1. The IT Industry, Its Primary Challenges and Perceived Trends: A Survey of 9 Countries with IT Professionals Rio de Janeiro 7th of July Local Economic Development Study

2. 2 OBJECTIVES To determine the degree of Optimism concerning the future of the IT Industry To measure the harmony between Supplier and Purchaser Expectations To measure the fit between the Brazilian IT industry model and what is practiced globally by potential competitor countries To map out the Brazilian IT industry’s perceptions vis-à-vis some of its global competitors

3. 3 Methodology Countries included:  Brazil,  Egypt,  Estonia,  Hungary,  Indonesia,  Korea,  Malaysia,  Philippines,  Spain Countries included given their DEMAND and SUPPLY profiles

4. 4 Country Development Relative to others within the same tier, countries below the grey bar tend to produce more software than they consume Relative to others within the same tier, countries above the grey bar tend to consume more software than they produce

5. 5 Methodology Method of data collection:  Dates of Field Period  January 24 to March 10, 2005  Telephone (Brazil, Estonia);  Face-to-face (Egypt, Hungary, Indonesia, Korea, Malaysia, Philippines);  Respondent preference (Spain) Sample: In each country, N=80;  Sample representative of the universe of companies (40% of companies with 1000 or more employees)  40 respondents working in IT Suppliers,  40 respondents working in IT Purchasers (Clients);  Equally divided between IT professionals and software developers

6. General Conclusions Companies, in general, are VERY optimistic about the future of the industry (both suppliers and purchasers) However, there are two caveats to this conclusion  CAVEAT 1: The study demonstrates a disconnect between Supplier and Purchaser Expectations. - Suppliers are much more optimistic than Buyers - Suppliers plan on offering service and product bundles that DO NOT necessarily correspond to Purchaser demands

7. General Conclusions  CAVEAT 2: Brazil’s present IT industry model, which emphasizes a high degree of customization and tailored client servicing, DOES NOT correspond to the model adopted by other peer countries - Is this a positive or negative point? -Can the Brazilian IT Model be exported? -Or must it be adapted?

8. General Context

9. 9 Comparing Expectations of Software Purchases And Sales in the next five years (increase a lot + increase some) Q14. Thinking about the next five years in the future, will software purchases by your company increase or decrease during this time? And is that a lot or only some? Q44. Thinking about the next five years in the future, will software sales by your company increased or decreased during this time?

10. 10 Software for Export: Current Situation and Perspective in the Next 5 Years (“A Great Deal” versus “Will Increase a Lot”) Q46. Using the same scale from one to five, where one means very little and five means a great deal, how much software developed by your company is intended for export to other countries? Q48. And thinking about the next five years, do you expect the number of countries that your organization exports to will increase or decrease during this time? And is that a lot or only some? Huge Expectation for Increased Brazilian Exports

11. 11 Plans to Migrate Primary Platform and Support for Alternative Platforms (Percent that say “YES”) Q19. Are you planning to migrate your primary desktop platform? Q41. Are you planning to change or add support for different platforms?

12. 12 Percent that includes Source Code in Application Sales Q36. When you sell a software application, is the source code included? Brazil’s unique customized focus  Is it sustainable in a globalized economy?

13. Non-Technology Industry Views: Perception of IT Purchasers

14. 14 Future Change in Software Purchases Q14. Thinking about the next five years in the future, will software purchases by your company increase or decrease during this time? And is that a lot or only some? High Levels of Optimism

15. 15 IT Purchasers – Proportion Of Employees Using Devices That Run On Software Q2. What percentage of the employees of your company need to use devices that run on software as part of their job? Brazilian Market: Diversified

16. 16 Types of Software Usage in Non-Tech Businesses 91% 43% 60% 94% 97% 95% Averag e 95% 52% 82% 90% 95% 98% Brazil General office management, such as email or scheduling Software development/ programming for other business uses Software development/ programming to help run a business like mine Accounting or finance Database Word Processing Communications, such as Internet connection/ modem/LAN Q11. What types of software do you use in your organization? What about… Brazilian Uniqueness

17. 17 Commercial or Open Source Software Usage Q15. Do you primarily use commercial software or “open source” software in your business?

18. 18 Non-tech Companies – Primary Platforms Q18a/b. What is the primary network/desktop platform in use by your company? Primary Network Platform

19. 19 Non-tech Companies – Primary Platforms Q18a/b. What is the primary network/desktop platform in use by your company? Primary Network Platform Solaris: Unix

20. 20 Non-tech Companies – Primary Platforms Q18a/b. What is the primary network/desktop platform in use by your company? Primary Desktop Platform

21. 21 Plans to Migrate Primary Platform Q19. Are you planning to migrate your primary desktop platform? Only a minority want to change their primary desktop Platform

22. 22 Multinational or Company Within Country Q3. Is your company part of a multinational with employees in a number of countries, or do all your company’s employees work in [COUNTRY]?

23. 23 International or National Software Purchasing Decisions (Percent of Multinationals that have sole decision making capacity in Brazil) Q3a. Are software purchasing decisions for your company’s office in [COUNTRY] made in [COUNTRY] or somewhere else? Brazilian Domestic Market is Internationalized Need to Think National when Local? OR a Possible Comparative Advantage?

24. Technology Industry Views: Perception of IT Suppliers

25. 25 Software Sales Volume: Past 5 Years versus Next Five Years (Increase a lot + Increase) Q43/44. Thinking about the past five years/next five years in the future, have/will software sales by your company increased or decreased during this time?

26. 26 Future Sales of Software in the Next Five Years Q51. Thinking about five years from now, do you expect the total revenue your company gets from sales of software or goods or services, where software is central or very important, to be 5, 4, 3, double, up 50%, up 25% the current level, about the same as now, or down from the current level?

27. 27 Current Sources of Company Revenue Q52. Does your company currently earn most of its revenue through… Current Revenue Sources Brazilian offering well-positioned for exports 67%

28. 28 Software for Non-Domestic Consumption: Current Situation and Perspective in the Next 5 Years (“A Great Deal” versus “Will Increase a Lot”) Q46. Using the same scale from one to five, where one means very little and five means a great deal, how much software developed by your company is intended for export to other countries? Q48. And thinking about the next five years, do you expect the number of countries that your organization exports to will increase or decrease during this time? And is that a lot or only some? Huge Brazilian Expectation for Export

29. 29 Future Domestic Competition versus International Competition (Percent Domestic Companies) Q59. Over the next five years, will most competition in [COUNTRY]’s IT industry come from domestic companies in [COUNTRY], or other country’s international firms? Will Brazil’s strong internal market divert an export focus?

30. 30 Percent that includes Source Code in Application Sales Q36. When you sell a software application, is the source code included? Brazil’s unique customized focus  Is it sustainable in a globalized economy?

31. 31 Plans to Change/Support Different Platforms (Percent Yes to change) Q41. Are you planning to change or add support for different platforms?

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