Joaquin Fagundo | Information Technology Services Liberalization

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Information Technology Services Liberalization

• Joaquin Fagundo

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AGENDA

• Mexico Economic Model
• IBM Example
• IT Services Industry in Mexico Engine for
  Development
• Mexico IT Services Strategy
• IT Services Liberalization Benefits
• IT Services Liberalization Objectives

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Mexico Economic Model

• Background
• After decades of a closed model based in imports
  substitution, in the middle of the 80s, Mexico
  started an economic liberalization process based
  on an open market scheme.
• Today Mexico is the country with the largest
  network of Free Trade Agreements (FTAs) in the
  world 42 countries on 3 continents.
• Mexico was successful in the 90s during the
  manufacturing boom. However, after 2000 the
  model changed dramatically.
• Mexico experienced a decrease in productivity at
  the end of the 90s and saw its competitive
  position decline in the international context.

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IBM Example

• IBM has operated in Mexico for 78 years, and its
  history is very related to the development and
  evolution of the information technology industry.
• During the 90s IBM Mexico was a major
  manufacturing center
• World leadership in PCs, laptops and hard disks
  subassemblies 60 - 65 of world volumes.
• IBM evolution
• Over half of revenue from services and nearly
  three-fourths of revenue from software and
  services.
• Serving global customers from worldwide network
  of interconnected data centers and software
  development labs
• Cross-border delivery of services is growing
• IBM Mexico is transforming its process from a
  manufacturing scheme to a service-oriented model.
• IBM software center in Guadalajara, Mexico, is
  the only CMM5 center in LA.

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IT Services Industry in Mexico Engine for
Development

• Mexico requires a strategy for development of the
  IT services industry to support both applications
  in the local market and export opportunities.
• Competitiveness and the IT services industry.
• Mexico must enhance its productivity and
  efficiency and increase economic competitiveness
  across industries through the intensive use of
  information technology and IT services tools.
• Investment in knowledge (i.e., software
  development, RD, and higher education) in
  countries such as USA, Switzerland and Finland is
  more than 6 of GDP. For Mexico, it is less than
  2 and with a very low growth rate.
• Internal market Opportunity for growth
• IT/GDP in Mexico is 1.3 vs. 4.3 in OECD
  countries
• SW/GDP in Mexico is 0.10 vs. 0.61 world
  average.
• Mexico market for software IT Services is USD
  2.6B vs. 7.4B in Brazil and 5.2B in Korea.
• Trade evolve to high-value services markets.
• Mexican model is oriented to external markets
  7th world exporting economy
• Evolving model from manufacturing to high
  value-added services in OECD economies, services
  account for almost 70 of GDP.

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Mexico Strategy for IT Services

• Public Policy IT Services as a strategic sector
• Mexican Government defined IT Services and
  software as a key industry.
• PROSOFT Mexicos government National Program
  for the Development of the Software Industry. The
  objective of the program is to develop a USD 5B
  software industry in Mexico and became the leader
  in LA in the IT services industry.
• Access to global markets is a key factor of this
  program.
• IT Services Industry focus
• Mexico Digital Foundation a public-private
  partnership that integrates national resources to
  improve their practices in commercialization
  schemes, trade integration, and technological
  penetration to improve supply chain operations.
• The objective is to increase the use of IT in
  Mexico from 1 to 2 as a percentage of GDP in
  the current administration.
• The capacity to access high-end services with
  competitive prices is a key factor for the
  success of the effort.

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IT Services Liberalization Benefits

• Liberalization of computer and related services
  (CRS) enables economic development and job
  growth.
• The Doha Round is an economic development
  opportunity for both developed and developing
  countries.
• Cross-border delivery of services creates
  opportunities
• Internal market local companies have access to
  the best IT services at the most competitive
  prices
• IT services can help make manufacturing
  operations and the delivery of other services
  more efficient, productive and competitive
• Global market Service providers from developing
  countries can serve international markets

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IT Services Liberalization Objectives

• New developments include the Web, application
  hosting, remote data centers and backup storage,
  grid computing and on demand computing
• Information technology and IT services will
  continue to evolve
• Commitments for full liberalization in computer
  and related services
• Cover technologically evolving services
• Commitments at 2-digit level (CPC 84)
• Mexico endorsed joint statement by Friends of
  Computer Services in February 2005

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IT Services Liberalization Related Objectives

• Commitments for full liberalization in Management
  Consulting (CPC 865) and Services Related to
  Management Consulting (CPC 866)
• IT-related consulting is covered under CPC 84
• IT is critical to the management of modern
  organizations
• It is increasingly difficult to draw a line
  between IT consulting and management consulting,
  so fully liberalize both
• Liberalize other services that can be delivered
  electronically
• Cross-border delivery of IT-enabled services
  provides excellent opportunities for many
  countries
• Mexico joined Chile, Hong Kong China and India on
  cross-border supply paper in June 2005

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Than You