NEWS
UK software sales are on course to lag almost $60bn behind China this year fuelling high-level calls for Britain to abandon the low-cost end of market.
Revenues in the Chinese software product and services sector are forecast to reach $140bn by 2010 and already hit $21bn during the first quarter of 2008 alone, close to the sector's $27.5bn revenue predictions for the entire year in the UK.
India's software sales and services revenues are forecast to reach $52bn this year.
Sean Finnan, president of the UK trade association for technology Intellect and UK country manager for EDS, said it is time for Britain to forget any hopes of matching China and India in the low-cost software market.
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Finnan says the country should instead carve out a niche for itself in high-value end of the sector.
An Intellect report into the state of the UK technology industry published today shows the European technology industry growing by 5.7 per cent last year, compared to 33 per cent in India and 28 per cent in China.
Finnan said: "It is unsustainable to try and dominate the low-cost ground. China and India will always be able to win the volume game. We need to try and follow the lead of the financial services sector to reposition ourselves at the high value end of the market. We believe that the knowledge economy services will be critical for the economy going forward."
Speaking at the launch of the report Richard Holway, of Farnham Consulting, said that less software was being sold as companies tried to extend the life of existing products.
He said: "Seventy to eighty per cent of the revenue is being generated by existing clients saying they are going to keep the software longer and spend more money on bolt and add-ons."
Tom Wills-Sandford, deputy director general of Intellect, said China is yet to cut into the UK software market but this could change in future.
He said: "The UK software industry has seen steady growth over the last few years and is in good shape. The software sector in China is certainly growing fast, but we have not seen a significant impact in the UK from either Chinese software products or Chinese outsourcing.
"However, given their appetite for expansion into new markets, and the staggering rate of development both internally and externally seen to date, this may well change in the future."
The Chinese first quarter figures released by the Ministry of Industry and Information showed software services has generated $4bn, software outsourcing £258m and software sales $7bn in revenue during the first three months of the year.
The European Information Technology Observatory software revenues forecast for the UK for 2008 predicted €10bn revenue from system software and €7.9bn from application software.
Comments
There are 6 comments. Join the discussion
1. anonymous
I can't think of a single piece of software I use, that is made in China.
2. anonymous
OMG, What rubbish!!!
3. Jesus R
It is time for everyone other than IT to realize that IT is a critical infrastructure component to our society. Without computers and software, we can not do many of the things we depend on in our daily lives. Companies and governments can not function without millions of lines of computer code to automate many business processes. The larger the company or govt, the more this is true. The lack of a strong base of software experts during world power shifts could significantly reduce the ability of the UK to survive. It is in every country's national interest to maintain armies of IT savy professionals.
4. Richard
In a world where most computers are connected to the web and so are open to "exploits."
How can a country which imports all of its software, verify that that the software is "secure"?
ps. Intellect enthusiastically supports the UK government's ID project; enough said!
5. anonymous
If people were to be foolish enough to heed to this article it would mean an end of a reserve pool to meet the supply needs of the so called high end niche market as indicated here.
6. joe
you wanted globalism because your businessmen were greedy ..I hope you boomer yuppies have enjoyed abasing the potential of future generations in favor of short-term narcissism.