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SA competitiveness unchanged, outlook positive for IT

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South Africa ranks 37th in the world in the 2008 IT industry competitiveness index, with its ranking unchanged against its 2007 ranking. the finding is weighted primarily towards a strong business and legal environment, represented by 76,9% and 63,5% respectively.

These are among the findings of a new study issued by the Economist Intelligence Unit and sponsored by the Business Software Alliance (BSA).
The study, now in its second year, assesses and compares the information technology (IT) industry environments of 66 countries to determine the extent to which they enable IT sector competitiveness.
Although the top 20 economies remain the same from one year ago, nine countries moved up and 11 went down in the rankings.
Three countries in the top five are new: Taiwan, Sweden and Denmark.
The top five countries in Middle East & Africa (MEA) are Israel (56.7%), South Africa (32.6%), Turkey (32.4%), Saudi Arabia (32.3%) and Egypt (25.3%), while the overall top countries are the US (74.6%); Taiwan (69.2%); the UK (67.2%); Sweden (66%) and Denmark (65.2%).
"This year's index shows that a country's IT competitiveness rankings can move upward or downward very quickly," says Alastair de Wet, chairman of the South African chapter of the BSA.  
The ability of local governments and IT industries to deliver jobs and a better quality of life through information technology is strongly affected by how they handle the six drivers of competitiveness.
"South Africa has been identified, alongside Bulgaria; the Ukraine and Vietnam, as an emerging outsourcing destination and, through the realisation of faster, more reliable and more secure Internet access, we can look forward to receiving a significant boost with fast, competition-led infrastructure development," adds de Wet.
The study finds that South Africa performed strongest in the areas associated with the business and legal environment, as well as support for IT industry development with a score of 57.5%. Areas of improvement include IT infrastructure (8.4%), primarily through the provision of high-quality networks and greater liberalisation of telecommunications in the region.
"Policymakers and business leaders need to address the full combination of factors that enable competitive IT industries," maintains Denis McCauley, director: global technology research at the Economist Intelligence Unit. "Few countries can hope to build strong IT production sectors without strong business and legal environments, deep pools of talent, support for innovation, and the widespread use of technology throughout society."
According to the Economist Intelligence Unit, six factors work together to create a sound environment for the IT sector, including: an ample supply of skills; an innovation-friendly culture; world-class technology infrastructure; a robust legal regime that protects intellectual property, such as patents and copyrights; an open, competitive economy; and government leadership that strikes the right balance between promoting technology and allowing market forces to work.
Those countries that perform well in these six 'competitiveness enablers' generally are home to high-performance IT industries. High performing IT sectors directly contribute more than 5% to the gross domestic product of most advanced nations. They also drive momentum in the wider economy by helping organisations and workers to be more efficient and productive.
Other findings of the research include:
* Investing in people is mission-critical for domestic IT industries. Sourcing talent will be among the toughest challenges IT producers will face in the coming years.
* Competitive broadband markets help cultivate strong IT sectors. Without fast, reliable, and secure Internet access, technology firms cannot interact effectively with partners and the research community, nor can they sell their services online.
* A legal environment that protects intellectual property rights (IPR) and takes a robust approach to cybercrime is essential. The US, Australia and Western European countries have the most effective systems in place to address IP protection and cybercrime, but gradual improvements are also evident in tough places like China.
* Globalisation and the Internet will 'liberate' R&D. Ecosystems, online or otherwise, that bring together talent, technology, venture capital, and good universities, supported by a risk-taking ethos, will be the best incubators of innovation.