How To Grow The Software Industry
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- Millicent Fitzgerald
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1 The Software Industry, Innovation and Developing Countries GLOBAL SURVEY OF IT/SOFTWARE ASSOCIATIONS June 2012 The UN Conference on Trade and Development (UNCTAD) and the World Information Technology and Services Alliance (WITSA) conducted a global survey of national IT/Software Associations to explore their role in supporting local software industry development. Software capability, in terms of software development and IT services associated with effective customization, support and use, is regarded as a growing indicator of economic development. The survey provides an analysis of this aspect of economic growth. The survey was comprised of four parts: Background information; Information about the member companies in the software and IT services industry, Information about the IT/software association, and Policy considerations. The results of this questionnaire will also feature prominently in the UNCTAD Information Economy Report (IER) The most recent edition of the IER is available for free download at: The survey includes data from the following 38 national ICT industry associations, representing more than 50 percent of the global software market: Argentina (CESSI) Armenia (UITE) Bangladesh (BCS) Bermuda (BTD) Brazil (Assespro) Bulgaria (Basscom) Canada (ITAC) Chinese Taipei (CISA) Colombia (Fedesoft) Costa Rica (Camtic) Dominican Republic (Dominican Association of Software) Ecuador (AESOFT) Egypt (EITESAL) Finland (The Federation of Finnish Technology Industries) Gambia (ITAG) Greece (SEPE) Haiti (AHTIC) India (NASSCOM) 1
2 Jordan Kosovo (STIKK) Malaysia (PIKOM) Mexico (Canieti) Morocco (APEBI) Nigeria (ITAN) Republic of Korea (FKII) Romania (ATIC) Russia (RUSSOFT) Singapore (SiTF) South Africa Thailand (ATCI) Trinidad (ICT Society of Trinidad and Tobago (ICTS)) Turkey Ukraine (IT Ukraine) United Kingdom (Intellect) Uruguay (CUTI) USA (TechAmerica) Venezuela (CAVEDATOS) Vietnam (Vinasa) In terms of survey results, the top three barriers to growth of the software industry are: #1 Limited access to venture capital; #2 lack of qualified human resources; and #3 lack of government procurement of software and IT services. General business climate, export markets, IP protection and software piracy ranked lowest in terms of obstacles to growth. The greatest growth potential was seen in the export markets (33%), in the vertical industries, such as banking, mining, health care, etc. (30%), and in the government/defense sector (22%). The smallest growth potential was seen in the domestic sectors (14%). We have also compiled a list of the most important policy changes needed to facilitate the growth and development of the software and IT services industry, as submitted by members. ICT infrastructure Provide access to affordable communications infrastructure, with acceptable broadband speeds. Modern regulatory framework for the telecommunications sector at large Build infrastructure across tier 2/3 cities in the country 2
3 Education and skills development Develop education programs at the tertiary level for Software and IT Services (2) Double the percentage of youth enrolled in scientific and technological careers. Develop human resources for the Software and IT Services Industry (2) Improve the quality of primary, secondary and tertiary education. Promote technical and college education to accelerate the availability of human resources. Support technological education and entrepreneurship Increase the level of computer science and ICT skills. In spite of economic uncertainty, the software and IT services industry is performing strongly and looking to recruit. However, many companies report difficulties in recruiting potential new employees with the requisite skills. There has been a decline in the number of students taking ICT lessons in school and a sharp fall in the number of students taking computing at A-level and at degree level over the past decade. This is a major issue for our sector and unless it is addressed, we may be disadvantaged in an increasingly competitive global economy. Solving this problem requires government and industry partnership and we are actively involved in a number of campaigns to try and address this. Invest in human capital and stimulate PPP for education Public procurement Enhance Government use of software and IT services and encourage e-government Increase government procurement opportunities for national companies Specify share of ICT (software and maintenance) in Government's public procurement projects Take multistakeholder approach to developing better procurement mechanisms Grow the use of local software by government Synergize focus on e-governance initiatives across the country Implement a true electronic government as an example for to the private sector Stimulate efficient development and implementation of e-government Increase access of local IT services companies to public tenders to increase experience Government vision and institutions Create a Ministry responsible for the National IT Policies and Strategies Make institutional reforms to improve government capabilities and public policy making. Time bound and clarity in implementation of different policies in the country Enhanced ICT use in private sector Create incentives for the private sector to invest in IT Promote integration of ICT in vertical sectors Subsidize ICT use in non IT industry sectors Promote the use of local software in SMEs. Encourage preference for use of local software in all sectors. 3
4 Better business climate in general Create a more favorable business climate for domestic entrepreneurs. Markets are often dominated by the large multinationals./ beneficial environment for business development/stimulate private sector in general Make taxation schemes more competitive/lower sales taxes Execute/More focus on Public Private Partnership Projects Clean up the legal environment Adopt structured policy support for growth of SMEs and start-ups Offer incentives for IT (including IT education) De-monopolize the economy Export promotion Export Development/ active assistance/increased support with access to export market Support SMEs in accessing international markets Implement a normal high tech export support policy Enhance access to capital Facilitate access to venture capital and other financial instruments/ Facilitate more venture capital Promote the interest of international investment funds Improve access to finance - One of the biggest barriers to growth for SMEs is having access to finance to grow. This is not an easy issue to solve and whilst the government has taken steps to address it, there is still work to be done (by both government and financial institutions) to get credit flowing and to accelerate the implementation of various schemes. Promote innovation and R&D Reach 1% of GDP in R&D Strengthen the institutional sector of STI, through legal framework update, redesign and policy Enhance protection and enforcement of intellectual property rights (3) Enhanced focus on R&D, IP development Prioritize innovation and ensure R&D incentives are globally competitive. Governments must raise the R&D tax credit for SMEs, protect the science and research budgets, and invest in catapult centers to help businesses commercialize R&D on new and emerging technologies. Globally competitive R&D incentives (for both SMEs and large companies) Software sector development Train and encourage companies to collaborate and find new niche opportunities Encourage innovation & commercialization via public policy Increase recognition of the IT industry as an innovator and provider of high-value solutions 4
5 Win-win growth of large, medium and small software firms by building a software ecosystem Favorable legislation and incentives for the software and IT services industry Offer more government support to the industry Ease taxation on the IT industry Increase trust of local clients in domestic IT industry capabilities Launch smaller sized projects that local companies can bid for Other areas Address issues of global protectionism through bilateral and multilateral forums If you have any questions or if you require more information, please contact Anders Halvorsen at ahalvorsen@witsa.org. 5
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