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On the occasion of the 25th Anniversary of ASOCIO, I am proud to present the report “Asia-
Oceania Vision 2020 - Enabling IT leadership through collaboration”. KPMG has prepared this
report working closely with IT Associations of the 20 ASOCIO member economies.
Since its humble beginning in 1982, ASOCIO has grown to become an important regional IT
Association. Over 25 years, ASOCIO has brought IT Associations of 20 economies together to
discuss and act upon issues of importance. These, among many others, include creating
opportunities to increase the IT trade across the region through bilateral and multilateral
collaborations, working with regional governments, helping the IT associations of countries
with nascent or developing industries, and preparing position papers on important regional
issues.
The 21st Century is slated to be ‘Asia’s Century‘. The region is expected to become one of the
single largest economic regions of the world, with a growing population as well as progressive
economies.
This report looks at this IT Transformation over the next decade to chart out the vision for year
2020. It outlines the challenges faced by the region which present IT opportunities in the
region as well as globally. Above all, it outlines the urgent necessity of collaboration across the
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
region in all the areas of eco-system of IT, including industry, academia and governments.
Most importantly, it outlines an action agenda for ASOCIO to realize this vision. Moving
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forward, this is indeed an exciting opprtunity for ASOCIO to make a difference to the IT
environment in the region. In short, it opens up new avenues for ASOCIO in its journey for the
next 25 years.
I take this opportunity to thank KPMG for preparing this report. My gratitude also goes out to
all ASOCIO member associations and others who provided their invaluable inputs to the report.
Ashank Desai
President
ASOCIO
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Foreword
The world today is more focused on Asia-Oceania than never before, as it is capable of
sustaining high economic growth rates. The region is built on strong fundamentals, and has the
potential to hold a global leadership position in the coming years. Growth rates in the Asia-
Oceania region as a whole are expected to be higher than in any other region in the next
decade. This 'foresight' is attracting a lot of interest in the region.
Leaders of economies in Asia-Oceania are trying their best to make the most of the current
overdrive. Unfazed by the global financial crisis, Asian economies are making aggressive
economic as well as social development plans. Even developed economies in the region, such
as Australia, have demonstrated resilience and have marched through the recession with
strong performing financial markets. The big four Australian banks are now in the list of top
twenty banks globally despite the financial crisis.
The multiplier effect of a developed information, communications and technology (ICT) industry
is not unknown. History has shown that technology has the potential to change society.
Therefore leaders of Asian economies accord particular attention to this industry and have
added ICT development as a priority area in their agenda.
Our report looks at the current growth and future prospects for the IT industry in this region
over the years. The current trends influencing the industry have been examined and the growth
potential of the Asia-Oceania economies, up to the year 2020 has been estimated. Asia-
Oceania’s dominance seems evitable and the year 2020 is expected to be a turning point for
the region. Asia-Oceania is also expected to become the largest supplier of Information
Technology (IT) and Business Process Outsourcing (BPO) services to the world, with about
74.5 percent of global demand expected to be sourced from here by 20202.
The focus of this publication is also on Collaboration through Diversity. The Asia-Oceania
canvas is painted with different strokes of development. The region witnesses remarkable
diversity ranging from cultural and linguistic dissimilarities to varying levels of economic growth
and development. Economies, such as Australia, Japan and Singapore are building an
ecosystem that is conducive for innovation, while others such as Laos, Nepal and Myanmar are
still trying to develop their economies for globalization. This diversity results in distinct
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capabilities and challenges for each country, and therefore presents a unique opportunity for
mutual collaboration and co-operation. firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Collaboration, especially within the ICT industry, can create opportunities for all economies in
the region. Collectively, the region can achieve growth rates that could transcend what
countries can hope to reach growing in isolation.
As Asia-Oceania moves into the second decade of the 21st century, the next 10 years would be
extremely important for the region to establish its leading position in the world economy. The
catch phrase 'For the first time, we have a nation for a continent, and a continent for a nation '
by the first Prime Minister of Australia Sir Edmund Barton in the 19th century, is likely to hold
true for the entire Asia-Oceania region in this century.
Kumar Parakala
Global Head of Sourcing Advisory
COO, Advisory, KPMG in India
Chairman, Australian Computer Society (ACS)
1. Asia-Oceania has been defined as South Asia, Asia Pacific, and the Australian continent
2. KPMG Analysis based on aggregation of projections outlined in individual country profiles
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Asia-Oceania is poised to see a dramatic rise in domestic consumption, as nearly 90 percent of Asia-
Oceania's people are expected to live in countries that have achieved middle-income status by 2020.
The region is already moving towards greater integration. Going forward, it is expected to play a larger
role and participation in the global politico-economic debate, the size of the region, the growth of its
middle income population and a sizeable increase in the region's trade and investment profile being
contributing factors.
Share in FDI stock: 11.4 percent in 2006 Share in FDI stock: 20 percent
vital. Many countries are planning to take advantage of the demonstrated benefits of ICT-led growth –
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such as low investment requirements, lower gestation, increase in jobs, export opportunities, and stricter
environmental standards, among many other factors. Poorer countries that pursue ICT-led growth may
have the added benefit of getting a much easier entry into mainstream globalization due to its many
benefits.
As the region recognizes the multifold benefits of ICT adoption, not only to the economy but also to
social development, ICT penetration is likely to increase, making the region a significant consumer of ICT.
Therefore the region’s role both as a consumer of ICT as well as a supplier of ICT is expected to grow.
There may be some constraints to this projected growth as the region faces several challenges –climate
change, an ageing population, poverty, political instability and industry-specific challenges such as piracy
and shortage of talent.
3. ADB, http://www.intracen.org/btp/regional_meetings/india/delhi_summary.pdf
These challenges can hinder the current growth initiatives of countries that are exploring the new
opportunities that ICT-led growth may bring. Global opportunities such as e-governance, mobile
commerce or telecom assume much larger proportions in Asia-Oceania because of the relative under-
penetration and large population of the region.
The trends and prospects for the region today, set the tone for future expectations for ICT industry
growth by 2020. A collective vision for the IT-BPO services industry in the region has been
developed in the report to illustrate the potential for growth in the coming decade. The hardware
and communications segments under 'ICT' have not been included in the projections for 2020 in
this report.
Australia Bangladesh
Japan Indonesia
Singapore Pakistan
Thailand
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Vietnam
Collaboration could be along four key elements – Investment, Trade, People Mobility and Knowledge
Sharing and Creation. The most obvious form of collaboration, where benefits are tangible, includes
those opportunities that lie in the trade and investment category. Collaboration for trade is likely to lead to
a larger regional marketplace, while at the highest level collaboration for innovation might have much a
wider effect, impacting individual countries, the region as a whole and perhaps even the world
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Collaboration within the region could result in several wide-ranging benefits such as a larger regional
market, workforce rationalization, and a narrowing digital divide among countries. It can allow developing
countries, and more specifically poorer countries, to gain from the experiences of more developed
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countries within the region and tap opportunities for sustainable development. Effective collaboration is
likely to create a win-win situation, with each individual member economy able to gain advantages,
whether by addressing a shortage of human resources, or accessing know-how to tap export markets, or
even through strategies to reduce piracy and Intellectual Property Rights (IPR) infringements.
Under the umbrella of ASOCIO, member economies have the opportunity to collaborate for growth and
may therefore be better equipped to achieve ‘Vision 2020’.
Global Challenges 21
Regional Challenges 26
Opportunities 36
Global Opportunities 37
Regional Opportunities 42
Country Profiles 50
Methodology 197
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Appendix 198
Abbreviations 221
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The ‘Asian Century’ is a term used Asia-Oceania’s ascent in the global economic and political landscape began with the rise of Japan in the
to describe the belief that the 21st second half of the twentieth century. It continues today, with economies like Taiwan and Korea,
century will be dominated by Asian Singapore and Hong Kong, and more recently India and China demonstrating high economic growth
economies, culture, and politics. rates.
This is similar to how the 20th
century is sometimes referred to as More importantly, the world at the current juncture relies heavily on the developmental dynamism of
the ‘American Century’. Asia-Oceania given the remarkable growth that the region is witnessing. The consensus of opinion
Source:
among the World Economic Forum (WEF), International Monetary Fund (IMF) and United Nations
http://www.cbe.berkeley.edu/research/pdf_fil Conference on Trade and Development (UNCTAD) also indicates that Asia is better positioned to recover
es/CBisel2007_AsianCentury.pdf
more rapidly from the economic downturn. China and India are expected to lead the growth trajectory
with growth rates in the range of 4.5-6.5 percent.1
Large domestic consumption and a rising role in international trade and finance have led to a faster
recovery. The other key driver of Asia-Oceania’s quick rebound has been its rapid and comprehensive
policy response to the economic crisis.
2
Dominance in world GDP: Asia has become a key part of the global economy, consisting of three of
?
the ten largest economies (China, Japan, and India) and accounting for more than 35.7 percent of the
world’s GDP (in purchasing power parity (PPP) terms) in 2005 compared to 19 percent in 19803. Major
economies in the region, especially India and China, are expected to continue their economic
advancement, helping Asia increase its contribution to the world economy to an estimated 43.2
percent in 20204.
The region has led world economic growth in the last 10 years: Post the 1997-98 Asian financial
?
crisis, the region has contributed about 50 percent of global growth5. Even during the current
economic slowdown, the region is expected to post faster recovery than that of Europe and the
United States. Mature economies such as Australia too have remained relatively resilient to the crisis
worldwide6
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Asia’s Share in World GDP
Units in percent (%)
20.8 20.3 19
19 US
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21
20.2 19.1
19.1 EU
8.6 8.9 8.6
8.6 Middle East, Africa & Russia
13.9 11 10.1 Latin America & Others
10.1
1. Business Council of British Columbia Outlook 2020 project 4. EIU Foresight 2020 Report
2. The term Asia here includes some countries in addition to Asia-Oceania 5. Asia-Oceania has been defined as South Asia, Asia Pacific, and the
countries, but excludes Middle-East and Central Asian countries Australian continent
3. http://www.imf.org/external/pubs/ft/fandd/2006/06/picture.htm, 6. http://www.nytimes.com/2009/12/02/business/global/02iht-ozecon.html
http://www.koreatimes.co.kr/www/news/opinon/2009/10/198_9874.html
12
Expanding regional income and consumption: Asia is estimated to grow at a rapid pace, with an
?
annual average real GDP growth of 4.9 percent in 2006-20 compared to 2.9 percent for the US and
2.1 percent for the EU. This can also narrow the gap in wealth between Asia and the West, as the
average per capita income is expected to rise from around USD 4,775 in 2005 to about USD 8,476 (in
PPP terms) in 2020.7 Moreover, nearly 90 percent of Asia’s people are expected to live in countries
that have achieved middle-income status leading to domestic consumption.8 Asian economies are
expected to witness a high increase in their private domestic consumption, with China and India
reaching 8.3 percent and 6.3 percent by 2020, respectively9
GDP Per Capita Growth GDP Per Capita Growth in Developing Countries in Asia
2006-2020 (annual average, %) 2006-2020 (annual average, %)
China 6.0
Asia 4.9 India 5.9
Indonesia 5.2
EU25 2.1
Malaysia 5.0
World 3.5
Philippines 4.9
Vietnam 5.4
Advancing share in world trade and investment: By 2020, Asia has the potential to account for one
?
third of world trade. Asia’s share in global exports is projected to rise from 14 percent in 1980 to 35
percent in 2020.10 There is a similar outlook for Asia’s share of global outward foreign direct investment
(FDI) stock. From 5.9 percent in 1980 to 11.4 percent in 2006, the share is expected to grow to 20
percent in 2020, signifying that Asia could become a major source of FDI for the rest of the world.11
Asia
Asia
Asia 35%
14% 27%
7. EIU Foresight 2020 Report, KPMG Analysis 10. ADB Strategy 2020 Report
8. ADB Strategy 2020, April 2008 11. Monetary Authority of Singapore
9. Deutsche Bank Research, http://www.business24-
7.ae/Articles/2009/8/Pages/23082009/08242009_37d9255e96a24cbf96e518
d5acca8932.aspx
13
Demographic dividend: Asia has more than half the world’s population, of which nearly 59 percent
?
are between the age group of 15-64 years. Between 2005 and 2020, India and China are expected to
add about 120 million and 65 million respectively to their working age population (15 -64 years). By
comparison, in the same period, the US is expected to add about 20 million while the working age
population of Europe might decline by 26 million.12
2005 2020
Emerging regionalism: The rise of Asia has also resulted in new ways of working together, within the
?
region. There are renewed efforts to deepen and expand regional and sub-regional economic
integration. This is reflected in the emergence of new regional groups, such as the 10 member
countries of the Association of South East Asian Nations (ASEAN), which has joined hands with five
large Asian nations, namely India, China, Japan, Australia and South Korea, to make a Regional Trade
Agreement (RTA). Apart from these regional economic cooperation initiatives, Asian countries are
actively engaged in making Free Trade Agreements (FTA) amongst themselves such as Japan-China-
Korea FTA; India-China FTA; India-Korea FTA; and India-Japan FTA. There have also been multilateral
arrangements such as ASEAN and South Asian Association for Regional Co-operation (SAARC), and
enhanced efforts to integrate in the direction of the formation of an Asian Economic Community by
2020.13
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shown European Union
Canada
ASEAN = Association of Southeast Asian (27 member
Nations United Sates
countries)
ASEM = Asia-Europe Meeting; Mexico
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Mongolia India
Notes : ASEM includes also the Pakistan PIF Nauru Cook Is.
European Commission as a
Palau Tuvalu Fiji Is.
member. CAREC SAARC
FSM Niue Vanuatu
For CAREC, the PRC’s
Kazakhstan Kyrgyz Republic Afghanistan Maldives Nepal
membership is focused on the
Tajikistan Marshall Is. Tonga Solomon Is.
Xinjiang Uygur Autonomous Uzbekistan Sri Lanka Bhutan
Region. Kiribati Samoa
Azerbaijan Bangladesh
Source : Asian Development Bank.
Gaining political significance: In terms of the global policy framework, Asia has gained significant
?
importance over the years. The role and participation of Asian players is increasingly being discussed
across various major international institutions that are involved in international policy dialogue on
macroeconomic and financial affairs. An important example is the Group of 8 (G8)14 summit in
Heiligendamm in 2007, which committed to embarking on a high-level dialogue with emerging
economies, including China and India.15 This dialogue focuses on global issues that are likely to be of
prime importance in the future, including cross-border investment, research, innovation and
intellectual property rights, climate change, energy efficiency, and development, particularly of Africa.
Hence, in almost every sense, Asia now plays a more important role in the overall global arena both
economically and politically and is emerging as the world's center of economic activity in the 21st century.
Low penetration and rapid economic growth to fuel domestic demand for ICT both
?
from individuals and businesses
Recognizing the role of ICT in social development and bridging digital divide, many
?
Expanding
Expanding
Role as a developed and developing economies are planning to use ICT for poverty and illiteracy reduction
regional use
regional use
Consumer strategies
of ICT
ICT is expected to serve as a powerful tool for small or developing countries to successfully face the on
?
going process of globalization by participating in the global marketplace through e-business, export of
software and IT-BPO
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ICT-producing sector (Hardware & IT-BPO) itself expected to witness strong growth given Asia’s
?
Role as a Asia’s
Expanding capabilities to service both commoditized and high end services
emergence
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14. G8 or Group of Eight refers to an international forum for eight industrialized nations, including Canada, France, Germany, Italy, Japan, Russia, UK and USA. In
addition, the European Union is included in the G8, but cannot host or chair the forum.
15. http://www.biac.org/comms/newsletter/BIACNewsJune2007.pdf
15
ICT and Production efficiency Enterprises are likely to be willing to use ICT for business processes in order to increase income
?
At the business level, the link generation and increase labor productivity. ICT can also help to reduce the cost of transaction and
between ICT use and labor increase market access
productivity is well researched. For
example, in a developed country At the same time, the increasing use of technologies such as mobile telephony and internet by
?
like Finland a 10 percent higher individuals is likely to continue to have an impact, especially in developing countries within Asia. The
share of employees using creation of many forms of services like e-banking, e-commerce and e-governance, which increasingly
computers was found to generate rely on ICT, are anticipated to gain greater traction in Asia.
between 1.8 and 2.8 percent higher
labor productivity in the ICT for social development:
manufacturing and services areas, The increasing diffusion of ICT in Asia-Oceania is also expected to contribute to bridging the large digital
?
respectively. While in a developing gap that currently exists within the region. ICT penetration is currently low and subsequently
country like Thailand, a 10 percent represents the low level of knowledge and use of various ICT tools to eradicate poverty, illiteracy and
increase in the share of employees inequality. Decision makers in poorer countries are considering the utilization of ICT in their
using computers was associated development agenda, given the potential and the applicability of ICT tools in the development process.
with 3.5 percent higher labor
productivity.
Asia Share in Global IT-BPO Consumption
Source:
UN Information Economy Report 2007-08
2020 26.3%
2008 19.9%
Asia Others
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Small or developing economies in Asia-Oceania can take full advantage of the potential of ICT to
?
advance their economic and social development. ICT can serve as a powerful tool to successfully face
the on-going process of globalization. As an enabler of globalization, ICT is expected to play a critical
role in the fragmentation of the global value-added chain and in shifting parts of production to low-cost
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destinations in Asia. ICT provides opportunities that many developing countries can leverage, in order to
participate in the global marketplace through e-business and the export of software and ICT-enabled
services.
There is increasing recognition that knowledge-based economic activities are likely to be the key for
?
international competitiveness and productivity growth. Comparatively, as the principal driver of
economic growth industrialization, particularly manufacturing is known to have longer gestation. At the
broader level, there is heightened consensus among policy makers that the ICT industry, and especially
services, can propel more employment and investment-driven gains for knowledge-based economies.
Especially in Asia, small and developing economies are expected to move towards a knowledge-based
economy leading to a rise in ICT trade, consumption and investments. On the other hand, mature
economies such as Australia are expected to play a key role in supporting the growth of the services
sectors in Asia-Oceania region, due to the maturity and cultural alignment.
16
Knowledge-based
Knowledge-based economies
can propel more employment,
Manufacturing
trade and investment driven
gains, thereby facilitating fast
globalization
Agriculture and
Natural Resources
Employment
Asia-Oceania has proven capabilities to produce and supply commoditized ICT products and services.
?
Increasingly, the region’s ability to innovate and produce high-end ICT products and services is
growing. This is likely to be a key decision driver for corporates worldwide considering shifting their
supply base to the region
In addition, the increasing use and penetration of ICT within Asia-Oceania is expected to go hand in
?
hand with the rise of investments in ICT. ICT as a production sector in the region is expected to
benefit from rising ICT investments. Economies in Asia-Oceania are believed to service the majority
of the ICT demand emanating out of Asia, underscoring the region’s dominance as both producers
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The export of ICT products and services to the West has been rapidly increasing during the last two
?
decades. The rise of ICT began with Japan, South Korea and Taiwan's significant contribution to the
global supply of ICT products and components. Recently, countries like Hong Kong, China and
Singapore have made significant contribution to ICT trade and manufacturing. Subsequently Malaysia,
the Philippines and Thailand have developed manufacturing and packaging capabilities. While China is
emerging as a production hub for ICT products, countries like India, Philippines, Malaysia are actively
contributing towards exports of IT-BPO services
Asia is expected to play an important role in the growth of international sourcing given its proven
?
capabilities. While international sourcing in ICT manufacturing has been a more common feature, the
outsourcing of services experienced rapid growth over the last few years and prompted many
developing countries in Asia-Oceania to try and develop a competitive advantage in this field. This
17
trend is likely to continue and even accelerate in the next decade, as there has been a clear tendency to
migrate services from high-cost to low-cost destinations in Asia-Oceania.
2000s
ICT Manufacturing
VALUE ADDITION
The relationship between the ICT industry and economic growth is not likely to be one-sided. Just as
economic growth is expected to contribute to the rise of the ICT industry, in turn higher adoption and use
of ICT is likely to contribute to the economic value added. This will be through an increase in productivity in
industries using ICT, as well as directly through the ICT industry.
Thus, the role of Asia-Oceania both as a producer and consumer of IT is expected to undergo a significant
shift, as the region stands at new frontiers. The region’s industrialized status is rapidly moving toward an
information-based and knowledge-intensive economy status.
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The rapid economic growth in Asia-Oceania is expected to fuel the pace of growth in ICT in several
countries. However, there are several global, regional and industry-specific challenges that may inhibit the
growth of the industry in this region.
Global challenges: Climate change and a rapidly ageing population are global challenges which are also
likely to impact the Asia-Oceania region
Regional challenges: Some of the major challenges that have particular significance to the region include
poverty and inequality, political instability and internal insecurity, and infrastructure deficit
Industry challenges: There are also industry-specific challenges in terms of people, process and policies
that impact the Asia-Oceania ICT industry.
The impact of these challenges as well as the strategies to overcome them have historically differed
based on each country’s resource availability, political will and commitment, and maturity of the society in
general. However, these challenges, if not addressed effectively, have the potential to constrain growth.
A case for an integrated approach to address the global and regional challenges
High economic growth in the region and a focus on moving towards the ‘knowledge economy’ is likely to
drive ICT penetration and adoption within Asia-Oceania in the next decade. Issues such as poverty,
instability or lack of infrastructure could constrain ICT growth in the region. The inter-dependencies
reinforce the need for comprehensively addressing macro-economic issues to remove roadblocks to ICT
growth in the next decade.
On the other hand, ICT-led growth has itself been propounded as a powerful tool to combat and alleviate
some of the macro-challenges. Investment in ICT has the potential to create a self-reinforcing spiral
conducive for broad-based growth for the country.
Diversion in
? Improved
?
investment priorities communication
Employment creation
? Diversion in
?
Lack of trained
? Employment creation
?
Capacity building
? investment priorities
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workforce ICT Growth in Tracking of anti-social
?
Innovative
? Slower ICT progress
?
Low ICT penetration
? Asia-Oceania activities
technologies in the affected areas
and adoption
Improved access
? Lower attractiveness
?
as offshore location
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Pressure on reducing
? Shortage of trained
? Lower regional and
?
emissions caused by manpower international
Greener, efficient
? Outsourcing
? Opportunities for ICT
?
the ICT industry Lower productivity
? connectivity
technologies that Improving workforce
? trade
Vulnerabilities among
? Shrinking market due
? Reduced market
?
lower energy use participation Improved access for
?
user-groups to lower consumption access
Technologies for
? Improvements in
? poor and marginalized
Lower competitiveness
?
disaster management healthcare sections
Higher automation
?
Studies by global bodies such as the United Nations, World Bank, World Economic Forum as well as
regional entities like the Asian Development Bank have highlighted the correlation between increasing
ICT adoption and sustainable development. Research generally points to a strong case for countries to
invest in expanding ICT adoption, while maximizing on the innovative and creative use of ICT to optimize
the benefits per dollar spent.
The demographic dissimilarities in the region manifest in varying impacts of the challenges on different
countries within the region.
Impact Climate Change Ageing Population Instability and Insecurity Poverty and Inequality Infrastructure Deficit
Source: KPMG analysis; Climate change and Ageing Population – ADB; Poverty – UN ($1/day poverty); Political instability – EIU; Infrastructure – World Economic Forum;
Note: All scales depicted are relative within the region
21
Global Challenges
Global Regional Industry
Challenges Challenges Challenges
Climate Change 1
Climate change is expected to spare no geography in the coming years. In fact, Asia-Oceania is likely to be
especially vulnerable as it is expected to account for roughly 60 percent of the global population by 2025
including the significant poor population2. The region’s geographic location makes it especially prone to
natural disasters. Further, a large number of countries within Asia-Oceania are still agrarian economies, and
these are likely to be affected much more than others due to variations in the climate, monsoon and falling
crop yields.
Besides the impact, the Asia-Oceania region is itself expected to become a major source of greenhouse
gas emissions in the near future as a consequence of rapid and carbon-intensive economic growth3.
Over the period until 2020 and beyond, the economic impact of global climate change on Asia-Oceania
may lead to increasing demands for government spending in the areas of:
Disaster preparedness and management
?
Rehabilitating people exposed to weather-related risks and natural calamities including droughts,
?
floods, forest fires and disease outbreaks
Increased healthcare costs due to climate-change related illnesses such as heat stress and pollutant
?
related illnessesEnergy management using alternative fuels and greener technologies
Water resources
Coastal ecosystems
Commercial Agriculture © 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Livestock
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Urban areas
Heat stress
Vector-borne diseases
Transport
Construction industry
Tourism
Addressing and mitigating the effects of climate change is likely to cast a large economic burden,
especially on developing countries. The Inter-governmental Panel on Climate Change (IPCC) estimates
that globally the impact of these measures could be as high as 3 percent of a country’s GDP on average.4
For the resource-constrained developing economies already burdened with other macro-economic issues
such as poverty alleviation, employment creation, or lack of infrastructure, spending on climate change
mitigation may not be a priority.
This may pose a huge risk in the face of rising international pressure on all countries for climate change
measures. Countries which cannot afford to spend on climate change may be at an increased risk from
changing climate patterns and not have the capacity to combat its after-effects.
? Nepal ? Vietnam
Source: Adapted from Asian Development Bank Report, Building Climate Resilience in Agricultural Sector, 2009, and KPMG analysis;
* China includes Hong Kong
Currently the IT industry itself is also a contributor to the climate change problem. According to a Gartner
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
study, greenhouse gas emissions from the IT industry accounted for 2 percent of total global CO2
emissions in 2008.5 However, this forms a small proportion compared to emissions from automotive or
petrochemicals or manufacturing-based industries. Emissions from ICT are expected to increase as ICT
penetration and usage grows. However, ICT-led growth may still be one of the greener alternatives for
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
There is likely to be continued pressure on the ICT industry, just as that on any other industry, to reduce
its carbon emissions. With increasing digital growth and trends such as e-governance, demand for data
centers is likely to increase. Gartner research also suggests that among the components of IT, emissions
from data centers are rising faster than other carbon emissions, mainly due to lack of floor space, failure
to house high-density servers, increased power consumption and heat generation.
However, the IT industry has the potential to reduce emissions of 7.8 Gt CO2e or 15 percent of its
business as usual emissions by 2020 according to Smart 2020, a report brought out by the Climate Group
in 2008.6 Achieving this might necessitate investments in developing and adopting newer technologies
across the globe.
4. IPCC Report
5. http://www.crn.com/hardware/208700292;jsessionid=BSPYCRGVOQMWQQSNDLOSKHSCJUNN2JVN
6. http://www.theclimategroup.org/assets/resources/publications/Smart2020ReportSummary.pdf
23
the only tools available to families Software for better predictability for climate-related changes/ disasters
?
to communicate with family
ICT for disaster management.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
?
members who were gravely ill with
SARS in the hospital.
Source:
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
http://www.digital-review.org/themes/7-the-
role-of-icts-in-risk-communication-in-asia-
pacific.html?93d8e68695e76f3bf28837adbeb
3725c=e546c35f949c6822fa4cbd5bd683c82
0&start=4
7. http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE58H2FM20090918
8. http://www.bloomberg.com/apps/news?pid=20601130&sid=aATxyQT1IE10
9. http://www.theclimategroup.org/assets/resources/publications/Smart2020ReportSummary.pdf
24
Ageing Population
Global Regional Industry
Challenges Challenges Challenges
The age distribution of the world’s population is undergoing a profound transformation. The world is
expected to witness a significant demographic shift in terms of age distribution over the next few
decades. With varying mortality and fertility rates, some regions are likely to experience steady
population growth, whilst others will face population decline. Population growth in Europe is expected to
slow down considerably relative to the United States and the emerging economies of China and India.
The age distribution is expected to shift gradually to older ages.10
Population ageing may not be an immediate issue for Asia-Oceania as a whole. The elderly population is
projected to reach 483.3 million, and their share is expected to rise to 10.1 percent of its total population
of 4.8 billion in 2025 from 6.4 percent in 2005.10 However, certain Asian economies like Japan, Hong
Kong, the Republic of Korea, Singapore, and Thailand are expected to have a much higher proportion of
elderly people by 2025. Moreover, the process of population ageing is occurring more rapidly in Asia-
Oceania than that in Europe or North America. It is also likely to occur at a much earlier stage in
economic development in some Asian countries than that in the developed world.
29.5 10.1
22.8
21.7Japan
19.1Singapore
% of Population aged 65 & above
13.7 Thailand
10.9 Sri Lanka
10.9 China
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
8.7 Korea
8.7 Indonesia
7.3 Malaysia
6.5 Vietnam
5.8 India
5.6 Philippines
6.4 Bangladesh
Pakistan
2005 Up to 2025
Pension, health and long-term care: Population ageing puts pressure on pension, health and long-term
care expenditure, especially in countries where such services are under served. An ageing population may
put stress on the finances of developed Asian nations that have extensive social programmes targeted to
Scotland Telecare Development the older population, largely in the form of health care and pension programmes. Rising expenditure on
Programme 2007/8 – 2009/10 social security, pensions and healthcare, will burden the working age population and reduce government
investment potential in other priority sectors.
Over the period 2007-2010, the
actual operational savings analysis Savings, investment and consumption patterns: Economies with large proportions of working-age
will be a minimum of: population can potentially grow faster. This is because this demographic structure generates a larger
46,500 hospital bed days saved
?
aggregate life-cycle surplus and because savings rates are expected to be higher as individuals save in
by facilitating speedier hospital
anticipation of their retirement. Thus, population ageing could lead to substantial changes in the
discharge
composition of the demand for goods and services, which in turn can impact the demand and adoption of
225,000 care home bed days
?
ICT.
saved by delaying the
requirement for people to enter
care homes Opportunities for the ICT industry
46,000 nights of sleepover care
? Demographic change however also represents new economic opportunities. For instance, ICT can play a
and 905,000 home check visits key role to facilitate the inclusion of elderly people in society and the economy.
saved by substitution of
remote monitoring
arrangements Major ICT domains for ageing population
Collectively, these savings are
valued at around USD 71.7 million ICT can go a long-way in providing access to healthcare and social system
through technologies like telecare / telemedicine to enjoy healthier and
Source:
http://ec.europa.eu
high quality of lifestyle
ICT can help elderly
Communication and
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
population to remain
online services
connected with
provide them with the
surroundings and
incentive and choice
community through Ageing at Home
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Case Study: The Intelligent Tea- • The outsourcing of employment to offshore locations through ICT solutions could be considered to
Pot (i-Pot) tackle labor shortage, leading to greater automation, and technologies improving remote and online
The Zojirushi Corporation, NTT delivery of services. Improvements in labor productivity can also be possible with greater
DoCoMo, and Fujitsu Corporation investments in ICT. For developing countries, this is likely to provide an opportunity to benefit from
have expanded the use of common cross-border movements in goods, capital, and labor in response to population ageing elsewhere in
Japanese household appliance i.e. the region or the rest of the world
electric teapots, and created a
user-friendly teapot (i-pot) that also • There are also a range of options with respect to enable prolonged employment and female
allows distant relatives to monitor employment. In order to maintain productivity levels, the workforce participation rate might have to
the well-being of their loved one, increase. Older and female workers can be in a better position to participate if the benefits of the
especially those living alone. ICT through communications and online services are extended to them. This is also likely to put
Devices imbedded in the i-Pot lower stress on government finances that are spent towards social security and pensions
transmits a signal to a remote
• Delivering the full potential of ICT in healthcare can help countries minimize the pressure of
server using NTT DoCoMo's
providing healthcare effectively and that too at lower costs. New technologies like telemedicine
wireless communication line when
open up new opportunities for providing medical care at the home. There are many such
the i-Pot is being used; the
developments in ICT-based home care, including ways of monitoring wellbeing and providing a
subscribers receive two e-mails in
secure home environment. Moreover, personal health systems can provide wearable and portable
mobile-phone and/or PC in a day
automatically at the time they set systems for monitoring and diagnosis, therapy and supporting treatment plans for individuals with a
Especially for Japanese old people, International organizations focusing on poverty reduction, especially the United Nations and Asian
the electric pot is one of the most Development Bank, are working with developing countries to negotiate defined and measurable targets
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
frequently used household through the ‘Millennium Development Goals’ (MDGs), instated in 2000. The MDGs aim to significantly
appliances, and this information reduce income poverty and bring about improvements in key human development parameters for
becomes one of the barometers for developing countries by 2015.
the person's condition.
Source:
http://www.cct.go.kr/data/acf2006/aycc/aycc
_0804_Shizuka%20Abe.pdf
Poverty Ratio (Percentage of poor below the poverty line) in Asia-Oceania countries
40 – 50% Bangladesh
‘It is difficult to see how the The focus on achieving the MDGs is likely to lead to significant government attention, and also funding
Millennium Development Goals from developed countries and international agencies into the poorer countries in Asia-Oceania. The
will be achieved without innovative implications of achieving the poverty-reduction targets among the MDGs for developing countries are
and widespread application of massive:
ICTs’. Lower poverty means a larger market for goods and services as more citizens move into the
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
?
‘consumer’ bracket
- UNDP Special Advisor,
Denis Gilhooly Lower poverty leads to better literacy, as poorer people often trade-off employment against education.
?
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Source: A more literate population is likely to result in a larger labor force, enhancing the economic output and
ICT for Poverty Reduction in Asia, Global
further reducing poverty levels
Knowledge Partnership
Reduction in poverty may lead to other benefits such as reduced social conflict that often results from
?
economic stability. This would free up resources of constrained governments for growth priority.
Though the developed countries in the region are relatively unexposed to the challenge of poverty, overall
growth in Asia-Oceania can be affected if large-scale poverty and inequality persists in the region, mainly
through increase in migration and stress on available natural resources.
The UN proposes a partnership approach for poverty alleviation in the Asia-Oceania region. Developed
countries can contribute in many ways, including - knowledge and capacity development, expertise,
advocacy for the MDGs; regional cooperation in delivering public goods; and providing resources.14
14. http://www.un.org.cn/public/resource/af09585456938fdec6e38d38d5981134.pdf
28
offers to buy the crop directly from agricultural productivity, improved market access for crops, and the creation of employment
any farmer at the previous day’s opportunities by increasing the access to jobs
closing price; the farmer then
transports his crop to an ITC ICT can be a powerful tool for strengthening good governance. ICT can help spread knowledge
?
processing center, where the crop and awareness of human and constitutional rights, bring more accountability, and give the poor a
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
is weighed electronically and voice. ICT is also known to enhance government efficiency in service provision that is directly
assessed for quality. The farmer is relevant for the poor
then paid for the crop and a
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
transport fee. ‘Bonus points’, which ICT can be relevant for health interventions and in the fight against diseases such as malaria,
?
are exchangeable for products that tuberculosis or HIV/AIDS through timely broadcasts, information exchange and better diagnostic
ITC sells, are given for crops with abilities
quality above the norm.
The ITC eChoupal network is ICT can help create direct as well as indirect (secondary and tertiary) employment, and help the
?
bringing huge benefits to Indian development of tier II and III cities in the countries. Already, countries such as India, Philippines and
farmers through market-based Malaysia are focusing on developing tier III cities for offshore outsourcing service delivery.
pricing for produce, elimination of
Nasscom’s estimates suggest that in India, the IT-BPO industry provided direct employment to close
middle-men and a ready buyer for
to 2 million people in FY2009 against revenue of USD 71.1 billion. However, the indirect
the produce.
employment generation was estimated to be close to 8 million, with a multiplier of 3.6 times. Close
Source:
to 50 percent of new recruits are now from tier II cities in India, with the percentage of women
http://planningcommission.gov.in/reports/ser
eport/ser/stdy_ict/4_e-choupal%20.pdf
15. Widening Broadband reach by 50 percent can boost India's GDP: CISCO, Oct, 2009, http://www.livemint.com/2009/10/11120242/Widening-broadband-reach-by-
50.html
29
Case Study: Grameen Telecom employees (25 percent) the highest among other industries. Moreover, the ‘indirect’ employment is in
(Bangladesh) the form of ancillary industries supplying food, transport, infrastructure support and other inputs to
In 1996, Grameen Bank initiated a the ICT industry, and need not necessarily be high-skilled employment. IT-BPO industry is making a
new programme aimed at largely large contribution towards the ‘inclusive-growth agenda’ in India.16
increasing information that was
available to rural farmers and ICT can aid in building capacity through training, distance learning and relevant workshops
?
technology throughout the country. supportive and predictable policy and legal framework.
In rural villages where no
Internal insecurity may be a more local occurrence, but in some countries, it affects the overall economic
telecommunications services have
environment. Fear of insecurity deters the investment and generation of jobs. Moreover, the resolution of
previously existed, cellular phones
political as well as internal conflicts is difficult, often taking up years of negotiation and involves diverse
are provided via a sustainable
stakeholders.
financing mechanism to very poor
women who use the phone to Both political instability and internal security may contribute to lower economic growth by way of a rise in
operate a business.
poverty, lack of access to healthcare or poor infrastructure development in the affected regions, and could
Source: even undo years of developmental efforts in countries. Where conflict and its impact are regional, the
siteresources.worldbank.org/.../Resources/14
648_Grameen-web.pdf
country may face unbalanced economic growth, leading to a growing divide and isolation with the rest of
the country.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
The EIU’s Index for ‘Underlying vulnerability’ shows countries in Asia-Oceania placed diversely across the
scale of 1 to 10 (1 being lowest), with Australia ranked as the most stable country in the region. firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Case Study: Sri Lanka EIU’s Index of ‘Underlying Vulnerability’ – 2009/10 (0 being most stable)
Nearly three decades of war with the LTTE led
to a series of challenges in Sri Lanka. Despite
Norway 0.4
high human development indicators and an
UK 1.3
educated workforce, Sri Lanka suffered from
USA 2.5
low public capital investment, low foreign
inflows, decline in tourism and devastation in
northern parts of the country. Australia 1.3
New Zealand 1.3
The end of the crisis in 2009 has brought new Japan 1.7
optimism for economic growth in Sri Lanka. Hong Kong 2.1
The Northern region, which bore the brunt
? Vietnam 2.5
of the war in terms of lack of access, Taiwan 2.5
poverty and other challenges, is now Singapore 3.3
expected to get high priority and South Korea 4.2
development focus from the government
Laos 4.2
Investors and businesses can expect a
? Mongolia 4.2
better economic outlook. Fitch has China 4.6
upgraded Sri Lanka's national risk rating Philippines 4.6
Several multinational companies, including
? India 5
IT-BPO companies are considering setting Myanmar 6.3
up operations in Sri Lanka. Indonesia 6.7
messaging system (MMS) has been used to conflict over Kashmir or the differences between North and South Korea have been going on for
send photos of criminal suspects to law several years. History has shown that due to the complexities in the resolution of such problems,
enforcement agencies; in Turkey, law and the number of stakeholders that are involved, some of the issues within the region may not
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
privacy considerations and their China
Taiwan
4.0
implications on such a project. 5.8
Pakistan
Hong Kong
3.2
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Source:
6.7
http://www.privacyinternational.org/article.sht
ml?cmd%5B347%5D=x-347-559484 India Philippines
3.2 3.1
Nepal Indonesia
2.2 3.1
Bangladesh Cambodia
2.5 3.4
Myanmar Singapore
2.9 6.7
Thailand Australia
4.8 5.0
Infrastructure development has been in the spotlight in recent years, as governments across most
countries in Asia-Oceania have allocated large resources for upgrades. However, the gap between
infrastructure needs and the available government resources to meet those needs is ever growing,
especially in the case of developing countries. On an average, it is estimated that the region needs to
invest about USD 750 billion per year in infrastructure during 2010-2020.17
Alongside physical infrastructure, countries in Asia-Oceania might increasingly also need to consider ICT
infrastructure as the key for sustainable and inclusive growth in future, especially for countries aspiring to
become knowledge economies.18 ICT infrastructure can range from basic telecom services, mobile
phones, and internet to high-end variants like high-speed broadband, wireless networks and others.
Countries within Asia show as diverse progress on e-readiness19 as well as on physical infrastructure
quality. Countries like Hong Kong, Australia and Singapore figure among the top ten countries globally on
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
the World Economic Forum’s e-readiness index, while progress in other countries is for the most part
limited to wireless penetration.
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Reduces regional and international connectivity: Lack of basic infrastructure restricts economic
?
exchange among various sectors of an economy, both locally and internationally. It makes it difficult
to provide greater access to key inputs for economic growth, such as resources, technology, and
knowledge. This impacts the potential of ICT adoption among business and also ICT trade
17. ADB
18. See appendix for defination
19. See appendix for definition
33
Affects
? competitiveness and ability to attract investments: Lack of infrastructure increases the cost
of regional (and global) trade, affects market competitiveness, and reduces propensity to attract
investment (including FDI). This affects the country’s potential to attract ICT investments. Also, poor
infrastructure raises the costs of goods and services, affecting competitiveness.
Deprives
? market access to remote locations: Small, poor, landlocked, and remote countries, and
even regions within countries, are deprived of better access to wider regional (and global) markets
due to lack of infrastructure, affecting ICT investment, trade, and economic growth in those areas.
Facilitates trade: ICT is an increasingly productive complement to physical infrastructure. ICT helps to
?
reduce the costs of finding suppliers, contracts negotiations, monitoring contract implementation,
and tracking the location and status of shipments. ICT also helps facilitate trade by streamlining the
movement of goods and services within nations as well as across borders. For instance, ICT can help
increase port efficiency by reducing the average time shipments spend at sea and in ports. Service
tends to become more frequent, facilitating timely delivery
Attracts investments: The ability of developing nations to attract investments is also largely
?
influenced by the availability of superior and efficient infrastructure. For example, trade in services-
related areas, such as banking and business services, or communications, a well-developed physical
and ICT infrastructure is required
Social benefits: Besides the direct contribution of ICT to trade and investment related infrastructure,
?
ICT allows poorer people and underdeveloped areas better access to markets and economic
opportunities. It can also improve access to education and healthcare.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Industry specific challenges
It is becoming increasingly important for the IT industry to look into some key considerations that directly
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
impact growth. The future of the industry depends on how solutions are built to overcome these
challenges and reduce the threat of external competition.
It has been repeatedly proven that better innovation in ICT leads to higher economic growth. The biggest
challenge for the IT industry in the Asian region today is, therefore, to build an ecosystem that is
conducive to innovation. This would also help the industry in maintaining its performance and retaining its
reputation of being a favored information technology and services industry. Considering the dynamic
global scenario, it is imperative for the industry to ensure competitiveness through innovation.
Some key considerations for the Asia-Oceania IT industry, moving towards an environment that is
conducive for innovation and progress include:
34
Industry Challenges
Global Regional Industry
Challenges Challenges Challenges
IES
MIN
ILIT
IMI
PAB
PROCESS
ZIN
CA
GE
AL
XTE
ERN
RN
INT
AL
ING
THR
MAINTAINING
ILD
EAT
PERFORMANCE
BU
S
PEOPLE POLICIES
People: The IT industry is extremely labor-centric and therefore people are the most important
component of the industry. Favorable demographic though is not a problem for the Asian economies as a
whole; the key consideration for human resources in the region is the quality of available skills.
According to Springboard’s study - ‘Bridging the Gap: Asia-Pacific IT Skills’ domain knowledge and
management skills are the top HR challenges faced by the region today.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
In terms of technology skills, Asia-Pacific companies are finding the greatest shortages in areas including
enterprise architecture, application development and system integration.20
Besides the availability of skills, the industry also faces other universal HR challenges: recruitment,
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
attrition and retention. However, these are particularly sensitive in IT-BPO as it is a services industry.
Process: Improving productivity and efficiency and finding ways and means to meet increased customer
expectations are extremely important for the growth of the IT industry. Moreover, high standards of
corporate governance, risk management, security and an adequate intellectual property framework have
to be achieved. Standardization becomes an important tool to drive efficiency & innovation and improve
transparency.
20. http://www.nationmultimedia.com/worldhotnews/30102019/Gaps-in-IT-skills-hurting-businesses,-hindering-recovery
35
While formal standards have an important role to play, the IT ecosystem is defined by continuous and
rapid innovation, vigorous competition, and broad customer choice among available solutions.
Market-led, customer-driven acceptance of technology and cross-industry support for popular ICT
specifications also plays a crucial role. The resulting situation is a dynamic coexistence of both formal
standards and the countless industry-developed specifications in the ICT marketplace. Together, these
standards and specifications fuel innovation and economic development, while enabling interoperability in
ICT products and services to ultimately deliver better user experiences.21
Policies: A favorable business policy and regulatory environment is critical role to the growth of the IT
industry. The government must play an active role as a key stakeholder of this industry. Countries that have
not articulated an effective IT policy, could, despite their potential, find itself under immense pressure of
competition.
Collaboration with the key stakeholders of the industry would help in overcoming these challenges and
building an ecosystem that is innovative and competitive. There is, thus, an action agenda for key
stakeholders: the government, the industry players and associations, as well as the academia.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
As the Asia-Oceania region recognizes and takes measures to overcome the challenges that could
potentially hamper the growth of the ICT industry, there lie significant opportunities.
Some challenges, when they are addressed, could convert to opportunities that positively impact not only
the development status of countries, but also grow the ICT market size.
The Asia-Oceania region takes on a role as a supplier as well as a demand market for ICT. Under-
penetration in the region has the potential to bring immense domestic opportunities for countries in areas
such as e-governance and telecommunications. These opportunities are very country-specific and require
a great amount of localization and therefore need to be serviced within the country itself, giving rise to a
large domestic market.
Global Opportunities
There is a demand for technology convergence, Green IT and services catered to Small and Medium
Businesses (SMB), and healthcare within the Asia Oceania region; however, the global opportunities for
these services are far more significant. These are being tapped into by Asia-Oceania as a supplier region.
There is, of course, competition for this market share, especially from the Central and Eastern European
countries and Latin America, but the experience in the ICT industry has given the region an edge over the
others. The Asia-Oceania economies hold the majority of the market share.
The access to these global opportunities however, would vary according to the inherent capabilities of
each economy in the Asia-Oceania region. The more ICT and export focused countries within the region
would most likely have a better chance at winning deals as compared to the others who have relatively
nascent ICT industries.
Regional Opportunities
Global trends likely to assume larger
HEALTHCARE proportion in Asia Oceania in the next decade
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
EDUCATION
WIRELESS
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
TECHNOLOGY CONVERGENCE
WIFI
SMBs
e-GOVERNANCE
GREEN IT
e-COMMERCE
s-COMMERCE
Global Opportunities
Asia Oceania is poised to service global
demand for ICT services in upcoming segments
Convergence has increased device capability and the market continues to move towards fewer devices
Convergent Services with a wider range of applications. The mobile is expected to be the next computer. While the PC is
Some of the new convergent services currently the dominant means of gaining access to the internet, IDC expects the number of mobile
are: devices accessing the internet to surpass the number of online PCs by 2012.1
Voice Telephony through the internet
?
Video On Demand
?
Fixed-Mobile Convergence
? Number of devices accessing the internet
Mobile-to-Mobile Convergence
?
Convergent Services
?
1.5
2008 2012
By 2012, half of the number of devices accessing the Internet will be mobile devices.
Source: IDC
of all devices is witnessing a steady fall. Consumers not only adopt newer devices but also replace
them in a quicker time frame.
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
This presents a huge opportunity for device design, which is pioneered by nations such as Korea and
Japan. Korea, which has been a test-bed for ICT innovations, was the first in the world to launch the
commercial satellite Digital Multimedia Broadcasting (DMB) services in 2005 for mobile handset
users to watch TV while riding public transport. Together with Japan, the two countries have also
pioneered in the implementation of the 3G mobile broadband.2 Along with mobile service operators,
manufacturers of mobile handsets and the components in the region are aiming to develop next
generation (so-called 4G) services by about 2010.3
·Content and services: Content providers are likely to experience a huge demand in the converged
environment. Internet and portal providers, as well as telecom companies have recognized that the
penetration into the wireless market for bundled services would require collaborative relationships.
1. http://www.mobilephoneblog.org/2008/06/15-billion-mobile-internet-users.html
2. http://www.itudaily.com/home.asp?articleid=528200901
3. http://www.abiresearch.com/research/1003400-Mobile+Phone+Innovation+in+Japan+and+South+Korea
39
Asian service providers are The convergence of technologies has given birth to the prospect of multimedia services which offer
gaining experience in interactive computer-based applications that can combine text, graphics, audio and animation features
converged services into a media experience for users.
IMImobile, an India-headquartered
provider of mobile value added The global market for mobile content and services is expected to rise to around USD 150.2 billion in
services for content providers, 2011 from USD 89.3 billion in 2006. Service providers in Asian countries like India have already gained
mobile operators and media experience in converged services and media and digital content. According to Frost & Sullivan, 20.8
agencies acquired dx3, a UK-based percent of households across 14 Asia-Pacific countries subscribed to a dual-, triple-, and quadruple-
digital content delivery services play (quad-play) services in 2008.4 This experience in the delivery of bundled services would give the
provider. The acquisition of dx3 region an upper hand in being the preferred service provider for global converged services.
was a part of the IMI’s expansion
plan designed to establish the
Healthcare
company as an important managed
While there is an increased expenditure on healthcare in North America and Western Europe, the trend is
service provider for digital content
not matched by an increase in the number of nurses/caretakers, and in some cases there is, in fact, a net
and converged value added
decline of healthcare professionals
services in the region.
news, games, ring tones, music France 2542 6.73 3601 7.73
and other data services, as the
Germany 2671 9.41 3588 9.94
mobile industry worldwide seeks
ways to boost revenues. Luxembourg * 2553 7.38 4162 11.02
Healthcare establishments of the Western world are facing several challenges. © 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Most of the Western countries are experiencing the ageing population phenomenon, which is leading them
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
to an increased spend on healthcare. This is leading to a rising demand for healthcare services. In the US,
spending on healthcare has exceeded GDP growth by about 2.7 percentage points each year, over the past
three decades. The country is one of the largest spenders on healthcare in the world.
An ageing population and the lack of requisite skills are leading to healthcare salary increases. According to
the 2009 Compensation Data Healthcare survey; nurses, occupational and physical therapists have been
high in demand and have received nearly double-digit salary increases since 2007. The US Bureau of Labor
Statistics has projected a 21.7 percent increase in the total US healthcare employment between 2006 and
2016.
Increasing regulatory compliance such as HIPAA is adding to the workload of the healthcare institutions.
The rising cost pressures coupled with the increasing workload have forced healthcare institutions to
explore the outsourcing/offshoring option.
4. http://www.itwire.com/content/view/26116/127/1/1/
40
Pharmaceutical companies
?
Increasing outsourcing/offshoring in Healthcare: The healthcare sector is expected to be one of the
Healthcare IT companies
? greatest beneficiaries of productivity improvements generated through increasingly automated and
KPO which includes medical integrated processes, creating a particularly strong market for companies offering BPO and outsourced IT
analytics for providers and solutions.
insurance companies seems to be
the next big opportunity in The total addressable healthcare provider market (which includes hospitals, nursing homes, long-term
?
Healthcare care facilities, physicians and other professional service groups, and a specialized therapeutic
enterprises) is expected to reach USD 58 to 65 billion by 2020. Of this nearly 88 percent is expected
to come from North America and Western Europe
This represents an opportunity for Asian economies such as India and Thailand. An abundance of skills
in India and Thailand’s healthcare system that is comparable to the West (ranking at 47 out of 190
countries according to the WHO 2000) is attracting healthcare and medical outsourcing to Asia6
Global Pharmaceutical companies that are based in developed countries are increasingly turning to
?
Asian economies for conducting clinical trials. The reduced costs combined with easy availability of
patients with varied diseases make these countries favorite destinations for clinical research
outsourcing. According to US government publications, today, 8.9 percent of clinical trials registered
with US health authorities are conducted in the emerging countries of Asia7
India, China and Singapore are emerging as the hotspots of outsourcing activities for big
pharmaceutical companies mainly in the areas such as contract research, clinical research and
contract manufacturing. Other countries like Korea, Taiwan and Malaysia too are trying their best to
attract the pharmaceutical companies to outsource their research activities.
launched car in the UK are aged 45-55, and those aged over 55 account for another 6 percent of the workforce. Over
Jaguar wanted to train its dealers 50 percent of US teachers and principals are baby boomers and the wave of departures for retirement is
all over the world on how to sell its likely to peak during the 2010-11 school year. This is driving the education services to the outsourcing
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Source:
www.e-learningcentre.co.uk
5. The Economist special report on Healthcare 8. KPMG Consulting: http://specials.ft.com/elearning/FT3W67AL2ZC.html
6. http://www.photius.com/rankings/healthranks_alpha.html 9. Valuenotes
7. http://www.offshoringtimes.com/Pages/2006/BPO_news926.html
41
The e-learning outsourcing industry consists of third-party providers as well as offshore delivery centers of
the e-learning providers and consulting firms10
Open Source
Making
commoditized Cloud Computing
technologies Virtualization
available
to enable savings
Low infrastructure
investment: Innovative
Revenue Models
The SMB market is relatively untapped today and is expected to drive future growth in the IT-BPO market.
The number of SMBs is expected to reach 330 million in 2014, and by 2020 the SMB market is poised to
provide an addressable opportunity worth USD 250 billion in technology and business services. The BFSI © 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Key drivers for outsourcing in this segment are similar to those of large firms – (reduced costs, focus on
core activities of the business, access to the talent pool across borders, etc.) with the objective of
improving competitiveness in the market.14
Companies in the SMB segment are currently lower on the offshore maturity curve as compared to larger
firms, but greater offshoring is expected from SMBs in the coming years. Moreover, the growing market
maturity in this segment is expected to lead to rising demand in the higher-end areas such as knowledge
services.14
friendly items In addition to catering to global demand, Asia-Oceania is also slated to benefit from high growth rates in
the domestic IT-BPO market in the region. Almost all of this demand is expected to be serviced within
the region, due to the cultural and language similarities and also because a significant cost arbitrage can
be tapped within the region itself.
Several opportunities are witnessing high traction in Asia-Oceania. These opportunities stem from global
trends, but they take on larger proportions in Asia-Oceania because of the region’s large share of the
world population. The large poor population and the relative under-penetration of the ICT within the
developing countries further boosts the potential for the ICT growth in the future.
15. Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Regulations
16. U Waste Electrical and Electronic Equipment (WEEE) Directive
17. http://www.eetindia.co.in/ART_8800477743_1800007_NT_a2ecad97.HTM
43
governance models through ICT sophistication and a greater interaction with the industry and the society.
vulnerable sections of the society
into the folds of government Developing countries in Asia-Oceania are at different stages of maturity, with countries like India, Malaysia
services has been invaluable. and Vietnam relatively more developed than Nepal or Lao PDR, which are as yet in their infancy in the use
of e-governance. Governments in poorer countries are highly constrained due to lack of resources, poor
ICT infrastructure, low ICT awareness and illiteracy.
Notwithstanding these constraints, e-Governance presents an innovative approach to address some of the
traditional challenges of governance for Asia-Oceania, and in particular, the poorer countries. Already in
Asia, there is a growing recognition that e-government can play a significant role in creating efficiencies,
and in expanding access to government services and information, especially for the vulnerable and
marginalized sections of the society.
Case Study: Australia and South However, implementing e-governance often requires positive modern leadership and a trans-sector
Korea approach to bring together several avenues of information, making e-governance implementation difficult
The Australian government, being for developing countries. Yet, in the next decade, implementing e-governance might increasingly become
one of the largest consumers of IT imperative for the developing country governments to help ensure their competitiveness for foreign
in the country has taken up the investment, as well as overall integration into global economics.
responsibility of leading by example
to encourage others to look into
Green IT solutions. The Department Opportunity for service providers
of Defence has realized savings of The adoption and use of e-governance in Asia poses a massive opportunity for service providers in the
over AUD 5 million per annum, or in region due to the sheer population size. The hardware requirement for connecting populations within
environmental terms, approximately countries is likely to be huge and so also the demand for customized software and application
31,000 tons of carbon dioxide each management.
year by an innovative switch off of
Besides, resource-constrained countries might require practical, innovative solutions which may have to
their desktops. There are several
be developed keeping in mind challenges at the grassroots. For example, the e-Choupal described earlier
Green IT related government
is an innovative solution to connect farmers directly to the retailers. It is also a practical solution which
policies and programs that are
intended to promote the green takes into account the lack of ICT literacy among Indian farmers by having a trained facilitator that helps
The mobile phone is able to provide voice communications to a large population spread over a wide
consumers with accurate geographical area. Therefore, mobile phones are experiencing a faster growth rate than fixed phone in
information on environmentally- the Asian market.
friendly items
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Developing countries in the Asia-Oceania region have had the benefit of leapfrogging in this technology
space and it now uses the second and third generation digital technology. These new technologies are
able to deliver voice services at a fraction of the cost, making mobile phones affordable and accessible to
even the poorer segments of the society20
Case Study: Bangladesh Mobile subscriber and fixed telephone lines in Asia and the Pacific 1997 – 07
Following a number of years of
strong growth, starting from a very
1600
low base, mobile telephone
penetration was approaching the 30 1400 1385
percent milestone in early 2009. As 1200
The large rise in subscriber base in the region’s mobile markets is offering huge potential for mobile data
services. Operators are now increasingly relying on mobile data services to boost revenues, fuel growth
and help retain subscribers in a fiercely competitive market, where traditional call rates are on the
downward trend. Besides, data services such as messaging, entertainment, internet access and mobile
banking are providing retention tools and differentiators for operators.
Asia-Pacific offers prime opportunities as its geography, existing infrastructure and socio-economic factors
can accelerate the adoption of new technologies at a faster rate than that in other markets. Already, low
and middle income countries are showing much faster wireless growth rates. However, average revenue
per user (ARPU) remains low in developing countries as compared to those in developed countries. While
the ARPU in Japan was USD 53.2 per month, that for South Korea was USD 38.04 in 2008. Comparatively,
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
the ARPU in countries like India, Indonesia and Vietnam are less than USD 10 per month, despite rapid
growth in the mobile markets. The difference can be attributable to lower per capita incomes, high number
of pre-paid subscribers and low propensity to spend on content-driven applications.21
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
In the developing markets, mobile usage is likely to continue to be dominated by voice and basic text
messaging services. Also there is focus on providing services to rural and under-penetrated areas. The
advent of the next generation technologies such as 3G has started relatively slowly, but is expected to pick
up fast. It is also likely that rural or under-penetrated areas may see wireless broadband even before fixed
broadband reaches them.
By contrast, in the developed markets such as Japan, Korea, Hong Kong, Singapore and Taiwan where
newer technologies such as 3G/3.5G/4G are making inroads, voice and data traffic have increased further.
This is leading to a greater demand for more bandwidth-intensive, high-speed multimedia applications and
services. Operators are likely to seek new methods to expand capacity and improve the performance of
existing networks to provide advanced, multimedia and IP services.
21. http://www.mediabuzz.com.sg/asian-emarketing/september-october-2009/621-asia-will-continue-to-lead-in-mobile-growth-and-revenues-with-china-in-the-forefront
46
Case Study: Wireless for rural Wi-Fi LAN (Wireless LAN/ WLAN)
development Asia-Oceania is one of the most under-penetrated markets for Wi-fi and therefore presents significant
Ashwini Project of the Byrraju opportunities for local service as well as equipment providers.22
Foundation - a leading not-for-profit
organization, is transforming lives in Unlike mobile phones where the equipment supplier base is small, the number of manufacturers of
rural India by using license-free Wi- WLAN equipment is fairly large. Many of the manufacturers originate from East Asia and are able to
Fi spectrum to provide employment, release products at very cost-competitive prices, in order to cater to the local Asian markets.23
develop cottage industries and
provide education. The success of Innovations in the wi-fi technology not only reduce the costs but are also able to bring these networks to
projects such as Ashwini is the rural areas due to a lower requirement of transmitters
testimony to the potential of
Though initially wi-fi adoption was slow, the Asia Pacific region today is a high-growth market with Japan,
wireless technology. The project
Taiwan, South Korea and Hong Kong experiencing high growth.24
was implemented to provide a
virtual delivery platform to rural The Wireless LAN industry revenues in Asia-Pacific are expected to reach USD 1.84 billion in 2009,25 and
people in Andhra Pradesh to drive
the region has been experiencing double digit growth rates.26 Support from the government is also
rural savvy services such as
benefiting the industry. Key telecommunication companies in Korea and Taiwan such as Korea Telecom,
computer literacy, telemedicine, e-
Hanaro, and Chunghwa Telecom are being supported on their Wi-Fi implementation plans by the
education, personality development
government’s strategic national information and communication roadmaps.
programs, etc, through the help of
videoconferencing. At present, there Wireless LAN is expected to become an important new revenue segment in Asia’s service market,
are 33 WiFi enabled Ashwini driven by an increasing broadband penetration and a rising usage of hybrid devices.27
centers in operation.
With Wi-Fi increasingly being deployed as a feature on the handset and the Wi-Fi hotspot footprint on the
rise, Asians are likely to use Wi-Fi to connect to the internet without having to own a laptop or a PC,
which may be an expensive investment.
Future growth in the region is expected to be fuelled by Japan, the Wi-Fi application and the innovation
hub, as well as other emerging markets such as China, Thailand, Malaysia, and India.
USD 967 bn
22% CAGR USD 827 bn
17%
USD 690 bn
USD 560 bn
37%
USD 433 bn
43%
The developed countries in Asia-Oceania have seen sustained growth in e-commerce due to their high ICT
penetration and ICT awareness in the society. However, the developing countries have been slower to
catch up on the trend due to low ICT penetration and even lower awareness.
However, lately, due to high wireless penetration in developing countries, there is a sense of tremendous
opportunity to conduct e-commerce using mobile applications. In fact, IBM forecasts 22 percent growth in
mobile, digital and interactive advertising formats between 2006 and 2010 against 4 percent growth in
traditional advertising formats.28
M-Commerce: Mobile commerce, often referred to as m-commerce, builds on the advances made by e-
commerce (such as automated, electronic processes) but makes interaction available to a wider audience
in a more personalized way, through a mobile phone.
Wireless penetration has exceeded PC penetration in Asia-Oceania, giving rise to the opportunity to
connect not just large businesses but also small businesses and individuals. In this sense, mobile phones
have the potential to bridge the digital divide much more effectively than computers. Asia Pacific already
leads the world in terms of using mobile phones for m-payments, accounting for around 85 percent of
customers worldwide. However, most of this growth is currently led by markets like Japan, Korea and
Singapore.
There are yet some practical limitations to mobile commerce. While there are good applications, the
technologies and business models to date have not been well suited to mass market applications. The
regulatory environment has also constrained this market. This is beginning to change as banks and
merchants collaborate with mobile operators.29
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
percent from less than a million, 20
making it the fastest growing 10
market for Linkedin. 0
Australia China Hong Kong India Japan Korea Singapore Thailand APAC
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Source: MasterCard's survey: Online shopping in Asia-Pecific - Patterns, trends and future growth, 2008
Note: Online shopping penetration rate - defined as the proportion of online shoppers population, among online population, calculated using the probability of purchase
Online shopping Penetration depth is calculated using the proportion of online purchases over personal consumption expenditure
Social Networking
The advent of Web 2.0 promoted the interconnectivity and interactivity of Web delivered content thus
leading to the birth and growth of Social Networking. Social Networking sites (SNS) have witnessed
exponential growth in the recent years.
30
The revenues from Social Networking services were estimated to be USD 965 million in 2007. Asia Pacific
31
accounted for 35 percent of the world's social networking memberships. While EMEA followed with 28
percent and North America with 25 percent.
Social networks have now localized their sites by translating them into new languages and bringing
opportunities for local service providers. Asian networks like QQ in China with 300 million active
accounts, Cyworld in South Korea (20 million users) and Mixi in Japan with close to 14 million user
accounts, are in the local languages, and have grown remarkably.
Social networks are also gaining attraction for the online travel industry. Referrals posted on these sites,
especially for the hotel industry, are seeing an increasing conversion rate.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
32. S-Commerce is Social commerce, a term coined by a market research firm Compete
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Each economy in Asia-Oceania is banking on its distinct capabilities to propel its growth over the next
decade, whether as an ICT demand market or a supplier. Even within the ICT industry, most countries are
targeting the services space and more importantly, are recognizing the potential from IT and BPO
services in global sourcing. Already economies such as India and the Philippines are considered leading
players in this space globally.
Several other economies in Asia-Oceania are now looking to emulate these success stories.
Governments, especially in developing economies, are according priority to the software services and
business process outsourcing (BPO) sectors. This is expected to act as an enabler to improve education
and to drive the country towards achieving the status of the ‘knowledge economy’.
ASOCIO member countries as ‘Producers’ of IT-BPO ASOCIO member countries as ‘Consumers’ of IT-BPO
ASOCIO member
countries share in ASOCIO member
Global IT - BPO countries share in
Outsourcing is expected 450 Global IT BPO demand is
to increase from ~73% expected to increase from
335 - 340 ~20% in 2008 to ~26%
in 2008 to ~75% in 2020,
growing at a CAGR of in 2020, growing at a
around 16% CAGR of around 7%
1500
79 395 - 400
850
58 - 62 169 - 173
Total Global Outsourcing Size ASOCIO member countries Total Global Outsourcing Size ASOCIO member countries
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Source: KPMG Analysis
Note: Chart for illustrative purpose, not to scale
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
On the supply side too, Asia-Oceania is expected to dominate the global services sourcing industry. The
share of ASOCIO member countries in the supply of global sourcing services is likely to reach around
74.5 percent in 2020, from around 73.1 percent in 2008.
2008 2020
Malaysia
2%
Philippines Vietnam
Vietnam
Others (Demand countries) 10% 1%
1%
10%
Malaysia Others (Demand countries)
Sri Lanka
2% 4%
1%
Philippines Non- ASOCIO export
8% 28% Pakistan
3%
India currently commands a leadership positioning global sourcing supply, servicing approximately 51
percent of overall global sourcing demand in 2008. By 2020, India is expected to retain its leadership
position. Newer countries such as Sri Lanka, Pakistan and Bangladesh are expected to make their mark
on the global sourcing supply landscape by 2020.
2008 2020
Singapore
1%
Taiwan 4%
New Zealand
6% New Zealand Taiwan 1%
Australia 2% 9%
8% India
Others Australia 15%
Korea 11% 7%
6% Thailand
Korea 2%
Japan 9%
62% Others
Japan
9%
43%
GDP at Market Prices (2008) USD 993.4 billion Economy and Industry1
Australia has a stable economy with its annual average GDP growth rate estimated to
Population (2008) 21 million
be around 3.5 percent during the 1998 to 2009 period.
Exchange Rate (USD:AUD) (Jan-Sep ’09 avg) 1.34
Services 70%
Australia's economy is dominated by its services sector, which accounts for nearly 70
percent of its GDP.
Since the 1980s, Australia has undertaken various structural reforms to transform its
economy to an open, internationally competitive and export-oriented economy. The key
economic reforms included unilaterally reducing high tariffs and other protective barriers
to free trade, deregulating the financial services sector, privatizing many government-
owned monopolies, and reforming the taxation system
The Government of Australia is predicting that the GDP is likely to shrink by 0.5 percent
in 2009-2010 as a result of the global economic downturn
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
draw heavily from its large mineral reserves2
10
8
2000s:
6
9.4 10.2 11.2 12.0 12.6 In 2009, recognizing the importance of the digital economy, the
4
2 Government released the Digital Economy: Future Directions paper
0 and re-emphasized on creation of a National Broadband Network
2003 2004 2005 2006 2007
(NBN). Under the NBN strategy, the Government plans to invest
Domestic Market Exports
nearly USD 36.1 billion over eight years to establish and operate a
Note: The industry size includes the domestic market as well as exports of IT services and software
high-speed, fiber-to-the-premises broadband network to service
products. BPO market estimates were not available.
Source: ACS, WITSA Australian homes and businesses3
The Australian Information Industry Association (AIIA) is the nation’s peak industry body for the technology sector. AIIA was
set up in 1978, and its membership encompasses all sectors of the industry, from hardware and software services to
multinational companies and local SMEs. AIIA member companies employ 100,000 Australians, generate combined annual
revenues of more than USD 40 billion and export more than USD 2 billion in goods and services each year.
AIIA’s Chief Executive Officer and national secretariat are based in Canberra. It also has executive officers in Melbourne,
Sydney, Brisbane, Adelaide, Perth and Darwin who work with our state committees and special interest groups.
For more details on AIIA please refer appendix section or visit www.aiia.com.au
3. http://www.dbcde.gov.au
4. http://www.austrade.gov.au/Invest/Opportunities-by-Sector/ICT/default.aspx,
http://www.manpower.com.au/documents/White-Papers/IT%20Market%20Insights-Australia.pdf
5. AAII
6. http://www.state.gov/r/pa/ei/bgn/2698.htm, Austrade Website
57
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
! Australia is ranked ninth out of 183 economies for the ease of
doing business in the World Bank Doing Business Survey 2010. It
Infrastructure development
takes three days to start a business in Australia, which is
! Australia has an extensive multi-modal transport infrastructure
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
CAGR 5%
!
offering a platform to pilot new products and solutions of
companies that are based in Asia-Oceania region, due to high
quality of infrastructure and the use of the skilled population
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
18. EIU
19. Inputs from KPMG Australia
59
Strengths Weaknesses
Opportunities Threats
Outsourcing Opportunity
Australia’s capacity to innovate has made it an internationally recognized
place to invest and successfully develop solutions with global applicability.
Many international companies are delivering niche services out of Australia
to both the region and the world. For e.g. Australian digital content
expertise has global recognition. The creative digital industry has earned
more than AUD 23 billion in revenues per year. The digital game
development sector alone generated AUD 136.9 million in 2006-07, with 93
percent derived from exports20.
GDP at market prices (2008) USD 79.6 billion Economy and Industry
Since its independence in 1971, Bangladesh has been focused towards creating a
Population (2008) 160 million
market economy. Economic policies aimed at encouraging private enterprise and
Exchange Rate (BDT:USD) (Jan – Sep ’09 avg) 68.94 investment, denationalizing public industries, reinstating budgetary discipline, and
liberalizing the import regime were accelerated after independence1, 2.
Inflation (1Qtr - 2009) 5.6 percent
Although, the services sector contributes more than half of GDP, agriculture remains a
major source of employment providing employment to nearly two-thirds of
Bangladeshis.
Garment exports and remittances from Bangladeshis working overseas - mainly in the
Middle East and East Asia - has helped fuel economic growth in Bangladesh. However, © 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
400 was formed in 1997 with the vision of developing the local software
and IT service industry in the Bangladesh. In 1998, the Government
488.6 541.1 568.7 598.9 635.4
200 removed all import duties and VAT for computer hardware and
software imports7
0
2006 2007 2008 2009E 2010E
2000 - Present
Domestic Exports
The ICT Taskforce was formed headed by the Prime Minister in 2001.
Note: Data for exports is for Bangladesh’s financial years; while data for domestic market is for Bangladesh finalized its first National ICT Policy in 2002 aimed at
calendar years
Source: BCS, WITSA Digital Planet Report
building an ICT-driven nation comprising of a knowledge-based society.
In July 2009, the Government approved the new National ICT Policy,
after reviewing and amending the National ICT Policy 2002. The new
Break up of IT-BPO by Service Line policy incorporates 306 action plans to achieve the country’s IT vision
of a ‘Digital Bangladesh’ in 2021. The Government prioritized the ICT in
Other IT Enabled the budget of the fiscal 2009-10 allocating a total of more than USD 80
Services 15% million8
1960s - 1980s: Out of the 550 registered IT-BPO companies in Bangladesh, more than
The Bangladesh Atomic Energy Commission first introduced 400 companies export their products to the US, Canada, EU, Middle
computers in the country in 1964, to be followed in late 1960s and East, Japan, Australia, South Africa and some South East Asian
1970s by their use in the financial sector. The National Computer countries. Most of the IT-BPO companies are of Bangladesh origin9, 10
Committee, the predecessor of Bangladesh Computer Council (BCC)
was formed in 1983. Later, BCC was officiated by an act passed in the Foreign investment in the IT-BPO industry has increased over the past
Parliament in 1990 under the Ministry of Science and Technology. few years. Nearly 30 companies are established through joint ventures
with foreign companies or as Offshore Development Centers with 100
Bangladesh Computer Samity (BCS) was established in 1987 with a percent foreign capital investment9, 10
view to assemble all entrepreneurs in the field of computer and
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
information technology under one roof to explore the then infant Bangladesh offers competencies in areas of software development,
web development, desktop publishing, data entry, 3D animation and
back office development.
Bangladesh Computer Samity (BCS)
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Bangladesh Computer Samity (BCS) is the voice of the ICT industry of Bangladesh. It is the national association of the ICT
companies in Bangladesh. BCS was established in 1987 with 11 members.
BCS contributes to the country’s ICT policy making and takes part in the implementation of national ICT action plans, along
with public entities. It also provides support and cooperation to NGOs in ICT related development and services.
The ICT industries of Bangladesh comprises of distributors, dealers, resellers of computer and allied products, locally
assembled computer vendors, software developers and exporters, internet service providers, ICT based educational
institutions and training houses, ICT embedded services providers etc. The total number of members stands at 710 at present.
For more details on BCS please refer appendix section or visit www.bcs.org.bd For more details on AIIA please refer appendix
section or visit www.aiia.com.au
expanded and improved to carry a majority of the national effective governance and policy-making23
passenger traffic, it still records a high fatality rate. Moreover, a
lack of adequate resource allocation for maintenance threatens Doing business
the sustainability of road transportation in Bangladesh. ! Bangladesh is ranked 119 out of 183 economies for the ease of
doing business in the World Bank Doing Business Survey 2010. It
! Irregular and unreliable power supply also affects the IT-BPO
takes 44 days to start a business in Bangladesh, which is
industry. There is a substantial gap of nearly 2000 megawatts
significantly higher than the regional average of 28.113
between supply and demand of electricity. The Government has
adopted a master plan to improve infrastructure in the country ! Bangladesh has an abundant supply of human resources and is
and disturbances in the power supply are expected to minimize competitive in terms of wages, but broadband and internet rates
by 201317 and electricity tariffs continue to remain very high24
25. KPMG Analysis, and interviews with representatives from ASOCIO, the member association, and
companies operating within the country
65
Strengths Weaknesses
Opportunities Threats
ICT. IT services demand of the specific SME segments was estimated to be terms of enforcing contracts in the World Bank’s latest Doing Business
around USD 17.94 million27 2009 survey
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at market prices (2008) USD 215.4 billion Economy and Industry
Hong Kong is a free market economy, which is fairly dependent on international trade
Population (2008) 7.0 million
and finance. The total value of goods and services trade was equivalent to nearly 212.5
Exchange Rate (HKD:USD) (Jan – Sep ’09 avg) 7.75 percent of GDP in 20081.
Inflation at Consumer Prices (1Qtr - 2009) 2.6 percent In 1997 Hong Kong was handed over to China after being colonized by Britain for over
150 years. Under the Sino-British Joint Declaration the Chinese government guaranteed
Unemployment (2008 avg) 3.5 percent
that it would preserve Hong Kong's capitalist economy for at least 50 years1.
S&P Risk Rating AA+/Stable/A-1+
Hong Kong
Source: EIU, S&P, AsiaOne News, x-rates.com GDP Composition industrialized rapidly
through the growth of
the textile and
manufacturing
Industry 7 % industries. However,
today most of the
factories in Hong Kong
Services 93 % have moved over the
border to the mainland1.
In November 2008, Hong Kong officially slid into recession. The economy is increasingly
facing challenges of rising unemployment, increased competition from mainland China
and an ageing population3
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Inward FDI (USD Billion) Exports (USD Billion)
2004 - 315.4
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
1. Phillyimc
2. EIU
3. Market Profile for ICT in Hong Kong by New Zealand Trade and Enterprise
68
2006 - Present:
Break up of IT Spend by Service Line In 2008, the government revised the Digital Strategy 21 and
highlighted five areas for action: facilitating a digital economy,
Hardware Web design and
consultancy 6% development 7% promoting advanced technology and innovation, developing Hong
Kong as a hub for technological cooperation and trade, enabling the
Hardware support System integration &
& maintenance 5% implementation 8% next generation of public services and building an inclusive, and a
knowledge-based society5
Website hosting Application support &
services 4% maintenance 12%
The Information and Software Industry Association (ISIA) was established in July 1999. Its objective is to promote the
standard, recognition and profitability of the local information and software industry and to expedite the development of
high value-added information and software services for the industries in Hong Kong and the region.
For more details on ISIA please refer to the appendix section or visit www.isia.org.hk
! Though Hong Kong invested about 4.2 percent of GDP on Government support and incentives13
education in 2008, the skills availability may pose to be a ! There are schemes available in Hong Kong that support the IT
problem in the region due to an ageing population8 industry, such as a USD 640 million fund that supports projects
that contribute to innovation and technology upgrade in local
! Low fertility rates and increasing life expectancy are causing a
industry, including joint R&D projects between the private sector
gradual decline in population growth and a shift in the age
and local universities
structure of the population toward a greater share of the elderly.
While higher labor productivity growth and increased migration ! The New Technology Training Scheme reimburses up to 50
of younger skilled workers from the Chinese mainland would percent of staff training costs in new technology
lower the economic impact of aging, they would not offset it
fully9 ! The R&D Centre Programme aims to strengthen collaborative
applied research activities between industry and research
ICT penetration in the country organizations
! Hong Kong’s ICT market is highly penetrated. Mobile penetration
in Hong Kong is high, with the number of mobile phone Competitiveness in the exports market
subscribers reaching 10.98 million at a penetration rate of 176 ! Hong Kong is an export-oriented economy of largely re-exports14
percent10
! Though Hong Kong’s major export market include US, the EU
! Hong Kong’s broadband penetration is also one of the highest in and Japan, the Chinese mainland accounted for 47 percent
the world – 76 percent of households use the broadband service 11 respectively of Hong Kong's total exports in 200615
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
48 percent which dropped from the 2006 figure of 53 percent
economy, which is expected to record relatively strong growth of
6.8 percent in 2009, is expected to support the state's own GDP
Infrastructure development
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
the world11. However, a USD 423 million Intelligent Transport region’s average of 41 days17
System (ITS) is being developed to improve the traffic
! According to several reports, Hong Kong has topped the list of
management and control systems in Hong Kong12
the highest office space rentals in the world in 200818
! The launch of the Hong Kong Applied Science and Technology
Research Institute (ASTRI) in 2001, Cyberport, Hong Kong’s
Hong Kong IT-BPO Industry - 2020 ! Collaborating with Japan on R&D training programmes is likely to
develop the innovative capabilities of service providers in Hong
USD 3.1 bn Kong
USD 2.6 bn
! The SAR could provide workshops for IP law enforcement
USD 1.4 bn techniques, and host shared learning sessions for countries in
CAGR 5%
CAGR 7%
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
19. The Pearl River Delta comprises of Hong Kong, nine municipalities of the Guangdong Province in China 21. Euromonitor.com
and Macao 22. www.chamber.org.hk
20. Chamber.org.hk
71
Strengths Weaknesses
Opportunities Threats
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
established in the Pearl River Delta region, representing an increasing
opportunity for Hong Kong-based IT companies to provide IT products and
services to the Mainland25
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
India
GDP at Market prices (2008) USD 1,225 billion Economy and Industry
Economic reforms since 1991 in India have signaled a paradigm shift to a more open
Population (2008) 1,148 million
economy with greater reliance on market forces, a larger role for the private sector
Exchange Rate (INR:USD) (Jan – Sep ’09 avg) 48.96 including foreign investment, and a restructuring of the role of the government1
Services Industry
57% 26%
India’s economy has grown by approximately 9 percent a year since the last three
years, and has seen a decade of over seven percent growth every year. Key industries
include textiles, chemicals, food processing, steel, engineering and machine tools,
electronics and software2
1. UNIDO.org
2. Economywatch.com
3. Indlaw.com
IT-BPO Industry size
1990s:
80 India's new telecom policy, post-liberalization, brought in further
70
changes with the introduction of IP telephony and the end of the
60 CAGR: 27%
state monopoly on international calling facilities. The Department of
50 47.3
40.9 Electronics (DoE) of the Central government introduced the concept
USD bn
40
31.8 of Software Technology Park of India (STPI). STPIs were set up at
30
24.2 various locations throughout the country and were given basic
20 18.2
13.4 24.3 infrastructure, dependable power supply, tax exemptions and also
10 23.1
13.2 16.2
8.2 9.9
0 given 100 percent ownership for the foreign firms. In May 1998, a
2004 2005 2006 2007 2008 2009 National Task Force on Information Technology and Software
Domestic Export (est.)
Development was formed to formulate a long-term national policy
Note: NASSCOM Strategic Review 2009 for the country and also to remove impediments for the growth of
the IT industry. IT domestic and export revenues amounted to USD
2000 - Present:
Other IT services
12% Customer interaction
The millennium started with the Y2K problem, and India was the
Software testing services 14% only country that had an abundant workforce to solve the
5%
Finance and accounting millennium bug, which brought in considerable business. Over the
Support and Training
7% past decade, the industry has achieved average annual growth of 40
5%
Vertical specific BPO percent as businesses access India's talented, low-cost workers.
IS Outsourcing 6%
10% Seventy five percent of the Fortune 500 companies have been
Other BPO Services
5% involved in the Indian IT-BPO industry7. The country's reputed three
Custom Application
Development IT services companies—Infosys Technologies, Tata Consultancy
Management 36%
Services (TCS), and Wipro Technologies—have evolved rapidly into
established global players.
Note: Other IT Services include: systems integration, IT Consulting, Network consulting and
integration and Others
Other BPO Services include: Knowledge Services, HR Admin, Procurement and logistics Current state of the IT-BPO industry
and others
With the sector clocking export and domestic revenues of
Source: NASSCOM Strategic Review 2009
approximately USD 71.6 billion in 08-09, the IT-BPO industry has
become an important segment for the Indian economy, generating
Evolution of the IT-BPO Industry direct employment for over 2.23 million people in FY2009. The IT
1980s: market has contributed to nearly 5.8 percent of GDP in 20098.
Software was recognized as an industry and was eligible for
incentives such as, lower import tariffs. One of the first companies The sector has made considerable investments in talent
to set up a technology base in India was GE, following the chairman development and has thus built capabilities of graduates from Tier II
Jack Welch’s visit to India. During the late 1980s, several European cities as well. Fifty percent of the new IT-BPO recruits are now from
airlines started using Delhi as a base for back-office operations; Tier II cities9
British Airways being one of them4. The National Association of Over 4,000 companies (including over 500 international companies
Software and Services Companies (NASSCOM) was set up in 1988
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
NASSCOM is the premier trade body and the chamber of commerce of the IT-BPO industries in India, with more than 1300
members. NASSCOM’s membership base constitutes over 95 percent of the industry revenues in India and contributes 5.5
percent to the GDP of the country. The IT industry employs over 2.24 million professionals directly and indirect employment
attributed to the IT-BPO industry is estimated to be fourfold, translating to over 8 million additional jobs. Its primary focus is
on Public Advocacy, providing thought leadership to the industry through research and business development by building and
leveraging on global linkages.
For more details on NASSCOM please refer appendix section or visit www.nasscom.in
! Literacy rates are low at 66 percent (average for years 2000 – ! The Special Economic Zones (SEZ) scheme provides similar
2007), with tertiary enrollment at 10.5 percent13 incentives as STPI to exporting companies (not limited to IT-BPO
companies). IT-BPO companies are expected to move from the
! Employability of Indian graduates is considered to be low, with
STPI scheme to the SEZ scheme post 2010, following the phase-
EIU rating India 2 on a scale of 5 on the quality of labor force
out of the STPI scheme22
ICT penetration in the country import of software, and on import of hardware for 100 percent
! The total wireless telecom subscriber base (GSM, CDMA, WLL) export-oriented projects, complete pass-through mechanism
15
crossed the 400 million mark and the overall tele-density was with single point taxation for venture capital fund and special
concessions for R&D
38 percent in 200916
! As of October 2008, the number of broadband subscribers Competitiveness in the exports market
totaled close to 5 million. India is not a strong performer in terms ! India’s major export products are engineering goods (23 percent
of internet usage with just below 10 percent of the population of total exports in ’07-08), petroleum products, gems and jewelry
using the internet 17 and textile
! In 2007, India server market revenues touched USD 727 million, ! IT exports constitute 14 percent of India’s overall exports.
shipments grew nearly 19 percent to 135,615 units during the Exports from the industry have helped in maintaining India’s
year, and the client PC market touched 6.5 million units trade balance, by offsetting India’s cumulative oil imports by
according to IDC, indicating healthy growth as Indian customers nearly 65 percent over the last decade14
expand their IT infrastructure
GDP growth and stability
IP protection and data protection ! Construction and manufacturing have led growth in GDP since
A India already has IPR laws in place, however, stronger the last few years. In the last quarter, however services
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
!
enforcement is required. In 2008, the World Economic Forum accounted for nearly 85 percent of incremental growth24
18
ranked India 48 out of 60 countries in IPR protection .
! The economy is expected to grow at 6.5 percent in the second
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
! Piracy rates in India are at 68 percent in 2008, down nearly 6 half of the current fiscal year25. Sectors like construction, trade
percent since 2004. Losses in 2008 due to piracy amounted to hotels, transport and communication, financing, insurance, real
USD 2,768 million19 estate and business services, and community, social and
personal services have achieved over 5 percent growth
Infrastructure development
! There are about 92 airports operational in India, out of which 12 Doing business
are international. The government has taken a number of ! The World Bank's Doing Business Report of 2010 ranks India 133
measures to step up the airport infrastructure for the country. It out of a total of 183 economies. It takes an average of 30 days to
has envisaged a modernization plan with a view to modernize 35 start a business in India, which is marginally higher than the
airports in smaller cities20 region's average of 28.1
According to NASSCOM, the Indian IT-BPO industry should aim to ! By learning from the experience of countries that are strong in
drive innovation, in addition to retaining its competitiveness. In order hardware, India could develop complementary skills so that it
to successfully achieve its goal, key stakeholders of the Indian IT- can showcase a more diversified portfolio of products and
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
BPO industry need to address the issues currently faced by the services
industry:
Improved infrastructure:
India needs to aggressively push to improve its current
infrastructure, largely in areas of power, telecom and transport. It is
also imperative for the government to build and upgrade business
infrastructure in next level cities given that the industry is highly
concentrated in Tier -I locations
Strengths Weaknesses
ICT penetration
Low ICT penetration in India would substantially hinder the domestic
market growth opportunity, and limit inclusive growth in the country,
especially in the semi-urban and rural areas
Opportunities Threats
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
SMB segment and develop new solutins such as Software as a Service
(SaaS) targeted at this segment
Protectionism
Increasing protectionism in global demand markets due to the rise of
Large consumer market unemployment could prove to be a threat to the growth of the sector if the
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
The sheer size of the nation has turned to its favor for India as it today global markets reduce outsourcing to lower cost destinations
boasts of one of the world’s largest consumer market for electronics and
technology. India is expected to cross 500 million mobile users by 2012 and
89.9 million 3G subscribers by 2013, indicating a huge and growing
domestic market27. There is great potential for India to develop internet
offering on mobile platforms and innovative mobile applications to cater to
this growing market
GDP at market prices (2008) USD 510.8 billion Economy and Industry
Indonesia is characterized among the lower middle-income countries of the world. It
Population (2008 estimate) 237.5 million
has a market-based economy, in which the government plays a significant role. Industry
Exchange Rate (IDR:USD) (Jan – Sep ’09 avg) 10,731.7 accounts for nearly 50 percent of Indonesia’s GDP1. Major industries include petroleum
and natural gas, textiles, apparel, footwear, mining, cement, chemical fertilizers,
Inflation at Consumer Prices (1Qtr - 2009) 7.9 percent
plywood and rubber.
Unemployment (2008 avg) 8.4 percent
Agriculture
14%
Services Industry
38% 48%
The Asian financial crisis of 1997 affected Indonesia badly, leaving it with a negative
growth of 13.1 percent2. Indonesia has recovered slower than some of its neighbors.
The country recapitalized its banking sector, and took steps to stimulate growth and
investment, particularly in infrastructure. Real GDP grew at over 6 percent between
2007 and 2008
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
2004 1.90 82.7
2500
1500
USD Mn
1,037.70
835.5 935.7
705.2 2005 - Present:
1000
537.4 According to Indonesia’s ICT Ministry, 65 percent of the industry is
395.5
500 872.6 921.5 made up of consulting services and 30 percent of multimedia software
736 841.3
503.1 581.9
houses. According to IDC, the Indonesian IT market grew at a CAGR
0
2004 2005 2006 2007 2008 2009 of 10 percent over five years till 20076. Indonesia's ICT industry
Services Software employed over 58,000 workers in 20077
The total IT services and software market grew to about USD 1.1 Services, which acquired a Filipino call center firm recently12, and
billion. During this period ICT revenues of USD 0.5—0.75 billion came Astagraphia, which was ranked by IDC as the third largest IT services
The Indonesian Information Technology Federation (IITF) was established on November 21, 2001 in Jakarta, United Republic
of Indonesia. The national development of Indonesia requires a maximum use of Information Technology for raising
productivity of all resources and for increasing the competitiveness of the economy. IITF was formed in order to capture all
the aspirations of the various national associations in one federated body, and, to accelerate industrial development and
increase the rapid utilization of Information Technology (IT) so that various technologies can be better integrated and
appropriately deployed.
IITF consists of eight industry associations in IT-related fields covering ISP, software, hardware, games/animation, wireless,
phone and internet kiosks, satellite and cellular businesses.
For more details on IITF, please refer to the appendix section or visit www.ftii.or.id
3. IDC 9. Zdnetasia.com
4. NCS.com 10. Reuters
5. Digital Review of Asia Pacific 2007 11. Thejakartaglobe.com
6. http://www.idc.com/getdoc.jhtml?containerId=IDC_P7164 12. Newsinfo.inquirer.net
7. Asiamedia.ucla.com 13. AT Kearney GLSI
8. Businessweek.com, IDC 2004
81
14. Marketresearchworld.com 22. Building and enforcing intellectual property value 2008
15. EIU 23. http://www.indonesiamatters.com/905/intellectual-property-rights/
16. Worldbank.org 24. Mida.gov.my
17. Indonesiaeceonomywatch.com 25. Forbes.com
18. Computerworld.com 26. Indonesiamatters.com
19. Penerbitdatakom.com 27. Xinhuanet.com
20. Internetworldstats.com 28. Austrade.gov.au
21. Thejakartapost.com 29. Themalaysianinsider.com
Indonesia: Outlook 2020
SMBs providing considerable growth potential investment. Moreover, within the country access to government as
Indonesia’s IT software and services spend was USD 1.8 billion in well as information is difficult as a high proportion of market data is
2008, growing at its current pace at a CAGR of 8 percent (2008 -20) not publicly available. Forming partnerships therefore becomes
the industry could reach USD 4.6 billion. However, factors such as imperative, which may lead to some entry barriers32.
lack of ICT literacy, lack of focus on the sector and slow reforms
could hamper the IT industry’s growth. Areas for Collaboration
Collaboration could push IT-BPO growth to higher than the projected
The Indonesian IT-BPO industry has the potential to reach USD 9.7
‘optimistic’ growth
billion with a CAGR of 15 percent. The growing SMB market could
bring immense opportunities for the industry. ! Indonesia benefits from a large population that could be trained
for skills specific to the IT-BPO industry. Collaboration with
Australia and Malaysia on domain specific training such as mining
Indonesia IT-BPO Industry - 2020
could bring opportunities to the country through business
sourced from US and Canada
USD 9.7 bn
Focus on education:
This is imperative for the growth of Indonesia as a favorable IT-BPO
destination. Besides improving basic education and literacy rates in
the country, Indonesia also has to focus on the sustainability of
learning and the quality of teaching. A defined certification and
qualification system may be necessary in order to encourage
lifelong learning31
Strengths Weaknesses
Opportunities Threats
Large consumer market High software piracy © 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Banking and telecommunications industries dominate IT spending in Indonesia features in the BSA 2008 Top 20 list of countries with the highest
Indonesia. The large customer base in Indonesia promises good piracy in the world, with USD losses worth 544 million. These regulatory
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
opportunities for the ICT industry as technology adoption increases34. issues have hampered the progress of the IT industry in the country36
Japan
Inflation (1Qtr - 2009) -1.2 percent For nearly three decades, Japan's overall economic growth had been remarkable,
averaging at 10 percent in the 1960s, 5 percent in the 1970s, and 4 percent in the 1980s1
Unemployment (2008 avg) 4.0 percent
Agriculture
1%
Services Industry
73% 26%
Growth in Japan in the 1990s was slower and the government efforts to revive the
economic growth met with little success and were further hampered in 2000-01 by the
slowing of the global economy2. The country, however, has benefited from trade
surpluses, amounting to USD 107 billion in 1999 and USD 95 billion in 2000.
Japan's main export goods are cars, electronic devices and computers3. Export of goods
and services accounted for 17.4 percent of the GDP in 2008. As exports plunged during
the first three months of 2009, Japan’s economy (which is highly dependent on exports)
has contracted and trade surplus is expected to shrink to USD 7.3 billion in 2009.
Japan External Trade Organization (JETRO) reports that the United States, Cayman Islands,
Singapore, Switzerland and the British Virgin Islands were the largest sources of FDI in
2007. The top sectors that received FDI were finance and insurance, wholesale and retail,
and real property
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Services Research
The rapid ICT penetration since 1996 set the stage for an info-tech
61% 2%
revolution, and the government placed ICT as an important sector.
Database services
2%
During early 2000, Japan focused on the i-mode system and the 3rd
generation mobile phone networks.
Source: IT Service Industry in Japan 2009, JISA
2003 – Present:
In order to contribute to the e-Japan strategies, in 2006, the
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
BFSI, automobile and consumer electronics are the highest spenders of IT in Japan11.
The growth in demand is particularly strong for Enterprise Resource Planning(ERP),
Customer Relationship Management (CRM) and Business Intelligence (BI) software in
Japan.
According to a survey by Nork Research, the ERP package software market in 2006
was estimated at USD1 billion and is expected to grow to over USD1.2 billion in 2010.
The increase is expected to come mainly from sales to SMBs.
Companies such as Microsoft, IBM, EDS-HP, Oracle, Sales force, SAP, Hyperion, TCS,
Infosys and Wipro already have a presence in Japan. Fujitsu, one of Japan’s important
outsourcing companies, has the top share of the Japanese outsourcing market12. Other
players include Hitachi, Toshiba, Accenture and NTT data.
China is the largest receiver of Japanese offshoring. The reasons are its low wages,
proximity to Japan, common script and many Japanese-speaking people. However,
other countries, such as the Philippines, India and Vietnam have also identified Japan as
a potential market for offshored services.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
JISA was established in 1984 and its members include leading software developers, information processing and
database/VAN service suppliers. Associate members are predominantly the leading Japanese hardware vendors, bankers,
insurers, manufacturers, traders and common carriers, etc. The mission of JISA is to maintain the growth of Japan's
information services industry and to contribute to the overall growth of the country's economy.
JISA has over 620 member enterprises, 30 local associations, and 50 associate members. Total sales revenue of its
members touched 9.2 trillion yen (55 percent of the national market), and employees were 313,000 (40 percent of employees
in the domestic IT services and software industry).
For more details on JISA, please refer to the appendix section or visit www.jisa.or.jp/en/
9. WITSA – Digital Planet 11. NASSCOM’s Emerging Market Series: Japan October 2008
10. Survey by IDC Japan: http://www.telecomasia.net/content/no-outsourcing-please-were-japanese 12. Fujitsu Annual report 2008
88
! Japanese companies have started to place greater emphasis on ! General elections held this year in August is being labeled as
acquiring and registering intellectual-property rights and also historic, as the Liberal Democratic Party (LDP), which has been
enforcing their rights. The government is also, on its part, putting in power since its formation over 50 years (except for a 11-month
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
IPR law reform on high priority. period in 1993), lost to the opposition, Democratic Party of Japan
(DPJ)22
Infrastructure development
Transportation in Japan is modern and infrastructure spending Doing business
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
!
has been considerable ! Japan is ranked at number 15 in terms of ease of Doing
Business. According to the World Bank Index 2010, it takes 23
! Railways are a major means of passenger transport, especially
days to start a business in Japan, compared to the OECD
between major cities and for commuter transport in metropolitan
average of 13 days
areas
! Tokyo ranks second as being the most expensive office location
! Japan has several airports, with the domestic hub being Tokyo
in the world23.
International Airport, which is the fourth busiest airport of the
world19
The Ministry of Economy, Trade and Industry, in order to prepare the foundation of an
advanced IT-enabled society plans to foster innovation and strengthen international
competitiveness. Moreover, the Japanese IT Strategic Headquarters has been enacting a
policy programme called i-Japan (formerly e-Japan) through which the country is likely to
focus on three areas: (a) Promotion of e-Government (b) Devising countermeasure against
internet crime and (c) Promotion of Green IT24.
With the advent of new technologies and architectures such as Service Oriented
Architecture (SOA), SaaS and cloud computing. The structure of the information society
in Japan has changed to an advanced information society25. At the current pace, the
Japanese IT-BPO industry could reach USD 149.3 billion by 2020, growing at a CAGR of
3 percent. However, some of the constraints towards Japan’s future outlook would be
the conservative attitude of Japanese enterprises to offshoring, as well as the cultural
dissimilarities and the limited English language capabilities. Another threat to the
Japanese economy as a whole is an ageing population and declining birth rates, which
could lead to a severe shortage of skills by 2020.
The Japanese IT-BPO industry has the potential of growing at a CAGR of 4 percent, if it
is able to embrace globalization and try to limit the barriers of language and culture.
Currently, China has the lion’s share of offshore outsourcing (nearly 60 percent), mainly
because of the similarities in culture26. As Japan opens to other markets such as India,
Vietnam and the Philippines, it would gain access to a pool of service providers with
domain expertise as well as service delivery maturity. Japan is known for its R&D
capabilities and has one of the highest rates of patents filing in the world27. A continued
focus on innovation and R&D would bring opportunities in high-end services
USD 175.3 bn
USD 149.3 bn
CAGR 4%
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
USD 104.5 bn
CAGR 3%
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
! Japan could run training programmes for supplier nations like India, Vietnam,
Philippines to familiarize them with the Japanese culture and language. This
partnership could also lead to knowledge-sharing sessions by service providers on
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
! Being one of the forerunners in the fight against piracy, Japan could train nations like
Bangladesh and Malaysia on efficient IPR enforcement techniques
! Opening up its labor market to the regional countries could provide Japan with
access to skills, which are currently on the decline in the country.
29. OECD.org
91
Strengths Weaknesses
Opportunities Threats
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
into new areas such as R&D, which the Japanese have proven expertise decade. The implications of these demographic trends for Japan's
31
in economic growth are profound32
Declining dominance
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
a substantial advantage for mobile commerce applications rising importance of China and India. India and China’s growing importance
in world trade can affect Japan’s position of an important exporter in Asia.
However, Japan is expected to retain its expertise in high-technology
industries and is expected to enjoy an advantage in the production of high
value added goods.
30. IPR in Japan: Asahi Koma Law 32. The Guardian, U.K., Aug 2, 2001
31. Eetasia.com 33. NASSCOM’s Emerging Market Series: Japan October 2008
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at Market Prices (2008) USD 929.1 billion Economy and Industry1
The country’s rapid capital-intensive growth over the last few decades has been driven
Population (2008) 49.2 million
by a high internal savings and investment rate and an emphasis on education. The
Exchange Rate (USD:SKW) (Jan – Sep ’09 avg) 1,102 economic growth model which started with import-substituting industrialization after
the Second World War shifted to export-oriented growth from the ‘60s onwards. Korea
Inflation (1Qtr - 2009) 3.9 percent
joined the Organization for Economic Co-operation and Development (OECD) in 1996.
Unemployment (2008 avg) 3.2 percent
GDP Composition
S&P Risk Rating A/Stable/A-1
Agriculture
3%
Services Industry
58% 39%
Korea, however, suffered heavily in the Asian economic crisis of 1997-98. After the
crisis, the country embarked on financial and corporate sector restructuring. The
country joined the trillion dollar economy club in 2004. Korea’s GDP growth was
between 4 and 5 percent from 2003 to 20072.
The Korean economy is currently in recession and the EIU expects the GDP to shrink
by 1.8 percent in 2009 as per its recent forecast3.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Inward FDI (USD Billion) Exports (USD Billion)
The Federation of Korean Information Industries (FKII) is a private and non-profit organization. The association was formed in
1979 and since 1979, FKII has contributed to spurring the growth of the IT industry and informatization of Korea. FKII has
emerged as a beacon of the IT industry in Korea to lead the ubiquitous area. The vision of FKII is to become a renowned IT
Leader displaying creativity and leadership. FKII has around 250 members, including regular and associate members.
In 2008 (P), the total revenue of the Korean IT industry was 288 trillion Korean Won (equal to USD 2,880 billion), it includes
all amounts from production and export in telecommunication services, Information Communication devices manufacturing,
and Software and related service.
For more details on FKII, please refer to the appendix section or visit www.fkii.or.kr
4. http://investintaiwan.nat.gov.tw/en/opp/inds/info.html 8. FKII
5. http://www.austrade.gov.au/ICT-to-Korea/default.aspx 9. http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Information-and-
6. Digital Planet Report, WITSA 2008 communication-technologies/Documents/ICT-market-in-South-Korea-February-2009.pdf
7. ICT in the Korea market, by the New Zealand Trade and Enterprise, Seoul, February 2009
95
! Korea has a highly trained labor pool, adding close to 40,000 ICT Government support and incentives
graduates to its workforce every year . Korea produces the 12 ! In May 2008, the government declared plans to grant cash
highest number of science graduates per 100,000 employed 25-34- subsidies to foreign companies setting up R&D facilities
year-olds among OECD countries, both for males and females 13 proportionate to the number of Koreans employed. Under this
plan, the government is to bear part of the wages for up to 100
ICT penetration in the country jobless Korean graduates of engineering universities and
! Korea is highly advanced in terms of ICT penetration, with the graduate schools, who are hired by foreign-owned R&D centers21
use of new technologies such as 3G, and IPTV also well
entrenched. 3G services were commercially launched in Korea in Competitiveness in the exports market
2007, and the number of 3G subscribers is 11.2 million as of May ! Exports have been the major engine for South Korean economic
200814 growth. In 2008, exports contributed around 48.5 percent to the
country’s GDP22. The major export markets are China (including
! Internet usage has expanded rapidly with over 76.3 percent Hong Kong), US, Europe and Japan17
(34.82 million) of Koreans accessing the internet as of December
2007. There were over 41.9 million wireless internet subscribers ! Exports from the ICT industry contributed 30 percent to Korean
14
as of January 2008 . Korea has more than 45 million mobile exports and close to 17 percent of the GDP in 200523
phone subscribers (compared to around 23 million land lines) as
of July 2008. The high level of ICT penetration is bringing about GDP growth and stability
rapid technological convergence in Korea compared to other ! The Korean economy is showing signs of a rebound from the
Infrastructure development disposable per capita income to around USD 20,00024. The per
! The country has advanced infrastructure including expressways capita income in 2008 was USD 18,00025
10. Viewswire One Click Report on South Korea, Economic Intelligence Unit 19. http://www.software.or.kr/english/activity/index05.html
11. Cabinet Office, Annual report on the ageing society, 2007, EIU 20. http://www.koreaittimes.com/story/3651/incheon-strives-be-reborn-world-class-global-city
12. http://ec.europa.eu/information_society/activities/itgirls/doc/stats_annex1_.pdf 21. http://www.fdimagazine.com/news/fullstory.php/aid/800/South_Korea_offers_a_wealth_of_incentives
13. http://www.oecd.org/dataoecd/32/24/41277858.pdf _to_investment.html
14. http://www.austrade.gov.au/ICT-to-Korea/default.aspx 22. Viewswire One Click Report, South Korea, Economic Intelligence Unit, 2009
15. Piracy Study, BSA-IDC 2008 23. CISA, Taiwan
16. http://news.xinhuanet.com/english/2009-07/29/content_11792733.htm 24. http://www.euromonitor.com/South_Korea_working_another_miracle
17. http://memory.loc.gov/frd/cs/profiles/South_Korea.pdf 25. http://www.koreatimes.co.kr/www/news/biz/2009/01/123_38369.html
18. http://www.international.gc.ca/canadexport/articles/90121h.aspx 26. http://www.doingbusiness.org/ExploreEconomies/?economyid=104
South Korea: Outlook 202027
USD 10.5bn !
outsourcing and offshoring is likely to help ensure a lower
operating cost environment for Korean companies, which can
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
27. KPMG Analysis, based on secondary research as well as extensive interviews with executives from the
country associations, companies operating within the country and local KPMG offices
97
Strengths Weaknesses
Growth in IP creation
Korea was historically good at adaptation and practical application of
technologies but lagged in basic research fields compared to countries like
the US and Japan. However, Korea’s share in global patents granted has
been increasing rapidly, growing from 5.8 percent in 2000 to 14.1 percent in
200628
Opportunities Threats
earmarked public funding. South Korea's President has envisaged a "low competition in the IT market, especially in the IT outsourcing market32. The
carbon, green growth" strategy for the country. In July 2009, a South monopolistic market induced by the Chaebol structure could pose a threat
Korean Committee on Green Growth announced a five-year plan to invest to the development of the Korean IT services industry going forward.
USD 87.7 billion in its Green New Deal programme. The money is set to be
spent on various aspects of IT, including faster broadband networks and
green technologies such as solar panels and hybrid cars and is likely to
provide a boost to IT services growth in the country29.
GDP at market prices (2008) USD 115 billion Economy and Industry
New Zealand has an export-dependent economy based on its very efficient agricultural
Population (2008) 4.3 million
system. Moving from high levels of protection for the domestic industry, New Zealand
Exchange Rate (NZD:USD) (Jan – Sep ’09 avg) 1.67 opened its economy to competitive pressures and world prices in 1984. It has been a
free-market economy since then.
Inflation at Consumer Prices (1Qtr - 2009) 3.0 percent
Services Industry
70% 26%
In 1997-98, large parts of the country suffered a drought, which brought down growth.
After this period the economy performed well, with GDP growth ranging between 3.5-
4.5 percent; between 2002 and 20041
Apart from a strong agricultural sector, other leading manufacturing sectors include
food processing, wood and paper products, and metal fabrication. Service industries,
particularly financial, insurance, and business services, also form a significant part of
New Zealand's economy.
New Zealand’s economy fell into recession in 2008, in line with its key trading partners,
Australia, Japan and the US, which together consume over 45 percent of New
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Zealand's exports2
3.50
CAGR: 5%
3.00 0.36 0.34
2.00
1.50 Major employers in the ICT sector include Microsoft, IBM, Vodafone
2.43 2.53
1.00 2.00 2.08 2.02 and local companies Datacom, Gen-I and Eagle. Tait Electronics,
0.50 Jade and UK-owned Allied Telesis, Navman, are internationally-
0.00 recognized examples of New Zealand's innovative ICT industry. New
2004 2005 2006 2007 2008 Zealand also has renowned digital content producers such as Weta
IT BPO Sales IT BPO Export Digital and Stracker International5
Packaged
applications, ranging from embedded software that supports
IT Services
Software 23% 77% electronic devices to high-performance software used for special
effects in games and films. Moreover, the industry is also active in
the creative sector, including advertising and publishing, as well as
computer services. The sector exports primarily to Asian markets,
the US, the EU and Australia7
NZSA is New Zealand's national software association. Association has relationship with regional software clusters and other
Information and Communications Technology (ICT) sector groups, associations and organizations. NZSA is also closely aligned to
government agencies responsible for software sector growth, development and investment. NZSA has built a collaborative
alliance between the country's primary software associations: Canterbury Software Inc (CSI), Website Developers Association
NZ (WDANZ) and Wireless and Broadband Forum (WBF). The Software New Zealand alliance enables members of each
constituent organization to access a wider range of events, companies and resources.
NZSA was established in year 1999 with objective to align with government for growth in the software sector and build
collaborative environment for sector to grow further.
NZSA seeks to help its members acquire in-depth industry knowledge and learn the essential business management, sales and
marketing skills required to enter and grow profitable export markets.
For more details on NZSA, please refer to the appendix section or visit www.nzsa.org.nz
! According to a study by Investment New Zealand, 3,818 students ! The 2008 tax package introduced a 15 percent tax credit for
graduated in 2002 with ICT-related qualifications and this number research and development expenditure that is carried out
was projected to climb by 32 percent to 5,045 graduates in 200712 predominantly in New Zealand.
! New Zealand invests about USD 1.5 billion annually in the tertiary Competitiveness in the exports market
(universities and polytechnics) education system, and has been ! New Zealand is an export oriented economy. Although New
able to attract several international students who are looking for Zealand's trading partners include US, China, Japan, Singapore,
an alternative to Australia and Germany. Australia continues to be New Zealand's principal
export market20. Proximity and cultural similarities between the
! Immigration is important to New Zealand and the Skilled
two countries have been the principal reasons. This has caused
Migration category is core to the New Zealand Immigration
New Zealand to seem remote compared to other countries in
strategy. The Skilled Migration category allows those people to
the region
emigrate, whose skills are likely to help boost the New Zealand
workforce13
GDP growth and stability21
!? New Zealand had a high per capita income (in PPP) of USD
ICT penetration in the country
26,700 in 2007
! Mobile penetration remains high in New Zealand, with an
estimated 109 mobile-phone subscriptions for every 100 people, ! The economy is currently in recession and is facing reduced
and this figure is expected to increase to an average of just demand in key export markets. Real GDP is expected to contract
under 111 subscribers in 2009-1014 by 2.7 percent this year, and is expected to grow by just 0.6
percent in 2010
!? New Zealand had 1.5 million internet subscribers as of March
2008, amounting to approximately 65 percent of New Zealand ! The country predicts long-term average growth rate to 3.5
households, ranking above Australia, the UK and US15 percent in 2011-20, which could be achieved through increased
productivity
IP protection and data protection
! New Zealand has one of the lowest piracy rates in the world at ! A growing emphasis on higher-value added production
22 percent in 2008, down from 23 percent in 2005 16
(particularly in the agricultural sector) is likely to help boost
overall productivity. This could be achieved by encouraging the
Infrastructure development17 use of farm technologies and other specialized software
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
! New Zealand’s infrastructure is strong to support the business technologies
environment. In February 2009 the government has announced a
spending of USD 61.3 million on housing and USD 70 million on Doing business
transport ! New Zealand is ranked second out of 183 countries in terms of
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
! Rail network is not vast in New Zealand, and rail services are ! According to Cushman & Wakefield’s report, New Zealand is said
focused primarily on freight, with limited passenger services on have one of the lowest office space rentals in the world22
some lines
Growth and Innovation Framework (GIF). average sizes of businesses. Thus, it is necessary for the country to
attract global ICT businesses by rolling out aggressive investment
promotion programmes. This is also likely to enable to create
opportunities for local residents and migrant students
Prospects 2020: New Zealand’s IT-BPO industry is
likely to grow through domestic revenues Build capabilities in R&D
New Zealand's IT-BPO industry has grown a CAGR of 6 percent The country needs to invest in R&D programmes to foster
during the period 2004-08, to reach a size of USD 2.9 billion21. innovation, by creating niche services that are aligned to the
important segments like agriculture, healthcare, digital content and
IT-BPO is an important component of the New Zealand economy, biotechnology. New Zealand carries a potential to emerge as a
both as an enabler and as an industry in itself. IT currently accounts supplier for advanced technologies
for approximately 4.3 percent of New Zealand's GDP22
Encourage relations with extended neighbors
As the country moves towards 2020, the IT-BPO industry could
New Zealand needs to renew its efforts towards coordinating with
grow at 5 percent CAGR (2008 – 2020) reaching revenues of USD
Asia to leverage its advanced business climate and developed
5.1 billion.
infrastructure
USD 5.8 bn
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
USD 5.1 bn
CAGR 6%
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
USD 2.9 bn
CAGR 5%
Strengths Weaknesses
Opportunities Threats
domestically as well as internationally. They are providing clinical to the country that can help in boosting the New Zealand workforce. Its
management systems for hospitals and general practitioners (GP), dependence on migration could prove a threat to the country’s growth
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Electronic health records, etc. More than a third of UK dental practices use
specialist dental software, provided by a New Zealand company25
GDP at market prices (2008) USD 165.2 billion Economy and Industry
In 2000, Pakistan made significant macroeconomic reforms like privatizing its state-
Population (2008) 166 million
subsidized utilities, reforming the banking sector, instituting a new anti-money
Exchange Rate (PKR:USD) (Jan – Sep ’09 avg) 70.4 laundering law, cracking down on piracy of intellectual property and resolving investor
disputes. GDP grew in the range of 6-8 percent during 2004-07, spurred by the gains in
Inflation (1Qtr - 2009) -0.2 percent
the industrial and service sectors1.
Unemployment (2008 avg) 7.4 percent
GDP Composition
S&P Risk Rating CCC+/Developing/C
Agriculture
20%
Services Industry
53% 27%
However, Pakistan’s economy remains vulnerable to external and internal shock due to
internal security concerns and the global financial crisis. Faced with large budgetary
deficits, high inflation and depleting foreign exchange reserves, the government agreed
to an International Monetary Fund Standby Arrangement in November 20082.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
percent of total exports. US and UAE remain the largest trading partners of Pakistan4.
1. http://www.sbp.org.pk/about/speech/economic_management_policies/2005/Economy_of_Pakistan_ 3. http://www.dbcde.gov.au
Expo_2005.pdf, CIA 4. EIU, http://www.state.gov/r/pa/ei/bgn/3453.htm, PSEB Pakistan IT Industry Year Book 2007-08
2. http://www.state.gov/r/pa/ei/bgn/3453.htm
IT-BPO Industry size
2100
1800 CAGR: 6% 175
116
1500 72
1200
USD Mn
Pakistan Software Houses Association (PASHA) for IT and BPO was initiated by a number of software houses in an attempt to
create a functional trade association for the IT industry in Pakistan. Over 350 companies are active members of PASHA. PASHA
acts as a voice of the industry and is also a platform for promoting, protecting and developing the software industry in Pakistan.
It provides a focal point of representation for outside agencies of various concerns. The main objective striven for is devising
ways to tackle issues by confronting the concerned authorities to achieve desirable gains for the organization’s members.
The Mission of PASHA is to create an enabling environment that makes Pakistan an attractive destination for foreign and
domestic ICT investments, sustain the ICT industry’s growth by raising the awareness at all levels of the society to invest into
the development of human resources, develop new and innovative avenues for PASHA's members to access partners and
customers outside Pakistan and open up new possibilities for the ICT industry to access finance.
For more details on PASHA, please refer to the appendix section or visit www.pasha.org.pk
ICT penetration in the country ! Pakistan also offers zero custom duties and tariffs on import of
! Although Pakistan is working towards improving its ICT all IT related equipment and zero percent income tax liability for
infrastructure given the rising focus on the IT-BPO sector, software development firms. A seven year tax holiday is also
internet and broadband penetration remain low with 17.5 million offered to venture capital funds in the IT sector14
internet users and 128,700 broadband users as on March 2008
Competitiveness in the exports market
! Pakistan has one of the highest mobile penetration rates in
Pakistan’s IT-BPO exports have witnessed a rapid growth over
South Asia, at 57.1 percent, with around 92 million mobile
the past few years to reach USD 175 million in 2008. Companies
subscribers as on April 200910 are capitalizing on opportunities in areas of software
development, call centers and back-office services19
IP protection and data protection
! Pakistan has a high rate of software piracy which stands at 86 GDP growth and stability
percent in 2008, resulting in losses amounting to USD 159
! Pakistan’s economy has grown by more than 6.5 percent per
million. High piracy rates have negatively impacted investments
year since 2003 with a per capita GDP of USD 1,010 in 2008.
in the software industry and the R&D within the economy11 Pakistan's economic prospects improved due to unprecedented
inflows of foreign assistance at the end of 2001. However, the
Infrastructure development
country continues to struggle with reforms, having met with
! Pakistan has a reasonably developed transport infrastructure
mixed success, especially in reducing its budget and current
comprising the railway, roads and airports. Road transport is the
account deficits9
backbone of Pakistan's transport system, carrying around 80
percent of the country’s total traffic. However, over the past few ! Pakistan’s investment climate has been affected due to the
years, road traffic has grown significantly faster than the unstable political landscape and issues related to international
infrastructure can handle, leading to the pressures on existing
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
terrorism
infrastructure
Doing business
! Pakistan witnesses a high incidence of power outages and an
! Pakistan ranked 85 out of 183 economies for the ease of doing
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
priority areas like human resources, infrastructure, software and improving the education system with specific focus on IT education. In
addition, the country should also work towards improving the labor
hardware industry development, the internet, incentives, IT promotion
participation rate, which can facilitate the growing BPO industry in
and adoption, and regulations.
Pakistan
USD 22.7 bn Asia Oceania countries, especially in the South Asia region. An
effective collaboration can help Pakistan to fruitfully leverage its
existing IT-BPO capabilities and put the Pakistani IT-BPO industry on a
USD 13.8 bn
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
USD 1.7 bn
CAGR 19%
Strengths Weaknesses
Opportunities Threats
management. Companies are increasingly leveraging Pakistan’s large base labor force is expected to grow rapidly, it suffers from a low participation
rate. Pakistanis had an average of only four years of schooling in 1990-99,
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
of qualified English speaking talent pool and the low costs of infrastructure
and illiteracy remains a major problem. In addition, cultural factors are
Domestic Opportunity likely to continue to hinder the increased participation of women in the
Pakistan’s economy is expected to maintain the growth momentum, as the workforce.
GDP is expected to grow annually at an average of 7.9 percent during the
period 2009-20. Pakistan is expected to benefit from a rising middle class,
increasingly dynamic private sector and increasing FDI. Moreover, the low
adoption of ICT among domestic SME and other companies is expected to
provide a large opportunity for local IT-BPO companies. Pakistan also has a
developing telecom and financial services industries, which are expected to
bring in additional demand for services like ERP software, mobile content
and domestic call centers.
GDP at market prices (2008) USD 166.9 billion Economy and Industry
The Philippine Government introduced a broad range of economic reforms during the
Population (2008) 92.7 million
1990s. These initiatives were designed to spur business growth and foreign
Exchange Rate (PHP:USD) (Jan – Sep ’09 avg) 47.75 investment. This move also helped the Philippines to move from a predominantly
agricultural economy, to become a services and manufacturing-driven economy1.
Inflation (1Qtr - 2009) 6.9 percent
Services Industry
53% 32%
Economic growth has averaged 5.4 percent since 2001, with growth rates reaching the
highest in 2007. GDP grew by 7.3 percent in 2007, the fastest annual pace of growth in
over three decades. Recent economic growth has been fueled by an increase in
government and private construction expenditures, growth in IT –BPO, improved
agricultural harvests, strong private consumption and spurt in remittances from
overseas workers1.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
trading partners2
7
6.1
6
CAGR: 42%
4.9
5
USD billion
4 2000s:
3.3
3 2.4 The Philippine IT-BPO industry grew from under 5,000 employees in
2 1.5 2000 to 400,000 in 2009. The Business Processing Association of
1 the Philippines (BPAP) was formed in 2004 with the merger of two
0 large associations, namely Contact Federation Philippines and
2004 2005 2006 2007 2008
Outsource Philippines. In 2007, the BPAP launched its road map to
Source: 2010 with an aim to capture a 10 percent share of the global IT-BPO
market by 20101.
Transcription The customer service sector of the Philippines has doubled every
3%
year from 2,400 employees in 2000 to 112,000 in 2005. Voice-
related services now constitute two-thirds of the country’s IT-BPO
Source: BPAP, 2008 industry. More recently, back-office BPO/KPO has evolved as the
fastest-growing segment, owing to the rapid growth of finance and
accounting outsourcing and human resource outsourcing7.
Evolution of the IT-BPO Industry
1970s - 1980: Back-office BPO/KPO has been among the fastest growing
Philippines started export of IT services as early as the 1970s. In the segments, recording a CAGR of over 60 percent during 2004-08. The
1980s, export of IT services and data-encoding services gained other areas that have helped fuel IT-BPO growth include Contact
traction in the Philippines. The Philippine Contact Center Cluster can Centers8
be traced back to the 1980s when companies outsourced services
such as animation and indexing. Later in the decade, animation in The IT-BPO industry employed close to 370,000 workers at the end
the Philippines entered its first ‘Golden Age’ 3
of 20089
1990s:
Growth of animation, IT, and data encoding from Manila continued
and spread to Davao and Iloilo. Large call centers and captives
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
The Business Processing Association of the Philippines (BPAP) is the umbrella organization for the fastest-growing industry in
the Philippines: offshoring and outsourcing (O&O). BPAP serves as the one-stop information and advocacy gateway for the
country's key O&O services sector and has over 200 company members, including 5 association members.
BPAP's thrust is to promote the competitive advantages and the growth potential of the Philippines in the existing and new
areas of outsourcing and supports the industry in areas such as offshore marketing, education and training, security and privacy,
legislation and public policy, among others. It aims to create a supportive environment for the Philippine O&O industry and
strengthen the Philippine case to be the preferred O&O destination by the end of the decade.
For more details on BPAP, please refer to the appendix section or visit www.bpap.org
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
passenger movement and about 50 percent of freight impeachment and coup attempts14
movement. Although the road network is quite extensive, less
than half is considered to be in good condition14. Road Doing business
congestion has become a major problem in the highly-urbanized ! Philippines is ranked 144th out of 183 economies for the ease of
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Metro Manila14 doing business in the World Bank Doing Business Survey 2010
! Availability of affordable electricity remains a major constraint for ! The Philippines offers a low-cost business environment, which
businesses operating in the Philippines. Electricity rates for has helped it to emerge as one of the leading low-cost
industrial use were as high as USD 0.19 per kWH in 200814 outsourcing destinations. Human resource costs in the
Philippines are estimated to be less than a fifth of the costs in
! The country remains competitive particularly in Special Economic the US and other developed countries. Also, costs of real estate
Zones (SEZ). Most IT-BPO companies are concentrated in the and telecom services are relatively low. However, high electricity
urban areas around metropolitan Manila, Cebu and Davao given costs remain one of the major concerns for businesses operating
the availability of human resources, telecom facilities and office in the country.
infrastructure15
The Philippines is now regarded as one of the top outsourcing sophisticated. Companies are likely to find it difficult to compete
destinations in the world, with revenues of USD 6.1 billion from unless they constantly revise and improve their business processes
outsourcing and offshoring in 2008. The Philippines IT-BPO industry and build reliable business models
USD 6.1 bn
CAGR 15%
2008 2020 - ‘Base-Case’ 2020 - ‘Optimistic’ Cooperation (APEC) forum can help it to resolve major challenges and
Scenario Scenario gain more share in the global outsourcing industry
Source: KPMG Analysis ! Philippines need to drive innovation and build capabilities to offer
high end services trough tie-ups with Asia Oceania countries.
Implications for stakeholders: Philippines companies can collaborate with companies in Asia
Philippines have demonstrated high focus towards developing its IT- Oceania region to build capabilities in high-end outsourcing within
BPO industry and enhancing its competitive advantage. To reach its engineering, F&A, etc.
projected target for 2020, the country needs to address the following
! The country needs to develop its talent to suit rising industry
areas:
needs. Philippines need to support a talent base that has good
management capabilities and a higher aptitude for R&D.
20. BPAP
115
Strengths Weaknesses
Opportunities Threats
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
areas of the south, have also affected the Philippines’ ability to attract
Local Opportunities much-needed foreign investment.
IT awareness in both the consumer and commercial sectors in Philippines is
growing due to rise of the outsourcing industry. Call centers, BPO’s, SME Commoditization of services
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
businesses and the education sector are also expected to continuously The Philippines outsourcing industry is heavily skewed towards
upgrade their technologies to maintain quality business processes. Green commoditized services and non-core processes. In terms of revenues, call
IT, next generation customer care, wireless technologies, etc. are expected centers remain dominant in the outsourcing business. Hence, the
to create new demand in the domestic IT-BPO market. Philippines is often recognized for its call centers, which might not be
appealing to customers looking to outsource high-end services. Also,
commoditized services and non-core processes are easily learned and
replicated by others competitors, which can lead to pressure on pricing and
margins in the future.
21. BPAP
22. World Bank – Philippines overview
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at market prices (2008) USD 181.9 billion Economy and Industry
Singapore is a developed free market economy, which is dependent on its entrepôt
Population (2008) 4.8 million
trade, benefiting from its strategic location in the middle of Southeast Asia1.
Exchange Rate (SGD:USD) (Jan – Sep ’09 avg) 1.51
Services Industry
67% 33%
The export of goods and services constituted nearly 24 percent of Singapore’s GDP in
2008. Singapore's major exports include petroleum products, food and beverages,
chemicals, pharmaceuticals and electronic components. Malaysia is Singapore's major
trading partner, absorbing 12.1 percent of Singapore's exports, followed by Indonesia,
Hong Kong, EU and China4.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Trade and Investment
Inward FDI (USD Billion) Exports (USD Billion)
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
1. http://www.gov.sg/50_selfgovernance_1959.html 3. http://www.austrade.gov.au/Invest/Opportunities-by-Sector/ICT/default.aspx,
2. http://www.state.gov/r/pa/ei/bgn/2798.htm, 4. http://www.gov.sg/50_selfgovernance_1959.html
https://www.cia.gov/library/publications/the-world-factbook/geos/SN.html
IT-BPO Industry size
! Since the 1980s,Singapore has formulated and implemented
16 national ICT master plans with a primary focus in areas related to
14 manpower development, ICT awareness and literacy of its
CAGR: 19%
12
residents and businesses7
10 7.2
USD billion
Singapore infocomm Technology Federation (SiTF) is Singapore’s premier infocomm industry association and it brings together 400
corporate members from MNCs and local companies. This association was set up in 1982. The main charter of the federation is to
assist its members in business development, market intelligence, overseas trade missions, networking and alliances.
SiTF's mission is to engage and connect the Singapore infocomm industry with a worldwide reach and recognition. SiTF works
towards achieving this mission through our strong working relationships with government agencies, other local trade associations
and international organizations.
SiTF operates on the principle of being highly responsive to its members' concerns. They are also a proactive organization that pre-
empts the possible influences on the industry. SiTF provides support infrastructures for harnessing the opportunities in a dynamic
and a rapidly changing infocomm industry.
For more details on SiTF, please refer to the appendix section or visit www.sitf.org.sg
6. IDA Website
7. http://www.dbcde.gov.au
8. IDA Annual Infocomm Industry Survey 2008
9. KPMG Analysis, IDA, http://www.buysingapore.com/InfoComTechnology.aspx
10. http://community.jobscentral.com.sg/node/116
11. AAII
119
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
! Singapore’s Changi Airport serves 180 cities in more than 50 Doing business
countries, while the International Maritime Centre (IMC) serves ! Singapore offers overall regulatory ease of doing business and is
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
an average of 140,000 vessel calls annually18 ranked first in World Bank’s Doing Business Ranking in 2010 in
Asia, It only takes three days to start a business in Singapore as
! Further, a Mass Rapid Transit system in the form of rail, bus and
compared to the OECD average of 13.0 days. However, the
taxi services provides good connectivity within Singapore.
country has a relatively higher operating cost environment24
Internal transport is largely land-based, as all parts of Singapore
are accessible by road19 ! Strong economic growth from 2004 to the first quarter of 2008
has led to a tightening of the markets for labor and commercial
! Singapore offers a wide choice of office space. There are various
and industrial space, which has contributed to higher business
business parks and specialized industrial parks that provide an
costs16, 25.
environment conducive for IT-BPO companies to operate.
Singapore’s electricity retail market is liberalized to facilitate
competition and it provides a reliable power supply, comparable
to that of the developed countries20
CAGR 8%
world in harnessing ICT to add value to the economy and the society.
USD 13.8 bn
CAGR 6%
The iN2015 master plan encompasses the following objectives:
! Realize a two-fold increase in the value-add of the infocomm
industry to USD 18.4 Billion (SGD 26 Billion)
2008 2020 - ‘Base-Case’ 2020 - ‘Optimistic’
! Realize a three-fold increase in infocomm export revenue to USD Scenario Scenario
42.4 Billion (SGD 60 Billion)
! To create 80,000 additional jobs Source: KPMG Analysis
The iN2015 masterplan also aims to spearheading the transformation of Ensuring long-term competitiveness
the key economic sectors like digital media and entertainment, financial Maintaining competitiveness of Singapore’s economy by developing
services, education and learning, healthcare and biomedical, government and managing its human capital and by taking a holistic view of the
services, manufacturing and logistics, and tourism, hospitality and retail. national, business, organizational, as well as the individual
competencies. Moreover, the country should be competitive to
continue to attract international talent given the rising competitiveness
among developed countries to attract quality manpower. Again, the
Prospects 2020: Maintaining competitiveness and country needs to maintain its cost competitiveness in order to sustain
spearheading innovation can be key for future growth the long-term economic growth, given that the other developing
Singapore has a developed IT-BPO industry with the presence of economies especially in Asia are likely to scale up their business
leading MNC software and services companies. The IT-BPO industry is environment, infrastructure, value-addition and the talent base
estimated to be around USD 13.8 billion, with exports accounting for competitively and at a lower cost base
27
nearly 52.2 percent of the total industry size . Singapore’s ability to
Opening up of the skilled labor market
provide a developed infrastructure, a superior business environment
As Singapore is facing demographic issues, the country should open
and quality human resources has helped support its IT-BPO industry.
their labor markets and have a controlled, skill-based immigration
Given its current attributes, Singapore’s IT-BPO industry is expected to
policy. Such policies help ensure that the country is the recipient of
reach a size of USD 26.4 billion in 2020, growing at a CAGR of 6
only those skills that are needed to develop the IT-BPO industry
percent during 2008-20.
further
However, Singapore’s IT-BPO industry is likely to face considerable
challenges in the future, as there is rising competitiveness to attract Fostering innovation and supporting the local enterprises
quality human resources among many of the developed countries. Singapore needs to move upwards in the services value chain by
Moreover, Singapore’s rising cost environment and the increasing driving innovation and entrepreneurial exploitation of knowledge. There
attractiveness of low-cost destinations can affect the future prospects is a need for Singapore to shift its focus on higher value activities in IP
of attracting the IT-BPO businesses. creation and exploitation. Local enterprises should develop go-to-
market capabilities and successfully showcase their innovation in the
Notwithstanding these challenges, Singapore plans to build a Next global arena. The academia could also be involved in a re-skilling
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Generation National ICT Infrastructure (Next Gen NII) consisting of programme for the IT-BPO employees. Short term programmes that
wired and wireless broadband network that offers pervasive and high- are focused on specific growth areas could be developed.
speed connectivity. Singapore also plans to focus on developing an
ICT-savvy workforce and raise the competitiveness of its local ICT
Opportunities for Collaboration
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Implications for Stakeholders ! Quality IT talent is critical for realizing Singapore’s IT potential.
Singapore’s plans of becoming an intelligent nation by enhancing the Singapore needs to develop more stronger ties with Asia Oceania
use of the ICT across both, economic and social spheres and to countries to attract and retain IT talent.
Strengths Weaknesses
than 80 of the top 100 software and service companies with many of them,
including the top 15 software companies, using Singapore as their regional Lack of Scale Among Local ICT Enterprises:
28
or Asia Pacific headquarters . Although, Singapore’s local infocomm companies have showcased good
growth over the past few years, the industry relies largely on a few major
Conducive Business Environment players. Nearly 96.5 percent of the local companies have operating
Singapore leads in the ease of doing business in Asia based on the World revenues of less than USD 50 million. Moreover, very few of the local
Bank’s Doing Business Ranking 2009. The country has adopted a pro enterprises have penetrated into the overseas market. A good number of
business policy making it one of the many business friendly nations. domestic companies lack the ability to market their offerings overseas,
Singapore has also put in place an advanced and reliable physical and ICT despite having high technological capabilities. Limited finance and
infrastructure for the benefit of businesses. Moreover, the country’s stable marketing skills are the major challenges for the local IT enterprises .
31
Opportunities Threats
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
adoption of the ICT in key industries can lead to more demand for the IT- Indonesia and China given that these remain major markets for the
BPO services in the future. electronic components, chemicals, and petroleum products. Also, re-
exports account for 48.1 percent of Singapore's total sales to other
Centralization of Services: countries in 2008 .
32
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Agriculture
12%
Services Industry
58% 30%
May 2009 marked the end of a civil war, which started in 1983, after the fall of the
Liberation Tigers of Tamil Eelam (LTTE). Security risks are therefore expected to
decrease sharply in 20102. EIU has already revised Sri Lanka’s Political Stability risk
score from 53.9 in the second quarter of 2009 to 43.4 as on 30 September 2009,
where 100 represents a ‘most-risky’ situation3.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
country4.
2006 - Present:
Consulting The estimated export revenue in 2006 was USD 171.2 million, which
16% grew to USD 211.3 million in 2007. In that year, for the first time Sri
Software
Development Lanka was ranked 29 among the top 50 outsourcing destinations in
35%
IT Services a global location index report, and in 2009 the country moved up its
20%
ranking to 166.
Software Products
29% Current state of the IT-BPO industry
There are approximately 178 IT-BPO exporting companies that
operate in Sri Lanka, mostly small and medium companies and a
Source: Export Value Survey 2008
few large global players. Among these are several leading global IT-
BPO companies including HSBC, WNS Global Services, Aviva,
Microsoft, Motorola, Industrial & Financial Systems (IFS), Amba
Research, RR Donnelley, Quatrro BPO, and Virtusa7.
The US is the largest market for Sri Lankan BPO services, and 69
percent of the BPO companies cater to this market. The UK is
targeted by 63 percent of BPO companies and 31percent are
exporting to Australia. Other export markets are Sweden, New
Zealand, Hong Kong, Singapore and Japan5. Top markets for the IT
industry include Europe - which is the largest – apart from North
America, South Asia, Australia/New Zealand and Asia9.
processing10. According to the Export Value Survey 2008, 72 percent of BPO export
companies offer non-voice services and 14 percent offer only voice services. The
leading sectors for software in Sri Lanka are Telecommunication, Banking Financial
Services and Insurance (BFSI) and Government11.
Federation of Information and Communications Technology Industry and Services Sri Lanka (FITISS)
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
FITISS was set up in 1996 with the purpose of giving a much needed focal point for the IT industry in Sri Lanka. The
mission of FITISS is to be the apex national organization leading and representing the IT Industry in Sri Lanka. firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
FITISS member associations are namely the Sri Lanka Association for Software Industry (SLASI), Sri Lanka Computer
Vendors’ Association (SLCVA) and Association of Computer Training Organizations (ACTOS) and LISPA. FITISS has as its
members in hardware, software, computer education and training, internet services and communications.
The activities of FITISS include: conducting a school Software Competition leading to participation at regional level at the
Asia Pacific ICT Alliance Awards (APICTA), organizing various networking events on ICT and business-related topics,
publishing a newsletter and ICT companies directory and hosting road shows for building awareness about the Sri Lankan
ICT industry within and outside the country.
For more details on FITISS, please refer to the appendix section or visit www.itlanka.lk
10. ICTA
11. Export Development Board Survey 2007
12. The Times of India (Chennai edition) October 5, 2009
13. Newsrilanka.com
126
! Next only to the UK, Sri Lanka has the largest pool of professionals who are fully
certified or in the process of getting Chartered Institute of Management
Accountants (CIMA) or Association of Chartered Certified Accountants (ACCA)
professional qualifications
! In Sri Lanka, CIMA has more than 11,000 students and 1,800 members. According
to ICTA, approximately 50,000 Sri Lankans qualify as accountants each year
! The Sri Lanka Institute of Information Technology (SLIIT) has about 3,500 students
graduating annually with IT degrees
! During 2001-2007, the total broadband subscribers in Sri Lanka grew at a CAGR of
143.99 percent17. The sector has further growth potential, as in 2007 the number of
internet subscribers per 100, was only at 1, which was below the South Asia region
average of 1.318
! Sri Lanka also enacted an Electronics Transactions Act, Computer Crimes Act and is
a signatory to the latest UN e-contracting convention. A Data Protection Code of
Practice is also under preparation
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
! Sri Lanka’s piracy rates remain high at 90 percent in 2008 according to the BSA IDC
Piracy report. However, the country has already implemented stringent laws and
regulations to prevent piracy and towards the protection of IP
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Infrastructure development20
! Sri Lanka’s infrastructure has been weak, which has adversely affected the
investment climate. The country is, however, making increased investments in
infrastructure. The transport and communication sector has received the maximum
percentage of loans from Asia Development Bank (amounting to nearly USD 1
billion as on end 2008) with a high project success rate of 80 percent
! The Board of Investment of Sri Lanka (BOI) has allocated USD 300 million for Techno
Park at Katunayake
! The BOI has also entered into an agreement with Orion Development for a project
to construct a building complex to set up an IT Park at Colombo, as well as establish
an IT Park in Malabe in collaboration with SLIIT and two Indian companies
! The government also provides special assistance on real estate acquisition based on
the investment and employment generation potential
! In order to attract investments in the former war zones in Northern and Eastern
region the government announced a 15-year tax holiday for companies setting up
operations there
! According to SLASSCOM, the IT-BPO sector has become the fifth largest export
earner for the country
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
which might reduce the investment attractiveness of the country
! GDP grew by 6.8 percent in 2007; remittances from foreign workers, estimated at
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
USD2.5 billion, helped the economy to achieve this growth. The economy is
estimated to grow by 6.0 percent in 2009
! After a civil war of over 25 years, in May 2009, Sri Lanka defeated the rebellious
group Liberation Tigers of Tamil Elam (LTTE) and restored peace in the northern part
of the island, boosting the chances of a long-term socio-political solution
Doing business
! Sri Lanka ranked 105 in World Bank's Doing business index of 2010, from a total of
183 economies. According to the Index, in Sri Lanka it takes 38 days to start a
business, which is higher than the region’s average of 28.1 days. This would improve
as Sri Lanka moves to a more secure political situation23.
The “Mahinda Chinthana: Vision for a New Sri Lanka” is a10-year Horizon
Development Framework (2006- 2016).
country’s supply of skills in the F&A area could bring in opportunities Malaysia and obtain some insights into creating a brand that
for knowledge services. could help promote the Sri Lankan software industry
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
USD 6.7 bn
CAGR 24%
USD 0.57 bn
CAGR 23%
24. FITISS
129
Strengths Weaknesses
Skills Infrastructure
Sri Lanka’s workforce is young and highly literate, with good English Though the Government of Sri Lanka is making an effort to address
language skills. The country has one of highest number of CIMA certified infrastructural weaknesses in the country, the transport infrastructure
graduates, and is said to produce 50,000 accounting graduates annually25. would need further development. Moreover, Sri Lanka’s satellite
communication is underutilized, due to which the country is required to pay
Strong telecommunication sector: Sri Lanka's telecom sector has seen
six times more28.
considerable expansion in recent years. As telecommunication is a
backbone of the IT-BPO industry, strong development in the sector is likely Lack of geographical diversification
to further encourage industry growth26. Sri Lanka’s IT -BPO industry is in and around Colombo, with the other areas
being very slow to adopt measures to build the industry in their region. This
could prove to be detrimental to the country, which plans to make IT and
BPO one of the key focus areas for export. The country being small in size,
would have further difficulties in offering services that require scale, if
operations are just centered around the Colombo metropolitan region.
Opportunities Threats
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Bangladesh is also considered to be an opportunity area for Sri Lankan
outsourcing companies
GDP at market prices (2008) USD 221.6 billion Economy and Industry
The growth experienced by Malaysia in the early 1970s transformed the country from a
Population (2008) 27.7 million
producer of raw material to a multi-sector economy1. The country has been able to
Exchange Rate (MYR:USD) (Jan – Sep ’09) 3.57 attract investments in high technology industries, medical technology, and
pharmaceuticals. The government is trying to boost domestic demand in order to
Inflation at Consumer Prices (1Qtr - 2009) 3.7 percent
reduce the export-dependence of Malaysia. As an oil and gas exporter, Malaysia has
Unemployment (2008) 3.3 percent profited from higher world energy prices2
Agriculture
10%
Services Industry
46% 44%
In 2005, Malaysia unpegged its currency from the US dollar, and thereafter it
appreciated 6 percent per year against the dollar in 2006-073
GDP growth which had averaged about 6.3 percent in the first 9 months of 2008 went
down to 0.1 percent in the last quarter of the year because of the global slowdown.
Export value contracted by 13.4 percent in 2008, which adversely affected economic
growth, particularly in the manufacturing sector4
2005 4 162
1. Microsoft.com 4. Speech by Deputy prime minister and Minister of finance 10 March 2009
2. CIA Fact book 5. EIU
3. Index Mundi
IT-BPO Industry size
3500
3000 CAGR: 22%
2500
2049
USD million
2006 - Present:
Break up of IT-BPO Spend by Service Line
The shared services and outsourcing sector was the biggest
contributor to MSC Malaysia’s revenue, accounting for 31 percent of
PIKOM, The National ICT Association of Malaysia is the association representing the information and communications
technology (ICT) industry in Malaysia. Its membership currently stands at over 1000 comprising companies involved in a whole
spectrum of ICT products and services which commands 80 percent of the total ICT trade in Malaysia. By facilitating
Malaysia's business growth and competitiveness through application of information technology, PIKOM is positioned to be the
voice of the Malaysian ICT industry.
PIKOM was formed in August 1986 with the objective of creating an environment that is conducive to the health, prosperity
and competitive nature of the ICT industry. In line with this, PIKOM aims to be a catalyst for the growth of the ICT industry in
Malaysia.
For more details on PIKOM please refer appendix section or visit www.pikom.org.my
6. MSC Malaysia (formerly known as Multimedia Super Corridor) is a Government initiative, to build the ICT 8. News.cnet.com
industry. The major categories of sectors in MSC Malaysia include Shared Services and Outsourcing, 9. Sharedservicesbpo.com
Application Software, Creative and Multimedia Companies, Mobility Embedded Software and Hardware 10. The Malaysian Insider.com
(MeSH) Internet based companies, and Institutions of Higher Learning and incubators. It originally 11. Mis-asia.com
included an area of approximately 15x50 km² which stretched from the Petronas Twin Towers to the 12. Faotoday.com
Kuala Lumpur International Airport and also included the towns of Putrajaya and Cyberjaya. 13. MSC Malaysia
7. Ktak.gov.my 14. Bloomberg.com, Governor's Keynote Address at the 12th Malaysian Banking Summit 05 June 2008
133
! More than 900,000 students are enrolled for higher education in Malaysia16, and the
Ministry of Higher Education has the vision of making Malaysia a centre of higher
educational excellence by the year 2020
! The country is making aggressive plans to attract foreign students17, and the Higher
Education Ministry aims for foreign students to make up 10 percent of student
enrolment.
! Therefore, despite the small population size of the country, the outsourcing industry
may probably have access to higher value adding skills and be able to grow through
niches
! Mobile penetration was at 98 percent in 2008. Mobile data services are expected to
grow with the increasing penetration and would account for 45 percent of all mobile
revenue by 201419
! According to the Business Software Alliance (BSA), piracy was at 59 percent in 2008
and has remained unchanged over the pervious year. Malaysia made losses of USD
368 million in 2008 due to piracy
! Malaysia has consecutively been on the US Government’s Special 301 Watch List20
since the last eight years, and may need to make a focused effort to curb piracy in
the country21
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Infrastructure development22
! Malaysia has made investments in infrastructure in view of its 2020 vision of
becoming a fully developed nation
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
! Today, more than 90 percent of the country's trade is by sea and therefore
Malaysia's seven international ports have been well maintained.
! There are 200 industrial estates or parks and 18 Free Industrial Zones (FIZs)
developed throughout the country. Malaysia currently has more than 12 technology
parks, concentrated in and around the Klang Valley. The government continues to
invest in technology parks, with emphasis on other areas: Penang, Johore, Kedah
and Melaka
15. CIA Factbook 20. US Trade Representative (USTR) issues an annual Special 301 Report which "examines in detail the
16. Ministry of Higher Education adequacy and effectiveness of intellectual property rights" in many countries around the world. Countries
17. Thestar.com article 19 April 2008 may be designated in the categories of Priority Watch List, Watch List, and/or Section 306 Monitoring
18. Bt.com status.
19. Reuters, PRNewswire.com 21. Star-techcentral.com ; USTR Watch List 2009
22. Mida.gov.my
134
! The government provides a "bill of guarantee" to MSC companies, which gives them
access to competitive telecommunications tariffs and good physical and information
infrastructure
! Malaysia’s competencies in the electronics and energy export market will attract
investment in these areas and provide an impetus to the ICT industry25
! According to the Prime Minister, the country must grow at 8 percent in order to
achieve its Vision 2020 of being a developed nation26
Doing business
! Malaysia ranked 20 in World Bank's Doing business index of 2009, from a total of
181 economies. According to the Index, in Malaysia it takes 13 days to start a
business, which is considerably lower than the region’s average of 44.2 days
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
23. Gartner 25. Governor's Keynote Address at the 12th Malaysian Banking Summit 05 June 2008
24. Bernama.com 26. Malaysianinsider.com article dated Aug 28, 2009
Malaysia: Outlook 2020
135
to be an export focused industry is a key focus today, must therefore remain an important investment
area for the government.
According to the Multimedia Development Corporation (MDeC),
Malaysia is gearing up to be ranked 2 globally for outsourcing
Establish competitiveness in niche markets
activities, edging out China, in five year’s time by ramping up its
27
Malaysia’s cost parameters are comparatively higher than its Asian
production of knowledge workers
competitors. The focus, therefore, for the Malaysian outsourcing
The IT-BPO is estimated to be around USD 2.7 billion in 2008. Given industry should be to establish competitiveness in niche areas and
its current attributes, the IT-BPO industry is expected to reach USD in high-value added services
7.1 billion in 2020, growing at a CAGR of 8.3 percent over the period
2008-2020. Tap new customer segments
Malaysia is represented in the Organization for Islamic Countries
Even though the shared services and outsourcing industry is (OIC) and in 2003 it was named the OIC’s strategic hub for the Asia
28
considered to be a priority sector for the country, some constraints Pacific region . The country is well linked to the Middle East and
should be looked into which could hamper the overall growth rates. could tap into this market for investments. As Middle Eastern
These are related to high cost parameters, lack of scale and countries expand operations in Malaysia, Islamic funds could be
requisite skills. accessed by financial companies which would give a further boost
to vertical specific IT services.
Malaysia’s IT market has the potential of growing at a CAGR of 13.6
percent, reaching USD 12.7 billion in 2020, if it is able build
Areas for Collaboration
innovative capabilities of outsourcing companies and solve the
Regional collaboration could accelerate the industry growth rate to
problem of lack of suitable talent. The country’s experience in the
higher than 13.6 percent. Malaysia already has proven trade
exports market, especially in the energy and electronics sectors
relations with the ASEAN region. If the country is able to collaborate
along with the maturity in the Islamic financial services segment,
with the Asia-Oceania region for IT-BPO, the growth rate could be
will push growth in the IT segment, enabling Malaysian IT to growth
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
pushed up further:
through niches
Strengths Weaknesses
Multilingual capabilities:
Malaysia is known to have a multi-cultural population, thereby bringing in
several Asian language capabilities. Besides English and Malay other
language support includes Chinese, Tamil, Telugu, Malayalam and Thai30 .
This has helped the country win international projects such as the recent
call center deal with SAP.
Aggressive branding:
The government has made proactive efforts to increase its branding in the
outsourcing/ offshoring world. Malaysia is promoting itself as a host for
outsourcing summits such as the International Association of Outsourcing
Professionals (IAOP).
Opportunities Threats
driven by increases in adoption of mobile broadband services and mobile to initiate ex officio IPR raids, which are authorized under Malaysian law
data applications
Local players not globally competitive:
Local vendors in Malaysia are mostly of small size and lack the scale and
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Niche services:
With its advanced role in Islamic products and services, as a center for competencies to compete in the global IT-BPO space. Stronger local
Islamic business processing — Malaysia could create niches in Islamic companies would help push the growth further and also provide assistance
banking, procurement, etc. Bio-technology and vertical specific IT to others that are still on the learning curve
processes for the energy companies are other areas where Malaysia has
the potential to enter. Malaysia has the requisite talent pool to serve the
oil and gas industry, which has been in the country for 130 years31. By 2020,
biotechnology is expected to create 280,000 jobs and contribute 5 percent
to GDP32
(Taiwan)
GDP at Market Prices (2008) USD 392.1 billion Economy and Industry
Chinese Taipei (henceforth referred to as Taiwan) has been among the world’s fastest
Population (2008) 22.8 million
growing economies in the last few decades1. The country’s economic growth has
Exchange Rate (TWD:USD) (Jan – Sep ’09 avg.) 31.5 averaged 6 percent since the mid-1990s2
Services Industry
73% 25%
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
2005 1.6 228.7
1. http://www.asianinfo.org/asianinfo/taiwan/pro-economy.htm 4. Economist Intelligence Unit - Viewswire, One-click Country Report, 10th June 2009
2. http://investintaiwan.nat.gov.tw/en/opp/inds/info.html 5. http://www.roc-taiwan.org/glance/en/ch7.htm
3. http://investintaiwan.nat.gov.tw/en/news/200410/2004100801.html
IT-BPO Industry size
12
CAGR: 12% 1.2
10
1.0
8 0.7 0.8
USD Billion
0.5
6 2000s:
4 8.7 The IT services industry was identified as a strategic service
6.6 7.5
5.7 6.5
2 industry for development. The move was expected to improve
0 Taiwan’s competitiveness in manufacturing by way of greater value-
2003 2004 2005 2006 2007 addition through strategic services. The IT services industry
Domestic Exports experienced an average growth rate of 10 percent from 2000 to
Note: The industry size includes domestic market as well as exports of IT services and software
2006. Software products and applications formed the largest
products. BPO market estimates are not included in the figure above. proportion of the IT services market.
Source: Department of Statistics/IDB, MOEA
Founded in 1983, CISA is the sole representative body of Taiwan’s software and information services industry. CISA’s 750
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
members cover the full spectrum of the industries which include independent software vendors, turnkey project operators,
system integrators, ICT consultants, ICT outsourcing service providers. Our member base includes small, large and international
companies.
Different from other associations, CISA keeps a large-size secretariat of about 50 full-time employees. The secretariat’s main
task is to undertake many government projects won from open bidding processes. These projects aim at promoting ICT and
deploying ICT to medium and small industries. By taking these projects, CISA is able to help create direct and indirect business
opportunities to its members. CISA actively lobbies the government to put more resources to enable its international
competitiveness. During CISA’ 20th anniversary in 2003, the industry leaders reached the consensus of forming a vertically
integrated and horizontally allied infrastructure to enhance the overall strengths of exporting to the China market.
For more details on CISA, please refer to the appendix section or visit www.cisanet.org.tw/En/Background
6. http://investintaiwan.nat.gov.tw/en/opp/inds/info.html 8. http://investintaiwan.nat.gov.tw/en/news/200804/2008040401.html
7. Department of Statistics / IDB, MOEA
141
Government among Asian countries11 e-Service Export of Taiwan (BEST) Programme, Bridging the
Digital Divide and encouraging CMMi certification
! Taiwan’s ICT penetration is relatively high, with 64 percent
internet users, 106 percent wireless subscribers and 4.55 million ! Besides this, the government currently offers one-stop
12
broadband subscribers . According to the World Broadband clearances for investors who want to set up in the Technology
Statistics, Taiwan ranked in fifth place in household broadband Parks, along with other incentives such as facilitation to acquire
penetration and eleventh in the number of broadband land and even exemption of rentals for up to four years
subscribers
Competitiveness in the exports market
! The government is implementing the Mobile Taiwan (M-Taiwan) ! Taiwan is an export dominated economy with the US and Japan
project, which focuses on constructing a mobile environment for being among its major trading partners. Exports accounted for
the next generation, integrating mobile and wireless networks about 74 percent of the GDP in 2007
and establishing a nationwide internet environment
! Taiwan is ranked first in the worldwide ICT product market share
for more than 10 products, including personal computers,
IP protection and data protection
! Efforts by the government in Taiwan over the last few years have motherboards, laptops, LCD monitors, CDT monitors, etc18
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
adverse trend over the last few years19
agencies on copyright enforcement and started campaigns
targeted at reducing end-user business software piracy, illegal ! Taiwan had a high per capita income of USD 17040 in 2008,
copying of books and infringement over the internet, among
putting it in the high-income country bracket of the world20
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
other measures13
! Taiwan’s Directorate General of Budget, Accounting and
! The estimated economic losses for the software industry caused Statistics forecast that Taiwan’s GDP would shrink by 2.97
by the use of pirated programmes dropped 7 percent to USD percent in 2009, due to the reduction in exports and private
200 million in 2008 from USD 215 million in 200714 spending21
The Science and Technology Advisory Group (STAG) in 2008 set the Implications for Stakeholder 24
“Intelligent Taiwan” goal as the direction for Taiwan's next decade of The target for the industry is achievable, provided Taiwan aims at
technology development. The goal aims to achieve balanced development significant restructuring and re-organization in its domestic IT-BPO
between the living environment and industry in Taiwan. The project delivery capabilities. The implications for stakeholders are:
includes three phases with distinct goals. The first, lasting from 2005 to
2008, is aimed at creating an environment suitable for developing Targeting higher value-add services
products applicable to tourism, recreation and family life. Taiwan needs to maintain its focus towards innovation and applied
research and development within the economy, managed by higher-
The second phase between 2009 and 2013 is to focus on manufacturing skilled Taiwanese workers. Since there is a projected shortage of
an expanded range of products for public services, care of the elderly and working age population on the island by 2020, the revenue per
emergency aid. In the third phase 2014-2020, the project is to aim to worker has to go up to achieve the targets set by the vision
transform Taiwan into a producer of intelligent robots with special,
medical and surgical purposes . Outsource commoditized services
As costs on the island are rising, Taiwan has to re-organize its
industry to deliver higher-value adding products and services, while
Prospects 2020: Potential to become an innovation outsourcing commoditized, repetitive processes to lower-cost
countries such as China, Vietnam, or Thailand
leader in IT-BPO services
Taiwan is the largest producer of 15 ICT products and second-largest
Expanding the geographical target market
producer of three ICT products in the world23. Taiwanese IT software
The target market needs to expand beyond the Chinese-speaking
and service providers have strong domain know-how which can
markets to the global market. This would involve improving the
create potential for growth in the next decade. The IT-BPO industry
English language capabilities of the workforce, as well as improving
in 2008 was around USD 9.4 billion, and is projected to reach USD
the capabilities to market and commercialize its products and
31.3 billion by 2020, as estimated by the Taiwanese government.
services. The experience in ICT products and hardware are likely to
Taiwan’s vision envisages greater automation and a move towards be an advantage and can be leveraged in the services space.
23. Taiwan Statistical Data Book, Council for Economic Planning and Development, 2008
24. KPMG Analysis is based on discussions and interviews with executives from the country IT-BPO
associations, Companies operating in the country and local KPMG offices
143
Strengths Weaknesses
Opportunities Threats
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Opportunity from co-operation with China
China is a large opportunity area for Taiwan, both in terms of mainland
China as a lower cost base for manufacturing and services support, and
also Greater China as a large and growing market for Taiwanese products
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
and services.
Focus on infrastructure
The “Intelligent Taiwan” initiative is focused on creating an innovation-
oriented nation28. Companies can take advantage of the policy focus and
significant investment set aside for the initiative until 2020 for research
and development and creation of intellectual property.
25. http://investintaiwan.nat.gov.tw/en/opp/inds/info.html 29. Economist Intelligence Unit - Viewswire, One-click Country Report, 10th June 2009
26. http://www.moeaidb.gov.tw/external/ctrl?lang=1&PRO=pda.NewsView&id=727 30. http://www.etaiwannews.com/etn/news_content.php?id=957946&lang=eng&cate_img=35.jpg&
27. Annual e-Competitiveness Report, Taiwan 2008 cate_rss=news_Business_TAIWAN
28. http://taiwanjournal.nat.gov.tw/ct.asp?xItem=44929&CtNode=428
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at Market prices (2008) USD 273.3 billion Economy and Industry
Thailand has made considerable economic progress since the 1990’s, after suffering
Population (2008) 67 million
several years of financial and economic distress1. It is the second largest economy in
Exchange Rate (TBH:USD) (Jan – Sep ’09 avg.) 33.3 Southeast Asia with an average GDP growth rate of 5.6 percent during 2002-2006. The
country’s GDP growth moderated to 2.6 percent during 2008 due to political instability
Inflation (1Qtr - 2009) -0.2 percent
and the global economic slowdown2.
Unemployment (2008 avg.) 1.4 percent
GDP Composition
S&P Risk Rating BBB+/Negative/A-2
Agriculture
12%
Services Industry
43% 45%
Over the last few decades, Thailand has transformed itself from being an agricultural
economy to a manufacturing and export-driven economy. Exports of goods and
services accounted for over 76 percent of GDP in 20083.
Thailand’s economy is in recession in 2009 and EIU expects real GDP to shrink by 4.4
percent in 2009.
2006 9 152.5
1. World Bank Website, Thailand Country Overview 3. US Chamber of Commerce Website, EIU
2. Viewswire One Click report, Economist Intelligence Unit 4. http://www.state.gov/r/pa/ei/bgn/2814.htm
IT-BPO Industry size
3.00
2.64
2.50 CAGR: 31% 2.30
2.00
2.00
USD Million
1.50 2000s:
1.20
1.00 0.90 Thailand established the Ministry of Information and Communication
Technology (ICT) in 2002 with the objective of developing and
0.50
supporting comprehensive electronic processes for the government,
0.00
2004 2005 2006 2007 2008 commerce, industry, business and education. In 2002, the Thai
Government also approved The National IT Policy Framework 2001-
Note: The industry size includes domestic market as well as exports of IT services and software
10. This policy has identified the goals, strategies and linkages
products. The BPO market is currently small and BPO estimates are not included in the figure above. between strategies and the development of the country towards a
Source: SIPA, EIU
knowledge-based society.
Mobile
Application 3% Many of the Thai IT companies focus heavily on domestic markets
given the rising domestic consumption. The corporate sector and
Embedded
System Software 3% primary sectors such as financial services and telecom, accounted
for nearly 57 percent of the total software sales in 2008, followed by
Source: SIPA, Thailand ICT Market 2008 and Outlook 2009
Note: Other Software Services e-learning, CAD/CAM, games (excluding online the government sector which contributes 29.8 percent.
games), etc Other IT Enabled Services include: Data Center and Disaster Recovery
Center, IT-related Training & Education, IT Consulting As of 2007, Thailand had more than 300 software companies hiring
over 40,000 qualified ICT professionals across all regions. The Thai
Evolution of the IT-BPO Industry5 software industry currently has a mix of the local and multinational
1990s: commercial software developers such as Reuters Software, DST
During 1997, the Thai government approved a plan to start Software International and Microsoft7.
Park Thailand. The plan intended to stimulate the development of the
Thai software industry by attracting local and international partners,
supported by advanced infrastructure and technologies.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
The Association of Thai ICT Industry (ATCI) is Thailand's first and foremost, professional information technology trade
association. ATCI has around 121 members (ATCI only has corporate members).
The membership of the ATCI is comprised of corporate members whose total share of the IT business represented over 80
percent of the overall market in Thailand. ATCI is a membership led organization.
The ATCI performs a vital role as the collective voice of the industry, by communicating the various needs interests of its
members to government policy makers, in an effort to collaboratively develop appropriate measures that can genuinely
stimulate the industry's continual expansion as well as foster healthy competition and sustained economic growth made
possible through the deployment of information and communications technology (ICT).
For more details on ATCI, please refer to the appendix section or visit www.atci.or.th
investor attractiveness
incidence of power outages on account of its stable and
13
dependable electricity generating system
Doing business
! The Thailand Infrastructure Annual Report of 2008 by the World ! Thailand was ranked 12th in the Doing Business 2010 report by
Bank mentions that availability and accessibility of infrastructure the World Bank, out of 183 economies . It takes 32 days to start
are no longer constraints in Thailand. The next step for Thailand is a business in Thailand, which is significantly better than the East
to move toward ensuring “quality of service deliveries, Asia and Pacific region’s average of 41 days19
We believe that by tapping opportunities and overcoming key Target markets in neighboring countries
In the future, Thailand can service the IT markets in its neighboring
challenges, Thailand has the potential to achieve a higher growth
countries such as Cambodia, Bhutan, Laos, etc. where Thailand has
rate than otherwise possible. Optimistically, the Thai IT-BPO industry
a relative language and cultural advantage. As of now, the market
can reach USD 8.2 billion by 2020.
size in these countries is not significant. But Thailand can get an
early mover advantage as these markets grow, and this could
Thailand’s IT-BPO Industry 2020
provide a large, combined market for Thai vendors to tap.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
USD 8.2 bn
Areas for Collaboration
Thailand’s growing ICT penetration is likely to create huge
USD 7.8 bn
CAGR 13.0%
USD 2.6 bn reach and access to markets for Thai companies through
CAGR 9.3%
collaboration, Thailand can aim for higher grow the rates in its IT-BPO
industry than those that are currently projected:
2008 2020 - ‘Base-Case’ 2020 - ‘Optimistic’ ! Create a joint market for Thai software companies by targeting
Scenario Scenario
neighboring countries such as Lao, Cambodia and Myanmar with
Strengths Weaknesses
Opportunities22 Threats
Demand market © 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
20. Software Park Website 22. Thai American Businesses News Letter
21. World Bank Website, US Chamber of Commerce Website 23. SIPA, Thailand
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at Market Prices (2008) USD 90.2 billion Economy and Industry
Vietnam has often been referred to as Asia’s ‘miracle economy’ due to its high GDP
Population (2008) 85.2 million
growth rate over the last two decades. In 1986, Vietnam started implementing
Exchange Rate (VND:USD) (Jan – Sep ’09 avg.) 16,440 economic reform policies (known as "Doi Moi") that introduced market reforms and
liberalized foreign investment. These policies resulted in significantly high GDP growth
Inflation (1Qtr - 2009) 11.2 percent
rates, averaging around 8 percent from 1990-97 and 6.5 percent from 1998-2003. From
Unemployment (2008 avg.) 4.9 percent 2004-07, GDP grew over 8 percent annually, which increased from an average of 3.9
percent (1986-1990) to 8.2 percent (1991-95)1.
S&P Risk Rating BB/Negative/B
Industry
39%
Services Agriculture
41% 20%
The period of 1996 – 2000 was regarded as an important stage to further accelerate
the national industrialization and modernization and the GDP growth averaged 7.5
percent every year.
Vietnam's trade and economic growth has gained more prominence with its trade
agreement with the ASEAN countries and the US, and its WTO membership.
1. http://www.agro.gov.vn/map2/page/d3e.htm
IT-BPO Industry size
700
175
600
CAGR: 40% 146
500
USD million
400 105
300 Evolution of the IT-BPO Industry
70
200 425 1990s:
45 354
255 The IT industry in Vietnam started in the 1990s and since then has
100 180
125 been one of the fastest growing sectors within the country.
0
2004 2005 2006 2007 2008
Domestic market Exports 2000s:
The ICT industry growth rate has been high in this decade. Around
Note: The industry size includes domestic and export market for the IT services, software products and
BPO in Vietnam half the enterprises in Vietnam are utilizing IT in business,
Source: Ministry of Information and Communications of Vietnam, EIU, KPMG Analysis
production management and service. The software sector in
Vietnam started to gain greater recognition after IBM opened its
Break up of IT-BPO Exports by the Service Line delivery center in Vietnam in 20072.
Vietnam Software Association (VINASA) is a national association in Vietnam, operating on a non-governmental and not-for-
profit basis. VINASA was established in April 2002. VINASA currently comprises of more than 160 corporate members, many of
whom are leading software firms operating nationwide. VINASA member companies are employing about 50 percent of the
total number of professional programmers and account for about 60 percent of software production in Vietnam. Beside the
software business, many VINASA member companies also engage in other ICT-related businesses such as hardware, telecom,
Internet, ICT training, etc.
vinasa The objectives of VINASA is to promote the co-operation and mutual support among the members, in order to promote the
development of Vietnam software industry and to protect the members' rights; to act as the bridge between companies and the
government as well as the international organizations.
For more details on VINASA, please refer to the appendix section or visit www.atci.or.th
2. KPMG Vietnam
3. VINASA, KPMG Vietnam, KPMG Analysis
153
The government projects the Vietnam software industry to contribute Some measures that can be taken are:
around 2.5 percent to the GDP by 2020, from 0.5 percent in 2008. The ! Participation at and hosting of international events and conferences
industry is expected to generate revenues of USD 6.2 billion by 2020. that are related to outsourcing
! Provide attractive incentives and subsidies. Also, simplify entry
Vietnam has good potential to become an important IT-BPO outsourcing procedures and provide one-stop information and assistance to
destination. However, it is likely to face constraints in terms of creating a companies who wish to set up
talent pool that is adequately skilled and improving the infrastructure in
! Showcasing of success stories
the country.
spend close to USD 58 million by 2012 to boost the development of the to vendors
software and digital content industry. The government also plans to ! Outsourcing government projects to Vietnamese vendors to
earmark funds of around USD 50 million to provide training for IT provide them with experience and scale.
professionals23.
Areas for Collaboration
Demand from the domestic market is expected from financial
Vietnam is rapidly making strides as an important IT-BPO outsourcing
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
! Vietnam can tie-up with countries like India and the Philippines to
2008 2020 - Projected understand strategies in order to promote the industry, such as how
Scenario
to grow and promote the second tier cities for outsourcing.
Strengths Weaknesses
Brand awareness
Awareness of Vietnam as a brand and as a serious contender in the export
market is currently limited and will need to be built in order to reach the
export target that is envisioned.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
24. http://www.cpv.org.vn/cpv/Modules/News_English/News_Detail_E.aspx?CN_ID=328080&CO_ID=30294
25. http://www.innovations.harvard.edu/cache/documents/6533/653317.pdf
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at Market Prices (2008) USD 11.2 billion Economy and Industry
Cambodia began the process of transforming from a command economy to a free
Population (2008) 14.49 million
economy in the 1980s. The economy grew steadily since then, except in 1997-1998 due
Exchange Rate (USD:KHR) (Jan-Sep ’09 avg.) 4054 to brief political instability and the Asian financial crisis. A new coalition government
was formed in 19981.
Inflation at Consumer Prices (2008) 25.0 percent
Industry
25%
Services Agriculture
41% 29%
Cambodia’s real GDP growth in this decade has been robust, at around 9 percent,
averaging more than 10 percent in the last four years. Cambodia became a member of
the WTO in 20042.
Despite robust growth, the incidence of poverty in Cambodia is high, alongside its low
gross national income per capita of USD 540 in 2007, and high inequality3. Agriculture
contributes 29 percent to the GDP and estimates suggest that roughly 73 percent of
the labor force is engaged in subsistence agriculture.
The Cambodian economy and its main sectors have been affected by the global
slowdown. GDP growth dropped below 7 percent in 2008, and GDP is expected to
shrink by 3 percent in 2009. Growth is likely to revive in 2010 when GDP growth goes
back to the positive, at around 2.2 percent, according to EIU estimates.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Cambodia’s main sectors for foreign trade are garments and tourism. The garment
industry currently employs more than 320,000 people and contributes more than 85
percent of Cambodia's exports, with the US being the largest consumer of Cambodian
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
garment exports4. The country attracted more than 2 million foreign tourists in 2007-08
FDI proposals approved by the Council for the Development of Cambodia (CDC) have
dramatically increased in recent years, with approved FDI reaching USD 871 million
during the first nine months of 2007, compared with USD 201 million in all of 2004
In 2008, China was the largest investor in Cambodia in terms of approved projects,
followed by South Korea5.
1. http://www.state.gov/e/eeb/ifd/2008/103670.htm 4. Https://www.cia.gov/library/publications/the-world-factbook/geos/cb.html
2. Viewswire one click report for Cambodia, EIU 5. http://www.entrancechina.org/news.php?id=82418
3. http://www.adb.org/Documents/Fact_Sheets/CAM.pdf
158
! ICT penetration in Cambodia is low. Internet penetration in 2005 was 0.1 percent.
Other ICT usage statistics are similarly low. However, Cambodia is making
progress in telecom and internet penetration. The number of cellular users
reached 2.6 million in 20088. The country is also receiving assistance from other
countries such as South Korea and Germany and this is likely to create many
potential opportunities for IT services and products in the future9
! Cambodia is ranked 145th out of 183 countries in the World Bank’s Doing
Business ranking in 2009. It takes 85 days to start a business in Cambodia
according to the report11.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Information Communication Technology Association of Cambodia (ICT-CAM) is the Telecom and IT industry body of Cambodia,
registered with the Ministry of Commerce of the Royal Government of Cambodia as business association. Members of ICT-
CAM include the leading of IT companies, Telecoms operators, IT consulting and system integration companies in Cambodia.
ICT-CAM is a proud member of ASOCIO and WITSA. The objective of the association is to build a sustainable Telecom and IT
industry in Cambodia.
6. CIA World Factbook 9. Current status and development of ICT in Cambodia, Sorasak Pan, 2005
7. Ministry of Education, Youth and Sport, Cambodian government 10. http://www.adb.org/Documents/periodicals/ADB_Review/2001/vol33_4/building_cam.asp
8. Cambodia Competitiveness Study, Overseas Development Institute, February 2009 11. http://www.doingbusiness.org/ExploreEconomies/?economyid=33
159
54
50
47
46
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
12. Cambodia Competitiveness Study, Overseas Development Institute, February 2009 14. International Telecommunication Union (ITU) statistics 20046
13. National ICT Development Authority (NiDA), November 2007
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at Market Prices (2008) USD 5.2 billion Economy and Industry
Lao PDR (Laos) is a landlocked economy in East Asia and one of Asia’s poorest
Population (2009) 6.8 million
countries1. In the 1980s, the Laos government began to introduce market-oriented
Exchange Rate (USD:LAK) (Jan-Sep ’09 avg.) 8,760.7 economic reforms and later developed trade links with the West and other Asian
countries. In 1997, Laos became an ASEAN member and has applied to join the World
Inflation at Consumer Prices (2007) 8.6 percent
Trade Organization2.
Unemployment (2005 avg.) 2.4 percent
GDP Composition
S&P Risk Rating Not available
Services
27%
Industry
Agriculture
34%
39%
Between 2001 and 2005, GDP growth averaged 6.3 percent per year3. Recent
economic growth in Laos is driven by an expansion in industrial growth at double-digit
rates. The main engines of industrial growth are construction and mining4, although
agriculture still forms 39 percent of the GDP.
Due to the global recession, the Laos economy is expected to face a number of
challenges. The slowdown has affected every area in the country this year, including
tourism, exports and foreign investment. Although the government has set a target of
achieving a growth rate of 8 percent in the fiscal year 2008-09, economists believe
growth might be slower between 6 and 6.5 percent5.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
industry7
Thailand has been the dominant investor in the country. In 2004, Thailand, US, France,
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Malaysia and China accounted for 34 percent, 13 percent, 9 percent, 5 percent and 4
percent of foreign investment respectively8
Exports increased from USD 475,000 from 2005 to USD 922,000 in 20079
! The application of IT in Laos is in its infancy. The market is very small so most
computer service companies are located in capital Vientiane. Only a few smaller
companies serve the other provinces. Most of the large IT companies have
significant foreign investment which account for 50-100 percent of the
capitalization12
! Lao PDR was ranked 167th out of 183 countries in World Bank’s ease of Doing
Business rankings. It takes 100 days to start a business in Laos according to the
report13.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Lao ICT Commerce Association (LICA) is association under the umbrella of the Lao National Chamber of Commerce and
Industry (LNCCI). Members of association are ICT related business enterprises, Internet Service Providers (ISP), Telecom
service providers (TSP) and IT related institutions of learning
The objective of LICA is to: promote the ICT market in Lao PDR, and promote ICT products, services, and human resources
development as a vehicle of economic development and growth of Lao PDR. It also aims to continuously improve the standard
of provisioning of ICT product and services to society and foster a closer and effective public-private-partnership in ICT
market.
For more details on LICA, please refer to the appendix section or visit www.lica.datacomlao.com
10. Lao PDR Country Report on ICT, Prime Minister’s Office, 2006 12. Asia-Pacific Development Information Programme
11. Digital Review of Asia-Pacific 2007-08 13. http://www.doingbusiness.org/ExploreEconomies/?economyid=107
163
! The government has recently formulated the National ICT policy with the
objective for Laos to advance beyond the least developed country status.
IT services
17%
Hardware services
83%
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at Market Prices (2008) USD 5.3 billion Economy and Industry1
The Mongolian economy has been historically based on agriculture and mining. The
Population (2008) 3.04 million
country has one of the lowest population densities in the world and vast natural
2
Exchange Rate (USD:MNT) (2008 avg.) 1165.7 resources, especially mineral deposits . Mongolia was a communist country, but after
the fall of Soviet Russia, the country brought on economic reforms and moved to a
Inflation at Consumer Prices (2008) 23.2 percent
democratic system and a free-market economy. During this transformation Mongolia
Unemployment (2008 avg) 2.8 percent saw deep recession and political inaction in the 1990s, and was compounded by natural
disasters3.
S&P Risk Rating BB-/Negative/B
Services Agriculture
42% 19%
Industry
39%
Mongolia’s GDP growth averaged 9 percent per year from 2004 to 2008 on the back of
high commodity prices. Poverty and inequality remain widespread in Mongolia even
4
today .
The country is facing a downturn due to the global slowdown and poor world demand
for natural resources, with real GDP growth likely to be around 2.5 percent in 2009. The
country had to take an emergency loan from the IMF in March 2009 due to soaring
budget deficits.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
! Export growth is driven by metal and mineral exports. The largest share of foreign
direct investment (67 percent) of a total of USD 500 million in 2007 also went to
the mining sector2.
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
1. Economist Intelligence Unit, One Click Report on Mongolia, August 3rd, 2009 3. CIA World Factbook, 2009
2. http://www.ide.go.jp/Japanese/Ideas/pdf/followup_14/04.pdf 4. http://www.ebrd.com/country/country/mongolia/econo.htm
166
! There are multiple mobile cellular service providers and the number of subscribers
is increasing rapidly. In addition, a fiber-optic network has been installed that is
improving broadband and communication services between major urban centers
with multiple companies providing inter-city fiber-optic cable services7
! Mongolia is ranked fairly high in World Bank’s 2010 ranking on Ease of Doing
Business – 60th out of 183 countries. It takes 13 days to start a business in
Mongolia, according to the report8.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
The vision of the MIDAS NGO is to create an information-based society in Mongolia that will improved the quality of life of
citizens and intensified all economic sectors of the country by developing Information and Communications Technology sector
as a one of the competitive sector. MIDAS NGO is a bridging 'hub' of the Mongolian ICT players and its related aspects and
MIDAS/MONITA assists bottom to top management of the ICT sector.
For more details on MIDAS/MONITA, please refer to the appendix section or visit www.ict.mn/midas/
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
GDP at Market Prices (2008) USD 27.2 billion Economy and Industry
Myanmar is a resource-rich country, endowed with natural resources like arable land,
Population (2008) 48.1 million
forestry, minerals (including gas and oil), and marine resources1
Exchange Rate (USD:MMK) (Jan-Mar ’09 avg.) 1,068
Despite the liberalization of the early 1990s, Myanmar’s economy largely stagnated
Inflation at Consumer Prices (1Qtr - 2009) 12.7 percent since 1997 due to poor macroeconomic management, a large public sector debt, a
sharp decline in foreign investment, isolationist policies and trade sanctions2
Unemployment (2008 avg.) 9.4 percent
Services
39% Industry
20%
Agriculture
41%
Myanmar’s economy is chiefly agro-based, including fisheries and forestry, and this
sector accounts for nearly half the total economy and employs more than 60 percent of
the total labor force3
In May 2008, the country was affected on an unprecedented scale by a cyclone, which
resulted in large-scale casualties and economic losses estimated to be about 2.7
percent of the GDP in 2008. Moreover, a combination of domestic factors and the
impact of the global economic recession also affected the economy in 20083
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
! India, China and Thailand are the major trading partners for Myanmar4
! FDI increased from USD 173 million in 2007-08 to USD 985 million in 2008-09. The
large increase was accounted for by a nearly five time increase in the FDI from
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
China mainly into Myanmar’s mining sector. Russia and Vietnam were the other
two large investors in the last year5.
1. http://www.adb.org/Documents/Fact_Sheets/MYA.pdf 4. http://www.dbcde.gov.au
2. http://www.asean.fta.govt.nz/myanmar-economic-situation 5. http://sinoburmanews.net/archives/2009/july-sept-2009/china-boosts-myanmars-fdi-more-than-five-fold-in-
3. http://www.state.gov/r/pa/ei/bgn/2698.htm, Austrade Website 2008-09
170
! The Myanmar Computer Federation (MCF) was formed in 1998 for raising
awareness of ICT. The Myanmar Computer Professionals Association (MCPA), the
Myanmar Computer Industry Association (MCIA) and the Myanmar Computer
Enthusiast Association (MCEA) are subordinated by MCF9
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
ICT is recognized as a key element in implementing political, economic and social objectives in Myanmar. There are many
opportunities for application of ICT in socio-economic organizations to increase the productivity, market penetration, reduce
costs and improve services so that they can compete in the global market. The Myanmar Computer Federation (MCF) was
established to contribute towards the socio-economic development through ICT, lay down and implement measures necessary
for development and dissemination of Information Communication Technology.
Three NGOs, Myanmar Computer Professional Association (MCPA), Myanmar Computer Industry Association (MCIA), and
Myanmar Computer Enthusiast Association (MCEA), were formed in 1998. With the representatives from these associations,
the Myanmar Computer Federation (MCF) was formed later in the same year. Presently, there are more than 7,000 professionals
as members of MCPA, more than 400 companies as members of MCIA, and 100,000 members of MCEA.
For more details on MCF, please refer to the appendix section or visit www.mcf.org.mm
6. Digital Review of Asia Pacific 2007-08, http://www.apdip.net/projects/dig-rev/info/mm/, CIA World Fact 8. http://www.dof.or.kr/pdf/Myanmar%5BWD%5D.pdf
Book 9. http://www.state.gov/r/pa/ei/bgn/2698.htm, Austrade Website
7. http://www.mp3-mp4-ipod.cn/world/2009-03/09/content_7555162.htm, Digital Review of Asia Pacific
2007-08
171
! Banks and the government are the largest consumer of IT-BPO. The commercial
market consists mainly of customized applications such as accounting packages,
Computer-Based Training (CBT), Web-enabled applications and multimedia
design11
! Myanmar Computer Science Development Council approved its first ICT master
plan in 2001. The second ICT plan is called the Myanmar ICT Development Master
Plan and Action Plan and covers the period 2006-10, The Master Plan guides all
ICT development efforts in Myanmar with an aim to achieve the following
objectives:
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Software Computer
15% Network & Hardware
60%
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Source: MCF
Nepal
GDP at Market Prices (2008) USD 31.09 billion Economy and Industry1
Real GDP growth in Nepal declined from an average of 5 percent per year in the 1990s
Population (2009) 28.56 million
to only 2 percent during 2000- 2005 due to political instability. Nepal remains one of the
Exchange Rate (USD:NPR) (2008 avg.) 69.8 poorest countries in the world, with an estimated three-fourths of the population
engaged in agriculture. Industrial activity, too, is centered on processing of agricultural
Inflation at Consumer Prices (2007) 6.1 percent
products.
Unemployment (2008 avg.) 46 percent
Services
50% Agriculture
33%
Industry
17%
GDP growth touched 5 percent in 2008 due to a good harvest. Nepal is expected to
remain relatively insulated from the global economic slowdown due to the large
contribution of agriculture. IMF expects real GDP growth to be around 4 percent in the
fiscal year 2009-102.
! Nepal’s exports in 2008 amounted to USD 868 million (FOB). However these
estimates do not include unrecorded border trade with India3
! The country received a total of USD 724 million of foreign investment in 2008.
India accounts for nearly 45 percent of the total foreign investment into Nepal4.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
! There were about 1200 IT professionals in Nepal in 2004461. The 'National ICT
Workforce Survey 2005', carried out by Computer Association of Nepal (CAN),
shows that of the total ICT workforce of around 4,000, only around 1,000 have
formal ICT education from recognized colleges and universities6
! The penetration of the internet in Nepal is very low, at 0.24 percent of the
population, while the penetration of wireless was about 6 percent in 20077
! Nepal is ranked 123rd among 183 countries in the World Bank’s Doing Business
report of 2010. It takes 31 days to start a business in Nepal, slightly higher than
the region’s average of 28.1 days8.
! The Computer Association of Nepal (CAN) is the national apex body for promotion
of ICT in Nepal
Computer Association of Nepal (CAN) was formed in May 1992 but was formally registered in December 1992 as an
autonomous, non political, non partisan, non-profitable and service oriented organization. The Computer Association has been
formed with the involvement of professionals, specialists, manufacturers, institutions and the related organization of Computer
and Information Technology within the country.
The main activities of CAN include organizing and conducting seminars, workshops, talk and training programmes and to
provide consultancy and R & D services and also to exchange knowledge, skill and technology in the field of Computer and
information technology with similar types of organizations within and outside the country.
For more details on CAN, please refer to the appendix section or visit www.can.org.np
5. http://www.adb.org/Documents/Events/2004/SASEC/First_Mtg_ICT/Nepal_Country_Paper.pdf 8. http://www.doingbusiness.org/ExploreEconomies/?economyid=136
6. http://www.i4donline.net/news/news-details.asp?newsid=2272 9. Computer Association of Nepal
7. http://www.itu.int/ITU-D/ict/conferences/bangkok07/doc/16.country%20presentation_Nepal.pdf 10. http://www.idrc.ca/fr/ev-127145-201-1-DO_TOPIC.html
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
What is collaboration? Today the center of gravity of the global IT-BPO is shifting to ASOCIO member countries. The region is
Collaboration is defined as a already emerging as a leading producer, supplier and consumer of IT-BPO. The detailed profiles of
cooperative arrangement in which ASOCIO member countries covered in the earlier chapter also depict the distinct capabilities possessed
two or more parties (which may or by each country that has helped them till date to leverage the IT-BPO opportunity.
may not have any previous
relationship) work jointly towards a However, as these countries move forward to fully realize their aspiration of bringing economic and social
common goal. Some of the development through IT-BPO adoption and establish their leadership in the global IT-BPO arena, they are
attributes of collaboration include also faced with diverse challenges that restrict their ability to fully benefit from the enormous potential
sharing of planning, making that IT-BPO offers.
decisions, solving problems, setting
goals, assuming responsibility, Moreover, ASOCIO members are now so important to the world IT-BPO backdrop that they must also
working together cooperatively, play a larger role in global IT-BPO leadership. Hence, it becomes necessary for these countries to
communicating, and coordinating collaborate and leverage on each others capabilities. Collaboration is equally essential for addressing a
openly. For a successful range of threats, including poverty, an ageing population, terrorism and environmental degradation.
collaboration, it is important that
the parties involved possess diverse
skills or characteristics that they can Diversity to act as catalyst for effective collaboration in Asia-
bring to the table to share.
Oceania
The case for effective collaboration in Asia is broad, deep and compelling. In fact, Asia’s great diversity –
in terms of its size, culture, languages, political systems, natural resources, level of industrialization, or
economic development status – sets a very favorable context for effective collaboration. Asian economies
can flourish if they become more closely intertwined with each other to build on their strengths and
collectively address the challenges that the region faces.
Diversity
Cost Arbitrage
Demographics
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Skills & Resources Linguistic Capabilities
Knowledge
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Complementary Proximity
Cultural Similarities
Level of Globalization
The Collaboration Iceberg Moreover, countries with complementary skills or proximity in terms of location, language or culture are
‘The Collaboration Iceberg’ implies also likely to collaborate effectively. Economies which are able to use all the three blocks of collaboration,
that the concept of collaboration is viz. diversity, complementary attributes or skills and proximity are likely to achieve the maximum out of
like an iceberg, with majority of the the collaborated relationship. For instance, a country with advanced software capabilities (such as India)
opportunities as well as benefits and a country with established hardware design and production skills (such as South Korea) would be
lying below the visual line and not able to collaborate effectively for newer opportunities in embedded systems that require c software as
so obvious on the surface. The four well as hardware capabilities; Economies with language and/or cultural affinity (such as Japan, China and
key elements – Investments, Trade, Vietnam) have proven effective collaboration manifested through trade or knowledge share.
People Mobility and Knowledge
Sharing and Creation - defined in
Without effective collaboration, however, diversity is believed to breed regional inequalities rather than
‘The Collaboration Iceberg’ indicate prosperity. The varied pattern of the Asian countries’ development status highlights this phenomenon.
that the collaboration efforts should Some countries in Asia boast of a highly-sophisticated IT-BPO industry, while there are many other fairly
focus on both a long-term vision and remote and landlocked countries that have been left out of the IT-BPO overdrive and have remained
short-term pragmatic initiatives that isolated not only geographically but also economically. This has led to a large untapped potential in the
are likely to show effective, step-by- region. Collaboration would be able, thus, to not only seal Asia’s dominance in the global IT-BPO scenario
step results. In other words, these by 2020, but also has the power to bring up the development status of smaller and fairly underdeveloped
elements are likely to have an economies of the region.
implied interdependency, and as
such each successive element has
the potential to influence the one Creating an architecture for co-operation: The collaboration iceberg
before it, and ultimately bring more Collaboration in the IT-BPO space has not been fully explored in the Asia-Oceania region. Most initiatives
opportunities for the region. have been around trade, investment and other economic relationships. Eventually, as Asian economies
move towards an environment of fierce competition as well as greater challenges, they will need to
The graduation from the base to the
invest in collaborated efforts that have far-reaching consequences. Asia will need to adopt some of the
tip of the iceberg denotes the
elements identified in ‘The Collaboration Iceberg’ to facilitate better integration and ensure an inclusive
visibility of benefits that each
and sustainable growth.
collaboration element can bring. The
elements towards the top of the
Collaboration Iceberg may have
The Collaboration Iceberg
more visible benefits in the short-
term, but they may benefit only a
small section of the stakeholders.
On the other hand, the elements at
the base of the iceberg may have
less visible or tangible benefits,
they are expected to be more
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
INVESTMENT
?
Companies can leverage benefit like cost arbitrage, talent availability by investing in
?
Industry Players
some of the unexplored countries in Asia Oceania region
Companies can invest in Asia Oceania countries
COLLABORATIVE TRADE ?
The region has competitive advantage across various areas ranging production of
electronics, telecom equipment, hardware, IT services and BPO
?
Industry Players
Trade with collaborative approach with benefits which ?
This competitive advantages can be leveraged by Asia Oceania countries by
are beyond immediate economic benefits conducting collaborative trade in complementary skills
TRADE
SALE OF GOODS and SERVICES
?
Industry Players
TRADITIONAL COLLABORATION
?
There are lot of opportunities available for intra-region trade due to diversities as
Sale of good and services from company to company and well as proximities within each of the Asia Oceania countries ?
Government
country to country with direct economic benefits
PEOPLE MOBILITY
?
Movement of professionals can be used to build skills which are required by ?
Industry Players
VISIBILITY OF BENEFITS
Movement of professional as well as students will build a countries having shortage of skilled professionals ?
Educational Institutes
INDUSTRY ASSOCIATIONS
KNOWLEDGE SHARING ?
Industry Players
?
Knowledge sharing can be done either to foster IT-BPO trade and develop IT-BPO
?
Educational Institutes
Platform for sharing good practices and avoid skills or to impact ICT usage with the Asia Oceania countries
reinventing the wheel ?
Government
Since prioritization of various elements of collaboration is difficult, it is vital that collaboration occurs
across all levels – between companies, industry, academia and government - in order to comprehensively
address the challenges and aspirations of the individual country as well as the region. This is likely to
create strong, prosperous and outward-looking Asian economies that are not only regionally integrated
but also exercise influence in the global IT-BPO landscape.
Better Utilization of
?
REGIONAL LEVEL BENEFITS
? ?
Human Resources Regional Ecosystem
? on Global Aid
Development Improved
? programmes
Utilization of
? Geopolitical Stability Positive contribution
?
Complementary to global economy
resources through product and
service innovation
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
A collaborated Asia could bring together the region’s immense intellectual and other resources to
address the numerous regional and global challenges. It could also help accelerate the global economy
by boosting productivity, raising living standards and reducing poverty.
Adopting ‘The Collaboration Iceberg’ each of the individual countries can collectively translate into a
higher growth, higher integration and increased competitiveness for the region vis-à-vis other regions in
the world. A collaborated growth is also likely to lead to benefits for the entire global community,
especially as knowledge sharing and knowledge creation in ICT has the power to lead transformational
growth driven by innovation and efficiencies.
Therefore, although regional collaboration for the IT-BPO development is primarily motivated by the
aspiration to advance the economic and social development in the region, it is also expected to bring
several positive contributions to the global economy. Asia’s regional collaboration can help to sustain
global economic progress at a time when other major regions are reaching the economic maturity.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Integrating Asia’s growing importance in the global IT-BPO landscape demands more determined and
efficient regional collaboration. To play a greater role in addressing global issues that impact IT-BPO, Asia
must increasingly act together, which is also likely to help it maintain global economic prosperity.
The distinctive approach of ‘The Collaboration Iceberg’ allows any group of countries to take part in the
integration process and share its benefits, regardless of its level of development and the stage at which it
operates in the IT-BPO landscape. As initiatives across each collaboration element strengthen, they could
lead to deeper and wider collaboration and ultimately the region’s leadership in the global IT-BPO. ‘The
Collaboration Iceberg’ ensures that Asia’s economic integration remains market friendly and responsive
to the region’s diverse economic, political, social and cultural realities.
Investment will
? Collaboration in
? Trade helps
? Movement of
? Helps to get access
? This is the most
?
bring economic and newer skills and countries to come skilled professional to information that important form of
Key employment areas can be closer and can be as well as students is either difficult to collaboration in
Collaboration growth significant revenue used as a input for can help in creating recreate or involves terms of its
generator for future collaborative an ecosystem for time and resources capacity to create
Elements
several economies trade countries to grow impact
& companies by collaboration
Offshore centers
? Complementary
? Good and services
? Skilled work-force
? Knowledge sharing Joint research on
?
for IT-BPO domain skills trading from labor surplus on ICT products
companies opportunities countries
Complementary
? To improve the IT-
? Conducive
?
Strategic
? software/Technical Extended market
? Student’s exchange
? BPO trade within environment for
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Illustrative acquisition of skills for IT-BPO programmes the country Innovation and IP
Opportunity smaller industry creation
Complementary
? To improve the IT-
?
player
areas to market skills BPO industry
Collaborate specific skills
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Complementary
?
geographic To impact ICT
?
advantage usage and
development of the
country
Offshore centers for IT-BPO Investments in setting up offshore centers can play a critical role in the India, Philippines, Malaysia, Singapore (countries where
companies development of the IT-BPO sector by shifting parts of production to low cost foreign companies can be tapped);
destinations in Asia Oceania. Through global sourcing, services can be provided
Bangladesh, Vietnam, Sri Lanka, Pakistan (can market their
by more cost-effective suppliers. Moreover, companies can tap specialized skills
destinations to foreign companies)
and thus benefit from various incentives provided by the host country.
Strategic acquisition within ASOCIO Companies can do strategic acquisitions with companies in Asia Oceania region All ASOCIO member countries
member countries countries. This is likely to give them a scale to grow in the region with the
existing set-up of target companies. The country’s IT-BPO sector is likely to grow
with increased business opportunities due to acquisition.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Trade
Trade can be divided into two major components
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Collaborative Trade
Collaborative trade is an extended form of trade. In this form of collaboration, there is a shared belief in
the benefits and a high commitment to promote growth and sustainable development.
In this form of trade, companies that have complementary skills collaborate with each other either in the
form JVs or other arrangements like profit sharing. Complementary skills can be in either domain,
technology or market knowledge. The benefits of this kind of trade are beyond economic benefit. In the
long-term employment opportunities are created, companies can acquire complementary skills, the IT-
BPO industry can take further momentum and new markets can be tapped for future trading.
185
Complementary domain skills Companies can collaborate with enterprises that are based in low cost All ASOCIO member countries
destinations and have the potential to develop domain specific products. This
kind of collaboration can create high domain-specific products at lower costs.
Opportunity 1 - Islamic banking opportunity: Companies in Malaysia which Malaysia; Bangladesh, Indonesia
are already experienced providers of IT-BPO services can contribute process
maturity, while companies from Bangladesh or Indonesia can provide talented
manpower at lower costs. Together these companies can tap the large Middle
East market for IT-BPO services in the Islamic banking segment through joint
ventures or on a profit sharing basis.
Complementary software skills Companies with complementary software/technology skills can collaborate to All ASOCIO member countries
develop new technologies and services.
Opportunity 1 - Embedded system and products: Companies in Taiwan Taiwan; India, Vietnam, Malaysia (likely partners for Taiwan)
which are very strong in hardware products can collaborate with companies
with services skills to develop a diversified product and services range in the
embedded systems and products.
Opportunity 2 - Gaming and digital content: Countries with a high demand Singapore, Korea, Japan (potential demand markets);
for gaming and digital content can collaborate with lower-cost countries.
Vietnam, Thailand, Philippines (potential supplier markets)
Conceptualization of the idea can be handled in the demand market, while it
can be executed at lower costs in the partner countries. Joint IP creation can
also be considered.
Complementary market skills Companies with knowledge of specific markets can collaborate with companies All ASOCIO member countries
with software/technology skills to tap the new market. These markets can also
be in the Asia Oceania region. This can also help Asia Oceania to serve its IT-
BPO demand within the region.
Opportunity 1 – Tapping new markets: The IT-BPO service provider India, Sri Lanka, Phillipines, Thailand (potential supply
companies in India and other Asia Oceania countries, who want to tap the markets);
Japanese market, can form JVs with either Japanese, Chinese or Vietnamese
Japan, China, Vietnam (potential JV partner)
companies. These companies are likely to have a good understanding of the
Japanese market and service providers are likely to bring IT-BPO specialization
to tap the market.
Sources: KPMG Analysis © 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Case Study:
Several aspects constitute the agreement’s proposed growth strategy. These include multi-shore delivery, which aims to
provide a distributed delivery capability across Singapore and Malaysia for the regional and global customers. Another
element of the partnership involves dispensing with subcontracting, and instead of dividing a project’s components among
the partnering outsourcing companies from both Singapore and Malaysia. Such a move aims to give customers better
visibility of service levels.
Like Singapore and Malaysia, other countries within the region which have similar strengths as well as complementary
capabilities can come together and create extended markets for their service providers.
1. http://www.mis-asia.com/news/articles/singapore-and-malaysia-outsourcing-companies-collaborate-to-improve-market-share
186
Case Study:
This not only saves money and time, but also boosts trade in ICT products in the two countries. Consumers also
benefit, as lower costs and higher volumes help to drive down prices. There is intent to extend such MRAs amongst all
ASEAN economies.
Sale of good and services Asia Oceania constitutes a strategically important market both in terms of All ASOCIO member countries
immediate opportunities as well as future potential. Therefore, there are very
obvious opportunities as each of the Asia Oceania countries have strength in
some services, which they can offer to Asia Oceania region from a trade
perspective.
Extended market for software Apart from complementary requirements, proximity in terms of language, Thailand;
companies culture, etc. can also facilitate effective bilateral trade. For instance, companies Cambodia, Laos, Myanmar (neighboring markets that could be
tapped)
in Thailand can sell their products and services in neighboring countries with
language and cultural similarities and create an extended market. Thai
companies are likely to gain from scale while consumers in the neighboring
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countries are likely to gain from the extended product and service availability.
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People Mobility
The movement of people in the region can be in two ways. It can be either movement of skilled
professionals or movement of students. Movement of skilled professional from countries with labor
surplus to countries with labor shortages can help countries enhance their capabilities. In the long term,
additional employment opportunities are generated in the receiving country. Student exchanges can help
countries understand the curriculum, appreciate each other’s culture and develop synergies between the
countries for future trade.
Skilled workforce from labor-surplus The ICT industry bodies in countries with a projected labor shortage could India, Indonesia, Malaysia, Pakistan, Philippines (countries
countries consider direct tie-ups with their counterparts in labor-surplus countries. A with projected labor surplus);
National Skills Registry in the labor-surplus country could identify areas where
Japan, Australia, Singapore (countries with projected labor
abundant skills are available internally. Companies in the labor shortage country
shortage)
could get an access to this registry at a negotiated price. This can help address
the skills shortage in the labor shortage countries and also help the labor
surplus country channel its human resources productively.
Student exchange programmes The Asia Oceania countries have different levels of education and student Australia, Japan, India, Thailand, Philippines (countries with
exchange programme that can be useful to understand the country’s culture, better education system); Cambodia, Myanmar, Nepal,
skills and education system. Pakistan, Bangladesh (Countries that can improve education
system)
Case Study:
Asia-Oceania comprises of leaders in various segments within the ICT space, and the other economies can use their
leadership position as a launch pad for their own industries. In turn, mutual access to markets is likely to help the leading
country.
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Knowledge Sharing
?
Knowledge sharing
Knowledge sharing within the Asia Oceania can help the region grow faster by developing the existing
knowledge rather than reinventing the knowledge. Different stakeholders can be involved for different
kinds of knowledge sharing.
3. http://www.ameinfo.com/182989.html
188
Knowledge sharing Knowledge Countries which are leading the IT-BPO trade, either in software or in hardware, Australia, Hong Kong, Singapore, India, Taiwan, Thailand,
sharing to improve the intra-region can share their trade related knowledge in areas related with market South Korea, Vietnam (can share experience in IT-BPO
IT-BPO trade improve the intra- development, potential opportunities, future growth areas etc. with developing services trading) Nepal, Mongolia, Myanmar, Cambodia, Laos
region IT-BPO trade Asia Oceania countries. ASOCIO’s initiatives such as trade-visits and (can learn from experience of leading countries)
Ambassador programmes aim to improve intra-region trade.
Knowledge sharing to improve the Countries with IT-BPO skills can share their knowledge in areas of disaster Australia, India, Taiwan, Philippines, Vietnam, South Korea
IT-BPO industry’s specific skills management, entrepreneurship, lowering cultural barriers, promotion of tier II & (can share experience in IT-BPO services trading) Pakistan,
III cities etc. with some of the developing Asia Oceania countries. Bangladesh, Thailand, New Zealand, Indonesia, Nepal,
Mongolia, Myanmar, Cambodia, Laos (can learn IT-BPO skills
from leading countries)
Opportunity 1 – Knowledge-sharing on disaster management systems: Japan, Taiwan, Singapore, Malaysia (can lend their expertise
For countries with severe vulnerabilities to climate change, disaster in disaster management);
preparedness for the IT industry needs to be high. Using the experience of other
Bangladesh, Cambodia, Laos, Myanmar, Nepal, India (disaster
countries with high preparedness against natural disasters, companies in such
prone countries)
countries can put in place systems to counter and react effectively to disasters.
Collaboration is also possible through tie-ups to set up disaster recovery and
business continuity centers in partner countries, with special visas for critical
staff handling these centers at the time of a crisis situation. Partner countries
stand to gain from employment creation in the recovery centers set up by
companies in the disaster-prone countries.
Opportunity 2 – Knowledge-sharing for entrepreneurs: Countries that are Singapore, India, Philippines, Vietnam, Malaysia (countries
trying to create opportunities in the IT-BPO services space can negotiate with that can provide training)
companies in established supplier nations to help them design and deliver
Cambodia, Mongolia, Lao PDR, Myanmar, Nepal (countries
training to potential entrepreneurs in the IT-BPO space. These trainings may
requiring the training)
cover aspects such as how to set up companies, develop marketing abilities,
train employees, and formulate good human resource practices.
Training companies in the established supplier nations stand to gain from the
increase in business opportunities.
Opportunity 3 – Knowledge-sharing to lower cultural barriers to Japan, Korea, Taiwan, Hong Kong (countries with relatively
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
offshoring: Countries such as Japan and Korea are large markets for IT-BPO low offshoring)
services but the proportion of offshoring has been low. One reason for this has
India, Philippines, Vietnam, Bangladesh, Sri Lanka, Pakistan
been that companies in these countries are culturally less inclined to offshore.
(countries that can take up offshoring)
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
Opportunity 4 - Knowledge-sharing on how to promote tier II and III Vietnam, Bangladesh, Sri Lanka (countries that may need to
cities: Countries such as India and the Philippines have recognized the need to promote smaller cities);
de-congest the IT-BPO centers away from the larger metro areas. A number of
India, Philippines, Malaysia (can provide knowledge on how
smaller cities are now being promoted as lower cost IT-BPO destinations.
to promote smaller cities)
Upcoming supplier countries can apply this knowledge to promote the IT-BPO
industry in the country. In turn, the smaller cities can be promoted as alternate
delivery locations to service as providers in the established supplier nations.
189
Knowledge sharing to impact ICT Countries having higher ICT usage can share their knowledge in the areas of e- Australia, Taiwan, Philippines, Singapore, Hong Kong,
usage and development of the governance, piracy reduction, ICT education, use of IT for the country’s Vietnam, New Zealand, South Korea (can share experience in
country development etc. with some of the Asia Oceania countries which are low in ICT ICT usage) India, Pakistan, Bangladesh, Indonesia (can learn
usage. the ICT usage from the leading countries)
Opportunity 1 - Host workshops /learning sessions for reducing piracy All ASOCIO member countries
and enhancing IP protection: Governments in countries with lower piracy
and strict IP infringement regulations could conduct workshops on IP law
enforcement techniques, and host shared learning sessions for countries in the
region that are still struggling with IP protection.
Opportunity 2 - Improving e-governance adoption in the region: All ASOCIO member countries
Countries at lower stages in the adoption of e-governance can learn from the
more developed countries through knowledge sharing. Understanding of best
practices, innovative use of technology, implementation of challenges and other
issues can be discussed through targeted seminars and conferences.
Companies in both countries can gain through increased business due to e-
governance adoption.
Opportunity 3 - Knowledge sharing on the use of technology on key All ASOCIO member countries
development parameters: Developed countries can share knowledge on the
use of technology in critical areas such as traffic management, pollution
monitoring, energy efficiency, waste management, health-care management,
digitalization, and others. Companies implementing these solutions in the
developed countries can gain from the business opportunities that will open up
in the developing countries.
Opportunity 4 - Improve ICT education in the country: Multiple countries All ASOCIO member countries
can collaboration to introduce systems for ICT education starting from primary
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
levels. This can happen through:
Student exchange programs
?
Common curricula and educational material
?
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Opportunity 5 - Common accreditation systems for ICT courses and All ASOCIO member countries
universities: Universities in the region could gain by formulating a common
accreditation system for ICT-related courses. This is likely to help standardize
the level of ICT education in the region and especially help developing countries
improve the standard of ICT education in the country.
190
Case Study:
Smaller countries within the region can leverage the knowledge and leadership of higher-growth countries within the
region to create opportunities for all.
Case Study:
Countries within Asia-Oceania can adopt this model to improve the human resource availability and capabilities in the ICT
sector. The lack of qualified human resources has been identified as a large hindrance to the sustainability and growth of
the IT-BPO industry.
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
4. http://www.articlesbase.com/international-business-articles/cambodia-calls-on-indian-smes-831212.html
191
Joint research on ICT products Collaboration could be among companies or academia, where two or more All ASOCIO member countries
parties can come together and contribute resources such as funds and qualified
talent. Companies or universities in countries with existing strengths in R&D
and IP-creation can especially partner with those in developing countries which
possess the talent but inadequate resources to conduct R&D.
Conducive environment for Member countries can form a consortium with the help of ASOCIO to create All ASOCIO member countries
Innovation and IP creation conducive environment for Innovation and IP creation. The consortium can host
seminars to create awareness within the companies and can advise the
government in IP-related laws. An overall system can be created which fosters
Innovation and IP creation within the region.
Case Study:
5. http://www.insead.edu/v1/gitr/wef/main/fullreport/files/Chap1/1.8.pdf
6. http://www.morst.gov.nz/international/global/korea/ict-delegation
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ICT summit
? is well represented in the Asia-Oceania region having a wide range of members from developed and
ICT exhibition
?
developing countries that extend beyond SAARC, ASEAN or such regional associations.
ASOCIO has been instrumental in connecting IT companies in its member economies. The annual
Point of view / position papers
?
ASOCIO ICT Summit is one of the region's high-powered IT forums, providing platforms for government
Rewards & recognition.
?
and industry to share information, develop closer relationship and, most importantly, identify new
business opportunities. In its 25 years of operation, ASOCIO has seen the rise of ICT industries in many
ASOCIO ambassadors sharing
countries, including the success of offshoring in India and the Philippines.
expertise with Mongolian
companies
As part of the Ambassador
programmes, ASOCIO members visited A new 'collaborative' agenda for the next 25 years
Mongolia in May 2008, with the The rapid growth of technology and the changes that it has brought about in this century necessitates a
objective of: new agenda for the next 25 years in terms of sustaining the efforts made so far, and providing greater
Gaining an understanding of the
? impetus going forward. ASOCIO is set to have a key role to play in fostering effective collaboration
Mongolian ICT Industry and local ICT among member countries and providing strategic direction, especially at the multi-lateral level. ASOCIO
Association can use the consortium approach to address specific needs of countries through member associations.
Sharing the Ambassador’s experience
? There is also an opportunity to further strengthen relationships with government departments and UN
in ICT development and Association bodies at the regional and global levels.
building
ASOCIO has the advantage of oversight since it is made up of countries at various levels on the
Advising on ICT Outsourcing
?
economic growth and development trajectory. It can therefore assist members in putting together
opportunities for Mongolia
enablers for creating a robust environment for future growth. Over the next 25 years, the role and
Based on the visit, a set of
?
representation from developing countries within the region is likely to rise significantly and this in turn is
recommendations were passed to
likely to reflect in the activities and decision-making for ASOCIO in its new agenda.
the ASOCIO member body in
Mongolia along with action areas
Moreover, though ASOCIO represents associations in a single industry i.e. ICT, that industry has the
that the country could take up to
potential to contribute significantly to economic growth and development. ASOCIO has a much larger
improve the potential for IT.
responsibility in that sense and its policies can reap rich benefits for the population at large in the
economies that its members represent. For this, it will have to solicit greater participation from its
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
ASOCIO led six economies in members in its regular activities as well as new initiatives, through targeted and result-oriented
Multilateral Trade Delegation to Ho programs.
Chi Minh, Vietnam
Forty delegates from the Asia-Oceania Furthermore, ASOCIO will have to deliver much more by way of value perception to its members’
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
economies including Japan, Laos, members, or the end-user companies, to ultimately garner sustained co-operation from its members.
Malaysia, Thailand, China and Hong Member economies are likely to look up to ASOCIO to provide them greater value and encompass larger
Kong attended the ASOCIO lead goals in the global arena that can also enable cross-industry collaboration as ‘technology convergence’
Multilateral Trade Delegation to Ho Chi
starts to spread its wings wider.
Minh, Vietnam.
The international delegates had the Collaboration through growth, and under the umbrella of ASOCIO, can enable member economies to
opportunity to meet prospective achieve each economy’s Vision 2020, as well as collectively set their sights for Asia-Oceania higher than
business partners and improve their has been ever envisaged.
understanding of the potential of the
ICT market in Vietnam.
Given the important role that ASOCIO can play, it can prioritize the illustrated action areas based on the
relative impact that they will bring to the region and the ease at which they can be implemented.
Moreover, even as the illustrative action areas hold potential across all set of countries; ASOCIO can
practice them based on their relevance to different set of countries, given the diversity in the maturity
level of the IT-BPO industry in various member countries. This will also lead to focused efforts in a
specific direction for ASOCIO. At the same time, as member countries evolve and move to the next level
of growth in future, ASOCIO should also change its priorities and focus areas for those set of countries.
In addition, even as possibilities abound, ASOCIO must continue to improve its focus on core areas such
as enhancing trade ties across all its member countries and enabling more power and co-operation
among its affiliated associations.
HIGH
Complementary
Complementary
market skills
domain skills
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EASE OF IMPLEMENTATION
LOW
LOW HIGH
Focus areas for all member countries Focus areas for leading countries
Focus area for developing countries Focus area for promising countries
ASOCIO can facilitate the following collaborations and interventions in various member countries for
overall development of ICT in the region:
Leading Countries
Building a conducive environment for Innovation and IP creation:
ASOCIO needs to foster an environment that is conducive for Innovation and IP creation in order to
support long-term competitiveness of ASOCIO members. ASOCIO can play an important role in setting
incubators that facilitate new ideas and generate resources. ASOCIO can bring countries together to
improve initiatives to protect IP and enforce compliance
Developing countries
Knowledge gain from mature locations:
ASOCIO can create forums and platforms for sharing best practices and providing mentorship and
support to developing IT-BPO locations. This knowledge will enable these countries to take cues on the
steps taken and missteps to avoid during their development
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ASOCIO can support developing countries in attracting prominent outsourcers to set up their offshore
centers in the country. This will enhance the skill and scale of the industry and provide an impetus for
globalization of services. ASOCIO can also help service providers from such developing locations to
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showcase their value proposition and capabilities through cross-industry collaborations with associations
Promising countries
Exhibit trade opportunities:
Relatively underdeveloped IT-BPO countries offer attractive trade opportunities, especially given their low
cost, under-penetrated market, specific skills etc. ASOCIO can encourage trade with these countries by
introducing delegations from prospective trading partners to various aspects of doing business and trade
in these countries
While implementing these action areas, ASOCIO will also need a prudent mechanism to track
developments and monitor effectiveness of its steps at proper intervals. This will help ASOCIO to
benchmark performance for future advancement and success of several of its initiatives.
As stated earlier, dominance of the region in the global IT-BPO landscape will require collaborative efforts
and ASOCIO can play an essential role in this context. In doing so, ASOCIO will have to re-look at new
ways in which it can motivate, engage and leverage its members. One important mechanism can be to
re-strategize working groups to focus on the illustrated action areas. Next ASOCIO will also need to
garner more financial resources to pursue new initiatives and fund new programmes.
Hence, with an ambitious programme and plans for next 25 years, ASOCIO can play a crucial role in
establishing the region’s leadership in IT and global sourcing as well its own transformation.
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Methodology
In developing the qualitative aspects of this report, we conducted interviews with a variety of players
associated with the ICT industry in ASOCIO member countries between June and September 2009. The
interviews were conducted in the form of in-depth, structured discussions with multiple respondents in
each country, including:
Companies operating in the member countries wherever possible – both local companies as well as
?
multinational players who have set up operations in the country
The responses were combined with insights obtained from professionals in KPMG offices across
member countries to collectively obtain objective and validated learnings from the field.
The projections for IT-BPO revenues in 2020 for each member country were developed using at least
three distinct quantitative assessments, based on past performance of the IT-BPO industry in the
country, growth prospects for the next ten years, likely constraints and a detailed SWOT analysis. To allow
for structural changes that may take place in the next decade, we incorporated two possible growth
scenarios – the one in which a status quo is expected to continue (base-case scenario), and another in
which today’s constraints are likely to be addressed and mitigated in the coming years (optimistic
scenario). The data as well as the two sets of projections were validated by our multiple respondent
groups.
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Association profiles
Australia
AIIA member companies employ 100,000 Australians, generate combined annual revenues of more than
USD 40 billion and export more than USD 2 billion in goods and services each year.
The mission of AIIA is to lead and represent the ICT industry in Australia to maximize the potential of the
Australian economy and society.
Shaping the image of the information industry within public and private business sectors and the
?
community
AIIA was founded as the Australian Computer Equipment Suppliers' Association in 1978. The association
was founded by Bill Wells, then Managing Director of Sperry Univac (later to become Unisys), who
recognized the need for the Australian computing industry to form industry views on matters of common
interest. In July 1981 the association became a company, with the chief executives of 9 of the 21
member companies being elected to the first board of directors. In January 1985 the company changed
its name to AIIA to reflect the broadening scope of the ICT sector.
AIIA’s Chief Executive Officer and national secretariat are based in Canberra. It also has executive officers
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in Melbourne, Sydney, Brisbane, Adelaide, Perth and Darwin who work with our state committees and
special interest groups.
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Bangladesh
BCS safeguards the interest of ICT entrepreneurs, promotes and diversifies effective use of ICT, renders
Key members expert business advice on ICT to the concerned authorities, negotiates with various authorities and
Chairman : Mustafa Jabbar parties on ICT and related issues, organizes mammoth ICT expositions, seminars, workshops, and
COO : Birendra Nath Adhikary
conferences, arranges training programs for ICT professionals, entrepreneurs and users, publishes
brochures and catalogues, supplements the Government’s effort in the development of ICT and
represents ICT community of Bangladesh in local, regional and global forums.
BCS contributes to the country’s ICT policy making and takes part in the implementation of national ICT
action plans, along with public entities. It also provides support and cooperation to NGOs in ICT related
development and services.
The ICT industries of Bangladesh comprises distributors, dealers, resellers of computer and allied
products, locally assembled computer vendors, software developers and exporters, internet service
providers, ICT based educational institutions and training houses, ICT embedded services providers etc.
The total number of members stands 710 at present. The body is run by a 7-number executive council
elected every two years.
To unite and encourage all computer vendors to join in one platform for achieving their common interest
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To render expert advise to the concerned authorities on computer technology and its implication of the
?
economy of Bangladesh
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To make representation to the Government and related bodies on behalf of BCS members with a view
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to reduce bottlenecks, grievances, anomalies and meeting legitimate demands
To discuss and promote legislative support and other measures connected to or having bearing on the
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business
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To enhance the competitiveness of Hong Kong information and software industry locally and globally
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To represent and safeguard the interests and opinions of the industry to the Government and other
?
international parties
To promote co-operation between Hong Kong and Mainland China information and software
?
organizations
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202
India
NASSCOM was set up in 1988, at Mumbai to facilitate business and trade in software and services and
to encourage advancement of research in software technology. It is a not-for-profit organization,
registered under the Indian Societies Act, 1860. Currently, NASSCOM is headquartered in New Delhi,
India with regional offices in the cities of Mumbai, Chennai, Hyderabad, Bangalore, Kolkata and Pune.
Other goals include accelerating trade development efforts, improving talent supply, strengthening local
infrastructure, building partnerships and driving operational excellence. It also boosts the process of
Innovation; IT workforce development and enhanced cyber security.
2. Partner with Government of India and State Governments in formulating IT policies and legislation.
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Partner with global stakeholders for promoting the industry in global markets
3. Strive for a thought leadership position and deliver world-class research and strategic inputs for the
industry and its stakeholders
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5. Continuous engagement with all member companies and stakeholders to devise strategies to achieve
shared aspirations for the industry and the country.
6. Encourage and facilitate members to uphold world class quality and service delivery standards
Indonesia
In addition, as there was a perceived need to needed to bring about a greater coordination and a greater
cooperation by the various IT-related associations, through a single point of contact' for international
relations.
IITF consists of 8 industry associations in IT-related fields covering ISP, software, hardware,
games/animation, wireless, phone and Internet Kiosks, satellite and cellular businesses. The founding
member associations are:
Indonesia Telematics Software Association (ASPILUKI - Asosiasi Peranti Lunak Telematika Indonesia)
?
Internet Services Providers Association of Indonesia (APJII - Asosiasi Penyelenggara Jasa Internet
?
Indonesia)
Bridging the Digital Divide so we can live in a world in which technology compensates for and corrects
?
the harmful effects of globalization of the economy through programs on information communication
technology for development programs (ICT4D)
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Japan
JISA has nearly 600 member enterprises, 35 local associations, and 50 associate members. Share of the
total sales revenue of our members is about 50 percent of the national market, and total employees'
share is about 40 percent in the IT Service Industry in Japan.
The mission of JISA include maintain sound growth of the Knowledge Economy, through promoting skill
development, improving the business environment, and enlarging IT products and services availability.
The objectives of JISA include market expansion, enhancing industry reliability, providing information on
public policies, promoting industry academia partnerships, protecting personal data from piracy,
collaborating with domestic overseas and international organizations and promoting international
affiliations.
JISA activities include responding to government initiatives, including domestic/international public policy
issues; offering basic computing skill courses for training based on ITSS to nurture IT professionals with
on-demand skills; conducting research and surveys to study industry trends, issues, markets and cutting-
edge information technology; promoting quality control, standardizing and promoting security measures
for information systems; studying workforce issues and intellectual property rights issues; holding
meetings, seminars and symposiums covering various topics; introducing the "privacy mark" certificate;
and taking part in international activities business seminars, and multilateral meetings.
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205
Malaysia
PIKOM was formed in August 1986 with the objective of creating an environment that is conducive to the
health, prosperity and competitive nature of the ICT industry. In line with this, PIKOM aims to be a
catalyst for the growth of the ICT industry in Malaysia.
PIKOM has taken on the task of growing the size and capability of the ICT industry in Malaysia by
creating opportunities for its members as well as all Malaysians to capture the benefits offered by
advances in ICT.
Networking both with other PIKOM members, and with the wider business community and
?
Government.
Government relations - to spearhead the ICT industry's support to the government in achieving k-
?
economy status.
`Building links to other industry organizations, reducing the perceived fragmentation, and achieving a
?
leadership position.
Using PIKOM global networks to assist exporters and to facilitate technology transfer.
?
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PIKOM actively represents the IT industry's problems and concerns to the government; acts as the
advisory, consultative and coordinating body on many government forum and agencies, including the
Malaysian Institute of Microelectronic Systems (MIMOS); Malaysian Administrative Modernization and
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Management Planning Unit (MAMPU); Industrial Standards Committee on IT; Multimedia Development
Corporation (MDC); and Malaysian Industrial Development Authority (MIDA). PIKOM conducts a series of
seminars, talks, conferences and industry forum on topical matters of national and policy interests in IT.
PIKOM actively participates in annual dialogues with the Ministry of Finance (Budget Dialogue); Ministry
of International Trade and Industry (MITI); Malaysian Royal Customs and Excise Department; Standards
and Industrial Research Institute of Malaysia (SIRIM); Ministry of Domestic Trade and Consumer Affairs.
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New Zealand
NZSA was established in year 1999 with objective to align with government for growth in the software
sector and build collaborative environment for sector to grow further.
NZSA seeks to help its members acquire in-depth industry knowledge and learn the essential business
management, sales and marketing skills required to enter and grow profitable export markets.
Reduce risk: Proven legal templates, advice from experienced entrepreneurs and seminars on important
?
subjects are provided, reducing the uncertainty of operating a software business.
Build relationships: Can find business partners, gain some wise advisers or share experience with like-
?
minded business people.
Contribute: Become part of a tight-knit community, share experiences and help the software community
?
grow.
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Pakistan
Today 350 companies are active members of P@SHA, thus demonstrating how in the long run P@SHA
has achieved its aim to help firms establish themselves providing assistance to help them gain access to
potential clients, locally and internationally.
P@SHA acts as a voice of the industry. Over the years it has dealt with issues that no company could
manage single handedly; such as providing input on policies, legislation and incentives related to the
industry, for organizations in the IT industry. Sponsored career events and salary surveys are also
conducted regularly to assist in the growth of a dynamic sector.
P@SHA has made consistent efforts to ensure that the right policy frame works are employed for
continued growth and development. The Government is also being encouraged to act as a facilitator in
creating a certain consistency in growth rates. Efforts to promote Pakistan’s IT industry internationally are
being channeled through trade and technical delegations sent to all corners of the world.
P@SHA has gained international recognition by having won several awards in the Asia Pacific ICT awards.
Pakistani companies are involved in leading edge work, thereby helping the software; services and
outsourced industry grow at an enormous pace.
The Mission of P@SHA is to - Create an enabling environment that makes Pakistan an attractive
destination for foreign and domestic ICT investments; Sustain the ICT industry’s growth by raising the
awareness at all levels of society to invest into the development of human resources; Develop new and
innovative avenues for P@SHA's Members to access partners and customers outside Pakistan; Open up
new possibilities for the ICT industry to access finance.
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Philippines
Given the excess global demand for O&O resources and the attractiveness of the resources the
Philippines has to offer, BPAP believes it is possible for the Philippines to increase its share of the global
O&O market from 5 percent in 2006 to 10 percent in 2010. This will mean the Philippine O&O industry
will earn revenues of about USD13 billion and directly employ close to one million people by the end of
2010.
The Philippine O&O industry has grown rapidly because it has the ingredients critical to O&O service
providers and customers:
large-scale people resources, with close to half-a-million English-speaking students graduating from
?
college yearly
quality, with a well-deserved reputation for excellence in communication skills, interpersonal warmth,
?
customer-service orientation, problem-solving abilities, and cultural affinity with Western markets and
customs
an operational cost advantage, with costs competitive with any supplier country in the world, including
?
India
infrastructure, with world-class telecommunication networks and BPO workplace facilities; and
?
financial incentives, with highly competitive investment packages for information technology (IT) and IT-
?
enabled services investors, whether third-party services providers or captive regional shared services
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centers.
BPAP's Team 2010 will also ensure a better business environment and wider opportunities for the O&O
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industry by positively influencing the various stakeholders of the industry and by proactively assisting
BPAP's members in positioning themselves as global leaders in outsourcing and offshoring.
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Singapore
SiTF's mission is to engage and connect Singapore infocomm industry with worldwide reach and
recognition. SiTF works towards achieving this mission through our strong working relationships with
government agencies, other local trade associations and international organisations.
SiTF operates on the principle of being highly responsive to its members' concerns. They are also a
proactive organisation that pre-empts possible influences on the industry. SiTF provides support
infrastructures for harnessing the opportunities in a dynamic and rapidly changing infocomm industry.
SiTF serves its members best by providing a backbone on which they can rely for achieving success in
their global aspirations.
SiTF provides our members with a range of services and activities that support their business growth.
SiTF’s member services include :Business Intelligence; Trade Missions; Networking events; Conduit for
the Industry to the government; focused conference and seminar and International representation.
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Policy Recommendation: FKII voices for IT industry in developing and formulating policies. Its
?
differentiated position makes FKII a special role as a bridge between government and business
Research and Survey: FKII forecasts business environment in the IT industry to help companies make
?
decision by providing information and data. FKII searches for next generation growth engines and
formulates business strategies to conduct research and studies on the growth engines for the
ubiquitous era. FKII provides differentiated information and data to IT community circles
International Cooperation: In bilateral and international arena, FKII has a close relationship with leading IT
?
organization of U.S. (ITAA), Japan (JISA), China (CIIA), India (NASSCOM), Singapore (SiFT), etc. and its
major cooperation fields cover digital convergence, healthcare IT, ubiquitous technologies, promotion of
the software industry, etc. In addition, FKII supports globalization and overseas marketing for Korean IT
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companies. Its main activities are also to participate in overseas exhibition and organize Korea pavilions
and to bridge developing countries and domestic companies in the sector.
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Sri Lanka
To provide a negotiating body and represent the IT industry on all matters concerning and in discussion
?
with, the Government of Sri Lanka and instrumentalities thereof
To encourage and promote members to provide world class products, services and solutions in Sri
?
Lanka and overseas.
To formulate and propose model legislation and other such measures for the advancement of the IT
?
industry to the best interests of the country
To establish a forum for exchanging information, developing closer relationships between members and
?
identifying new business opportunities with IT organizations in other countries
The activities of FITISS include: schools Software Competition leading to participation at regional level at
the Asia Pacific ICT Alliance Awards – APICTA; various networking events on ICT and business related
topics; to publish Newsletter and ICT companies directory and doing road shows for building awareness
about the Sri Lankan ICT industry within and outside the country.
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Thailand
Officially, inaugurated in'89, the primary mission of the ATCI has been to represent the overall
Key members information technology industry by promoting its continued growth and facilitating industry excellence in
President : Bunrak areas such as quality, production and service, which ultimately brings added value, both to the national
Saraggananda
economy and Thai society, as a whole. The ATCI performs a vital role as the collective voice of the
Executive Director : Pravit Chattalada
industry, by communicating the various needs interests of its members to government policy makers, in
an effort to collaboratively develop appropriate measures that will genuinely stimulate the industry's
continual expansion as well foster healthy competition and sustained economic growth made possible
through the deployment of information and communications technology (ICT). As trends like the merging
of IT and communications become increasingly prevalent, the role of the ATCI also encompasses
providing a conducive growth environment for convergence technologies such as ICT to go forth and
multiply.
The membership of the ATCI is comprised of corporate members whose total share of the IT business
represent over 80 percent of the overall market in Thailand. ATCI is a membership led organization. ATCI's
membership listing includes all leading companies of Thailand's information industry granting the
association a high recognition factor and respect nationally and internationally.
To promote and assist infrastructure and human resource development to grow IT industry in Thailand.
?
To stimulate the exchange of knowledge, experiences, trade and research among members, interested
?
parties and the public
To encourage and promote cooperation among associations and professional organizations whose
?
objectives are consistent with ATCI's.
To provide and disseminate information and views on information technology to the public, policy
?
makers and government.
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Vietnam
Program Promotion Department: in charge of holding events, seminars, symposia, organize trade
?
delegation to study overseas or take part in international exhibitions
Human Resource Development Center: in charge of holding training courses in order to improve the
?
capacity of IT and software human force of Vietnam; implementing the DI project to strengthen the
Vietnam Software Association; building the Vietnam ranking system (VRS); holding seminars.
Digital Life Magazine (or Nhip Song So): the voice of the Association
?
The objectives of VINASA is to promote co-operation and mutual support among the members, in order
to promote the development of Vietnam software industry and to protect the members' rights; To act as
the bridge between companies and the Government as well as international organizations.
Policy recommendation
?
Cambodia
Policy Advocacy
?
Organizing market promotion activities for Telecom and IT enterprises to promote IT and Telecom
?
services in the society
Organizing events/meetings for members as well as for other associations to cooperate with each other
?
associations
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Lao PDR
To promote ICT product, services and human resource development as a vehicle of economic
?
development and growth for Lao PDR
To improve continuously the standard of provisioning of ICT product and services to society
?
To foster a closer and more effective public-private- partnership in the area mentioned above
?
To ensure the sustainability for the development and growth of its members as well as all beneficiaries,
?
stakeholders involved in the ICT progress in Lao PDR
Participation in multiple ICT events to represent Lao PDR’s IT industry at different forums
?
Organized a multi-trade study visit as well ASOCIO planery meetings with ASOCIO (especially ATCI)
?
Participating and sponsoring the Ministry of Labor in joining the ASEAN Skill competition on IT
?
With the cooperation of LNCCI has assisted members in sending their staff for ICT training abroad,
?
specifically in India, South Korea and Japan
Planning to work closely with ASOCIO for the ambassador program to get experience IT pioneers and
?
leaders to provide advice on key ICT strategy and Plan.
With the authorization and support from the Lao National Chamber of Commerce and Industry, under
?
the Ministry of Commerce, organizing its first ICT Expo, scheduled on 12th – 17th January 2010.
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217
Mongolia
The National ICT Council was acting without any legal status and permanent secretariat. On the other
hand, they are expected to initiate ICT-related activities such as influencing to organize regular activities
and to follow-up.
During the period of MIDAS project implementation, the members of the National ICT Council were
working more closely and they are also known as a MIDAS Council. In order to broaden the Council's
activities and to have a legal status, the MIDAS Council members registered the MIDAS project as an
NGO named "MIDAS" or Mongolian Information Development Association.
The vision of the MIDAS NGO is to create an information-based society in Mongolia that will improved
the quality of life of citizens and intensified all economic sectors of the country by developing Information
and Communications Technology sector as a one of the competitive sector. MIDAS NGO is a bridging
'hub' of the Mongolian ICT players and its related aspects and assists bottom to top management of the
ICT sector.
The activities of MIDAS include: surveys in ICT field: Organization of workshops, seminars, meeting and
discussions; Consultation and support ICT-related activities: Supports creation of the ICT related work
places; Assists companies in recruiting ICT professionals and other ICT related issues; Prepares ICT-
related proposals for conducting surveys through questionnaires and public opinions for the National ICT
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Committee; Cooperates with local and foreign entities in ICT field; Cooperates with other government
and public entities and NGOs in ICT field; Supports the implementation, monitoring and auditing of the
subprojects ; Prepares proposals on ICT-related policies and decision-making documents prior to future
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development; Protects rights of the ICT players and Improves public awareness on ICT
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Myanmar
To lay down and implement measures necessary for the development and dissemination of ICT
?
To supervise the import and export of computer hardware, software and information services.
?
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Nepal
To assist in the utilization, enhancement and promotion of computers and information technology within
?
the country and help to develop strategies to meet the necessary requirements for the development of
literacy and skills regarding computer science.
To provide and protect the necessary rights and privileges, benefits to individuals, institutions,
?
companies and organizations affiliated to the activities of CAN.
To provide support and facilities to all general, corporate and honorary members of CAN.
?
To assist and develop the synchronization and standardization in the field of computer training and
?
education.
To organize and conduct seminars, workshops, talk and training programmes and to provide consultancy
?
and R & D services.
To exchange knowledge, skill and technology in the field of Computer and information technology with
?
similar types of organizations within and outside the country.
To assist in the field of technology transfer, export, import and formulation of national policies.
?
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Asia-Oceania:
? Asia-Oceania is defined as the region including South Asia, East Asia and Pacific, and the
Australian continent
ASOCIO
? Member Countries/ Economies: ASOCIO currently has 21 members in the Asia-Oceania
region, including Australia, Bangladesh, Cambodia, Hong Kong SAR, India, Indonesia, Japan, Lao PDR,
Malaysia, Mongolia, Myanmar, Nepal, New Zealand, Pakistan, Philippines, Singapore, South Korea, Sri
Lanka, Taiwan, Thailand and Vietnam. These countries together have been referred to as ASOCIO
member economies or member countries
Climate change:
? A change of climate that is attributed directly or indirectly to human activity that alters
the composition of the global atmosphere and which is in addition to natural climate variability observed
over comparable time periods. Source: UNFCCCDigital Divide: The term digital divide refers to the gap
between individuals, households, businesses and geographic areas at different socio-economic levels
with regard to both their opportunities to access ICT and to their use of the internet for a wide variety of
activities. The digital divide reflects various differences among and within countries. Source: OECD
website
e-Readiness:
? E-readiness is the ‘state of play’ of a country’s ICT infrastructure and the ability of its
consumers, businesses and governments to use ICT to their benefit. Source: EIU
ICT industry:
? The ICT or information, communication and technology industry is defined as the broader
term including the domestic market, imports and exports of IT services, software products, BPO
services, hardware and telecommunication equipment and services
Inequality:
? refers to the dispersion of a distribution, whether that is income, consumption, or some
other welfare indicator or attribute of a population. Inequality is often studied as part of broader analyses
covering poverty and welfare, although these three concepts are distinct. Inequality is a broader concept
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than poverty in that it is defined over the whole distribution, not only the part of the distribution of
individuals or households below a certain poverty line. Source: ADB
Knowledge
? Economy: A knowledge economy is ‘an economy that creates, disseminates, and uses
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
knowledge to enhance its growth and development’. A knowledge economy necessitates development
along four pillars: Education and Training, ICT Infrastructure, Economic Incentive and Institutional
Regime, and Innovation Systems. Source: The World Bank
Poverty/ Absolute poverty: The degree of poverty below which the minimal requirements for survival
?
are not being met. This is a fixed measure in terms of a minimum calorific requirement plus essential
nonfood components. While absolute poverty is often used interchangeably with extreme poverty, the
meaning of the latter may vary, depending on local interpretations or calculations. Source: ADB
Working
? Age Population: Population in the age group between 15 and 64 years. Source: United Nations
221
?FITISS - Federation of Information and Communications Technology Industry and Services Sri Lanka
?
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?IITF - Indonesia Information Technology Federation
?
Acknowledgements
This report would not have been possible without the commitment and contributions of the following
individuals:
Michael Smart (KPMG Australia), Guy Holland (KPMG Australia), Prem Krithivasan (KPMG Australia), Ali
Ashfaq (KPMG Bangladesh), Mahmud Hasan (KPMG Bangladesh), Ning Wright (KPMG China), Alan Fung
(KPMG China), Iwan Atmawidjaja (KPMG Indonesia), Enoki Chiaki (KPMG Japan), Noako Suzuta (KPMG
Japan), Hiroyuki Ishikawa (KPMG Japan), Kwang-Woo Song (KPMG Korea), Ganesan Kolandevelu (KPMG
Lao PDR), Paul Bahnisch (KPMG Malaysia), Alin Ungureanu (KPMG New Zealand), Wahid Ahmed (KPMG
Pakistan), Reginald Nery (KPMG Philippines), Ronald Gonzales (KPMG Philippines), Gia Phong Le (KPMG
Philippines), Brett Hall (KPMG Singapore), Idan Moskovitch (KPMG Singapore), Priyanka Jayatilake (KPMG
Sri Lanka), Stanley Chang (KPMG Taiwan), Tommy Woo (KPMG Vietnam), Nazish Zaman (KPMG US)
ASOCIO Members:
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Ian Birks, Kelly Hutchinson, Lisa Robey (AIIA, Australia), Abdullah Kafi, Birendra Nath Adhikary, Mustafa
Jabbar (BCS, Bangladesh), Ken Chanthan (ICT-CAM, Cambodia), Hidemi Yamamoto, Junko Kawauchi
(JISA, Japan), Sangeeta Gupta (NASSCOM, India), Dr. Y.T. Lee, Grant Son (FKII, Korea), Thanongsinh
Kanlagna (LICA, Laos), Ong Kian Yew, Rama Chandran (PIKOM, Malaysia), Wayne Hudson, Steve Corbett
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
(NZSA, New Zealand), Oscar Sanez, Gillian Joyce Virata, Nette Roselo (BPAP, Philippines), Sim Wee Leng,
Leo (SiTF, Singapore), Udaya De Silva, Govind Nangrani (FITISS, Sri Lanka), Bunrak Saraggananda, Pravit
Chattalada (ATCI, Thailand), Richard Yin, James Liu, David Chang, Ivy Chang, Tina Hsu (CISA, Taiwan),
Truong Gia Binh, Tran Vu Viet Anh, Lam Quang Nam (VINASA, Vietnam)
Alan Brame
Partner, IT Advisory
Auckland, New Zealand
+64 (9) 367 5811
alanbrame@kpmg.co.nz
Iwan Atmawidjaja
Partner
Jakarta, Indonesia
+62 21 574 2333
iwan.Atmawidjaja@kpmg.co.id
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firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.
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