KT to Nuture the Software Industry

As reported in The Korea Times, KT has announced new measures to support the growth and development of South Korea's software industry.  The article also summarizes some of the key changes in corporate culture within KT under the leadership of Chairman Lee Suk-chae.   It is well worth reading.

Korea's Hardware Success and Software Challenge

A great deal has been written over the years about the strength of Korea's IT manufacturing and export sector in comparison to its relative weakness in software and content industries. The Joongang Daily has a lengthy article on the topic today, with supporting data and an effort to explain why Korea remains relatively week in the software area.

According to the article, as Korean companies take a hard look at their software vulnerabilities, they say they see a vicious cycle at work.

First, students shun software-related majors at universities. The quality of Korean software manpower falls behind that of other advanced countries. Companies don’t pay and treat their software engineers right. And that goes back to students shunning software majors at universities.

The accompanying graphic shows average salaries by certain occupational groups (click on the graphic to see a full size version).

According to a recent report by the Samsung Economic Research Institute, the number of places in IT-related departments at about 100 major universities in Korea have been declining for four years straight since 2006.

Admission quotas, or places, in computer engineering departments plunged at the fastest rate. The figure stood at 80 in 2006, but decreased to 73 in 2009. That compares to the figure for electric and electronic engineering, which inched down from 87 in 2006 to 85 in 2009.

“As the IT environment undergoes rapid changes, it’s crucial for Korea to secure software capability fast,” the report pointed out. “But universities appear to have succeeded in neither attracting top-tier software talent nor providing high-quality education programs.”

“The morale of Korea’s software talent is at its lowest,” said Daniel Lee, 41, CEO of Inspirit, a local company that makes software for mobile communication networks. “The importance of software is growing day by day, but if things don’t change, Korea’s software industry has no future.”

Some cite an even broader problem in the Korean technology industry: An under-appreciation of the value of start-ups and their innovative ideas, except by foreign tech firms.

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.

Korea's IT Service Sector vs. IT Manufacturing

In recent decades, South Korea has become an IT Powerhouse, based largely on the impressive strides it has made in ICT-related manufacturing.   We all know the main products --semiconductors, mobile handsets, LCD flat panel displays and digital televisions, along with parts and components for many of these products as well as fiber optic and wireless digital networks.

A new report by the Hyundai Research Institute warns that the sluggish development of South Korea's IT Service industry could hurt the country's overall IT competitiveness since it widens the gap between the service and manufacturing sectors.  Korea's IT Service industry expanded by an annual average of 7.1% from 2001 through 2008, while its IT manufacturing industry grew 9.5 percent in the same period.

An article published by Yonhap News also notes that the the IT service industry encompasses consulting, systems integration and management, and IT education.