Many Irish tech businesses look to the UK and Europe for expansion. But could there be more untapped potential further afield?
While Irish tech companies are becoming major players on the global stage, there are still pockets of the world that remain largely untapped.
While Ireland’s businesses naturally look to the more traditional markets of the UK, Europe and the US, a recent report highlights the growth opportunities in Latin America.
A recent survey from research platform Toluna found that just 6pc of tech companies surveyed are currently providing services in Brazil.
However, with Brazil being the fifth largest online market in the world, the opportunities for Irish tech to tap into this market is huge.
A report commissioned by the Irish Business Network Brazil (IBNB) found that 30pc of companies active in Brazil report revenues of €500,000 from the country per year. The report estimates that these companies could be earning a total of between €6.6m and €9.8m in annual revenue from Brazil.
Brazil needs tech services
“Even in the midst of the Covid-19 pandemic, the majority of those surveyed predicted that there would be growth in demand from Brazil in the next two years,” the report stated.
Richard Fenning is the secretary of the IBNB as well as the SEO manager for B2W, a major e-commerce operator in Brazil. Unsurprisingly, he said B2W saw an increase in digital activity during lockdown periods, but that customer demand for fast delivery and robust logistics networks can be challenging in Brazil.
“There is a massive need in Brazil for more efficient tech services. Irish companies and start-ups can take advantage of the present global climate to try new things and explore the largely untapped potential in Brazil,” he said.
While the Brazilian tech scene remains largely untouched from an Irish business perspective, further reports also highlight its potential.
In 2017, a Deloitte report on global fintech hubs found that Brazil had more fintech start-ups than any other country in Latin America.
According to the Latin American Trade Council of Ireland, trade between Ireland and Latin America grew exponentially between 2005 and 2017, from €1.3bn to €6.4bn with this growth expected to continue.
The challenges of the Brazil market
However, the report from IBNB also highlighted a number of challenges when doing business in Brazil.
“Operational costs are higher in Brazil than in many other markets for many reasons – security and complicated tax systems are just a couple of examples. The absence of a double taxation agreement between the two nations can be a headache for Irish companies doing direct trade with Brazil,” the report said.
“There are cultural nuances that need to be considered before a company invests resources into the market. This is not limited to market research to analyse demand for goods or services – it is necessary that companies have a full technical, legal and cultural understanding of the market before meaningful engagement of resources.”
A potential way to address this challenge is to tap into the Brazilian talent pool within Ireland. According to the Department of Enterprise, Trade and Employment, Brazilian workers made up more than one in 10 of the people offered work permits in 2020. The only other country providing more labour to the Irish market since 2018 is India.
While it isn’t clear from the data how many of these work permits fell under the critical skills category that would include ICT skills, there is potentially a large talent pool there for Irish tech firms to tap into, which could also help them target the Brazilian market.