IBM signs $1bn outsourcing agreement in Brazil

IBM has entered an agreement with Brazilian industrial conglomerate EBX Group that sees the IT giant take over IT operations for the company and invest in its technology division.

EBX Group is a holding company owned by Brazil’s richest man, Eike Batista. Subsidiaries include a mining company, and oil and gas provider, a logistics operation and SIX Automacao, a technology provider specialising in systems for the utilities and marine sectors.

IBM has agreed to acquire a 20% in Six Automacao and to set up a new research and development joint venture with the company.

In return, EBX Group will pay IBM $1 billion over ten years to take over its IT operations.

"Partnering with one of the largest technology companies in the world offers EBX Group a broad portfolio of modern IT solutions," Batista said in a statement. "IBM, in turn, will expand its presence in one of the most promising markets in the world, working with a Group that has a significant presence in strategic sectors."

EBX Group is in the process of investing $15.5 billion in its home country, promising to create 20,000 jobs in the fast growing economy. Last week, an state-owned investment fund from Abu Dhabi invested $2 billion in the Brazilian company.

French IT services provider Capgemini made a similar move in 2010, acquiring a 55% stake in CPM Braxis, Brazil’s leading IT player, in a deal worth €233 million.

According to Gartner’s latest IT spending forecast, emerging markets including Brazil will account for 31% of global IT spending this year. Latin America will collectively spend up to $326 billion on IT during the year, it predicts.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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