Santa Catarina professionals are the most productive from Brazil. Why?
When they want to do business in Brazil, entrepreneurs usually think in the two main economic centers of the South American country: Sao Paulo and Rio de Janeiro. Or if the company is in technology, Minas Gerais is an attractive option for the tax benefits of the region. However, those who consider productivity to be the most critical element should consider Santa Catarina.
Santa Catarina does not have the highest income, the most significant number of companies or the largest number of employees in regards to the technology sector in Brazil. However, it beats other states in Brazil if we look at different metrics.
This state of southern Brazil stands out because it has the highest productivity per employee in large companies and a more significant number of tech startups, according to data from Tech Report 2019, prepared by the Technology Association of Santa Catarina (Acate) and previously published in the Brazilian business magazine EXAME.
The most productive Brazilian state in technology
The revenues of the technology sector represent 5.8% of the Gross Domestic Product (GDP) of Santa Catarina or 15.8 billion reais. In Brazil, the industry represents 4.4% of GDP and revenues of 300 billion reais.
In absolute terms, Santa Catarina is the sixth most significant contributor to revenue, behind São Paulo, Rio de Janeiro, Minas Gerais, Paraná, and the Rio Grande do Sul. However, in revenue divided by the number of companies, Santa Catarina jumps to Third place. They are only surpassed by Amazonas (with the Manaus Free Zone) and the Federal District (with significant demand from the public sector). Each Santa Catarina company has an annual average of 1.4 million reais.
Relativity is also seen in the number of companies. Santa Catarina accumulated 11,274 companies in the state at the end of 2018, even placing it in the sixth national position. However, the number of technology companies in Santa Catarina today is double the figure seen in 2014.
Among the cities of the state, we highlight the Florianópolis (2,438), Joinville (1,473) and Blumenau (1,218) centers, which concentrate 45% of the companies in the Santa Catarina technology sector. Florianopolis is the second capital with the highest density of startups (4.9 startups per thousand inhabitants), only surpassed by the city of São Paulo (5.4 startups per thousand inhabitants).
Nowhere does relativity speak as high as the efficiency of each employee in large technology companies or startups. The productivity of Santa Catarina companies in the technology sector is the highest among the six main technology centers in Brazil. Ninety-nine thousand reais are generated per worker, while the national average does not exceed 72 thousand reais.
Florianopolis is the first municipality of Santa Catarina in earnings per employee, with 113.9 thousand reais. Blumenau is the second, with 106.4 thousand reais. Joinville completes the podium with 95 thousand reais. In São Paulo, as a reference, the value is 76 thousand reais. While the average income per technology employee in Brazil increased by only 2%, the figures for the state of Santa Catarina increased at a rate of 21%, lower than in Rio de Janeiro alone.
Where does productivity come?
The productivity of Santa Catarina has been obtained thanks to factors that entrepreneurs do not usually consider, such as the state’s university tradition up to the high indicators of quality of life. The capital of Santa Catarina, Florianopolis, is the clearest example. This city stands out for its capacity for innovation, which has placed it as the second place in several new companies per inhabitant. Only the megalopolis of São Paulo manages to exceed these figures. In recent years, the region has compiled cases of scalable and innovative companies of international recognition, from traditional companies such as Dígitro and SoftPlan to recently created companies such as Decora, Urban Fish, and Digital Results.
With 51.8 thousand employees in the technology sector, Santa Catarina is the fourth largest pole of this branch in Brazil, behind the three most populous states: São Paulo, Minas Gerais, and Rio de Janeiro. These employees correspond to 7.6% of the members of the technology sector in Brazil. There are 23.5 members of the technology sector for every 1,000 formal workers in Santa Catarina, against 14.5 in the national average. Gran Florianópolis concentrates the most significant number of jobs in the industry (51.2%). In 2018, the Santa Catarina technology sector generated 3,000 new jobs, led by Florianópolis (1,200 posts). Between 2012 and 2018, there were 11 thousand new publications.
A first point that explains productivity is the training of employees who previously studied in the state. Santa Catarina is the second state in Brazil with the highest percentage of higher education students in technology courses, only behind Minas Gerais. The southern state has 233,000 more upper education students, 44,000 (19%) in technology areas.
Institutions such as the Federal University of Santa Catarina (UFSC), created in 1960, trained the first professionals to work with technology in public, private, and eventually their businesses. “Being in Florianopolis helped us because our first employees were competent university and work colleagues. These results attracted people from other regions and generated a variety of solutions to complex problems,” says Marcelo Gracietti, president of Cheesecake Labs.
Another point that attracts the most productive technology employees to Florianopolis is the highest salary. These vacancies offer, on average, 55% above the state average and in diversified work specialties. The cost of living is also higher than the state average, but low compared to capitals such as Belo Horizonte, Brasilia, Rio de Janeiro, and Sao Paulo.
Money is worth more, and the quality of life is also superior to those capitals, true in Florianopolis and other regions of Santa Catarina. “A happier person is more productive, and Florianopolis provides it. Today’s job opportunities even attract people from other states and countries, “says Daniel Dias, vice president of operations for the HostGator hosting company.
An example is the case of the co-founder of HostGator. Robledo Ribeiro moved the Brazilian headquarters from Rio de Janeiro to Florianopolis around 2010. “I was looking for a place with a better quality of life, and I discovered a technology and training center, fostered for decades,” says Ribeiro. HostGator has around 300 employees at its 3,000 square meter headquarters in Florianopolis, 20 of them are from Latin American countries and ideal for serving clients in countries such as Chile, Colombia, and Mexico. The company is creating a bank of 2,000 resumes in the next three months.
The city’s plan is now to attract increasingly talented technology professionals to “put Florianopolis on the world map,” in the words of Daniel Leipnitz, president of Acate. The capital of Santa Catarina brings together a series of events this week through Floripa Conecta, a kind of Santa Catarina version of the American festival of culture and innovation SXSW. One of them is the Startup Summit, an innovation event that will bring together about 4,000 participants and at which the Tech Report 2019 was presented.
“Floripa Conecta must grow and become a product of annual attraction. It is a recent revolution and society is beginning to see this innovation environment as something close to them, “says Leipnitz, who expects reflections even in the rest of the state. The best for Santa Catarina productivity.
The challenges of Santa Catarina
Even so, skilled labor remains a challenge in Florianopolis and the rest of the state due to the demand of technology companies, a common problem in Latin America due to the disconnection between the educational offer in technology and the needs of the companies, however, several programs are encouraging the development of professionals in the field.
In the public sphere is the Tec Generation, established by the State Government through the Ministry of Sustainable Economic Development, to qualify young people and adults in the sector. “We have to connect the study with the work, not just the form. We have a skills analysis requested by each city, and this generates an employability rate of approximately 70% of our 5,000 graduates,” says Leipnitz. Acate is one of the Tec Generation generators.
With the same banner in the private sector is Code Start, Nation, which brings together giants such as Magazine Luiza and Movile to sponsor a 10-week training in information technology for possible future hiring. Around a thousand professionals have accelerated in the last two years. “Technology companies grow, and the workforce does not keep up. We have to put more people in this market and push those who already have the logic behind programming, “says Krislaine Kuchenbecker, co-founder of Code: Nation and who has worked in the technology industry since 2011.
In addition to training, another challenge is to retain talent: the dispute at best even crosses the Brazilian borders, with the recruitment of technology workers to the United States and Europe. At Cheesecake Labs, with 60% of its international client base, its employees are expected to be attentive. “Putting bean bags can be attractive, but it doesn’t stop,” says Garcetti. “The welfare and productivity of employees depend not only on benefits but also on daily processes.” Cheesecake Labs has 55 employees and achieves a balance between autonomy and commitment, with four teams of eight to ten junior and senior employees.
Technology companies have adopted this form of work, such as the Spotify online music service. This organization allows employees to feel part of a larger project through small agile teams, called squadrons.
These small squads of well-paid and happy workers are those who contribute to Santa Catarina becoming a productive Latin American Silicon Valley.