Brazil It Case

Use the theories of international trade and investment that have been presented in this chapter to help explain Brazil's intentions and actions regarding the international information technology sector.

Brazil's IT sector seems to be growing at a strong rate. This growth has attracted many countries to outsource their IT jobs to Brazil. While India was the hot spot for outsourcing, Brazil is becoming a strong competitor in the field. Brazil's strengths have become a competitive advantage in bringing a good source of outsourcing IT jobs from India to its country.

Porters Diamond model of competitive advantage "considers four aspects of a country's economic environment that affect its competitive position" (Ball 120). One aspect is the location of the country. Brazil, compared to the United States, is located only one time zone away from the United States. This geographical location helps when conducting business between the main office and the IT sectors that are outsourced.

An advance factor of Porter Diamond Model is that Brazil has an advanced infrastructure to handle the outsourcing. "Brazil has a sophisticated telecommunications and network services infrastructure, one that has been rated higher than India and China" (Ball 59). India has been plagued with "increasing labor costs, inadequate physical infrastructure, and a daunting government bureaucracy, among other factors" (Ball 59).

The eclectic theory of international production is another explanation as to why companies would outsource to Brazil instead of exporting the service. With this theory there must be three advantages for a firm to decide to take on the task of outsourcing.

These advantages are ownership specific, location specific, and internalization.

Ownership specific advantage that Brazil has for a company to invest in outsourcing would be the lower wages, high quality workers, and low employee turnover. Training costs and salaries would be lower to employ Brazilian workers which would offset the cost of long distance operating costs. Location specific, as stated before, is an advantage due to the time zone difference between the U.S and Brazil. The costs of doing business between the two countries would be low because of its close proximity. Brazil is also the 5th largest country in the world; this means it has room for development and growth with real