IDB

IDB finds digital services drive 74% savings for businesses and citizens of São Paulo city

  • Brazilian municipality obtained a return of 27 reals for every real invested in digital transformation.
  • The study analyzed costs related to travel, wait times, shipping, human resources and other aspects.

A study conducted by the Inter-American Development Bank (IDB) based on data from the City of São Paulo, “Economic benefits of the digital transformation of public services” (only in Spanish and Portuguese) found that each 1 real invested in digitalizing public services generated a return, or annual savings, of 27 reals to the public administration.

The study quantifying the benefits of digital transformation in the public sector concluded that digital transformation saved citizens and companies an average of 74% of the unit cost of public service request. For services for individuals only, the average reduction was 83%, while savings on services for companies were 67%.

For citizens and businesses, the study analyzed changes in the volume of requests, costs associated with travel, wait times, printing and mailing documents, and other aspects.

“The results of this study, which is among the first to assess the post-implementation impact of digital transformation in Latin America, prove expected outcomes: large savings for both citizens and government”, said IDB Representative in Brazil Morgan Doyle.

“In addition to reducing costs, digitalization improves people’s lives by making it easier for them to access services. Brazil stands out in the delivery of digital public services, and the IDB provides technical and financial resources so it can continue to pursue this path. Digitalization is a priority of Vision 2025, our blueprint for achieving a sustainable and inclusive economic recovery”, he added.

The researchers also analyzed the impact for government administration, considering costs related to human resources, physical space and investment in digitalization, among others, and they found an average drop of 40% in the unit cost of a service request, as well as saving of 50% on human resources who directly provide public services. Meanwhile, 19% less staff were needed to handle requests. These changes gains from digitalization allow officials or employees to be reallocated to other activities, expanding government capacity.

Evidence-based knowledge generation

This study forms part of IDB’s efforts to support evidence-based knowledge generation and thus drive digitization in the public sector. The bank also supports the Brazilian digital transformation with financial resources, such as the US$1 billion Brazil Mais Digital credit line, and through initiatives such as the Rede Gov.Br Platform, where it partners with the federal government to propel digital transformation in Brazilian municipal governments.

“Brazil is a leading country in digital transformation of the public sector, and this study shows that digitalization is key to increase the efficiency of public services”, according to Susana Cordeiro Guerra, Department Manager of Institutions for the Development of the IDB.

“At the IDB, we are committed to measuring the effectiveness of development and we hope that the lessons learned from the Brazilian experience will serve as an important input for the design of digital transformation strategies for other countries in the region.”

The results of the study are based on the digitalization of 15 service request processes, which make up 22% of the Municipality’s volume of digital services. These processes include unlocking passwords for individual micro-entrepreneurs, student transportation electronic tickets, parking permits for people with disabilities, and services linked to property taxes.

The analysis covers digitalization of the process of registering and directing the request to the appropriate person rather than performing the service itself, since some services have steps that must be face-to-face.

Digitalization is one of several channels in an integrated service delivery strategy that also considers groups who use digital media less, such as older people. But it is extremely relevant: an IDB survey published in 2021 showed that the vast majority of the Brazilian population is ready for more and better digital services. The survey found that 86% of Brazilians already feel adapted to online life and 95% have internet access from their cell phones.

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