For the layman, the first thoughts that come to mind regarding Brazil are Carnaval in Rio de Janeiro, FIFA World Cup soccer champions, and the Amazon. For investors, the first thoughts are Petrobras (PBR) and its vast oil riches off the Rio coastline, and Vale (VALE), and its expanding iron ore operations, including some in the Amazon.

But for investors who watch Brazil closely, they see companies like Embraer (ERJ), the third largest jet maker in the world. A country can’t build a successful aviation company without having some technological know-how and a serious dose of home grown innovation. Little do most Americans know, that on their short flights from Boston to New York, they were most likely flying an Embraer jet.

Taken deeper, Brazil is a tech savvy. It’s elections are all digitized. People can sit at home and watch national election data unfold straight from a government’s website, without watching the evening news. Technology at Brazilian banks is some of the most innovative around, not only for security matters, but also for the myriad of ways that Brazilians have grown accustomed to paying bills — through checks and money orders and bank receipts — all facilitated online. Brazilian computer engineers have come up with proprietary tech to compliment their society and their business.

So, yes, Brazil is more than just oil and minerals. But will their tech talents ever translate into a company like India’s Infosys? Or Accenture?

When it comes to IT companies, most people think of corporate India as the hub, with its brand name multinationals. Few people would know that Brazil ranks seventh in the world’s IT market to India’s 9th place ranking, according to IDC in Framingham, Mass. After China, it is the second largest emerging market for IT spending. Brazil even beats Russia, home to Nobel prize winning scientists, cosmonauts and Kaspersky Lab, the third largest consumer cyber security company in the market.All the big IT players in Brazil. Industry group Brasscom is hoping to push Brazil’s ranking to No. 5 and make it one of the three global hubs for IT research and development.

It won’t be easy. The Brazilian currency is a lot stronger than IT competing nations like China, the third largest IT market after the U.S. and Japan. The stronger currency makes Brazil a less attractive place to invest in R&D, says Sergio Pessoa, president of Brasscom.

Then there’s the high skill labor issue. According to the Labor Ministry, Brazil is not graduating engineers fast enough in the computer sciences. Those that are in the market now do not have some of the required skills. There’s not a severe labor shortage in the market for IT, but if graduation rates don’t improve for computer engineers, there will be.

Paulo Nascimento, a researcher at Brazil’s Research Institute for Applied Economics (IPEA), says a lack of highly skilled labor is not as bad as it seems at the moment. He notes that 38% of students who graduated with advanced degrees in engineering are working as engineers, and if the economy grows at a steady clip of 3.5%, that will rise to around 44%. 

“When you hit 70% of those with engineering degrees working in the field, then it becomes a supply issue,” he says. “But that kind of level would be above the worldwide norm.”

Meanwhile, the government is doing its part by reducing payroll taxes to help the sector grow. There is political support for the sector in Brasilia, the nation’s capital.

Over the next four years, Pessoa estimates that local and international companies will invest $13.6 billion in information technology due to the build-out associated with the 2014 FIFA World Cup and the 2016 Summer Olympic Games in Rio. In 2010, Brasscom calculated the country’s IT market be worth $85.1 billion in annual spending, nearly 40% of which comes from spending on proprietary technologies developed in-house for private companies and governments.

Brazilian tech companies have not turned out a new Infosys, at least not in name. Brazil IT firms mostly operate in unglamorous places, behind the scenes and with very little exposure. They don’t have recognizable logos, and they are all privately held, adding to their ability to fly well below the radar. And while there are no household names born and raised in Brazil, that doesn’t mean Brazilian IT firms are not just as multinational as Accenture.

São Paulo based IT services firm Stefanini acquired U.S. firm TechTeam in 2010 and CXI in February 2011. It also expanded into Colombia that same year.

Another Brazilian IT company, Ci&T, has been around since 1995 and is large enough to have operations in China, London and in four cities in the U.S.

“When we founded Ci&T in 1995, the initial concept was to build a Brazilian software exporter,” says Cesar Gon, Ci&T chief executive. “Today our vision has evolved into a global and multicultural company with Brazilian flavor. Our approach is to not stop investing.”

Anyone who has followed Brazil as an investment story knows that the country’s stock market does a relatively poor job reflecting the country’s economic diversity. The BM&F Bovespa index is top-heavy banks, steel, Petrobras and Vale. That’s mainly because the appetite for small and mid-cap names in Brazil is thin compared to the U.S. Brazil is therefore stuck in Petrobras and Vale land, when it is just as much an Embraer, at least in terms of tech savvy.

Out of the roughly 675 companies listed on the exchange, only five are computer services companies.

CPM Braxis, Brazil’s largest, was acquired by Capgemini in Sept. 2010. Another one, Bematech, keeps getting bigger and is leaving its mark in the U.S. It acquired Logic Controls in New Hyde Park, New York in 2008 and is now going by its Brazilian name in the U.S., starting in January of this year. Itautec is leading the way in Brazil’s hot financial services IT segment. Anyone who has ever walked through a Brazilian airport has probably seen ads for TOTVS, an enterprise software company that reported around $680 million in annual revenues in 2010. Lastly, Universo Online was the early America Online of Brazil and is still kicking.

“Brazil is a technological innovator,” Pessoa says in a phone interview back in November. “They’ve innovated on financial services technologies and they are in the process of innovating on oil services and drilling technology solutions as we speak.”

As a percentage of GDP, IT spending in Brazil is increasing faster than in Russia, India and China because it is more openly embraced among different sized businesses and the government. It’s a much different story in places like India, where IT spending is primarily concentrated on IT services, and in China, where IT spending is focused on large central government projects.

According to IDC, Brazil’s IT spending is expected to rise 9% in 2012, below that of Russia, India and China.