Daniel de Souza
Whenever a foreign company decides to open a new office or branch in a new location, it is essential to carefully consider the costs of such a move.
Any IT firm that plans to set up operations in São Paulo will have to consider several factors that could inflate costs quite considerably: the level of local executive salaries and the costs of bringing expatriates to live in Brazil’s biggest city.
It is cheaper to transfer an executive to New York City than to São Paulo, according to a report recently published by Mercer, a global consultancy firm. The city of 11.5 million people is the most expensive in the Americas and the 19th most expensive in the world for expats, Mercer says.
High living costs
There are several reasons for this: the high cost of accommodation – São Paulo has experienced a
real-estate “bubble” (which has yet to burst) in the past few years; the strength of the local currency ($1 USD is approximately 2.25 Brazilian real); and the high costs of transport, health and education.
Any executive moving to São Paulo, which is something of a giant concrete jungle, will want to live in a nice neighbourhood. This most likely means living far from the office, but unfortunately public transportation in the city is awful. It is extremely rare to see a director or high-level exec of a well-known company taking the subway to work every day – something that might be more common in cities such as New York, London or Paris.
Reflecting on the cost of living in São Paulo, Fabiano Cardoso, a senior consultant at Mercer in Brazil, told local economic news website Exame that “In general we pay expensive prices for products in comparison to what it is paid in the United States, both for consumer goods and for durable ones, such as cars.”
Expensive Big Macs
Another study that sheds light on the costs of the city, The Economist’s biannual Big Mac index, reveals that São Paulo has the fifth most expensive Big Mac in the world, at a whopping $5.28 USD. Across Brazil, the burger is over-valued by 71.6 percent, the study showed.
Other South American cities, such as Buenos Aires and Caracas, have also become more expensive due to the high levels of local inflation, Mercer shows in the study, but São Paulo remains considerably more expensive than all of them.
