BitDepth 545 - October 10

A report prepared by the IDC puts Trinidad and Tobago behind the pack in IT development...
Behind the curve in the IT economy

Monique Gibelli of IDC and George Gobin of Microsoft at the launch of the report. Photo by Mark Lyndersay.

Just over a week ago, Microsoft West Indies launched their latest industry report, charting the economic impact of IT in thirteen countries, three of them from the Caribbean.
The indicators were not positive and offer compelling indicators that suggest Trinidad and Tobago isn't keeping pace with global IT advancements.

The report, commissioned by Microsoft and produced by the International Data Corporation, offers key measures of tax revenue from the sector, IT spending, employment within the IT sector and the potential for growth over the next four years.
Twelve Latin American countries along with Trinidad and Tobago make up the survey; Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Mexico, Panama, Peru, Puerto Rico, Uruguay and Venezuela.

One of the primary indicators measured by the report is the relationship between IT spending and the Compound Annual Growth Rate (CAGR) of each country's Gross Domestic Product.
The traditional wisdom holds that IT spending grows at roughly twice the rate of the GDP and that holds true generally for twelve of the countries measured by the report, except for Trinidad and Tobago, where IT spending is reported to be growing at half the rate of the GDP.
T&T's IT growth rate is expected to be 4 percent with a GDP of 8.5 percent. Compare that with Brazil, recognised as a breakout nation, with an IT growth rate of 11.5 percent and a GDP growth expectation of 3.5 percent.

Those figures were questioned, albeit respectfully, by RBTT's Group Technology Head, Krishendath Maharaj, an invited panellist.
"Five hundred million in IT spending seems a bit on the low side," Maharaj said, "based on what I spend on IT alone."
Maharaj has budgeted US$50 million over the next three years to improve IT operations and effectiveness at the bank. He suggested that the heating of the economy caused by Government spending, some 33 percent of overall expenditure and the impact of the oil and gas sector might have done much to skew the results.

That spending, according to IDC's Monique Gibelli, who presented the report, is broken out as 70 percent hardware and 15 percent each in software and services, figures that she described as being "consistent with an emerging country, early in its technological development, spending to build out its infrastructure."
But software and services, the engines that turn hardware to productive use, will require greater attention and investment to achieve real gains from a refreshed infrastructure. Microsoft's operating system is pervasive, but the applications that drive connectivity, productivity and growth are lagging behind. It's a gap that KPMG's Raoul John described as a "breakdown between hardware and software and services."

Software normally accounts for 20 percent of sales, but supports 70 percent of employment in the sector. Trinidad and Tobago's 15 percent of spending on software accounts for just 43 percent of employment.
Three thousand people are employed in the local IT industry, according to the report, 1,300 are IT professionals employed by corporations, 1,300 are employed by the sales channels that provide hardware and boxed software, and 392 are described as IT "producers," the programmers, product specialists, and solutions providers that turn code into productive potential.

By comparison, Brazil's IT industry accounts for 47 percent of the 1.3 million jobs in the sector throughout the Latin American region.
That local pool of 3,000 is expected to grow to 3600 over the next four years, but that projection stimulated much comment from the audience. University lecturers in the audience weren't sure where those 600 people would be coming from.

Krishendath Maharaj followed up on those concerns by noting that 80 percent of current local IT graduates leave the country to look for jobs.
The 2007 budget remained blind to these issues, committing two paragraphs in a 60 page document to focus on reducing hardware and networking costs by eliminating VAT on these import items.
Stimulating software development geared to improving productive use of the growing infrastructure and readily available computers will call for a very different type of investment and planning to engage the minds we're training in our universities today.

Chile's heat
Chile is another country that has been able to depend on a natural resource that's in heavy demand. The country produces copper, and ten years ago, it decided that IT would leverage its future development.
According to Monique Gibelli, the country opened its telecoms market first in the region and spent the last decade encouraging foreign investment in technology.
Today, Chile is ranked 29th in the Global Competitive Index (Trinidad and Tobago is at 63) and managed to almost triple direct foreign investment between 2003 and 2004 from US$2.5 billion to US$7.1 billion.

The country has large wage disparities, but manages inflation down to between 2-4 percent and is aggressive about microeconomic reforms designed to stimulate entrepreneurship.
With a population of just over 16 million, Chile has, as of June, 2006, 899,964 broadband connections, 80 percent of them to homes.
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