Nearshore Americas

Offshoring in Emerging Markets Depends on Robust Broadband, says UN

GENEVA (Reuters) – Developing countries risk missing out on the benefits of information technology because of their lack of broadband infrastructure, a U.N. agency said.
Lack of broadband Internet access deprives countries of the possibility of building up offshoring industries, the United Nations Conference on Trade and Development (UNCTAD) said in a report late on Thursday.
It also prevents people from tapping into all the advantages of mobile phones, whose use is exploding in poor countries.
“The narrowing of the digital divide remains a key development challenge,” UNCTAD Deputy Secretary-General Petko Draganov said.
“What is known as the broadband gap for example is becoming a serious handicap for companies in many poor countries,” he told a briefing to launch UNCTAD’s Information Economy Report.
Companies and consumers are 200 times more likely to have access to broadband in developed countries than in the poorest Least Developed Countries (LDCs), the report shows.
And the cost of broadband access varies widely — over $1,300 a month in Burkina Faso, the Central African Republic and Swaziland against less than $13 in Egypt or Tunisia.
Broadband is essential for offshoring industries such as call centers and back offices, which many developing countries in Africa, the Caribbean and Asia want to develop and expand.
Such industries are likely to expand despite the economic crisis because they enable companies in rich countries to cut costs, UNCTAD notes.
Broadband allows consumers to make better use of their mobile phones — rapidly overtaking computers as the information and communications technology (ICT) tool of choice in developing countries.
People in poor countries are using mobile phones for banking, to check markets and monitor the weather — reducing the need for travel and boosting productivity, UNCTAD noted.
As a result mobile phone usage is growing. In Africa there are already 20 times more mobile subscribers than fixed lines, and India added almost 100 million new mobile subscribers in the first seven months of this year, it said.
However, the economic crisis has hit sales of ICT goods such as phones and computers and trade in them declined dramatically last year, according to figures from the top six exporters — China, Singapore, Japan, Hong Kong, United States and Germany.
Exports have recovered this year, especially from China, now by far the biggest ICT goods exporter.
This is part of a continuing shift to dominance of the sector by Asia, which already accounted for more than half of ICT goods exports by 2007, UNCTAD said.
ICT exports are not only growing faster in China than elsewhere, but are also the fastest growing sector in China.

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Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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