Brazilian IT departments brace for "horrible" year

Recession prompts reduction in technology teams and increase pressure on CIOs to keep costs at the bare minimum, says research
Written by Angelica Mari, Contributing Writer

This year is going to be a challenging one for IT decision makers in Brazil as the current recession is forcing them to reduce their departments as well as overall technology costs, according to recent research.

Some 35 percent of organizations in the country will be reducing their IT departments, while 10 percent will be replacing more senior staff for employees on lower salaries, says the 11th yearly report on local trends by Brazilian research firm IT4CIO.

"In 2015, not even a third of the companies had the intention of downsizing their IT teams," IT4CIO research director Ivair Rodrigues tells ZDnet.

"Usually, IT departments would be spared during a recession and tech investment remains crucial. But now the crisis has arrived for everyone and companies are trying to cut all the costs they possibly can," the analyst adds.

According to Rodrigues, roles that are less likely to suffer during the current economic downturn in Brazil are security, business intelligence and cloud specialists.

The IT4CIO study adds that 70 percent of IT decision makers are under pressure to reduce the cost of technology within organizations. The study also suggests that the dollar hike in relation to the real, the local currency, plays a significant role in the current situation and that has also driven CIOs to renegotiate supplier deals and postpone projects.

In 2016, IT investments in Brazil will go up by 2 to 3 percent, so below the predicted inflation rate of 7,4 percent, the study adds. That compares to the 2,8 percent growth rate seen in 2015.

"Even though we are still seeing some growth, it is barely enough to make up for the impact of the dollar hike," Rodrigues says.

"We have been talking to top IT executives at the largest companies in Brazil and all of them agree that 2015 was bad, but 2016 is probably going to be a horrible year for the industry," he adds.

The IT4CIO research heard IT decision makers across 1,400 medium and large organizations in Brazil.

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