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Torbjrn Fredriksson Chief, ICT Analysis Section, UNCTAD-DTL International Center for Promotion of Enterprises Ljubljana, Slovenia 6 December 2012 INFORMATION ECONOMY REPORT 2012 The Software Industry and Developing Countries INFORMATION ECONOMY REPORT 2012 The Software Industry and Developing Countries Slide 2 Software is Everywhere The growing emphasis on ICTs in the delivery of government, healthcare, education and other goods and services demands customized applications. Countries therefore need the capacity to adopt, adapt and develop relevant software. BAN Ki-moon, UN Secretary-General Slide 3 Software Sector Opportunities Low capital barriers to entry Generator of employment not least for the skilled youth oSome 10 million people work in computer software and services Source of innovation oSoftware top recipient of venture capital in the US Source of export revenue oTop exporters from the South: India, China, Philippines, Singapore Key to sustain productive ICT use in society oSoftware increasingly important for the functionality of both goods and services Slide 4 India tops software exports from the South Followed by China, Philippines and Singapore Top 20 exporters of computer and information services, 2010 or latest year Slide 5 Computer and information services exports as a percentage of GDP, top 10 countries, 2010 Austria 0.5% Bulgaria 0.8% Italy 0.1% Romania 0.5% Slovenia 0.3% Slide 6 Developing Countries Spend Little on Software Source: WITSA/IHS Global Insight Inc. Share of software and services in ICT spending Austria 31% Bulgaria 7% Hungary 17% Italy 32% Romania 7% Slovenia 19% Slide 7 Market Orientation Differs Slovenia Slide 8 The Case of China Domestic focus Rapid growth in production: ofrom $5bn to $295bn in 12 years Embedded SW important ICT use drives local demand oIndigenous web platforms Exports also rising oJapan key destination Supported by policies Source: Gregory et al., 2009 and MIIT Slide 9 Local Demand for Software is Expanding Mobile applications Mobile revolution: affecting virtually all countries More use of mobile phones more demand for mobile apps 2011: first time more smartphones than PCs were shipped Global mobile app industry expected to be worth $38 billion by 2014 Mobile apps development adapted to local needs, cultures and languages also rising in developing countries Diverse content: from news and entertainment to patient care and government services apps Source: Various market estimates, AT Kearney, World Bank. Slide 10 Mobile Apps: The Case of Sri Lanka RankName of appDescription 1 SETT Sinhala/Tamil web browser The only Sinhala/Tamil-enabled web browser for Android 2 SETT Hindi web browser Renders Hindi Unicode within the app 3 Tamil SMSAllows users to send SMS in Tamil 4 Sinhala Tamil-English dictionary First such dictionary on Android Market 5 Sinhala Dictionary offline Sinhala-English-Sinhala dictionary for Android 2.1 and above 6 Sri Lanka Radio Live Free radio with more than 10 live stations 7 Helakuru Sinhala Keyboard First phonetic Sinhala keyboard for mobiles 8 Sri Lanka Train Schedule Train schedules, traffic information, prices 9 Bhasha PuvathTrilingual news reader 10 LankadeepaBreaking news on Android mobiles Most popular locally developed apps in the Android App Market in Sri Lanka, March 2012 The developer of the No 1 app, Mr Dhanika Perera, is a 25 year old university student from a rural village in southern Sri Lanka. Since January 2011, he has developed another six apps for the Android market. Slide 11 Growing Demand for Software Social media, online work and cloud computing Broadband Broadband enables new forms of software development social media Use of social media creates demand for new applications oEnd 2011: 481 million Facebook users; ~75% outside of North America oMobile version widely used in developing countries Online software freelancing Online software freelancing rising fast oElance: programmers from 150 (!) countries involved oBangladesh: some 10,000 freelance programmers Cloud computing Cloud computing and Software as a Service (SaaS) oBrazil and China among fastest adopters of cloud computing oTrend also visible in Africa and other parts of the world Source: UNCTAD, Facebook, Elance.com, Capgemini, Forrester, media reports. Slide 12 Free and Open Source Software Gaining Market Shares in Many Segments Source: UNCTAD, Center for Strategic and International Studies, NetCraft, StatCounter. Top five Internet browsers, share of all users, 2008-2012 FOSS growth areas Servers (Linux) Mobile operating systems (Android) Internet name system (BIND) Web servers (Apache) Web browsers (Firefox, Chrome) Big data (Linux) Mobile apps But not desktop operating systems Internet Explorer Firefox Chrome Slide 13 FOSS Offers Several Advantages to Users Promotion of local learning Lower costs and more local value creation Less dependence on proprietary software National security considerations Opportunities for local business development Policies are becoming more friendly to FOSS o Europe leading the way o Among developing regions, Asia is the front-runner Source: UNCTAD, Center for Strategic and International Studies, NetCraft, StatCounter. Slide 14 Software Strategies Spreading Software strategies put in place in many countries, e.g., oArgentina, Bangladesh, Brazil, China, India, Kenya, Malaysia, Mauritius, Nigeria, Singapore, South Africa, Sri Lanka Should be integrated in broader ICT development plans Need to be adapted to each situation Should involve dialogue with private sector, university and developer community oMASIT Macedonia oBASSCOM Bulgaria oATIC Romania Slide 15 A National Software System Slide 16 Barriers to Software Growth According to national IT/software associations Share (%) of respondents mentioning factor Source: UNCTAD and WITSA Slide 17 Areas for Policy Intervention Affordable ICT infrastructure especially broadband Enhance availability of skilled workforce oWith contribution by private sector Public procurement as strategic tool to create local demand Foster local software industry capabilities oBusiness environment oEncourage relevant quality certification oAccess to finance Strengthening legal framework oIPRs, e-payment, e-transactions Slide 18 A Role for International Partners Capacity-building Training Application development Strengthen legal and regulatory frameworks Create demand by using software expertise in developing countries when developing software applications for their development projects Slide 19 Conclusion Importance of software capabilities rising Greater opportunities for engaging in software projects and seizing them requires active involvement by Governments and their partners Strategies should seek to balance exports and domestic sales and leverage partnerships with other stakeholders Goal: to move from passive adopters of foreign technology to developers of relevant local applications Companies in every industry need to assume that a software revolution is coming. Marc Andreessen, Wall Street Journal, 20 August 2011 Slide 20 INFORMATION ECONOMY REPORT 2012 can be downloaded free of charge at www.unctad.org/ier2012