The Digital Port of Recife: the

best IT business and

technology park in Brazil

Cláudio Marinho
Porto Marinho Ltd.

ICTSI IT Conference
Pernambuco, Brazil
July 15, 2008

1
Pernambuco: what place is this?
The new global geoconomy
Brazil’s greatest sustainability challenge...

...is the Chinese

crowding-in effect
on the world
resources...

...but this is also

Brazil’s greatest
economic
opportunity for
growth in decades.
Brazil in the world context
Countries with area Countries with population
> 5 million km2 > 150 million

Bangladesh

Rússia Nigéria

EUA Paquistão

Brasil Indonésia
Austrália China Índia

Japão
Canadá

México
Espanha
França
Países baixos
Itália
Alemanha
Brazil is a BIG Reino Unido Countries with GDP
country Coréia do Sul > USD 600 billion

Fonte: MIC (Brasil & Parceiros 2005)

 [thanks to Mauricio Schneck,
mauricio@portodigital.org,
www.portodigital.org, for the latest
value added to the original slides!]
What is Porto Digital?

 A cluster-based, public-private
business model to implement
public policies supporting IT
companies, bringing about
economic development and
revitalizing the old port area of
Recife
16
17
18
 19
Graf Zeppelin at the Jiquiá field, circa
What is Porto Digital?

Launched in 2000 and located at the historic center

of Recife, Porto Digital is acknowledged today as the
largest technology park in Brazil (AT Kearney, 2005)
and the best technology park/innovation habitat in
the country (Anprotec, 2007).
Porto Digital
Companies X Employees

Number of companies Number of IT professionals

3.700
100 103
94
3.000
86
2.500
63
2.000

1.100

2003 2004 2005 2006 2007 2003 2004 2005 2006 2007
IT Ecosystem
Pernambuco Information Technology GDP

(US$ million) 441

353
310

233
196 200 208

2001 2002 2003 2004 2005 2006 2007(*)

Source: IBGE, CONDEPE/FIDEM. (*) Estimated.

IT Ecosystem
Brazilian IT market – 2004/2006

2004 2005 2006

Brazilian IT Market (US$ bi) 11,0 11,9 16,2

Software 2,36 2,72 3,26

Services 3,62 4,69 5,83

Hardware 5,02 4,49 7,11

World market share 1,1% 1,1% 1,3%

Latin America market share 40,9% 39,0% 43,0%

Source: ABES, IDC.

IT Ecosystem
Comparative IT market growth – 2006

49,5%

36,1%

27,3%
21,1%
19,3%
15,9%
13,8%
8,3% 5,5%
9,6%
2,6%
0,0%

World USA Japan UK China Spain Brazil Russia Mexico India Israel Ireland

Source: ABES, IDC.

Porto Digital
IT companies’ capabilities
 Software Development (solutions & products)
 Management
 Finances
 Health
 Security
 Transportation & Traffic Management
 Software usability
 Geomatics
 Biometrics
 Games
 Neural Networks / AI
 E-business
 Mobility and Wi-Fi
 Information Security
 Infrastructure and Connectivity
 Outsourcing
 Education & Research
Why in Recife, Pernambuco?
Strategic location

Recife
 2,660km away from São Paulo (a
2:45-hour flight)
 Less than 4,000km away from:
Dakar, Rio de Janeiro, Belém, Belo
Horizonte, Brasília, Assunção, La
Paz.
 Less than 9,000km away from:
Chicago, New York, Miami,
Montreal, Havana,
Mexico City, Madrid, Lisbon, Rome
Why in Recife, Pernambuco?
Strategic location

300km (~200 miles)

4 state capitals
3 international airports
2 regional airports
4 international ports
12 million people
More than 35% of Northeast GDP

600km (~400 miles)

800km (~500 miles)

7 state capitals
5 international airports
6 international ports
20 million people
90% of Northeast GDP
Why in Recife, Pernambuco?
Strategic location

Northeast
AREA – km² 1.5 million
POPULATION 51.6 million
GDP US$ 124 billion

Pernambuco
AREA – km² 100 thousand
POPULATION 8 million
GDP US$ 28 billion

Brazil
AREA – km² 8.5 million
POPULATION 188 million
GDP US$ 1,655 billion
Why in Recife, Pernambuco?
Academic base and human capital

S ã o L u ís

F o r t a le z a  51% of all R&D groups in the

M A

Northeast Region are at a

T e r e s in a

RN N a ta l
CE
PB
PI C a m p in a G ra n d e J oão Pessoa maximum 3-hour car-drive
PE R e c if e
C a ru a ru
distance from Recife(1).
AL
M a c e ió
SE

BA A ra c a ju
 Recife is the 11th city in Brazil
S a lv a d o r
in number of Masters an PhD (2)

1
(CNPQ, 2002)
2
(IBGE, 2000)
Why in Recife, Pernambuco?
Academic base and human capital

 + 3,000 PhDs and masters, 50 PhDs at UFPE-CIn

(Federal University Computer Science Center)
 2,336 nationally certified researchers
 CIn is one of the top-five IT institutions in Latin America
 14 technical schools, many of them with IT classes
 29 colleges and universities offering IT courses
 + 60 courses in IT, including master and PhD programs
 approx. 2,500 students graduated in IT courses in 2006.
Why in Recife, Pernambuco?
Academic base and human capital

• Recife
– Annual university education labor pool estimated
in 16-17 thousand people.
– Annual IT and Administration labor pool
estimated in 3-4 thousand people.
– Total annual operating cost per FTE for IT
delivery centers: US$40.000 – US$43.000.

Source: Everest Research Institute Analysis, April- 2006.

Why in Recife, Pernambuco?
IT labor costs

Total IT labor costs in Recife are 12% smaller than in São Paulo (3).

10.000

8.000

6.000
São Paulo(1)
4.000 Recife(2)

2.000 3.692
2.117 1.995 2.137 2.557
1.271 1.271 1.271
0
analista de Programador administrador supervisor de
segurança de banco de operações
dados

•The value includes salary + governmental taxes. For each job position it was
considered a level distribution as follows: 35% junior, 40% mid, 25% senior.

Sources: (1) Manager Consulting, April-2006.

(2)
Site Location Analysis. Deloitte, August- 2006.
(3)
Global Service Delivery Location Analisys. Everest Research, 2007
Why in Recife, Pernambuco?
Total annual operating cost per FTE for IT centers, 2006

• Recife _________ US$ 40,000-43,000

• Curitiba _______ US$ 43,000-45,000
• Brasilia ________ US$ 43,000-45,000
• Belo Horizonte _ US$ 44,000-46,000
• Rio de Janeiro __ US$ 48,000-50,000
• São Paulo ______ US$ 51,000-53,000

Source: Global Service Delivery Location Analisys. Everest Research Institute, 2007.
Why in Recife, Pernambuco?
Recruiting and selection

Recife has a significant number of head-hunting companies. They

provide cost-efficiency to recruiting/selection processes.

• Deloitte
• PWC
• E&Y
• RH Brasil
• C.E.S.A.R.
• Gelre
• Espro
• Pleno
• Pádua Consultores
Why in Recife, Pernambuco?
Taxes and regulatory costs

 Reduced ISS (Tax on sales):

Regular rate – 5%
Porto Digital – 2% for ICT and BPO services

 IPTU (Tax on real estate) - 2%

Exemption, in case of refurbishing historical buildings

 Corporate Income Tax:

Regular rate - 15%

 Employment taxes and legal costs (Brazil):

approx. 54%
Porto Digital
Available spaces

• Office spaces to be
refurbished with low rent
prices and short delivery
time.
• Growing market for built-to-
suit options at the Porto
Digital area
Porto Digital
Office spaces rental cost (per sq. meter *)

São Paulo Porto Alegre Recife

US$17 US$27 US$6

*Average price for occupied office spaces

Porto Digital
Presence of global IT players

• Microsoft
• Borland
• IBM
• Nokia
• Motorola
• Oracle
• Samsung
Porto Digital
Facilities

 Restaurant & bars

 Coffee shops
 Banks
 Government offices
 Mail office
 Drugstores
 Bakery
 Beauty parlors
 Theaters
 Book stores
 Shopping Mall
 Tourist attractions
 Art galleries
 The Porto Digital bank
(building of the former state bank Bandepe,
now office space for IT companies)
Go glocal

Imago

46
 by Flickr

We are happy you are here,

 Cláudio Marinho
cmarinho@gmail.com