INFORMATION ECONOMY REPORT 2012 The Software Industry and

INFORMATION ECONOMY REPORT 2012 The Software Industry and Developing Countries Torbjörn Fredriksson Chief, ICT Analysis Section, UNCTAD-DTL International Center for Promotion of Enterprises Ljubljana, Slovenia 6 December 2012

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

Software Sector Opportunities q Low capital barriers to entry q Generator of employment – not least for the skilled youth o Some 10 million people work in computer software and services q Source of innovation o Software top recipient of venture capital in the US q Source of export revenue o Top exporters from the South: India, China, Philippines, Singapore q Key to sustain productive ICT use in society o Software increasingly important for the functionality of both goods and services

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

Computer and information services exports as a percentage of GDP, top 10 countries, 2010 Austria Bulgaria Italy Romania Slovenia 0. 5% 0. 8% 0. 1% 0. 5% 0. 3%

Developing Countries Spend Little on Software Share of software and services in ICT spending Austria Bulgaria Hungary Italy Romania Slovenia Source: WITSA/IHS Global Insight Inc. 31% 7% 17% 32% 7% 19%

Market Orientation Differs Slovenia

The Case of China q Domestic focus q Rapid growth in production: o from $5 bn to $295 bn in 12 years q Embedded SW important q ICT use drives local demand o Indigenous web platforms q Exports also rising o Japan key destination q Supported by policies Source: Gregory et al. , 2009 and MIIT

Local Demand for Software is Expanding Mobile applications q Mobile revolution: affecting virtually all countries q More use of mobile phones – more demand for mobile “apps” q 2011: first time more smartphones than PCs were shipped q Global mobile app industry expected to be worth $38 billion by 2014 q Mobile apps development adapted to local needs, cultures and languages also rising in developing countries q Diverse content: from news and entertainment to patient care and government services apps Source: Various market estimates, AT Kearney, World Bank.

Mobile Apps: The Case of Sri Lanka Most popular locally developed apps in the Android App Market in Sri Lanka, March 2012 Rank Name of app 1 2 3 4 5 6 SETT Sinhala/Tamil web browser SETT Hindi web browser Tamil SMS Sinhala Tamil-English dictionary Sinhala Dictionary offline Sri Lanka Radio Live Helakuru Sinhala 7 Keyboard Sri Lanka Train 8 Schedule 9 Bhasha Puvath 10 Lankadeepa Description The only Sinhala/Tamil-enabled web browser for Android Renders Hindi Unicode within the app Allows users to send SMS in Tamil First such dictionary on Android Market Sinhala-English-Sinhala dictionary for Android 2. 1 and above Free radio with more than 10 live stations First phonetic Sinhala keyboard for mobiles Train schedules, traffic information, prices Trilingual news reader Breaking news on Android mobiles 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.

Growing Demand for Software Social media, online work and cloud computing q Broadband enables new forms of software development q Use of social media creates demand for new applications o End 2011: 481 million Facebook users; ~75% outside of North America o Mobile version widely used in developing countries q Online software freelancing rising fast o Elance: programmers from 150 (!) countries involved o Bangladesh: some 10, 000 freelance programmers q Cloud computing and Software as a Service (Saa. S) o Brazil and China among fastest adopters of cloud computing o Trend also visible in Africa and other parts of the world Source: UNCTAD, Facebook, Elance. com, Capgemini, Forrester, media reports.

Free and Open Source Software Gaining Market Shares in Many Segments Top five Internet browsers, share of all users, 2008 -2012 Internet Explorer Firefox Chrome 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 Source: UNCTAD, Center for Strategic and International Studies, Net. Craft, Stat. Counter.

FOSS Offers Several Advantages to Users q Promotion of local learning q Lower costs and more local value creation q Less dependence on proprietary software q National security considerations q Opportunities for local business development q 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, Net. Craft, Stat. Counter.

Software Strategies Spreading q Software strategies put in place in many countries, e. g. , o Argentina, Bangladesh, Brazil, China, India, Kenya, Malaysia, Mauritius, Nigeria, Singapore, South Africa, Sri Lanka q Should be integrated in broader ICT development plans q Need to be adapted to each situation q Should involve dialogue with private sector, university and developer community o MASIT – Macedonia o BASSCOM – Bulgaria o ATIC – Romania

A National Software System

Barriers to Software Growth According to national IT/software associations Share (%) of respondents mentioning factor Source: UNCTAD and WITSA

Areas for Policy Intervention q Affordable ICT infrastructure – especially broadband q Enhance availability of skilled workforce o With contribution by private sector q Public procurement as strategic tool to create local demand q Foster local software industry capabilities o Business environment o Encourage relevant quality certification o Access to finance q Strengthening legal framework o IPRs, e-payment, e-transactions

A Role for International Partners q Capacity-building q Training q Application development q Strengthen legal and regulatory frameworks q Create demand by using software expertise in developing countries when developing software applications for their development projects

Conclusion q Importance of software capabilities rising q Greater opportunities for engaging in software projects… q …and seizing them requires active involvement by Governments and their partners q Strategies should seek to balance exports and domestic sales… q … and leverage partnerships with other stakeholders q 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

INFORMATION ECONOMY REPORT 2012 can be downloaded free of charge at www. unctad. org/ier 2012