Brazilian software market grows, but loses two positions in the global context

While the IT sector grew 5% in the world in 2019, the market in Brazil increased 10.5% in the same period and reached R? 161.7 billion (US $ 44.3 billion), considering the markets for software, services, hardware and also exports in the segment. This is what the study “Brazilian Software Market - Panorama and Trend 2020”, published by ABES - Brazilian Association of Software Companies. The document, which uses data from the IDC for the last year, shows that Brazil represents 1.8% of the global IT market and 40.7% of the Latin American market. Investments in this segment were in the order of 2.3% of GDP. ”The results were positive for the domestic market. However, when we analyze in the global context, despite the growth well above the world average, we fell from 9th to 10th position in the ranking of investments in global IT, demonstrating that we are not being agile in absorbing the benefits of technology. Specifically as a software and services sector, we lost positions to Italy and the Netherlands and are in 11th in the global ranking ”, says Rodolfo Fücher, President of ABES.

According to him, this year, the sector should present positive surprises: growth of 4% in 2020, according to the optimistic forecast of IDC. “Certainly many companies were not prepared to face the pandemic that forced them to migrate to the digital world in 24 hours. They were forced to invest in their IT structures. A clear example is the use of CRM solutions: 51% on the market still used local solutions in 2019, not taking advantage of the benefits of cloud computing ”, he explains.

For 2021, the forecast is for recovery, with a solid reaction in IT investments in Brazil in the post-COVID-19, which puts the growth projection for next year at around 10%. Themes such as cloud, security, mobility, collaboration and communication stand out in this context.

The full study can be accessed here.

Software market grew 16% in 2019

According to the study, within the IT segment, the software market grew more sharply in 2019, in the order of 16%. Export software and services increased 29% compared to the same period last year.

“It was to be expected a greater increase in the growth rate of Software, since new technologies - such as Cloud, Mobility, BI, among others - have made innovation converge to investments in this pillar”, points out Jorge Sukarie, vice president of ABES board. He explains that there was also a great demand from the foreign market for Brazilian software companies, mainly in Latin America. “The economic recovery scenario in the country, experienced in 2019, also contributed to the growth of the total software market, he explains.

Today, Brazil has 21,020 companies dedicated to the development and production of software, distribution and provision of services. Considering only the 5,519 companies that work in the development and production of software, about 95.3% are micro and small companies, that is, they have up to 99 employees.

Commerce had the biggest increase in IT investments in the last year

Practically 50% of the IT user market in Brazil is composed of companies from the sectors of Finance, Services and Telecom, followed by Industry and Commerce. Among these, Commerce was the one that most invested in IT in 2019 - 16.9%. The Government showed a recovery in 2019 compared to previous years, going from a market share of 3.7% to 6.3%. On the other hand, the Oil and Gas sector showed the lowest growth, with a rate of 10.2%.

Smartphones lead the market growth, among equipment and mobility, with a rate of 8.8%. Then, notebooks, with 4.5%; and desktops with 3.8%. Active data connections in Brazil, both for corporate and domestic use, remained stable compared to 2018.

In the cloud computing segment, the market showed significant growth in 2019. SaaS solutions increased by 48.7%, while PaaS solutions grew by 55.4%. In the IoT segment, the market, including connectivity hardware, software and services, also grew, with a rate of 18.7% compared to 2018.
2021 will be the year of resumption

The impact of the pandemic on the market growth of the different categories of software and services in 2020 should result in a growth of 0.4% in the year in a pessimistic scenario and up to 4% in an optimistic scenario. The IDC estimates that the sector's recovery interval to return to the 2019 investment levels in the country may extend until 2021, when the projection is 10%.

"Despite the reorganization of investments that we are going through at this moment, companies will need to rethink their technological needs to satisfy their customers in the post-COVID-19 era and ensure business continuity with new operational schemes, such as home office and social distance," he explains Fücher. According to him, the pandemic drives the adoption of new technologies and adaptation to new processes and procedures, as well as the rapid evolution of digital transformation.

The entry into force of the General Data Protection Law (LGPD), according to Jorge Sukarie, makes the topic of Information Security one of the main priorities for investments in IT in 2020. “The LGPS ABES Index points out that only 40% of Brazilian companies are ready to meet the requirements of the new law. Therefore, we are certain that the search for updating and adapting applications will generate a positive impact in the customized development market and investments in security will advance, leveraged by consultancies and services ”, he says.