Cover Story / SW Industry Korean software (SW) firms have managed to gain a mere 2.4% share of the global SW market according to recent statistics of KOSA (Korea Software Industry Association: www.sw.or.kr). The background to Korea's fragile software industry is that although Korea is an IT power in terms of hardware, the government has been too complacent in nurturing the software industry and has not been actively promoting it. Nonetheless,, Korea's hardware industry maintains its dominant position as a powerhouse by possessing a global market share of 30% in world market thanks to Korea's No. 1 position in the fields of semiconductor, LCD, digital TV and so forth. However, in the case of software, Korea's It industry reveals its fragility due to the indifference of the government. However there are signs that the SW industry's importance is gradually coming to the fore. At the moment, it is a reality that Korea's main economic growth engine is the IT industry, with a growth rate hovering around 20%, whereas the non-IT industry's growth rate is no more than a the 2% level, according to recent statistics in 2004. In terms of both export scale and increase rate too, IT industry's growth is conspicuous and the relative importance of IT industry is very large in the domestic field as well. Even experts point out that the entire business depends on the IT industry's business. Considering that 62% of the global IT industry is the SW industry, the importance of the SW industry is unquestioned. Actually, the world IT market's scale amounts to $1.1 trillion. Of this, the software market accounts for over 62% with a scale of $750 billion. Growing conscious of the importance of the SW industry, the government or related SW business circles must form a united front to nurture the SW industry so that Korea can enter the era of national income $20,000~$30,000 sooner rather than later. Insiders in SW business circles insist in that regard that the strategic SW field as well as promising SW firms must be fully supported, and the SW industry has to be globalized. The Soft Power Korea 2010 Vision means that from 2004 to 2010, production increases from 18.7 trillion won (approx. $10.9 billion) to 53 trillion won (approx. $54.3 billion) first of all. Over this period, employment and exports will come to increase from 171,000 people to 270,000 people and from $830 million to $5 billion respectively. In terms of the number of world 100 largest SW firms too, 10 Korean SW firms will come to belong among the 100 largest SW firms globally by 2010. SW must be sold at a fixed price To accomplish these goals, experts elaborate that first of all, strategic SW must be nurtured as a priority including public SW supply's spread, embedded SW power advancement, and the emergence as a global digital content producer. Secondly, SW manpower's supply capacity and R&D systems have to be strengthened along with SW development's productivity improvement and strengthening SW intellectual property rights. Thirdly in connection with nurturing promising SW firms, Executive Deputy Chairman Lee Jang-hun, KOSA (Korea Software Industry Association: www.sw.or.kr) pointed out that there is an urgent need to forge an environment in which SW can be sold at a fixed price without making any reductions. He further insisted in regard to SW industry's globalization too that tailor-made package SW's overseas inroads must be supported plus strengthening IT service export system. As part of such support measures, KOSA is planning to kick off its export support center in the course of April, this year. Mr. Lee explained that since software exports need continuous business discussion as well as on-the-spot customizing after MOU conclusion, at the minimum one year's negotiation period is necessary. It is said that 20 Korean SW firms during the period of the CeBIT 2006 Exhibition have accomplished contract agreements of $8 million plus an amount of business negotiations amounting to $200 million thanks to the support of KOSA, according to the Executive Deputy Chairman. Mr. Lee emphasized that the conversion from IT code to SW code as Korea's President Roh Moo-hyun, pointed out, cannot be realized ultimately without leading to SW export industrialization. In that sense, globalization support for SW firms through international collaboration enlargement is deemed to be indispensable. Fragile SW industry in terms of capital & human power The SW industry, for which smaller companies accounts for the great majority, is relatively fragile in terms of capital as well as human resources strength part compared with other sectors of the industry. In this context, information collection for overseas export, developing overseas marketing human networks, as well as support for its utilization are deemed to be urgent. Recognizing such circumstance well, KOSA also plans to carry out its role as export support center for the purpose of special SW firm globalization as well as overseas export support, attaching importance to its member SW company-centered service innovation, according to Executive Deputy Chairman Lee of the Association. On one hand, as SW development jobs are being avoided by the youth, nurturing superior SW manpower is emerging as a very urgent task. Thus, knowledge value recognition about knowledge-based industry employees is necessary. Domestic SW industry's insiders further observe that SW industry business circles must make concerted efforts toward coexistence collaboration success models and its spread by forging an atmosphere among which co-existence cooperation and fair competition can be fixed so that the domestic SW industry can advance into global markets. Last but not least, complications between larger SW companies and smaller SW firms have to be overcome by all means so that the domestic SW industry can enlarge its global market share. In connection with the "SW Industry Development Nurturing Policy" announced in December 2005, experts explain that it is still not too late for Korea to emerge as an SW power providing the government and associated industry business circles are united in their determination to develop software so that Korea can advance into the era of national income $20,000~$30,000.