Participation in Software for Export

Unfortunately, the reality of participation in global software development brings these challenges and difficulties that have been often minimized or even ignored by many officials who promote software production in developing countries like Barbados or Jamaica. Their desire often is to have their country regarded as being a technological capable country that has been able to bridge the digital divide. The reality, however, is that such basic questions that have to be answered include:

• What software can or should be produced?

• Will the user-interface be acceptable?

• How and where will it be marketed?

• How will it be supported?

• Are relevant tools and people available?

• Is documentation adequate?

Software development also takes place in the Information Services Sector where companies at this higher value-added end of the sector undertake programming contracts with many North American corporations. These companies may be affiliates of U.S. corporations taking advantage of the generous investment concessions granted by government, local companies or joint venture companies formed between local and North American entities.

From the perspective of a small developing country such participation has become an attraction for two main reasons:

1. Successes gained from their initial involvement in the provision of lower end services have made them aware of the possibly greater gains to be made through advancement to higher-valued services such as software development. Jamaica's National Industrial Policy document suggests that successful performance in the provision of data entry services to U.S. clients and software services to the local private sector could be a basis for seeking to penetrate the international market.

2. Many computer science graduates from these developing countries, imbued with an entrepreneurial spirit, armed with PCs and with contacts in the U.S., now seek to become global 'infopreneurs' (Heeks, 1999). Involvement at this level provides an excellent opportunity for these graduates to experience the latest technologies. IT professionals in local companies eagerly expect to function with such novel technologies. Overall the presence of these high tech operations has a positive effect on the domestic IT environment.

For such countries, successful participation will be determined largely on the contribution of foreign currency earnings to the national economy. Concerns about securing employment opportunities for their citizens and the earning of foreign exchange still dominate the thinking of governments in developing countries. It follows that while a new software product at a major U.S. developer, according to Yourdon, only shows up as a 'blip' in their accounting system when it generates $50 million annually, a small developing country would readily grasp such an earning opportunity. The global software pie was estimated at US$400 billion in 1997. Any country that can provide reliable and efficient software services at competitive prices can expect to get at least a small contract for software production. Therefore, with the pie being worth so much, almost any slice would represent a success for any small country. In light of the many likely challenges, serious consideration of a strategy for involvement should be given.

Strategies

Schware's strategy and Heeks' indigenisation thrust have been suggested earlier as means of assessing a developing country's capability of becoming involved in the production of software for export. Both, however, seem to be less applicable in the current environment where virtual or global software teams are commonplace. Their proliferation is due mainly to more sophisticated and advanced technologies being less costly and so permitted collaboration between partners and individual team members from different cultural and geographical regions.

Heeks (2001) and Dafoulas (2001) have examined some of the issues such teams have to confront. Critical factors that affect and determine their success include:

• Cultural values between team members

• Frequency of communication

• Frequency of meetings

• Actual roles allocated to team members

This last factor was an important concern in the strategies outlined earlier. Without enhanced local technological advancement, team members from the developing countries could still be relegated to performing the lesser roles of programming with only minor involvement in analysis and design.

Various authors have outlined possible development strategies for involvement of developing countries in software for export (Heeks, 1999; Yourdon, 1994; Reichgelt, 2000). The following reflects a Caribbean perspective on the issue, but should provide useful insight for small developing countries elsewhere.

• Market existing locally developed software. This was usually custom-written for a single client and hence, tended to be unsuitable for mass packaging. At one time, some thought was given to marketing some public sector software in other developing countries in the Commonwealth that had adopted the British administrative systems for that sector. Fuller analysis led to the abandonment of this idea. The few software packages already written and implemented regionally would have had much difficulty competing against similar but globally written packages after considering continued maintenance, support and purchase costs. When a local software system was marketed throughout the region, it was found that a help desk had to be provided.

• Develop software locally, explicitly for an identified overseas market. Even if the technological capability and competence existed in a small developing country, major factors such as venture capital support, product identification and marketing would prove to be major hurdles. Opportunities had been identified in the past through the initiatives of government investment agencies stationed in developed countries. These agencies hired consultants in developed countries to seek out outsourcing contracts on their behalf. IT conferences were held with North American speakers invited, to which potential investors from developed countries were also specially invited with a view to making on-the-spot assessments and contacts with partners. With the possibility of the project exceeding the capability of a single developer in Barbados, it was necessary to satisfactorily address the formation of project teams from among individual software entities. The actual project management was a major concern. In Barbados, a project implementation unit, called Project INFOTECH, was contemplated as a means of assisting locals firms that sought to become involved in software development for U.S. corporations. A team of IT professionals was nominated to serve as a liaison between the client and the developers and to provide any further professional assistance. This well-intentioned initiative was short-lived as difficulties arose with the establishment of consortium teams of small local software units to tender for software projects. While the engagement of a consultant could be seen as a positive step, the fear, uncertainty and doubt experienced by U.S. clients in doing business with developers in the developing countries would present a virtual roadblock. Participation in joint ventures with software developers from the developed countries may be the only logical course of action. The question of technology transfer remains a debated one.

• Develop software locally in collaboration with an overseas company as a subcontractor, in a joint venture partnership or as a participant in a global software team. The major advantage with this arrangement is that the overseas company would handle the marketing function, secure contracts and provide specialist tools and training as required for each project. Contract work would generally originate in the U.S. and would feature the same level of technology found in U.S. corporations. A certain minimum technological competence would be expected from local counterparts in the global team. Training initiatives toward this goal are being implemented in both Jamaica and Barbados. Reichgelt (2000) suggests that the best way to approach participation in software for development is through the establishment of joint ventures with recognized international software vendors.

• Seek out market niches to take advantage of a country's unique expertise. Reichgelt (2000) has suggested that, in the case of Jamaica, the development and marketing of application software related to all-inclusive hotel operations in the tourism sector, an area where that country is a world leader, could be considered. A few years ago, the millennium bug provided developing countries with a good opportunity to earn valuable foreign currency. Their programmers seemed more au fait with the COBOL language, in which many legacy systems were written, than those from the developed countries. Provision of data conversion services remains an option, but recently, opportunities for web site development, hosting and maintenance became widely available.

Challenges and Solutions

As small developing countries contemplate greater involvement in software for export, it must be appreciated that the requirements will far exceed current practices and expectations for software for domestic use. Many challenges will have to be overcome if the expected benefits are to accrue from involvement in software for export.

Training

Bishop (2001) examined the human resource capability needed for successful involvement in the information services sector. He reported that, based on a recent survey in that sector, increased training should be provided in areas such as systems analysis and design methodologies, case tools, Java-based programming, project management and documentation. An initial improvement should be seen in the quality of the system development process with more formalized procedures being applied. Better management control of the development process will ensure the quality assurance so necessary in a competitive environment. Other improvements should also be evident in cost management and in the ability to measure specific processes.

In Jamaica and Barbados the respective governments have, in collaboration with universities in the U.S. and U.K. and with companies in their Information Services Sectors, established special training institutions to assist with human capital development. These feature short, high-impact and modular courses specially oriented toward the applications found in this sector in respect of the languages and methodologies studied.

The University of the West Indies at its campuses in these two countries has been modifying its Computer Science programmes to pay greater attention to areas such as information systems and software engineering. Management and Accounting Options and separate courses in these disciplines are now available to Computer Science majors.

In the event of an absence of software business incubators, the involvement of IT corporations in the design and even teaching of web-based courses and other programs should be encouraged. Job attachments for tertiary-level students with companies in the information services sector are now a regular feature in the training of IT personnel.

Availability of Programmers

The size of the pool of competent software developers has been seen by Reichgelt (2000) and others as a major challenge since it is known that there have been large software projects that have absorbed hundreds of software engineers. Indeed Reichgelt argues that a necessary condition for the establishment of vibrant software engineering project is the availability of a large pool of highly trained individuals. He however admits that small developing countries such as Singapore, Israel and Ireland have become important players in the global market.

For a better appreciation of the prospects of small developing countries, one should note that the actual size of typical software teams is quite small. For example, in India over 75 percent of companies have had fewer than 25 professionals and in Egypt company size has varied from being one to five persons up to a maximum size of 50 to 100 professionals. The existence of global software teams suggests that generally programming modules are being assigned to individual teams which can be quite small.

One common project in today's networked environment is the development and maintenance of a web site for a corporation. This can be undertaken in a small developing country by a company with only a few professionals. Technical competence, along with the requisite teamwork appears to have a greater impact on the eventual success of the project than the actual size of the team.

In both countries, there have been attempts to bring in IT professionals from other developing countries, mainly India, to boost the numbers of trained personnel. These have been unsuccessful because of the cultural differences between these and the local programmers and also due to the desire of these migrants to seek greener pastures in the U.S.

Regulatory Framework

A major difference for smaller developing countries between participating at the lower and upper ends of the Information Services Sectors is the mandatory existence, in the case of the latter, of the requisite legal environment. Intellectual Property and Anti-Piracy legislation and an up-to-date Computer Misuse Act are basic requirements if corporations in the developed countries are to be comfortable with having their software projects undertaken by companies in developing countries partners. Governments in the two Caribbean countries have taken this issue seriously and in addition to the introduction of actual legislation, have supported public discussion on such topics as intellectual property and the legal requirement for electronic trading.

Telecommunications

Monopoly companies have for a long time controlled the telecommunications services in most developing countries but strenuous attempts are being made to correct this practice. Jamaica has enacted legislation to fully liberalize those services there, while in Barbados consultations and deliberations are in the final stages before the enactment of such legislation. The problems with telecommunications would therefore appear to be about to be resolved. Unfortunately, companies in the Information Services Sector in Barbados still relate horror stories about the cost of such services, a charge vehemently denied by the monopoly service provider. Government's role then is a critical one. In a situation where there has been little experience with such technical matters, government officials are unable to properly confront the service provider. Friendly persuasion has been their preferred approach, but meanwhile, affected companies continue to complain that they are unable to maximize their contributions to the economic development of the country. At least one other Caribbean has taken a more radical approach in the attempt to liberalise its telecommunications sector. It is still too early to assess the consequences of that course of action.

Sustainability

The area of software production has come to be regarded as one where the continued existence of an entity is a problem. As indicated starting such an IT operation is easy and relatively inexpensive and appeals to those with an entrepreneurial flair. However, in this fast-paced, dynamic and very competitive environment business changes come too quickly even for large corporations and suppliers of well-known products. As an example WordPerfect's share of the word processing market decreased from 46 percent in 1990 to 17 percent in 1997 (Hoch, 2000).

The picture from the Caribbean tells a similar tale. The U.S. custom-software design company PRT set up operations in Barbados in 1996, staffed by some 300 programmers from India, but only a few Caribbean nationals who were recruited both from inside and outside of the region. It was suggested that regional IT personnel, though well educated, were not capable of software production to the desired level. It provided software for Fortune 500 corporations in the U.S. and had a Level 3 rating in its software development. Within just two years it was being hailed as the flagship for software in the Caribbean. However by the end of 2000 only a skeleton staff of less than 50 remained with the company. Another company, providing web-based business solutions, relied entirely on local personnel. After some initial success it too collapsed with managerial problems, according to anecdotal evidence, being cited as a major cause. There has been similar but less high profile failures recorded throughout the region in both domestic and export-oriented companies.

In any attempt to try to determine the causes of these failures, a key factor has been the quality of management of the company. The selection and retention of competent software professional continues to be a major problem as better jobs with higher salaries from North American companies are constantly being offered. The ability to retain secure financing is also a major problem. It has been suggested that while many entrepreneurs have good ideas for business start-ups and are able to create effective software products, few are able to complete the transition to become successful managers of those companies.

There however seems to be some hope for a small company which is able to enter the global market through the provision of products and services in a restricted area and to a few clients. Management of such companies is much less complicated, and profit margins can still be recorded. The practice of web page hosting and maintenance has been successfully undertaken in a small country like Bermuda.

Role of Foreign Investors

Multi national companies and foreign investors have been at the heart of any successes by developing countries in the export of software. They must also be at the core of the enhancement of local technological capability through their involvement in the design and implementation of programmes and courses offered by educational and training institutions. On-site training at offices in developed countries has proven to be very beneficial and this practice must be extended to include more companies in the Information Services Sector. Governments must insist that all foreign corporations, through conditions attached to their gaining access to training and other incentives, provide for the transfer of technology that would enhance local technological capability.