Sale of state-owned tech companies postponed again in Brazil

The privatization of Brazil’s main information technology companies has been postponed once again, according to government officials.

According to an updated schedule presented last week by privatization secretary Martha Seillier at an investor event last week, the sale of the Social Security Technology and Information Company (Dataprev) and the Federal Processing Service (Serpro) should take place in 2023.

Dataprev and Serpro are accountable for the development, maintenance, and operations of thousands of government systems as well as major data-related government strategy and projects. The disposal of the companies is part of a major privatization plan that aims to add 1.3 trillion reais (US$ 253 billion) to public funds by 2022.

The change of plan follows a previous postponement in July 2021, when the government announced both companies would be privatized in the second half of 2022 when the presidential campaign will be taking place.

The process relating to the privatization of Dataprev and Serpro, including the privatization modeling work, market research, national and international sectorial diagnosis and regulatory studies, as well as alternatives to privatization, is being handled by a consortium comprising of the Brazilian subsidiaries of global consulting firm Accenture and PR firm Burson-Marsteller, as well as law firm Machado, Meyer, Sendacz, Opice e Falcão Advogados. The studies began in January 2021.

A damning report published last year by the Inter-Union Department of Statistics and Socio-Economic Studies (DIEESE) stated the sale of both companies to the private sector could present serious risks to the privacy of Brazilian citizens and national sovereignty.

“First, [government control of the state-owned tech companies] prevents the privacy of – potentially – the entire Brazilian population from being exposed to companies private companies, including multinationals”, the study noted, referring to the factors that would justify retaining control of Dataprev and Serpro.

“Second, and perhaps even more relevant, it avoids handing over to the private sector-especially to large international information technology companies-strategic information that allows not only to deeply know the private data of each Brazilian citizen”, the research added. What would happen when data belonging to millions of Brazilians shift to private servers was also a concern raised by Dataprev employees when the privatization plans became known.

“By relinquishing its own technology to buy third-party solutions, giving up the possibility of developing technologies in this field and becoming just a passive consumer, Brazil is moving in the opposite direction when compared to developed countries,” the Dataprev staff manifesto noted.

“This is a policy that will widen the gap that separates us from other nations that focus on investing in research and technology.”