Overview

Partnerships: Since Latvian companies active in the IT sector are relatively small and lack such critical resources as capital and marketing channels to Western markets, these companies are actively seeking foreign partners to assist in offering IT services.  The growth of the IT sector has also been stimulated by the cooperation of Latvian companies with Western clients.

Telecommunications:  At present Lattelekom has the monopoly for fixed line telecommunications. The government intends to liberalize the telecommunications market by 2003 which will bring competition and better quality services.  Presently, there is free competition in data communications services in Latvia.  Several companies operate in this area and provide both fixed line and wireless data communications solutions. The larger companies are using data communication services extensively. Special service packages are being offered for small and medium size enterprises.  Well-developed telecommunications reduce the need for offices and in several industries the employees can do much of the work being at home with real-time network connections.

Specific Class Project Scenarios To Be Discussed (see underlined headings)

Building a Sales Office Scenario:  As decision-makers in a non-IT-related business and after having analyzed the IT infrastructure and its future development in Latvia, we recommend that our company move forward in building a sales office in Riga.  However, the sales center should start out small and progress on a tiered growth plan that can take advantage of the IT and telecommunications progress that will be made as the country matures in these industries.

By creating a presence in this growing region, a company can take advantage in building an infrastructure for the formation of additional business units with future growth in mind.  Building a sales center will necessitate a solid telecommunications infrastructure for which the telecommunications industry in the country can support.  Telecommunications costs are cost effective and labor costs are low.

The following points support this decision:

• Low cost telemarketing workforce
• Educated workforce with solid foreign language skills
• Average salary for a sales call center representative is 1/4th the cost compared to other European nations
• High quality cost effective telecommunications infrastructure
• Experience in creating and managing call centers

Regional Distribution & Manufacturing Centers Scenario:  In accordance with the above recommendation, it would not be adviseable to build a regional distribution center at this point in time due to the lack of skilled IT labor in the region.  It would be in the best interest of the country and foreign investors to invest heavily in IT related skills because the citizens of the country are literate and well educated.  Therefore, creating traditional manufacturing jobs would be counter-productive to effectively utilizing the Latvian workforce.  Additionally, distribution and manufacturing centers require a high level of networking and assembly line operations for which Latvia cannot currently support.

Conclusion

The quality of the IT professionals currently employed in the industry is certainly good and getting better.  If given the opportunity to hire these professionals, the cost would be competitive.  In an effort to grow the people of Latvia buying power, education and investment must be increased among the citizens of the country.  A great deal more must be accomplished to expand the qualified IT professional pool and ultimately expand economic growth in sales, manufacturing, and distribution business units.

Privatization and deregulation, as mentioned in the telecommunications industry, will certainly bolster competition and growth.  Additionally, by continuing to educate the Latvian workforce will bring foreign investment and business from the West ultimately increasing the living standard of the people of Latvia.  As the living standards and buying power increases, the impact on technology will be realized at the household level with more and more consumers purchasing information technology tools (hardware and software and Internet services).  This will ultimately increase the investment in e-commerce related businesses ultimately bringing into the e-business fold.  Government's role is integral in the development of this process and ultimate success of the country however, it is critical that the private sector play a larger role in the investment of this resourceful and up and coming country.
 

Telecommunications	Privatization and Deregulation	Internet Activity	Electronic Commerce
Hardware Manufacturing	Software Development	IT Usage	IT Labor Market
IT Geographics	IT Financing	Government Policies	Legal Environment
IT Strengths and Weaknesses	Impact on Business	Sources and Links	About the Authors

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