The entire IT "value chain" in Brazil (specially in São Paulo) is more expensive than any other location in the US. Honestly I'm surprised they could keep the overall price increase at around 36%. If you take real estate cost + taxes + data transfer costs alone, that would be enough to push operating costs way up. Labor cost could also be a big factor here, since payroll taxes are around 100% (for $1 pay to employee you give another $1 to goverment in taxes), but of course they have all the technology to put high degrees of automation to their benefit.

Contrary to the popular saying here, brazilian payroll taxes amount to 56% of the salary in an annualized basis, not 100%.

Yes, sure, you can always work out the numbers. If you skip unemployment insurance and some minor previdenciary collections you can get it to around 65%. But that won't make you attractive to the workforce in question. And, of course, you can always balance it with some contractors, at your own risk.

I think that with typical US "glasses" on, 56% is more or less equal to 100% when it comes to taxation. :)

Of course, this is me being a bit prejudiced, but I think there's a least a bit of truth in there.

same here but we prefer to think of it as 50% ;)

Presumably power and/or network connectivity are more expensive, and they have to pass on the prices. Also, given the high cost of disks these days, it's not surprising EBS prices would be high in a newly opened region...

Brazil has a 60% import tax. Not sure if this applies to everything but it does to individuals and small businesses.

It only applies to individuals or business that choose to use a simplified import procedure. Large imports pay between 0% and 18% on most goods; IT hardware import taxes tops at 12%.

Of course, the import tax is just the beginning.

Honestly, I'm surprised how cheap that is. If you take into consideration that computers cost between 2x and 3x more, bandwidth 4x more, higher taxes and almost the same wages, it's a steal.

I expected it to cost between 2 to 3 times more.

Our current providers tend to cost 4x to 8x that, so I'm really curious to see how the market will behave.

Taxes, we have this service tax billed in são paulo that increases the price.

I imagine there's a large number of reasons.

Of the top of my head:

Supplier costs

Volume discounts smaller (until they scale up more at least)

Infrastructure partners more limited and costly

etc, etc

Real estate there is insanely expensive. Bandwidth is also likely pricier too. So datacenters will cost more.

I once hosted a Zope site on three different datacenters - one for the ZEO server (the object store) and two others for the clients (the front-end/app logic). Worked well enough (Zope caches things very efficiently).

No. I really didn't needed to do it - I just wanted to know if it would work. I suspect a similar approach with light front-ends on low latency regions with heavy loads on cheaper regions would be a good technique depending on your problem.

Brazil's once largest airline used Zope a lot and not even they had problems that needed solving this aggressively.

Now that I am writing this, I remember there was a government (Plone-based) site that suffered a major data-center outage and we quickly switched to running their Varnishes in Brasilia off our mirror in São Paulo for weeks. Nobody outside the technical team noticed.