ‘very small’, and that growing that presence organically would have taken too long.
Despite it a concerted push by BRASSCOM to promote Brazil as an offshoring destination, the country’s IT services exports equal just 5% of its domestic market.
Hermelin said CPM Braxis hopes to change this. “[Our] new Brazilian colleagues hope that they can [be] some kind of alternative to India … to help US customers with remote service in a time zone that can be more convenient than India,” he said. “It’s a little bit more expensive than Indian labour costs, but it might provide flexibility and we will probably leverage that too.”