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Fostering Korea's software sector
Publication Date : 21-01-2014
Samsung Electronics chairman Lee Kun-hee said recently that the firm should work hard to enhance its software competitiveness. Company officials said Lee told top executives that measures to strengthen its software prowess should include M&As.
Lee’s comments illustrate how seriously Korea’s corporate leaders take software, even as some of them, like Lee and Hyundai Motor’s Chung Mong-koo, bask in the global success of their hardware products, ranging from televisions and smartphones to automobiles.
But the Korean tycoons’ dream to move their companies beyond hardware production is not easy to realise, if one looks into where the Korean software industry and market stands.
The Korean software market is valued at US$36.9 billion, 2.8 per cent of the $1.3 trillion world market. Moreover, the local industry is too focused on embedded software and games.
The industry suffers from a chronic shortage of skilled workers. Local firms still have difficulty securing qualified software developers and Web experts.
The sector is failing to attract future workers as well. The combined number of students who studied computer, applied software, information and communications engineering and relevant fields at junior colleges or higher-level institutions decreased to 54,000 in 2010 from 73,000 in 2006.
The situation stems largely from the poor working conditions at software companies. The industry is still notorious for its long working hours, low pay and poor job security. Industry workers also blame the government for doing little to foster the industry.
Although not in response to the criticism, the Park Geun-hye administration has chosen the software industry as one of its future growth engines, putting out one support policy program after another.
Most recently, officials said they plan to include software studies in the high school curriculum starting in 2018. That would pave the way for the subject to be included on the all-important College Scholastic Aptitude Test.
Government-initiated measures also include a project in which 400 billion won will be invested by 2017 to help Korean firms reach global top-three status in the areas of medical visuals and security software.
All these measures are deemed well advised in view of the importance of developing the software industry for the sake of the nation’s industrial competitiveness.
But such support programs fall short of securing the local software industry’s competitiveness on a global level. They should be complemented by strict protection of the industry from piracy, which has been hindering sound development of the software market.
It is shameful that the illegal copying rate in the country still stands at about 40 per cent, much higher than the 25 per cent average of the Organization for Economic Cooperation and Development. Without addressing this problem, government officials’ pledge to enhance competitiveness of the software industry will go nowhere.