Factors for the creation of an IT-related export industry [checklist for trade commissioners, industry associations, and chambers of commerce]

The success of any export-oriented industry depends on several factors, including the availability of skilled resources, robust linkages with global trade and investment flows, access to capital, and favorable tax incentives. In addition, the cultural alignment between the country of origin and the target market is another important consideration. Compliance with legal and statutory requirements in both countries is also critical for ensuring business continuity. Finally, the quality of life in the country of origin must be sufficiently high to attract and retain talent.

• Skilled resources

As the world increasingly moves online, the demand for IT skilled resources is higher than ever before. The talent shortage is having a knock-on effect on businesses, with many struggling to fill even entry-level positions. The situation is also causing wages to rise, as employers compete for the limited pool of talent.

To meet this demand, talent must be traded and investment must be made. One way to address the talent shortage is to encourage more people to enter the IT field. This can be done through initiatives such as trade schools and apprenticeships, talent-based visa programs, tax breaks, and investment opportunities in the IT sector. In addition, the government can provide incentives for businesses to invest in training and development programs.

Another solution is to encourage businesses to sour their talent from other countries. This so-called “nearshoring” can help to fill skills gaps. However, this trend is not without its challenges. First, there is the risk of souring relations with domestic workers who feel they are being passed over for jobs that they are equally qualified for. Second, there is the risk that nearshoring talent may be less effective than onshore talent in meeting a company’s specific needs. Despite these challenges, the trend toward hiring IT expatriates looks set to continue.

• Linkages

IT linkages are trade and investment between IT firms and other industries. As the IT industry has grown, so too has the number of IT linkages. The majority of these linkages are with trade (digital nomad villages, technological parks, and associations) and investment-oriented firms, but there is also a significant number with government and industry bodies. The most important drivers of IT linkages are the search for new markets, the need for new technology, and the desire to reduce costs. However, there are also a number of risks associated with IT linkages, including the potential for souring relationships and the country ratings downgrades that can result from nearshoring or outsourcing decisions.

Mitacs is a Canadian nonprofit national research organization that, in partnerships with Canadian academia, private industry, and government, operates research and training programs in fields related to industrial and social innovation. Beyond that Mitacs provides funding.

• Capital

In most cases, financing for IT companies comes from family, friends, and external sources like banks and microfinance institutions. The challenge with this financing model is that it’s often difficult to get access to financing when you need it most – during the early stages of your company’s growth. This is where government programs and incentives can play a role. By partnering with government agencies, companies can access funding that would otherwise be unavailable. Also by providing financing or investment early on, these programs can help IT companies get the capital they need to grow and succeed.

• Tax incentives

As the information technology industry is constantly evolving, and businesses must continually invest in new hardware and software to stay competitive. Unfortunately, the high cost of these investments can be a barrier to entry for many small businesses. However, the government can offer a number of tax incentives that can help offset the cost of financing these investments. The most notable of these programs is the research and development tax credit, which offers a credit of up to 20% of eligible expenses. Other incentives include the accelerated cost recovery system and the investment tax credit. These programs can provide critical financing for businesses that are looking to enter the IT industry or expand their existing operations. For example, the Canadian government’s Scientific Research and Experimental Development Tax Incentive Program offers tax breaks to businesses engaged in research and development activities.

Such programs can play a role in attracting financing and investment to the IT industry. However, tax incentives must be carefully designed and administered in order to be effective. Otherwise, they can result in windfall profits for companies and may fail to generate the desired economic benefits.

• Compliance with legal and statutory requirements

The IT industry is subject to a variety of trade and export regulations. Compliance with these regulations can be complex and time-consuming. To ensure compliance, many IT companies have teams of specialists who work to keep up with the latest legal and statutory requirements. In addition, many IT companies have programs in place to best practices for compliance. By staying up-to-date on the latest compliance requirements and implementing best practices, IT companies can help ensure that they are able to trade and export freely. Governments, on their side, play important role in the unification of such legal and statutory requirements across nations and regional trade unions.

• Culture alignment

Culture alignment has always been a challenge for the IT industry. On the one hand, trade and export rely heavily on teamwork and sharing of best practices. On the other hand, programs and standards often need to be customized to fit local needs and preferences. As a result, many IT companies have struggled to find the right balance between global and local operations. In recent years, however, there has been a shift towards more culture-aligned IT practices. This has been driven by a number of factors, including the rise of remote working, the increasing importance of customer experience, and the need for greater agility in an ever-changing market.

When trade barriers are removed, the cultural alignment allows for the free flow of ideas and products between countries. This results in a more efficient and effective IT industry.

• Business continuity

Business continuity is the term used to describe an organization’s ability to keep functioning during or after an interruption. Production supply chain, trade, export, and other aspects of the IT industry can be disrupted by a variety of events, including natural disasters, power outages, cyber-attacks, and even simple equipment failures. To minimize the impact of these disruptions, businesses must have well-developed continuity plans in place. These plans should address everything from how to keep critical systems up and running to how to communicate with customers and employees during an interruption. By following best practices and preparing for the worst, businesses can ensure that they are able to weather any storm.

Most businesses do have some form of business continuity plan (BCP) in place, but the effectiveness of these plans varies greatly. In many cases, the BCP fails to adequately address the specific risks faced by the organization or does not take into account changes in technology or processes. As a result, businesses often find themselves ill-prepared when an interruption does occur.

There are a number of steps that businesses can take to improve their business continuity plans. One is to conduct a business impact analysis (BIA) to identify which functions are critical to the organization and what would happen if they were disrupted. Another is to develop a recovery plan that outlines how the organization will recover from an interruption. The recovery plan should be tested on a regular basis to ensure that it is still effective.

Finally, businesses should consider seeking government support to help with the costs of business continuity planning and implementation. In many countries, there are programs available that can help offset their costs.

• Quality of life

Many factors influence a company’s decision about where to locate its sales and operations. In the IT industry, two important considerations are the quality of life for employees and the investment attraction of the local economy. While it is important for sales and operations to be centrally located, companies also want to be in an environment that attracts and retains top talent. A vibrant community with good schools, parks, and cultural amenities can be a deciding factor when companies are considering locations. Additionally, a supportive business environment with incentives and programs to foster technology transfer and attract investment can tip the scales in favor of one location over another. Ultimately, a combination of factors must be considered when making these decisions, but the quality of life and investment attraction are often key deciding factors in the IT industry.

All of the brought above factors must come together for an export-oriented industry to be successful and IT related sector is no exception.

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