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© IBM Corporation Mexico: Computer Services and Competitiveness Sept. 2005 Jesús E. De la Rosa IBM Mexico
© IBM Corporation Mexico 2 AGENDA Mexico Economic Model IBM Example IT Services Industry in Mexico: Engine for Development Mexico IT Services Strategy IT Services Liberalization: Benefits IT Services Liberalization: Objectives
© IBM Corporation Mexico Mexico Economic Model Background After decades of a closed model based in imports substitution, in the middle of the 80s, Mexico started an economic liberalization process based on an open market scheme. Today Mexico is the country with the largest network of Free Trade Agreements (FTAs) in the world: 42 countries on 3 continents. Mexico was successful in the 90s during the manufacturing boom. However, after 2000 the model changed dramatically. Mexico experienced a decrease in productivity at the end of the 90s and saw its competitive position decline in the international context.
© IBM Corporation Mexico IBM Example IBM has operated in Mexico for 78 years, and its history is very related to the development and evolution of the information technology industry. During the 90´s IBM Mexico was a major manufacturing center World leadership in PC´s, laptops and hard disks subassemblies: 60 - 65% of world volumes. IBM evolution: Over half of revenue from services and nearly three-fourths of revenue from software and services. Serving global customers from worldwide network of interconnected data centers and software development labs Cross-border delivery of services is growing IBM Mexico is transforming its process from a manufacturing scheme to a service-oriented model. IBM software center in Guadalajara, Mexico, is the only CMM5 center in LA.
© IBM Corporation Mexico IT Services Industry in Mexico: Engine for Development Mexico requires a strategy for development of the IT services industry to support both applications in the local market and export opportunities. Competitiveness and the IT services industry. Mexico must enhance its productivity and efficiency and increase economic competitiveness across industries through the intensive use of information technology and IT services tools. Investment in knowledge (i.e., software development, R&D, and higher education) in countries such as USA, Switzerland and Finland is more than 6% of GDP. For Mexico, it is less than 2% and with a very low growth rate. Internal market: Opportunity for growth IT/GDP in Mexico is 1.3% vs. 4.3% in OECD countries SW/GDP in Mexico is 0.10% vs. 0.61% world average. Mexico market for software & IT Services is USD 2.6B vs. 7.4B in Brazil and 5.2B in Korea. Trade: evolve to high-value services markets. Mexican model is oriented to external markets: 7th world exporting economy Evolving model from manufacturing to high value-added services: in OECD economies, services account for almost 70% of GDP.
© IBM Corporation Mexico Mexico Strategy for IT Services Public Policy: IT Services as a strategic sector Mexican Government defined IT Services and software as a key industry. PROSOFT: Mexicos government National Program for the Development of the Software Industry. The objective of the program is to develop a USD 5B software industry in Mexico and became the leader in LA in the IT services industry. Access to global markets is a key factor of this program. IT Services Industry focus Mexico Digital Foundation: a public-private partnership that integrates national resources to improve their practices in commercialization schemes, trade integration, and technological penetration to improve supply chain operations. The objective is to increase the use of IT in Mexico from 1% to 2% as a percentage of GDP in the current administration. The capacity to access high-end services with competitive prices is a key factor for the success of the effort.
© IBM Corporation Mexico IT Services Liberalization: Benefits Liberalization of computer and related services (CRS) enables economic development and job growth. The Doha Round is an economic development opportunity for both developed and developing countries. Cross-border delivery of services creates opportunities: Internal market: local companies have access to the best IT services at the most competitive prices –IT services can help make manufacturing operations and the delivery of other services more efficient, productive and competitive Global market: Service providers from developing countries can serve international markets
© IBM Corporation Mexico 8 IT Services Liberalization: Objectives New developments include the Web, application hosting, remote data centers and backup storage, grid computing and on demand computing Information technology and IT services will continue to evolve Commitments for full liberalization in computer and related services Cover technologically evolving services Commitments at 2-digit level (CPC 84) Mexico endorsed joint statement by Friends of Computer Services in February 2005
© IBM Corporation Mexico 9 IT Services Liberalization: Related Objectives Commitments for full liberalization in Management Consulting (CPC 865) and Services Related to Management Consulting (CPC 866) IT-related consulting is covered under CPC 84 IT is critical to the management of modern organizations It is increasingly difficult to draw a line between IT consulting and management consulting, so fully liberalize both Liberalize other services that can be delivered electronically Cross-border delivery of IT-enabled services provides excellent opportunities for many countries Mexico joined Chile, Hong Kong China and India on cross-border supply paper in June 2005
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