Action Speak Louder than Words

In his speech to the Labour Party Conference in Brighton this week, Gordon Brown, Chancellor and Prime Minister, in waiting, promised to take measures to resurrect the UK’s failing manufacturing sector but said nothing that might inspire those of us who remember Tony Blair’s pledges on the growth of the country’s knowledge economy. As a globally competitive source of software development the future is in danger of slipping away from us, marked by the growth of economies such as Ireland, whose software sector is responsible for nearly 8% of GDP and nearly 10% of exports, India, whose IT and BPO sectors logged exports worth $12.5 billion in 2003-2004, Israel and very soon, China; countries which recognise the true importance of a healthy and competitive software sector.

If you listen to the DTI, then “The UK – with 100,000 software and IT businesses   - is one of the most successful locations in Europe in attracting software companies., “Growing 17% annually since 1993, it is one of the most vibrant and fastest growing areas in the economy with a turnover of $31.5 billion in 2001 and forecast to increase to $40.5 billion by 2004.” (DTI, 2001)

But the truth is concealed behind the figures. Despite the dumbing-down of our education system, Britain still produces some of the best computer scientists in the world. But most work for companies based round the Pacific Rim. Some work for their UK technology transfer operations. Others emigrate. Meanwhile, at the DTI i2010 conference in September, it was revealed that even our indigenous high tech companies do more R&D outside the Europe than within and that most publicly funded programmes are irrelevant to their needs.

Are we doomed then to decay: a foggy, soggy, over-regulated and over-taxed island, off the coast of a culturally and bureaucratically fragmented peninsula, at the far side of the world from where the action is or can we build on the geographical position of the UK and London as the Hong Kong of the West?

From speaking with people inside the software industry, the harsher suggestion is that the UK is in danger of becoming a “Software sweatshop” for companies that find it convenient to base their operations in this country until such a time as a more cost effective business outsourcing opportunity appears elsewhere. A mirror image of the more accelerated experience faced by the manufacturing sector. In some areas of development, there’s no doubt that our indigenous software industry thrives and it is no coincidence that the only sector of the UK-owned commercial software industry that is still truly world class is that supporting our financial services industry.
In June, I spoke at the Irish Software Industry’s annual conference, alongside a representative from Israel who pointed out that while Israel was investing over 7% of its GDP in research and development, Ireland was only investing 1.38% below the 2.5% of GDP set by the European Union’s Lisbon Agenda.

Ireland, the largest exporter of software in the world, I warned, has no clear policy to support innovation and its market success is threatened, like that of the UK, by emerging software economies, which have a lower cost of production and greater future capacity to create software.

But Ireland’s present success is arguably a beneficiary of EU generosity and the UK’s complacency and the initiative can and possibly will be snatched away from both countries unless their respective governments grasp the real nature of the challenge now facing European societies. In the UK, our high technology businesses are being held back by over regulation and compliance costs, our workforce is falling behind in the skills needed today, let alone tomorrow and our public services are victims of countless expensive failed transformation projects. None the less, government appears to believe we are doing well in comparison with the wrong countries.

No single nation has a large enough pool of information-literate workers available to sustain the rapid growth in the global networked economy” and BT’s Ben Verwaayen told me last December, “We think we have a system that gets the best out of people and makes them productive. Think again.”

With an inexorable movement in the global balance of economic power and software development from the Atlantic Rim to the Pacific Rim, I’ll be saying a few words on the challenges facing the UK software industry, at the Conservative Party Conference in Blackpool. This is, I would argue, a challenge that lies beyond party politics and one that has to be met and urgently resolved before, like the steady decline in our manufacturing industries, it is too late to act.


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