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IT in Korea

Software Development

Software Industry
With the support and an increase level of consciousness of the importance of information by Korean government , software industry is growing rapidly. Even though Korea has a world-class hardware manufacturing industry, the software industry is not strong as hardware manufacturing industry.   Korea has about 1,600 software companies [44] ,and software and computer related industry generated 38,273,000,000,000 won (with an exchange rate 1USD= 1,200 won, $3,189,416.666.67 ) in 1997. Within the software industry, computing services sector has been keeping a rapid growth. The growth was the result of government support and local demand. Many Korean firms have computerized their management systems, such as office automation, online production control, and communication network.

Table 1. Number of Businesses in Software Industry [45].

Classification 1992 1992 1994 1995 1996 1997

Package Software 467 527 511 943 958 774

Computing Services 108 48 157 508 544 712

Database Services - - - - 23 94

Data Searching Services - - - - 31 13

Total 575 675 668 1,451 1,556 1,593

Source: KAIT

Table 2. Revenues of Software industry [46]. (100 million won)

Classification 1992 1993 1994 1995 1996 1997

Package Software 3,314 4,676 5,310 7,276 9,877 12,606

Computing Services N/S N/S N/S 9,183 16,419 27,058

Database Services 388 455 501 273 292 486

Data Searching Services - - - 20 108 122

Total 3,702 5,131 5,811 16,752 26,696 40,272

Source: KAIT

Table 3. Package Software Sales [47]

Unit 1997 1996 1995 1994 1993

Total Sales 100 million won 16,336.3 12,624.3 9,723.2 5,496.8 5,082.3

Increase Rate % 29.4 29.8 76.9 8.2 47.2

System Software 100 million won 2,827.2 2,369.7 2,726.9 1,204.6 1,076.0

Development Software 100 million won 2,373.2 1,353.2 1,206.9 770.0 584.4

Allocation Software 100 million won 11,135.9 8,901.4 5,789.5 3,522.2 3,422.0

Source: National Statistical Office

          Software Export and Import Status

In 1992, the Korean software industry exported only $20 million while importing $38 million in software and software related products. However, Korean software companies have been trying to merge into international market, developing marketing strategy, and interacting with other international software firms. As a result, $51.4 million ( 2 times larger than in 1996) in software was exported in 1997.

Table 4. Software Export [48]

Classification 1997 1996 1995 1994 1993

Package Software $9.6million $9.5million $15.2million $16.4million $20.3million

Computer related Service $41.8million $11.9million $1.5million - -

Database Service - - - - -

Total $51.4million $21.4million $16.7million $16.4million $20.3million

Source: KAIT

Table 5. Software Import. [49]

Classification 1997 1996 1995 1994 1993

Package Software $404.4million $341.4million $317.3million $39.6million $70.9million

Computer related service $3.8million $6.7million $5.8milion - -

Database Service $0.1million $1.6million - - -

Total $408.3million $349.9million $323.1million $39.6million $70.9million

Source: KAIT

Condition of Technical Experts in software Industry

Korea Software Industry Association (KOSA) provides the number of technical experts in software industry and distribution of technical experts. According to the KOSA, there ware a 65.2% increase in the number of technical experts in 1996 and 18.3% increase in 1997.

Table 6. Yearly Summary of Technical Experts in Software Industry. [50]

Classification 1994 1995 1996 1997 Percentage Increase in 1995 Percentage Increase in 1996 Percentage Increase in 1997

Number of Technical Experts 20,916 24,658 40,736 48,175 17.9% 65.2% 18.3%

Source: Korea Software Industry Association.

Table 7. Distribution of Technical Experts. [51]

Classification Number of Technical Experts in 1996 Percentage Number of Technical Experts in 1997 Percentage Percentage Increase in 1997

Superior Technical Expert 3,836 9.4% 4,510 9.4% 17.6%

High-Class Technical Expert 6,157 15.1% 7,265 15.1% 18.0%

Mid-Class Technical Expert 11,250 27.6% 13,634 28.3% 21.2%

Below the Mid-Class Technical Expert 19,493 47.9% 22,766 47.2% 16.8%

Total 40,736 100.0% 48,175 100.0% 18.3%

Source: Korea Software Industry Association.

Software Piracy in Korea.
The software piracy rate in Korea fell from 75% in 1994 to 64% in 1998, according to the Business Software Alliance(BSA).[9] The piracy rate in Korea is higher than that of developed countries, such as the United States, Japan, and U.K., and lower than China, and Taiwan. The piracy rate in Korea is falling more quickly than elsewhere in the Asia and Pacific regions. However, Korea continues to struggle with the problem of controlling software piracy.

        Table 8. Piracy rates [52]

Country 1994 1995 1996 1997 1998

Korea 75% 76% 70% 67% 64%

U.K. 42% 38% 34% 31% 29%

U.S. 31% 26% 27% 27% 25%

Japan 66% 55% 41% 32% 31%

Taiwan 72% 70% 66% 63% 50%

Singapore 61% 53% 59% 56% 52%

China 97% 96% 96% 96% 95%

Total World 49% 46% 43% 40% 38%

Source: Business Software Alliance (BSA)

This report was completed in December 1999 for the class
Impacts of National Information Technology Environments on Business taught in the program of the MOGIT (Management of Global Information Technology) at the Kogod School of Business at American University in Washington, D.C.