In 2006, the 65,754 Brazilian companies which belong to the sector of Information and Communication Technology (ICT) had net revenue of R$ 205.9 billion and generated R$ 82.1 billion  (value added and value of manufacturing), which accounted, that year, for 8.3% of the total value added produced by industry, trade and services.  Although this level of participation is quite significant, there was gradual reduction of importance of the ICT sector, which had been 8.9% in 2003, mainly due to the lower increase rate of the telecommunication sector.

 

The ICT sector is highly concentrated, with 76.1% of the value generated in the companies with 250 or more persons employed. On the other hand, micro and small companies play an important role in the generation of jobs. The Southeast Region concentrated, in 2006, 65.0% of the value generated by the ICT sector, whose 95.6% of the companies and 71.1% of the persons were engaged in services activities.

 

Another characteristic of the sector is high compensation paid to workers, with average monthly salary of R$ 2,025.18, in 2006, versus R$ 937.48 of other industrial, commercial and services activities. Once more, in this case, telecommunications are the highlights, with average monthly wage of R$ 3,315.26.

 

These are some of the data presented by IBGE in this previously unseen study of the Information and Communication Technology sector. The study analyzed the ICT sector in terms of supply, in the period 2003-2006, and was conducted based on the result of annual economic surveys of IBGE in the fields of industry, trade and services of the Secretariat of Foreign Trade in the Ministry of Development, Industry and Foreign Trade.

 

In the chapter concerning ICT products and surveys, the study shows increase in the participation of the wireless telecommunications sector (from 34.1% to 43.2%), whereas wired telecommunications faced decrease in participation (from 60.3% to 50.7%), in the period 2003-2006. It showed increase from 8.5% to 13.6% in the participation of calls made from public booths (in the revenue of fixed to fixed telephony). There was also reduction from 8.9% to 5.1% in the participation of revenue of international calls, as a consequence of alternatives available for distance communication online.

 

Number of ICT companies grows, but participation of the sector in the economy falls

 

The Brazilian ICT sector was formed, in 2006, by 65,754 companies, which employed 673,024 persons, and between 2003 and 2006, there was increase of 18.3% in the number of companies and of 40.7% in the number of persons employed. In 2006, the net earnings of the sector reached R$ 205.9 billion; and the addition of value added (VA) to the value of industrial manufacturing (VTI)¹, R$ 82.1 billion, showing increases of 47.4% and 38.1%, respectively, in relation to 2003.

 

In spite of this increase, between 2003 and 2006, the participation of the ICT sector in the total companies of the country remained stable at, respectively, 2.4% and 2.5%; whereas the participation of value added/value of industrial manufacturing in relation to the total Brazilian economy² decreased by 0.6 percentage points, changing from 8.9% in 2003 to 8.3% in 2006. This occurred because the ICT sector had lower nominal increase (37.6%) than the average of economy (47.6%) between the two aforementioned years. This participation decrease can be seen, in general, as derived from the telecommunications sector, of which increase was below that of the other economic sectors, despite the increase occurred in the period.

 

The net revenue of the ICT sector kept stable participation in the total, being at about 7.1%, from 2003 to 2006. The group of persons employed in the sector was the only one to have slight increase in the same period, from 2.6% to 3.0%. The data are summarized in the two tables below:

 

 

ICT sector is concentrated in big companies in the Southeast and South of the country

 

The Brazilian ICT sector is concentrated in big companies, both in terms of persons employed and value generated. In 2006 almost half of the persons employed in ICT (48.2%) worked for companies with over 250 persons employed. In terms of value added/value of industrial manufacturing, the participation of big companies was even bigger (76.1%).

 

The analysis of companies by level of earnings, 40.7% of the persons employed in the ICT sector in 2006 worked for companies with earnings above R$ 60 million, but a close percentage (37.8%) was employed in companies with lower earnings (of up to R$ 2.4 million). The analysis of value generated shows a high degree of concentration (77.2%) in the category with highest earnings.

 

Productivity (ration between the value generated and the persons employed) of companies with over 250 persons was, in 2006, 4.8 times bigger than in the small companies. There was more effectiveness in companies with earnings above R$ 60 million, since their productivity surpassed, at least three times, that of companies in other earning categories. This occurred because big companies (both in terms of persons employed and earnings) account for a bigger proportion of value generated than employed persons do.

 

In 2006, the ICT sector activities were concentrated in the Southeast Region in what concerns persons employed (65.6%) and value generated (64.4%). In second place was the South Region, In second place was the South Region, with 13.2% of the employed persons and 11.6% of the value added/value of industrial manufacturing. The participation of other areas were, respectively: North 7.2% and 9.6%, mainly due to the Manaus Tax Free Zone; Northeast 6.2% and 7.4%; and Central West 7.9% and 6.9%.

 

In relation to the activities, the ICT companies concentrated in the services, which show slight increase of participation in the sector, from 95.3% in 2003 to 95.6% in 2006. Industrial companies represented 3.3% of the ICT sector in 2003 and 3.0% in 2006. Trade had lower relative importance, in spite of the small increase in participation, from 1.4% in 2003 to 1.5% in 2006. 

 

Concerning persons employed in the ICT sector, there was also concentration in the services sector, which, in 2006 gathered 71.1% of the persons employed, whereas in industry this participation was 25.6%, and trade kept on presenting little relative significance (3.3%).

 

Computer science activities gather 89.7% of the companies and 56.3% of persons employed in ICT

 

The analysis of the main activities of the ICT sector shows high concentration of the number of companies in computer science activities, although it presents decrease in participation, having changed from 92.4% in 2003 to 89.7% in 2006. At a lower level is the activity of telecommunications, with 2.5% of the total of companies in 2003 and 3.7% in 2006.

 

The structural composition of ICT activities in what concerns persons employed also shows computer science activities as he most active segment in terms of manpower, with 56.3% of the total of the sector. This result in participation was influenced by the significant presence of non-salaried persons (owners and partners, cooperative members and family members) who made up, in 206, 24.4% of the employed population.

 

Industry is also a highlight, once, in 2006, it accounted for 25.6% of the population employed in the ICT sector. The subsector of telecommunications accounted for 13.5% of the persons employed in the ICT sector in 2006. However, there was gradual decrease of participation, once in 2003 the figure was 14.9%.

 

Even considering decrease of salaries, compensation offered by ICT is above average

 

The ICT sector faced real fall (1.6%) of the average monthly wage³ paid between 2003 and 2006. In spite of that, the sector used to pay in 2006 (R$ 2,025.18), more than economy in general (R$ 937.48). This fact occurred repeatedly in industrial activities (R$ 1,902.06 in ICT and versus R$ 1,337.93 in general); commercial activities (R$ 2,521.12 versus R$ 623.72); and service ones (R$ 2,046.73 versus R$ 897.09).

 

In ICT services, there was decrease of the average monthly wage, which changed from R$ 2,107.13 in 2003 to R$ 2,046.73 in 2006, with real accumulated decrease of 2.9%. This fall was influenced by telecommunications, a sector which is still facing a process of restructuring of personnel management, as reflected in increase of the number of persons hired for lower salaries. In spite of that, telecommunications still account for the highest average level of compensation of the ICT sector: R$ 3,315.26 per month. Concerning computer science activities, it was possible to observe a tendency to steady salary raise, from R$ 1,671.06 in 2003 to R$ 1,768.73 in 2006, with accumulated increase of 5.8%.

 

The ICT sector increased its cost of work⁴ from 28.0% in 2003 to 31.9% in 2006; however, it remained below the cost of work for economy, which changed from 39.1% to 39.8%.

 

Telecommunications account for the biggest part of value generated by ICT sector

 

In 2006, the value generated by the ICT sector reached the amount of R$ 82.1 billion, pointing to nominal increase of 38.1% in relation to 2003 (R$ 59.4 billion), divided as follows among the economic sectors: 74.4% for services, 23.0% for industry and 2.6% for trade.

 

Telecommunications are responsible for the biggest part of the generation of value of the ICT sector, although they present decrease of participation, from 55.2% in 2003 to 47.8% in 2006. On the other hand, computer science and other ICT activities increased their participation, between 2003 to 2006 from 23.6% to 25.6% and from 19.3% to 22.9%, respectively.

Revenue of wireless communication increases 

In the telecommunications sector, in the period 2003-2006, the participation of wired telecommunications fell from 60.3% to 50.7%. On the other hand, the participation of wireless telecommunications increased from 34.1% to 43.2%, in this period. With lower participation in the revenue of this sector were Internet services (increasing from 1.9% to 2.3%) and other services (increasing from 2.0% to 2.4%).

 

International calls decrease due to the existence of lower-cost options online

 

In the group of wired telecommunications, the main services accounting for revenue in 2006 were: fixed to fixed telephony (30.5%), followed by complementary services to fixed telephony (24.5%) and mobile telephony (18%). Even with less significant participation, the highlight in this group in the period 2003-2006 was the revenue of connection services for Internet access, which increased from 2.9% to 5.6%. In fixed to fixed telephony, long-distance calls accounted for 43.4% of the revenue in 2006, followed by local calls (37.9%).

 

In the period 2003-2006, there was decrease of participation in international calls (from 8.9% to 5.1%), due to other options available on the Internet at a lower cost. Another highlight was the trend to increase of calls made from public booths (from 8.5% to 13.6%), as a consequence of the General Plans of Universalization Goals for Fixed Telephony Services Rendered by the Government, established in 2003. 

 

Post-paid mobile telephony grew leaving pre-paid system behind

 

In the subsector of wireless telecommunications, services of interconnection in mobile telephony (inter-company call service) accounted, in 2006, for 27.6% of the revenue. Important segments in the revenue of telecommunications services were post-paid mobile telephony (27.1%), followed by pre-paid mobile telephony (11.6%) and by the sales of mobile telephone appliances (13.5%). From 2003 to 2006, there was growth of the service of post-paid mobile telephony, from 21.4% to 27.1%, whereas pre-paid services fell from 17.9% to 11.6% in terms of participation of wireless telecommunications revenue). In post-paid services, local calls accounted, in 2006, for 70.7% of the revenue. 

 

Narrowband Internet faces significant decrease whereas broadband Internet grows

 

In the group of services related to the Internet, broadband Internet service providers concentrated 64.8% of the revenue, in 2006, followed by other services (16.1%) and management of space for publicity (7.2%). In the period 2003-2006, there was significant decrease of the participation of narrowband Internet service providers (from 26.2% to only 5.2%), whereas the broadband service accounted for 49.1% of the revenue, in 2003, reaching 73.3%, in 2005, followed slight decrease in 2006 (64.8%).

 

Customized softwares account for over 30% of the computer science revenue

 

In the computer science subsector, the segment of customized software development concentrated over 30% of the revenue, between 2003 and 2006, followed by development, editing and licensing of softwares ready for use which, in the period analyzed, fell from 19.0%, in 2003, to 16.7%, in 2006. Between 2003 and 2006, a highlight was the increase of the participation of information technology consulting, which changed from 10.4% (2003) to 15.0% (2006). On the other hand, the subsector of equipment maintenance faced decline, with change in revenue participation from 7.7%, in 2003, to 4.9% in 2006.

 

Increase of exports causes 30% decline in ICT international trade

 

The study shows that whereas the surplus of Brazilian international trade as a whole almost doubled from 2003 to 2006, the deficit of international trade in products of Information and Communication Technology  increased by 32%, in the same period, as a consequence of the increase of imports.

 

Between 2003 and 2006, the participation of imports of products in this sector in relation to the overall production in the country increased from 12.5% to 14.3%; exports in the same period remained at 3.2%. All the categories, except telecommunications equipment, faced deficit (imports surpassed exports), being a negative highlight the categories of electronic devices and computer and related equipment, which, together, accounted for 85% of the international trade.

____________________________________________________________

¹Value added  (VA) in the annual surveys of Trade and Services is the difference between the gross value of production and intermediate consumption. In this case, the calculation the calculation is made without the methodological adjustments of National Accounts.  The value of manufacturing of the Annual Survey of Industry - Enterprise is the difference between the gross value of production and costs of industrial operations. 

² Considering industrial activities, services and trade. 

³ The monthly average wage is calculated by the relationship between the total salaries, withdrawals and compensation and the total number of persons employed divided by 13 (12 months and the 13th salary).

⁴ It corresponds to the relation between the expenditure with personnel and the value of manufacturing; in trade and services, it corresponds to the relation between the expenditure with personnel and value added.