The IT sector has displayed significant growth over the last few years in Brazil, and most analysts agree that expansion rates will be maintained over the coming years. The forecast is enticing to equipment manufacturers and distributors, but also presents opportunities to a segment that has developed substantially in the country: the one of equipment refurbishers.
According to recent studies by market analyst Gartner, IT spendings in Brazil are expected to account for USD 116 billion in 2015, while analyst IDC predicts that the sector will grow 5% in the country during the same year.
Although the overall IT market is growing there is a clear shift in terms of the distribution of IT investment, Brazil is quickly developing a more modern and mature IT market where more than half of all IT investments are related to software and services.
In order to increase investment in software and services as well as increasing flexibility, Brazilian CIOs are looking at alternative ways to both finance hardware purchases and recover value of used IT equipment. The Brazilian IT market today tends to select equipment from renowned international manufacturers like IBM, Dell and HP rather than cheaper Brazilian alternatives with less liquidity.
Over recent years we have seen low-cost Brazilian computer brands like Itautec, CCE, Megaware and Kellow disappear while international brands are still driving the market.
Refurbishment Industry in Brazil
The Brazilian market for refurbishing is still young and there are very few international players in this market. Traditionally there has been very little value capturing pre-owned Brazilian IT equipment apart from Mainframes and high-end network equipment.
The industry of professional IT refurbishers in Brazil is still in its early stage and the current players only focus on value recovery for enterprise customers, there are still no high-volume services available for individuals or SMEs on a national scale.
With the entrance of new players like Arrow Value Recovery, Brazilian refurbishers of IT equipment are increasingly becoming more professional and today they are offering a range of value added services both for the company that is in need for value recovery as well as for the customer of pre-owned equipment. However there are still only two Brazilian companies that are a part of the Microsoft’s Authorized Refurbishers program.
The Brazilian government’s statistics indicate that 1 million PC’s are discarded each year in Brazil, while in 2014 there were 10,3 million computers sold in the country, according to data by IDC.
The demand for IT equipment is expected to remain high, and the increasing quality of refurbished components should only help drive the growth this market segment. It is important to notice that while the global PC market has reached a saturation level, growth is still expected in the Brazilian PC market, especially in the education sector where pre-owned refurbished equipment has a strong presence.
There is also a trend towards increased awareness around the potential data security implications for donation of IT equipment. While in the past, companies often donated computers directly to community center and schools, it is expected that with newer and more complicated data storage technologies like SSD drives, companies will turn to external companies for professional end-of-life management of their IT equipment.
The trading of refurbished equipment remains less popular in Brazil than in other countries, and to some extent this has to do with the country’s legislation. Companies are only allowed to import refurbished equipment to Brazil if they provide clients with the same warranty of a brand new product and if they prove that no similar product is manufactured in the country.
During recent years, the Brazilian Federal Government created initiatives to foster the refurbishment and delivery of computers to public schools, libraries and internet centers while receiving donations from both private citizens, government organizations and private companies. The training of students coming from families with lower incomes was also a side effect of these programs, as individuals involved with the initiatives would be able to have their first contact with hardware and components.
Known as CRC’s, or Computer Refurbishing Centers, a number of these facilities have been deployed in state capitals around the country to help develop the public institutions in their vicinities. As of 2014, over 13 thousand computers have been refurbished and delivered around the country due to this program.