It is not the first India-based IT firm to do so, but ‘born again’ Mahindra Satyam (MSat) has just acquired a majority stake in Brazilian SAP shop, Complex IT. Terms were not disclosed but Complex turned over R$82m (c. £25m) in 2011 and has over 500 employees. Complex has been an SAP Brazil partner for 14 years. Its client list reads like a who’s who in Brazil, including the likes of GM, BASF, and L’Oreal, as well as local giants Vale and Petrobras.
This is a ‘brave and courageous’ move for any India-based player, let alone Mahindra Satyam, which is still waiting to consummate its arranged marriage to step-sibling Tech Mahindra (see Tech Mahindra still seems shy on sibling Satyam). Not that Complex is in the ‘wrong’ space for MSat – quite on the contrary. Indeed the erstwhile Satyam was renowned for its ERP expertise and in its heyday generated over 40% of its revenues from this space, nearly twice that of its major peers.
The challenge is more to do with culture. The India-based players are generally having a woeful time in Brazil as the market simply doesn’t fit the offshore services model. TCS established its Brazilian operations back in 2002 via a controlling interest in a joint venture with Brazilian IT player, Grupo TBA (see TCS brings a touch of India to Brazil) and has struggled pretty much ever since. Even Capgemini, which acquired a majority stake Brazil’s then largest IT services firm CPM Braxis back in 2010 (see Capgemini has a Brazilian), is still finding it tricky to make a decent margin.
There is huge potential in the Brazilian IT services market as readers of BrazilViews will know. But realising the opportunity is tough enough for the well-established (and dominant) multinational players like Accenture and IBM, let alone newcomers!