Korea's IT Service Industry Lags Behind World Leaders

Korea is becoming well known around the world for its IT manufacturing industry. However, as reported in the Chosun Ilbo today, its IT Service industry lags behind world leaders. A study of 37 major IT firms including Samsung SDS, LG CNS and SK C&C was released by the Federation of Korean Industries on Monday. It estimates the competitiveness of Korea's IT Service industry at 73.3% of that in nations that lead the industry.

Some of the reasons given in the report were a fixation with low prices, a focus on the domestic market, the lack of a high quality workforce and insufficient investment. Interestingly, lack of foreign language skills and poor working conditions were also cited.

The world IT service market was worth $754 billion in 2008, far more than the markets for semiconductors ($255 billion)and mobile phones ($122 billion). Korean companies account for only two percent of the IT service market.

A Call for Greater Integration of IT and Conventional Industries

Reinforcing a point I made in earlier posts, the inaugural meeting of the IT Innovation Forum in Seoul called on Korea to bolster its national competitiveness through greater integration of its information technology sector and conventional industries.  As noted in the Joongang Ilbo, policy makers from the Ministry of Knowledge Economy, the Federation of Korean Industries and academia said that Korea has not taken full advantage of its world-class IT infrastructure.   Participants in the innovation forum noted that efforts must be made in the coming years to push for a paperless business environment that can benefit a wide range of businesses, including logistics, and establish software as a service  into everyday work. "Software as a service,"  is a term for online use of software for a fee, rather than purchase of software products.