Globalisation and the Australian ICT industry

Merri Mack reports on the debate about the effects of globalisation on the Australian ICT industry held at the Gartner Symposium today.

Will globalisation erode Australia's information and communication technology (ICT) capability?

The operative word here is 'will'. Yes, Australia is holding its own now according to one of the debaters from Gartner's round table on globalisation but will it continue to do so? The pros and cons of the issue were argued in a debate held at the Gartner Symposium/ITxpo in Sydney this week.

With the end of the federal election campaign in sight, and ICT issues such as Australia's broadband infrastructure, industry development and the skills shortage on the political agenda, the impact of globalisation on Australia's ICT capability is increasingly under scrutiny, according to Gartner.

In election campaign style, an electronic 'worm' tracked the views of the audience during the debate and an interactive polling system polled the audience before and after the debate.

Gartner's definition of globalisation is: Unhindered trade in goods and services among countries. And its definition of ICT is: all information and communication technology products and services that enable customers to access and use ICT.

Arguing the affirmative position that globalisation is eroding Australia's ICT capability, Gartner research vice president and distinguished analyst Partha Iyengar highlighted Australia's struggle to compete with its neighbours. With fewer science and technology graduates emerging from universities, Australia risks becoming an innovation backwater, he said.

"Australia's gross domestic product has nothing to do with ICT, it is raw materials that drive it," said Iyengar. "In comparison to other Asia-Pacific nations which can offer both a strong knowledge economy combined with low wages to remain competitive, Australia is simply reliant on its export of raw materials to Asia's emerging industry powerhouses, primarily China. Clearly this resources boom won't last forever and then Australia will be in trouble."

Noting the recent drop-off in student enrolments in technology-related disciplines, Iyengar warned that globalisation is posing serious challenges for Australia. Citing recent data illustrating that Australia's ICT position is worsening, he posed the question, "Is Australia doomed to be compared with Mexico and Poland in the future, rather than the UK or Germany as it is today?"

In presenting the opposing view that globalisation is not eroding Australia's ICT capability, Gartner research vice president and distinguished analyst Craig Baty said that Australia is already "punching above its weight" on the world stage and has nothing to fear from globalisation.

"Globalisation gives Australian businesses access to cheaper, higher quality and more reliable technology from overseas, but also gives other nations access to our expertise and services. Information technology itself is just a tool, it is what you do with it that matters," said Baty.

Baty argued that Australia is already a highly globalised economy and reaping the benefits of it. He cited the 'globalisation index' published by Foreign Policy and A.T. Kearney, which ranked Australia 13th out of 97 nations as a globalised economy, only one place behind the UK and well ahead of India and China, which don't even make it into the top 20.

"Global companies like IBM, which last year generated more than AU$600 million in exports for Australia, understand that Australia offers a diverse and highly skilled workforce. And for small, innovative start-ups, it is easier to establish a business in Australia than in other nations with more red tape and barriers to entry. According to one IT services company CEO, it is cheaper to open an office in Australia than in Mumbai."

Baty said that Gartner's well-known Magic Quadrants, which depict the major providers in a particular technology market that are capable of servicing global clients, featured twelve Australian technology companies, Australian companies named in a Gartner Magic Quadrant include Mincom, Tower Software, 80-20 Software, Atlassian, Objective Corporation, Technology One and Ruleburst to name a few.

"This means that Australian companies are on the shopping list for organisations around the world that are looking for technology solutions," said Baty. "Australia is already an innovative nation. ICT contributes 4.6% to Australia's GDP, a greater contribution than the agriculture, forestry, fishing, education and defence sectors." Baty also cited a survey by the Economist Intelligence Unit (EIU), in which Australia ranked ninth out of 69 countries for its e-readiness with China and India coming in at 56th and 54th respectively.

Iyengar emphasised the word 'will' in his responses to Baty. Despite Australia's 30 quarters of uninterrupted growth, the pace of change is no longer linear but logarithmic. In other words, thing will change rapidly and Australia does not have the two things necessary. These are low-cost labour like countries such as China and India and the makings of an innovative knowledge industry.

Australia is heading in the wrong direction. For example, there has been a 90% decrease in the growth rate of science and technology graduates over the 2003-2004 graduates.

To add credibility to Iyengars' arguments the Australian Information Industry Association (AIIA) has slammed the federal election as an ICT Policy-free-zone. AIIA CEO Sheryle Moon said that while the parties bickered over who had the best plan for Australia's broadband future, the underlying issues of ICT were not being addressed.

"ICT is responsible for 4.6% of GDP and yet both the Coalition and Labor have failed over the election campaign to deliver any vision for the future of ICT in Australia.

"The focus of the debate thus far has been broadband. Where is the momentum from our political leaders to think beyond one area at a time? Neither party is giving our sector cause for optimism. They have had years to formulate policy and yet appear to be hamstrung by one issue while neglecting the rest. For the sake of over 500,000 Australians employed in the ICT sector and for an industry which exports $5.7 billion worth of goods and services, I think we deserve better," said Moon.

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