Boomerang: incubators? Start-ups? Sounds suspiciously 1999, but Recife's digital port is for real.

On the second floor of a former warehouse on Rua Bione in downtown Recife, Jeferson Valadares hammers his computer keyboard and rattles his joystick as he plays Futsim, an online soccer fantasy-management game.

Valadares, 27, is not just an employee whiling away the hours playing games on company time but the latest young entrepreneur coming out of Recife's Porto Digital, a center for the development of information technology. Jynx Playware, the start-up software company he co-founded three years ago, is now closing a deal to sell Futsim in Europe. Cesar, another company in the complex, recently outbid 29 software developers from around the world to have its cellular phone game marketed by several Asian mobile phone companies, including SingTel Mobile from Singapore.

Since opening its doors in April 2001, Porto Digital has attracted 66 companies with more than 1,100 employees, including big names such as U.S. database software company Oracle. Most of the warehouses that it occupies were until recently abandoned. Today, they are packed with 26 kilometers of fiber-optic cables and buzzing with entrepreneurial spirit. A 10-megabit wireless Internet connection allows employees in several of the buildings to roam freely without going off-line.

"They have excellent infrastructure and with so many companies raider one roof it's easy to exchange ideas and explore business opportunities," says Paulo Viera with Modular Mining Systems, a software company from Tucson, Arizona, which furnishes operating systems to Companhia Vale do Rio Doce (CVRD), the world's largest iron-ore producer. The company's locally hired programmers are now developing software to operate CVRD's railway system.

Compared to other high tech centers, Recife's operating costs, particularly rent and labor, are far lower. A junior software programmer earns between US$340 and $680 per month. That is roughly 30% less than in Silo Paulo. Some of the country's finest beaches are within a stone's throw and there is far less traffic than in most large cities, an enviable quality of life. Yet Porto Digital has not only been successful in providing a home for thrifty companies but in encouraging new businesses with in-house incubators, venture capital firms and research centers.

The expansion of the port is beginning to change the face of downtown Recife and revive the local economy. With the help of funds from the state government, many buildings have been restored, resulting in nearly 20,000 square meters of new office space. Yet Recife is not your typical high-tech park offering infrastructure or tax breaks to bring in investors. Its main attraction for companies is the large pool of qualified students and the business-oriented research at the University of Pernambuco in Recife.

"We were extremely impressed with the creativity and technical preparedness of the personnel in Recife," says Antonio Luiz Flaquer, administrative manager with Waterloo Hydrogeologic, a Canadian company that specializes in water management software.

Industrial strength. The company recently chose Porto Digital as its global software development center over China and India. The company is targeting irrigation projects in the Scribe, the semi-arid savannahs in Brazil's northeast. Within two years Waterloo plans to transfer as much as ball of its production team to Recife. "Porto Digital was good news for our strategy," says Flaquer.

Just as Waterloo is developing water management projects, Porto Digital promotes software applications to several industry clusters in the state, from textiles and fashion to the wine and dais" industries. It is backed by a $10 million cash injection from the Inter-American Development Bank, which called the project a "model of public-private partnership."

The next big challenge is to go international and bring in some hard currency. That, "involves getting international quality recognition," says Pier Carlo Sola, the port's president and a former executive with Telecom Italia.

Sola says he is going out of his way to help more companies in the port get international certifications on software and management systems. "These will be the basis for us to attack the international market" says Sola. First Brazil, then the world.

RAYMOND COLITT * RECIFE, BRAZIL