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S. Korea's weak IT service sector denting IT competitiveness: report

All Headlines 15:33 October 05, 2009

By Lee Youkyung

SEOUL, Oct. 5 (Yonhap) -- The sluggish development of South Korea's information technology (IT) service industry could hurt the country's overall IT competitiveness as it widens the gap between the service and manufacturing sectors, a local economic think tank said in a report Monday.

According to a report by Hyundai Research Institute, South Korea's IT service industry expanded by an annual average of 7.1 percent during the 2001-2008 period, while its IT manufacturing industry grew 9.5 percent per year in the same period.

The IT service sector encompasses consulting, systems integration and management, and IT education.

South Korea's leading IT manufacturing firms include makers of mobile phones, memory chips and liquid crystal displays (LCD).

In 2007, South Korea's global market share in the memory chip, mobile handset, and LCD markets amounted to 45.1 percent, 23 percent, and 46.5 percent, respectively, while the country's contribution to the global IT service sector came in at a mere 1 percent.

"Such disproportionate growth between the service and manufacturing sectors dragged down South Korea's IT competitiveness," said Lim Sang-soo, a researcher at Hyundai and author of the report.

South Korea was considered the third strongest IT country in 2007 according to Economist Intelligence Unit, a research firm under the Economist magazine, but the country slid to the eighth spot and then to the 16th in the following years. South Korea also moved down two spots from ninth to 11th place in an IT competitiveness ranking compiled by the Geneva-based World Economic Forum.

Lim attributed the imbalance to the sluggish overseas business performance of most IT service providers and a lack of local guides for global IT service standards. Most local IT service developers are small firms with scanty resources that face challenges when entering global markets, he said.


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