Nearshore Journal

Alvi Abuaf | President & CEO CPM Braxis USA

By Philip Peters – NJ Editor In Chief

Yes, I spent 20+ years at Ernst & Young then Capgemini (which acquired the consulting practice of E&Y). My last position was Vice President and Managing Director of Americas Financial Services Industry Consulting. After that I was the Managing Director of Global Strategy and Program Management in Citigroup’s Operations & Technology. I am currently an investor and the President and CEO of CPM Braxis USA, the leading Brazil-based global IT services and outsourcing company. My experiences were extremely valuable in preparing me for my current role. I have the unique benefit of seeing the industry with a 360 degree view – as advisor, provider and buyer:

• At E&Y I learned to work with large corporations and give them advice on vendor selection,
• at Capgemini I got significant experience in delivering outsourcing services from India and
• at Citi I was responsible for the “Right Placement” program where I got a full view of all of the outsourcing vendors and their competitive positioning.

With your background and so wide a portfolio of companies, what is it about the culture and capability of CPM Braxis that drew you to the firm?

My goal of moving to CPM Braxis, was to build an outsourcing company, as a complementary offering to India, from the strong foundation of IT services companies that already existed in Brazil.

CPM Braxis is a vibrant, lean and focused organization with a strong Brazilian “can do” mentality and I thought that combined with its capabilities and deep and strong experience in multiple industries would be the recipe for success in the Outsourcing market.

CMP Braxis is the first Brazilian firm to achieve CMMI Level 5 certification. Your company has also won a number of awards and recognition. Share with us some more core features of the CMP Braxis brand in terms of how it is digested internally, and what you want the market to fundamentally grasp about the core CMP Braxis value offer?

CPM Braxis is a new name for many in the U.S., but we are in fact a 27-year-old company with 2009 revenues in excess of $US 550M, and more than 5,500 full time employees. We are a full service IT provider, with 12 separate development centers across Brazil. As we all know, ultimately this is a people – based business. We are dedicated to continuous learning, education and certification of our professionals. We have developed 10 strong “Core Values” for our company. We have a strong culture dedicated to quality and a strong local brand with which we are able to recruit and retain the best talent the country has to offer.

Our portfolio consists of four types of IT related services and products:

• IT Infrastructure Solutions (remote infrastructure services – servers, network equipment, operating centers, service desks).
• IT Applications Solutions (AD&M and QA of various technologies and in various models – staff augmentation, fixed-price, managed services, etc).
• IT Business Solutions (ERP, CRM, Data Warehousing, Business Intelligence, etc.).

Brazil has emerged as a premier outsourcing destination in the Western Hemisphere, as well as globally. The Brazilian IT industry employs more than 900,000 people, with a GDP of more than $16B in 2007. Unlike many other destinations that are new to outsourcing, Brazil has an IT heritage of more than 40 years, and hence has a depth of both legacy and web-based technologies. CPM Braxis offers Brazil-based delivery processes to realize the following benefits:

• Time Zone convenience, allowing seamless communication between onshore and nearshore resources, thereby requiring smaller onshore teams and associated expenses, and ultimately reducing overall costs;
• Adjacent time zones, allowing for simple overnight travel, with next day productivity for traveling teams both to and from North America. Additionally, travel and telecommunications costs are reduced over Far East destinations;

• Cultural Affinity, the Brazilian working style is very compatible with the U.S.; it is questioning, challenging, and creative. Generally, with a more senior resource as well as outstanding work ethic;
• Infrastructure, Brazil has a highly advanced transportation and utilities infrastructure within all major cities;
• Low risk destination in terms of natural or political disruption.

One of the questions you responded to at last week’s Global Outsourcing Forum at the Javis was the market’s perception that perhaps English as a second language in Brazil may be viewed as a lesser strength in delivering service to a U.S. or global customers. For our wider blog audience, would you please share your insight on why this perception needs to be updated?

As a global service provider, CPM Braxis recognizes the importance of English proficiency in our industry. Accordingly, we have set a goal of becoming a fully bi-lingual company. Currently, 21% of our professionals speak English and 37% write English at an adequate working level. We have committed to a large investment for this purpose and we believe that we are the leaders in our industry in Brazil in our commitment to English training.

We have set up an ambitious English training program for our professionals, which has been in place since 2007. This initiative assures accelerated development of their careers.

The program starts with an on-line test that assesses the English proficiency of the professional and according to their classification they will be able to participate in one of the following programs:

• In person: professional receives subsidy from the company, which can vary from 50% to 80% of the total cost of the program.
• E-learning: 100% subsidized by the company.

We also work with a Global English Company – http://www.globalenglish.com/m/products/corporate_learning_service/

IT/BPO Companies in two BRIC markets (India, China) seem to favor the capital markets. However, Brazil and Russian companies prefer the private route. In South America only two IT outsourcing/computer services companies have gone public – Brazil based Tivit (Tivit Terceirizacao de Tecnologia & Servicos SA)(tivit.com.br) and Chile headquartered Sonda (sonda.cl) – which is a constituent in our Zagada Waagstein Global Outsourcing 100 Index (Zagadawaagstein.com). What’s your insights on why the IPO market in the sector is so anemic and what can you say about a potential CPM Braxis IPO?

Becoming a public entity forever changes the way our company will do business. Going public is an enormous decision for a business entity. There are benefits to being public in that capital markets can fuel the rapid growth of a company. I think many companies in Latin America, especially in the IT services space are eager to accelerate their growth and therefore carefully considering an IPO.

2009 has been a challenging economic experience. How has CPM Braxis performed in this climate and what is you company’s sentiment about 2010 and the future?

There is no doubt that 2009 was a challenging year because the U.S. economy was “officially” in a recession, but the prospects for outsourcing, surprisingly, appear much better. The negative economic outlook remains discouraging; but the greatest hindrance to outsourcing is uncertainty, and the economy is finally moving beyond that noncommittal midpoint. CPM Braxis did fairly well. We’ve consolidated our portfolio of offerings and acquired significant and strategic new client accounts, and we are in the final preparation of our growth strategy for 2010 and beyond.

The rising cost of maintaining complex and multiple information systems is causing concern among companies across industries. However, rapid expansion of businesses and increasing geographical reach require specialized information systems for better end-user satisfaction and operational efficiency. India’s IT and business process outsourcing (BPO) services industry could be bringing in US$60 billion by the year 2010, growing at over 25 percent a year, according to a report released Monday. However, the industry could face a shortage of half a million workers unless remedial measures in public education, infrastructure and corporate training are taken quickly, according to the report. That’s a great opportunity for Brazil, and it is how it can be leveraged and be a risk mitigating alternative to India for companies that need to outsource their IT operations.

As the economy recovers, Brazil is playing a stronger role in providing globalization services to the United States and Europe. With its cultural and geographical affinity to the United States and Europe, Brazil can be an alternative to India as globalization matures. Rather than displacing India, however, Brazil is an alternative for risk diversification, competing with Eastern Europe and China. Brazil’s domestic market is also likely to see some increased competition as outsourcing players from around the globe seek new growth markets. Both the nature of competition and the industry structure may evolve as players seek to compete more aggressively for business in Brazil. So based on these facts we think 2010 will be a solid growth year.

Thanks Alvi, we appreciate your thoughts and insights and wish you and your team the best.

by Philip Peters