[Index]
International outsourcing reshapes the
world ICT industry, creating opportunities,
but also arousing fears
Geneva, 25 October 2004 - The
major force moving the world industry
of information and communication technology
(ICT) in the post-bubble era is the spread
of international outsourcing. For companies
in emerging market countries to benefit
from this and other market trends, governments
have a fundamental role to play. These
were the major conclusions of the Seminar
“Fostering Internet Enterprise Development
by Governments and by Large Companies
through Subcontracting”, which took
place in Brussels, Belgium, on 5 October
2004. It was organized by the United Nations
Economic Commission for Europe (UNECE)
and by its Team of Specialists on Internet
Enterprise Development (TSIED).
International outsourcing
of ICT services means that companies (generally
from developed market economy countries)
shift part of the process of production
of these services to other countries that
combine lower wages with well-qualified
human resources (engineers, programmers,
IT technicians, etc.). The countries that
supply these services may be located far
away from the home country of the outsourcing
company (off-shoring) or relatively close
(near-shoring).
The move towards international
outsourcing in the ICT services industry
is changing the geography of the world
ICT industry, similarly to what happened
in manufacturing decades ago. In ICT services,
this process dates from a few years, but
it is growing very quickly. Moreover,
surveys with ICT companies in North America
and Western Europe indicate that it will
accelerate in the near future. This raises
fears in industrialized countries that
they will lose a large number of high-skill
jobs without qualified job creation elsewhere
to compensate. Nevertheless, available
estimates of job losses in North America
and Western Europe due to international
outsourcing of ICT services (although
they vary considerably) indicate that
they seem to be small if compared to total
employment.
The by far largest vendor
of internationally outsourced ICT services
is India. However, recently other countries
have started entering the market, such
as China and Russia. Outsourcing companies
are at present diversifying their international
service supplier base, which creates opportunities
for new companies and countries to enter
the international ICT outsourcing the
market. In the UNECE region, this includes
particularly the countries of Eastern
Europe and the Commonwealth of Independent
States (CIS). However, succeeding in this
highly competitive and dynamic market
requires a well targeted strategy, building
international reputation and creating
business gradually by taking into account
the size and qualification of the domestic
labour pool.
Governments of emerging
market countries have a crucial role to
play not only in assisting their companies
benefit from existing and arising market
opportunities, but also more generally
in fostering domestic Internet enterprise
development. This includes setting the
general framework conditions, creating
a competitive environment (including in
the provision of ICT goods and services),
as well as adopting a well-targeted national
e-strategy. The latter comprises implementing
a well-designed e-government programme,
which acts as a catalyser for widespread
ICT uptake by business and the population
at large. In turn, reaching this goal
requires broadening the access of citizens
and companies to ICTs (and particularly
Internet) and to qualify them for the
use of the new technologies.
Countries in Eastern
Europe are striving to put in place these
conditions that foster Internet enterprise
development. Estonia is an exemplary case
of how a middle-income country can be
capable of adopting new technologies very
quickly and intensively through a combination
of well-designed policies for the ICT
sector, the early adoption of an effective
national e-strategy, providing multiple
incentives for businesses and citizens
to use new technologies, an efficient
e-government and the intensive provision
of ICT training to the population. The
country’s experience was presented
in the key-note address of the Seminar,
delivered by Ms. Signe Ratso, Deputy State
Secretary of the Ministry of Economic
Affairs and Communications of Estonia.
The Seminar was attended
by government officials, ICT company executives
and academics from western and eastern
Europe, North America and the CIS. They
debated actively with presenters the issues
raised by the growing trends in international
ICT outsourcing and by government action
involving new technologies.
In his concluding remarks,
Mr. George Kowalski, Director of the Industrial
Restructuring, Energy and Enterprise Development
of UNECE, stated: “Emerging countries
of Eastern Europe and the CIS have valuable
human resources that they can use in order
to tap opportunities of the growing international
ICT outsourcing market. This can generate
benefits for both these and developed
market economy countries. At the same
time, the governments of emerging market
countries have a fundamental role to play
in fostering national Internet enterprise
development. If requested, the UNECE can
assist them in this endeavour.”
“This Seminar highlighted
several potential areas of future work
for the TSIED. We can accomplish our goal
of transferring knowledge to where it's
needed –the countries of Eastern
Europe and the CIS– from where it
exists today –countries that have
succeeded in fostering Internet enterprise
development. To do so, we will rely on
the high level of international expertise
that is available today and on the lessons
learned from experienced economies”,
said Mr. Patrick Gannon, Chairman of the
TSIED and President and CEO of OASIS (Organization
for the Advancement of Structured Information
Standards).
For further information
on the Seminar event, please consult the
web page of the TSIED (www.unece.org/ie/wp8/tsied.htm),
or contact Mr. Rolf Traeger at [email protected]
or at telephone number +41 (0) 22 917
5771.
Ref. ECE/IREEDD/04/P08