FDI and Offshoring within the ICT Sector

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FDI and Offshoring within the ICT Sector

• Mustafa Çagan
• November 2005

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Service Economy
Services have steadily increased their share of
global GDP.
Source World Development Report 2000/2001
And service economy has no boundary!...

• If you lose your luggage on British Airways, the
  techies who track it down are here in India.  If
  your Dell computer has a problem, the techie who
  walks you through it is in Bangalore, India's
  Silicon Valley.  Ernst Young may be doing your
  company's tax returns here with Indian
  accountants. The brain chip for every Nokia cell
  phone is designed in Bangalore.  Renting a car
  from Avis online?  It's managed here.

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Country Specialization Examples by Niche

• Ireland
• Packaged Applications
• Localization
• Product Development

• China
• Embedded Software
• Hardware Services
• Localization
• Application Development

• Canada
• Application Development
• BPO
• Contact Centers

• Israel
• High-End Software
• Learning Systems

• Philippines
• BPO
• Contact Centers
• Animation
• Application Development

• India
• Application Outsourcing
• ITO
• BPO
• Product Development
• Contact Centers

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A Real Success Story Philippines

• Consists of 7,108 islands off the southeast
  coast of the Asian mainland
• Location is strategic
• Situated on the crossroads of Asias commerce
  and transportation, it plays a significant role
  in international affairs. It serves as a bastion
  of democracy and a convenient and vital link
  between the two worlds the East and the West.
• Doing Business in the Philippines by Price
  Waterhouse

ICT will be our leading sector for economic
growth We expect ICT to be the key to finding
our proper niche in the global village in the
21st century. -President Gloria
Macapagal-Arroyo 2000
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In 2004 they reached export volume of 1.4 B USD
in IT Services
268 M USD
483 M USD
40 M USD
Examples of Global References
Source Outsource Philippines, CEO forum 2004
(Figures are 2004 Estimates)
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Philippines Levers of the Success Story
Philippine Economic Export Zone (PEZA) Free
Trade zones for IT Services Export
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• Philippine Export-Import Credit Agency (PhilEXIM)
  
• Loan guarantee
• Export Credit Insurance

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Technical Education and Skills Development
Authority (TESDA)
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What about Turkey?

• Strategy Missing long term strategy and also
  ownership in the Government about ICT
• Regulations Insufficient regulations and
  incentive mechanism
• Technopolice Limited contribution to the service
  export
• Education Current education system does not
  match the need in the market

50 M USD IT Services Export 17,6 young
population unemployment rate (Source DIE 2005)
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If we dont, someone will do!
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Back Up
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60 Electronic Equipment and Parts...