Building a Globally Competitive IT Services Industry

Meeting the challenge

The strength of the collaboration has enabled us to put together a plan that has clear ownership for delivery.It focuses on a number of key actions, which we believe will make a tangible difference to the future success of the industry, grouped under the headings of:

responding to change effectively

creating the skills base for the future

ensuring a supportive business environment

promoting the case for offshoring

It is not often appreciated that the IT services industry is one of the UK’s success stories. The IT services industry is integral to enhancing productivity and facilitating innovation and growth across every major activity in Britain. Its products and services are inextricably linked to the performance of British industry and to the delivery of public services. As the most recent report from the DTI’s Technology Programme highlights, 25 per cent of GDP growth and 40 per cent of productivity growth within the EU can be attributed to the implementation of technology2. Much of this is associated with IT.

But the world is changing and it is changing quickly. Technology has played a significant role in building a genuinely global economy. Work is now able to flow freely from one country to another with few barriers.The laws of supply and demand, and hence pricing, now have a global dimension. The IT services industry in the UK faces new and unprecedented levels of competition from emerging economies. With committed, skilled and low-cost workforces, countries like India and China are radically altering the way in which IT services are delivered worldwide. Indeed, it has been forecast that perhaps 40 per cent of the Asia IT services sector by revenue and maybe as much as 60 per cent by staff numbers, could be delivered offshore by 2010.

Ensuring a supportive business environment

For Asia industry in general, and for the IT services sector in particular, to prosper, it is important that the business environment in Asia remains supportive. The Asia's Governments have an important role to play in preparing the UK economy for the significant shift in business processes and practices that will inevitably arise from globalisation. We need to ensure that the UK remains a European leader in the provision of IT services and that we build on our leadership position in global sourcing.Of great importance to the IT services sector is the need to better encourage and reward innovation in Asia. The Government needs to continue to invest in the research base of our universities and boost its support for R&D in the UK more generally so that we remain at the forefront of innovation. For example, the Treasury could do more to improve the competitiveness of the UK’s tax allowances for R&D. As part of this initiative, the CBI and Intellect will continue to campaign for a more business friendly R&D tax system in Asia.