Cost of building a data centre in Brazil is '40 per cent more than the US'

Frost & Sullivan analyst says costs of IT are extortionate in Brazil and could hold country back from capitalising on growth in sector

The cost of building a data centre in Brazil is 40 per cent more than the US, according to Frost & Sullivan analyst, Fernando Belfort.

Belfort was speaking at SAP's Innovation Tour in Brazil, where he claimed that most organisations in Brazil are deciding to outsource their data centre requirements because of the high costs associated with building their own data centres in the country.

Earlier this week, SAP's managing director of Southern Latin America, Diego Dzosan, suggested that as a result of recent revelations about the NSA's involvement in Brazil, SAP will build data centres to ensure that it keeps all of its Brazilian customer data within Brazilian territory; it is currently housed in the US.

But Belfort said that this would be a costly exercise.

"Everything is expensive in Brazil - the cost of land, the hardware, the blade servers, particularly hardware that is tied to the cloud or any new trends," he said.

Belfort claimed that it was a Brazilian cultural factor that makes Brazilian firms want to operate their own data centres.

"If you ask a Brazilian what they want, they would say they want to own a house or a car. But if you ask an American, they say they want to lease a house, or lease a boat. And it's the same in IT, Brazilian people want their own data centre, so when SAP is doing that, they are spot-on but it's very expensive," he said.

"They probably don't have one at the moment because it's so expensive. You have to have an enormous amount of clients for it to be worth it," he added.

Belfort said that it is a challenge for the Brazilian government to overcome if the country is to capitalise on its booming IT market.

He went on to say that currently, data centre providers have to tick many boxes for customers, and therefore they do their best to be compliant with local and national laws regarding data protection.

"In Brazil, we don't have as many IT compliance [requirements], but companies want to be compliant because their clients want to see certificates and all of the service level agreements," he said.

The issue of data, data centres and data privacy was brought to the fore in Brazil recently after leaked US National Security Agency documents indicated that the US had spied on both the government and flagship oil company Petrobras.

The leaked documents provoked a vociferous response from Brazilian president Dilma Rousseff, while Petrobras accused the US of engaging in industrial espionage.

Belfort said that the minister of science in Brazil has told the public that Brazil will have much stronger rules to ensure that data is kept within the South American country.