If US$180 billion IT business takes place in developing countries by 2010 and worldwide software industry becomes worth US$280 billion by 2008, following the roadmap properly, shown by this article, developing countries could generate IT business worth around US$100 billion by 2010! The recipe to unlock that vault of affluence is out there! What are you waiting for?
The Information age has replaced the Industrial age. What does that mean to developing countries? Is there any opportunity for developing countries to grab something or is it merely another threat to face? US$180 billion IT (Information Technology) business will take place outside developed countries by the year 2010 and IT Parks can become crucial platforms in developing countries to harness that golden opportunity. While some developing countries like India, Malaysia, and the Philippines are successful in establishing IT Parks, others are struggling for successful IT Park development. What is the reason behind that struggle? This article explores critical success factors of IT Park development and suggests a roadmap for developing countries to play an amplified role in international IT market by taking recourse to benchmarking. While establishing IT Parks in developing countries, critical success factors must be in place for sustainable development and 'Benchmarking' is the right way to have them.
Benchmarking
Developing countries, like Pakistan, Bangladesh, Vietnam, Thailand, who aspire to set up IT Parks, should turn to benchmarking for successful establishment in the shortest possible period and most cost-effective way.
Human Capital
Human Capital is one of the prime critical success factors for IT Park development in a country. The phenomenal success of Indian software industry can be largely attributed to human capital. Support to all levels of education, including the highest, is really paying off. Despite substandard telecommunication and power infrastructure, India reigns supreme in global software industry, only next to US, by dint of human capital. While intellectual capital can bring about an exceptional success in IT park development, its absence can equally prove fatal. For example, because of shortage of human capital mainly, Bangladesh is struggling to set up IT parks. Even Germany did approach Bangladesh for fulfilling 20,000 IT professionals needed in Germany; but Bangladesh miserably failed to meet the demand.
Even the sudden magnetic attraction of first world countries has thrown challenge to developing ones in terms of retaining human capital. New Oroville has planned to set-up an excellent Information Technology Township, only comparable with Silicon Valley, to attract and retain 4000 programmers in India.
Several steps must be taken to manage knowledge in IT parks. First, IT parks consultancy group should comprise hybrid professionals, who have sound knowledge and expertise in business as well as in IT. Second, IT parks should go for setting up training centres not only for programmers, system analysts and other IT job related skills but also for software and e-business entrepreneurs along with project management expertise. Third, IT parks should be learning organisations where knowledge management practice will go on in terms of Personal Mastery, Mental Models, Shared Vision, Team Learning and System Dynamics. Fourth, there should be exchange of teachers and students, business and technical expertise among countries to have international exposure and understand world-class performance. Fifth, salary structures of teachers and IT professionals should be reviewed in some countries and special package should be in place to attract world-class teachers. Sixth, there could be strategic linkage with western universities in developing countries to benchmark education system. Last but not least, education system should emphasise on developing higher order cognitive skills in students, because that quality is a must in IT related jobs. While these steps would manage knowledge in IT Parks considerably, a special culture should be nurtured side by side in IT Parks.
Culture in IT Park
Culture in IT parks should be different from the traditional one prevailing in normal commercial market. People of IT Parks are to see life through an engineer's eyes, as a series of problems to be solved by turning to technology. They should approach everything as a technical problem and that trend should extend even to the way they view their lives. Everyone should have a personal mission statement to fulfil within a certain period. Aspiring nations must have to change their mindset to cultivate that Silicon Valley's culture in IT parks.
Role of government
Role of government is indispensable for overall infrastructure development. The supportive role of Malaysian government has facilitated successful development of Multimedia Super Corridor (MSC). IT friendly government policies in Malaysia have provided world's first comprehensive framework of cyber-laws, attractive facilities and healthy infrastructure. As a result, it helped Malaysia win over Singapore and Hong Kong to secure contract with British Telecom!
International Network
Indian software companies are following the International network, the type of Chinese bamboo network, to a considerable extent. The foreign Indian brains helped software industry to flourish in many ways. Now Thai software companies have formulated Thai Software Syndicate to promote the production and export of Thai software.
Bangladesh has good potential of developing IT parks particularly in Sylhet City through her international network since Sylhet has the highest number of non-resident Bangladeshis, who are willing to invest but waiting for the right direction. Survey tells that there are around 10,000 graduates of Bangladeshi origin in UK, of whom some are graduates in IT and Telecommunication sectors and around 6,000 people are working in IT sector of the US. The bulk of successful future of IT Parks in Bangladesh largely relies upon how efficiently the nation would utilise that foreign think-tank.
Furthermore, aspiring countries like Bangladesh, Pakistan, Thailand, Vietnam should build up website and database immediately with a view to having virtual network. There will be two important portions of the website- first, the database of what expertise one is willing to offer and second, type of business one would like to get involved or is doing now. A delicious example of virtual network is Zambia. Zambians have tapped their own talents in Canada over Internet.
In addition, holding IT expositions in native country for overseas corporations and investors, international media coverage, participation in international conferences, exhibitions and the like are essential for attracting locators.
Business Strategy
Another critical success factor is business strategy at macro and micro levels. While, macro level policies should be taken by IT park authority in general to nurture right business environment, micro-level strategies need to be adopted by individual companies for sustainable growth.
Macro Level Strategy
IT Park of an aspiring country could take a series of actions to have competitive edge. First, a dynamic leader like Chandrababu Naidu, chief minister of Andra Pradesh, India, would facilitate setting the right vision.
Second, attracting locators would create jobs in IT parks. Rex Drilon, president of Cebu property Ventures and Development Corp (CPVDC), has pointed out that if they can convince only 30 locators, at 600 employees per locator, about 18,000 jobs will be created.
Third, joint incubator ventures, like JTC- Microsoft in Buona Vista Science Hub's Technopreneur park and Multimedia Development Corporation (MDC)-British Telecom (BT) in Malaysia, are conducive to international technology and know-how transfer.
Fourth, regional leadership and co-operation among countries would be fruitful for neighbouring countries to learn from the regionally leading country.
Fifth, the growth enablers for Indian software industry specified by Nasscom-Mckinsey study would be beneficial for other countries. They are:
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Building a supply base of the world's best knowledge workers
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Creating the ideal regulatory environment
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Building anchor country's brand, for instance, India Inc. brand.
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Opening new opportunities through country-specific initiatives
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Achieving global parity in telecom infrastructure.
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Unleashing venture creation and incubation engine.
Sixth, though it is a realistic view that every developing country would not be able to innovate new technology through expensive research and development, it is advisable to have research centre to absorb technology and know-how from other developed nations.
Finally, building Industry-Government- Academia consortium to plan and implement objectives would be conducive to IT Park development indeed. MIGHT in Malaysia and NVTC in USA are examples. Besides, strategic alliance with universities of developed countries, Technology Parks of leading countries, and co-operation among governments would prove fruitful for aspiring countries, like Bangladesh, who lack some crucial aspects of IT parks.
While IT park authority need to address all these macro level issues to create congenial environment, individual companies should implement micro level ones to have sustainable growth.
Micro Level Strategy
Individual companies also need to take a series of special actions to have competitive edge. First, There should be interacting specialist companies rather than independent ones to offer the total package as well as develop adaptability to absorb shock of market change. Second, companies need to exercise valued system, right processes, and sound management principles and formulate effective business model to play ably in global IT market. The new business model would comprise internal reorganisation, external partnership and market penetration. Third, companies need to explore emerging businesses like 'data mining' 'multiple intelligent agent modelling and simulation of corporate entities,' xSP, secure networks for real time financial transactions. In addition, e-business will grow from 15.5 per cent in 2001, to as high as 50 per cent by 2004. Hence, companies need to focus upon e-business related software development and allied services. Fourth, Infosys, the leading Indian software company has become benchmark for Indian IT industry. Like Infosys, companies must have a mix of onsite and offsite projects, quality initiatives and good quality processes in place to move up the value chain. Fifth, it is imperative to move up the value chain since low cost model is not sustainable in the long run due to impending price war among competing companies of different developing countries. Sixth, native companies need to explore local market to gain experience, which in turn will help them to play in the international market effectively. Seventh, an interesting trend prevailing in international IT business is to set up front office in the US, run by white people whereas the offshore development centre in developing countries like in India to tap human capital as well as operate business cost effectively. 'Paradigm Infotech' is such type of successful company. It has head office in Maryland, USA and offshore development centre in Hyderabad, India. Finally, though merger and acquisition is not a common phenomenon in developing countries, companies would turn to it for consolidation in near future.
However, one point should be borne in mind both macro and micro level strategies must complement each other, that is, government, academia and business communities should set cohesive targets collectively for the nation. While effective business strategy is vital for success, IT Parks must ensure certain features and facilities available to attract locators.
E-commerce
IT parks could play an important role in developing e-commerce environment of a nation. Since, developing countries do not have basic e-commerce infrastructure in place, IT parks could lead a nation in the field of e-commerce by providing all necessary facilities. Interestingly, www.elance.com is an excellent example of wide participation in e-commerce. Companies of 150 countries are bidding for IT related service business. IT Parks could offer consultancy to local companies to participate in such type of events.
Future Trends
Since IT parks hold bright promise for developing countries, international communities and developed countries alike should come forward to help developing countries establish them. In this regard, some steps should be taken:
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Build International IT Parks Development Centre to conduct research and offer consultancy to developing countries.
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That centre would also act as matchmaker.
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Offer total package for IT Park establishment, from infrastructure to software syndicate group.
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Build prototypes of the IT Park Development Centre in each developing country.
Concluding Remarks
If US$180 billion IT business takes place in developing countries by 2010 and worldwide software industry becomes worth US$280 billion by 2008, following the roadmap properly, shown by this article, developing countries could generate IT business worth around US$100 billion by 2010! The recipe to unlock that vault of affluence is out there! What are you waiting for?
The Full Research Paper was presented at 8th European Conference on Information Technology Evaluation, which was held at University of Oxford, England, on September 17-18, 2001.
Ahmed Salman is Director of Knowledge Planet Ltd. and an alumni of Universities of Westminster, Bradford and Cambridge.)
Source: The Daily Star, Dhaka, February 13, 2002