Taiwan should break into the information technology (IT) services sector by leveraging the strong knowledge and capability it has built in the IT manufacturing domain, an industry watcher said yesterday.
"Taiwan has to turn manufacturing into services at a certain stage," making the services business a pillar of the nation's export-oriented economy, said Craig Baty, Gartner Inc's group vice president and chief of research in the global tech industries segment.
Baty made the remark on the sidelines of an industry forum organized by the Industrial Development Bureau under the Ministry of Economic Affairs.
The IT services sector is composed of support services and professional services, according to Gartner. Support services refer to maintenance and support of hardware and software, while professional services include consulting, IT management and application integration.
Taiwan's IT services market made up 5 percent of the US$27.62 billion Asia-Pacific market excluding Japan, or US$1.38 billion last year, according to Gartner's figures.
The Stamford, Connecticut-headquartered research house expects Taiwan to enjoy a compound annual growth rate (CAGR) of 6.9 percent in the sector, boosting the market size to nearly US$2 billion by 2008. The global market, meanwhile, should see a slightly lower CAGR of 6.03 percent and grow to US$727.8 billion from US$568.9 billion over the same period.
Countries like India and China are doing well in IT services in such areas as call centers and applications, while Taiwan has not actually exported much in the way of IT services, Baty said.
Given the country's advantages from its sophisticated knowledge and skills in IT manufacturing, Taiwan could export high value and high margin IT services, such as consulting for manufacturing systems.
To achieve this goal, Taiwan, as a newcomer in the global arena, needs to strengthen its marketing and branding and develop its reputation, through the adoption of international certification such as the Capability Maturity Model (CMM), as India and China are doing, Baty said.
Taiwan can break into the foreign IT service markets via forming partnerships or alliances with local companies or combining the strength of several domestic companies for an overseas expansion, Baty said.
The Council for Economic Planning and Development said last month that the government has vowed to develop the nation's service industries, aiming to achieve an annual economic growth rate above 5 percent by 2008.
IT services is one of the 12 service industries the council has targeted, along with sectors including financial services, logistic and transportation services, as well as telecommunication and media services.
The council projects that the development of IT services will create an output value amounting to NT$4.5 billion, while boosting private investment to NT$560 million and generating NT$1.5 billion-worth of export services by 2008.