SW industry in low growth trouble…Uncertain future
Hur Woo Young | yenny@ | 2017-08-09 14:57:36
Korean SW industry is analyzed as not stagnating while software (SW) has been attracting attention as a brain that moves core areas of the fourth industrial revolution such as smart factory, autonomous driving vehicle, and future energy. Meanwhile, competitors such as China, India, Mexico and South Africa have more than four times the rate of growth in Korea.
According to the `2016 SW Industry Annual Report (White Paper)` published by the Ministry of Science, Technology, and Information and the SW Policy Institute, domestic SW industry production value is KRW 50.5 trillion as of last year, 4.0% more than 2015 (KRW 48.5 trillion).
The amount of SW industry output is the amount that the companies actually produced based on SW sales, inventory, and resale. If we look at sectors, IT services accounted for KRW 32.1 trillion, KRW 9.4 trillion for game software, and KRW 9 trillion for package software. Domestic SW production grew by 6.3 ~ 9.8% in 2012 ~ 2014, but fell to 5% in 2015 and then fell to 4% last year. As the IT service industry is stagnating due to the economic downturn, it is analyzed that the game and package SW industry is also falling along with it.
According to IDC data from the global IT market research firm cited by the white paper, the Korean SW market grew 2.7 % from USD 10.6 billion in 2015 to USD 10.9 billion last year. Compared to last year, the global SW market grew 4.5% year-on-year to USD 1.96 trillion (KRW 1,233 trillion), Korea`s low growth rate is remarkable. The domestic SW market was ranked 16th in the world, with only 1% of the total. The United States, on the other hand, ranked first in the world with USD 496.7 billion, accounting for 45.3% of the total market, followed by Britain (USD 80.5 billion, 7.3%) and Japan (USD 69.4 billion, 6.3%). The average annual growth rate of these top countries in 2015-2016 was more than 3%, higher than Korea (2.2%).
In particular, China, India, Mexico and South Africa, which are in competition with us, are growing at a remarkably high rate. The Chinese market grew 8.8 % last year to USD 37 billion last year, followed by India (USD 13.6 billion) with 8.5 %, Mexico (USD 9.2 billion) with 10.3 % and South Africa (USD 7.3 billion) with 8.7 %. The average annual growth rate of these countries between 2015 and 2016 was 8.6 ~ 11.6%, four times higher than Korea.
The problem is that the gap will grow. The Korean SW market is expected to grow at a slow rate of 2% by 2020, while emerging economies such as China (8.9%), India (9.1%) and Mexico (9.1%) are expected to enjoy rapid growth.
An IDC Korea representative said, "Emerging countries are adopting SW throughout the industry, which is characterized by high growth similar to the economic growth rate. It is analyzed that the domestic IT industry is experiencing stagnation in the IT service market.”
In this regard, an expert from the SW industry pointed out, "It is necessary to support win-win cooperation with small and medium sized enterprises by solving restrictions on bidding participation of large companies in public SW projects in new technology fields such as artificial intelligence, Internet, and cloud with high demand. It is urgent to create an ecosystem for the development of the SW industry through separate ordering and mandatory BMT (quality performance test)."
By Hur Woo Young yenny@
[ copyright ⓒ The Digitaltimes ]
According to the `2016 SW Industry Annual Report (White Paper)` published by the Ministry of Science, Technology, and Information and the SW Policy Institute, domestic SW industry production value is KRW 50.5 trillion as of last year, 4.0% more than 2015 (KRW 48.5 trillion).
The amount of SW industry output is the amount that the companies actually produced based on SW sales, inventory, and resale. If we look at sectors, IT services accounted for KRW 32.1 trillion, KRW 9.4 trillion for game software, and KRW 9 trillion for package software. Domestic SW production grew by 6.3 ~ 9.8% in 2012 ~ 2014, but fell to 5% in 2015 and then fell to 4% last year. As the IT service industry is stagnating due to the economic downturn, it is analyzed that the game and package SW industry is also falling along with it.
According to IDC data from the global IT market research firm cited by the white paper, the Korean SW market grew 2.7 % from USD 10.6 billion in 2015 to USD 10.9 billion last year. Compared to last year, the global SW market grew 4.5% year-on-year to USD 1.96 trillion (KRW 1,233 trillion), Korea`s low growth rate is remarkable. The domestic SW market was ranked 16th in the world, with only 1% of the total. The United States, on the other hand, ranked first in the world with USD 496.7 billion, accounting for 45.3% of the total market, followed by Britain (USD 80.5 billion, 7.3%) and Japan (USD 69.4 billion, 6.3%). The average annual growth rate of these top countries in 2015-2016 was more than 3%, higher than Korea (2.2%).
In particular, China, India, Mexico and South Africa, which are in competition with us, are growing at a remarkably high rate. The Chinese market grew 8.8 % last year to USD 37 billion last year, followed by India (USD 13.6 billion) with 8.5 %, Mexico (USD 9.2 billion) with 10.3 % and South Africa (USD 7.3 billion) with 8.7 %. The average annual growth rate of these countries between 2015 and 2016 was 8.6 ~ 11.6%, four times higher than Korea.
The problem is that the gap will grow. The Korean SW market is expected to grow at a slow rate of 2% by 2020, while emerging economies such as China (8.9%), India (9.1%) and Mexico (9.1%) are expected to enjoy rapid growth.
An IDC Korea representative said, "Emerging countries are adopting SW throughout the industry, which is characterized by high growth similar to the economic growth rate. It is analyzed that the domestic IT industry is experiencing stagnation in the IT service market.”
In this regard, an expert from the SW industry pointed out, "It is necessary to support win-win cooperation with small and medium sized enterprises by solving restrictions on bidding participation of large companies in public SW projects in new technology fields such as artificial intelligence, Internet, and cloud with high demand. It is urgent to create an ecosystem for the development of the SW industry through separate ordering and mandatory BMT (quality performance test)."
By Hur Woo Young yenny@