Gap between technology haves and have-nots growing in South Asia

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‘Gap between technology haves and have-nots growing in South Asia’

ISLAMABAD: While South Asia has unarguably come a long way in liberalizing and promoting trade in information and communications technology (ICT) and ICT-enabled-services (ICTES), it still has a long way to go because the region lags behind most of the world in terms of ICT diffusion, access and quality. There is a particularly large digital divide between rural and urban populations, says the 2009 report of Human Development in South Asia.

Despite the unstable security conditions in several countries in the region and the global financial crisis, the sector remains amongst the most important in South Asian countries in terms of growth, trade and attracting FDI.

The report, issued by Mahbub-ul-Haq Human Development Centre, notes that ICT-enabled services have immense potential for cross-border collaborations.

The report said that some of the most significant advances in liberalization and FDI in ICT services have occurred in telecommunications services in the region. South Asia was controlled by State-owned or regulated monopolies and protected strongly against both foreign investors and the private sector; such is not the case today. Domestic service providers had found it difficult to penetrate the market and provide new technologies on their own. Progressive liberalization directed by a strong regulatory and legal framework has the potential to help spur growth in the industry and make many contributions to human development.

The industry has also provided employment opportunities across the wider social spectrum. It has not only played an effective role in reducing gender disparity in the job market but also helped reduce the rural-urban divide. Estimates suggest that for every three jobs that are outsourced to developing countries the multiplier effect generates 10 new jobs. Growth in the sector also spurs on greater employment in other sectors as greater wealth and improved living standards among industry employees stimulate the demand for consumer durables and other goods.

However, the industry continues to face several challenges and concerns. The growth in the trade of IC and ICTES in South Asia is limited by unreliable means of connectivity and the inadequate supply of an appropriately skilled work force. The higher education curriculum also needs to be revised continuously to meet the evolving needs of the industry.

Legal and regulatory frameworks remain weak. Data privacy is the key concern with regards to outsourcing. Currently, compliance with laws and regulations is a weak link that needs to be strengthened in South Asia.

Despite the positive human development impacts, there are some social costs of expansion in the sector. A major cost is the exacerbation of inequalities across sectors, occupations and regions. ICT-enabled services are currently predominant in urban areas and rural populations have not benefited from these facilities. The industry has also promoted further inequality within cities, as the urban poor have suffered from the rising cost of living that follows developments in the wake of ICTES.

The sector has significant value chain segmentation. India is currently at the higher end of this value chain, and is followed by Pakistan and Sri Lanka, both of which are trying to develop their ICTES industry. The sector is still nascent in other South Asian countries.

The report strongly suggests that it is imperative for South Asian countries to look at collaborative growth in the ICTES industry. Companies across the region can initiate joint ventures to designate tasks and disseminate needed training. Regional collaboration would enable South Asia to develop enhanced comparative advantage in the wake of stringent competition as new entrants venture into the sector.

The report also suggest that South Asian countries, especially Bangladesh, Nepal, Pakistan and Sri Lanka, need to do more to promote themselves as viable outsourcing destinations. Currently, the Asian business process outsourcing (BPO) sector is dominated by India, the Philippines and China. Other countries need to develop their own individual identity in the international BPO market. In this regard, international marketing campaigns, road shows and participation in international BPO conferences could help attract more investment.

The size of BPO industry in Pakistan stands at $1.24 billion whereas in Sri Lanka, BPO exports in 2008 were $0.3 billion. Bhutan, Nepal and Bangladesh have also recently initiated efforts to develop and spur growth in the sector. India, in terms of ICTES has emerged as a leading destination, with 37 per cent of the overall offshore outsourcing market. A number of policies can be adopted to ensure the supply of an adequately skilled workforce that can support the development of trade in ICT and ICTES. Links should be fostered between industry and universities. The education ministers of South Asian countries should also meet with industry professionals and entrepreneurs to assess their needs and then revise national curricula to meet those needs.

Daily Times - Leading News Resource of Pakistan