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SOFTWARE INDUSTRY IN TURKEY
DOĞAN UFUK GÜNEŞ CHAIRMAN, YASAD
TURKISH SOFTWARE INDUSTRY ASSOCIATION
YASAD - Turkish Software Industry Association
• A non-governmental organization representing the software sector in Turkey • Established in 1992; celebrating 20th anniversary with 324 members
comprising most of the local software producers, including the leading, the fastest growing and the largest software companies..
• 50% of total software revenues in Turkish market • 75% of software export revenue holders • 70% of Deloitte Technology Fast50 Turkey software companies • 50% of Turkish companies in Deloitte Technology Fast500 EMEA
…are members
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Mision: • To place Turkey in the list of major global players who export software
and related high value-added technological products, and continuously improve its position
• Converting the sector into one of the driving forces of the Turkish economy
YASAD: As an active leader
Well connected with Ministries - Ministry of Transport, Maritime Affairs and Communications
- Turkcell, Vodafone and AVEA meetings with YASAD members - Ministry of Economy
- Regulations for Software Products Export - Ministry of Science, Industry and Technology
- Working on state of art technologies for various ministries as Health, Justice
Well connected with other organizations as - The General Secretariat of Istanbul Mineral and Metals Exporters’
Association - Istanbul Electrical Electronics, Machinery & ICT Exporters' Association – IEEMBIB & TET
- Trade Office of Istanbul - ITO - The Union of Chambers and Commodity Exchange of Turkey – TOBB - Universities – Bahcesehir, COOP
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YASAD: The Power in Turkish Software Market
• The largest sector companies with the highest revenues by covering all sectors are members…
4 Source: 2010 Turkey Top 500 ICT Companies Report by Interpromedya
• Huge ICT market growth - 14% CAGR between 2002 and 2010, reaching USD 28.5 billion in 2010, and exceeded USD 30.5 billion in 2011*
• Increased interest in the ICT sector - Started the necessary studies such as new regulations, initiatives and R&D law
• The young and dynamic population of Turkey - Continuous demand for new products
• Much more ICT users than most of EU countries - Excellent subscriber numbers and penetration rates in mobile sector, internet and broadband - Internet users exceeded 50 million, broadband subscribers increased to around 13 million, and mobile phone subscribers reached 65 million Q2’11
• Fast growing ICT companies - 28 out of out 500 ICT companies in the EMEA region in 2010 Deloitte Technology Fast500 EMEA survey
• Others - More than 1.5 M Small and Medium Sized Enterprises who have the capacity to use IT
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TURKEY: An attractive ICT market
* Source: Interpromedya ICT Market Research Company, 2011
Advantages of TURKEY - Jeopolitic Demographic status and Incentives • Young Population:
⁻ Average age is 28.3 and 47% of population is under age 24 • Strong Communication and Internet Network:
⁻ 50M Internet Users, 4th highest in Europe • Important Jeopolitic Position of Turkey:
⁻ Gateway to the Middle East and Caucasus • Religious, ethnic and commercial relationships in
⁻ Europe, Turkish Republics and Middle East markets • Important Tax Exemptions for Software Developers placed in
⁻ 23 TechnoParks, 19 Free Trade Zones, 63 R&D Centers • Subsidies for R&D Projects and Sales & Marketing of Software Export
⁻ Research and Development Law 5746 boost local R&D also attracting R&D sections of global corporations to the Turkey
• Very Flexible and Enthusiastic Government Approach
Turkey as Near-Shore Outsourcing Location
Key Findings • Turkey is an attractive option for foreign direct investors due to its low cost of living, low
labor rates and relatively low cost of travel to the country. • There is also a relatively short travel time to Turkey from anywhere in Europe. It is therefore
fast emerging as a low-cost destination to handle Pan-European outsourcing work. • The government has plans to work with private organizations to promote IT education in
2011. • The Turkish government has continued consistent investment during the past few years in
information and communication technology (ICT). It also has introduced tax incentives to boost the local IT industry.
• Many Turkish workers speak English as well as the other European languages, German, French and Dutch.
Recommendations • Consider Turkey as an outsourcing destination for its convenient location and
cultural compatibility with many countries. Turkey has made efforts with several countries around the world to boost economic and cultural cooperation.
• Consider Turkey as an outsourcing destination for low-cost software development services.
Gartner view 2011:
Resources in IT- Highly Qualified • Turkey is the best in people skills and availability scores in Eastern European
countries: ⁻ 15,000 graduates from 102 State and 52 Private Universities, 727 private IT Centers ⁻ ~160,000 employees working in IT sector
Source: IMD WORLD COMPETITIVENESS ONLINE 1995-2011 (Updated: Jun 2011)
Availability of Qualified Engineers 2011 Availability of IT Skills 2011
TURKEY’s Position: Fast growing ICT companies in the EMEA region
According to Deloitte Technology Fast500 EMEA 2011 Survey • 27 companies in Fast500, two of them in the Top 10:
• LOGIC, 1st and ELKOTEK, 9th 9
Rank Country Total Companies
1 France 93 2 United Kingdom 86 3 Sweden 54 4 Netherlands 53 5 Norway 48 6 Turkey 27 7 Finland and Germany 23 8 Israel 18 9 Republic of Ireland 17
10 Poland 15 TOTAL (Top 10) 457
Why to Invest in Turkey ?
10
50 m internet users in 2012, up from 4 million in 2002
65 m GSM users in 2011
40 m credit card users in 2011,
7 m airline passengers in 2012,
31.4 m international tourist arrivals in 2011
Large Domestic Market
Tax benefits and incentives in Technology Development Zones, Industrial Zones and Free Zones
New R&D and Innovation Support Law
Low Taxes & Incentives
Customs Union with the EU since 1996, and a total of 12 free trade agreements (FTA), 11 more FTAs underway
Accession negotiations with the EU since 2005
Customs Union with the EU since 1996
17th largest economy in the world and 7th when compared to the EU Countries in 2010 (IMF)
Successful Economy
Best in people skills and availability scores in Eastern European countries
~160,000 employees working in IT sector
Qualified and Cost-effective Labor Force
A natural bridge between both East-West and North-South axes, hence creating an efficient and cost effective outlet to major markets having 1.5 billion customers, worth USD 25 trillion of GDP
Centrally Located
The largest youth population when compared to the EU countries, with continuous demand for new products
Population
• Very Flexible and Enthusiastic Government Approach
Liberal and Reformist Investment Climate
Why I have chosen Turkey?
Hans-Joachim Otto, Parliamentary State Secretary in the Federal Ministry of Economics and Technology (BMWi) , during Cebit 2011
Dr. Joachim Behrendt, co-founder of Nexum Bogazici (Turkish software company), from his experience in Turkey
Turkey is a very dynamic country. It is an Europe's gateway to the Middle East. Turkey has incredible
growth figures. Turkey is the Germany's most important trade partner. For us, Turkey is more
important than China and Russia .
Turkish young people receive a good education, especially in the field of engineering. Language does not cause the problem. They can easily establish a dialogue with customers.
• Market size anticipated to surpass more than $32 billion in 2012 with 6.2% increase • Telecom market is the largest piece, 73% in total ICT, 2011 • Software and IT services are growing rapidly in aligment with overall ICT growth
ICT Market in Turkey
*Estimation Source: Interpromedya ICT Market Research Company, 2011 12
Telecom Market in Turkey
0
50
100
150
200
250
300
MoU
(Min
utes
)
Rate of Mobile Phone Usage against EU Average
189 261 279
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• Rate of Mobile Phone Usage over than EU Average with2nd highest rate
• Mobile subscribers reached 63.8 million with the 87% penetration rate in Q2’11
• Tremendous growth in 3G subscribers; up to 28.6 million within 3 years
• Internet users incread rapidly to 50 million
• 3rd place at social media following
– 43 million Web users – 35 million Facebook users
245% 421% 535% 632% 757% 833% 168% 1730%
2069% 2922%
5646%
7778%
1998-2000 1998-2002 1998-2004 1998-2006 1998-2008 1998-2010
Increase in the number of internet users in Turkey Compared to EU average
EU Average Turkey Usage
Sources: ICTA, 2011 ITU -- ICT Indicators Database, Eurostat, SocialBakers, Turkish Telecom 2010 Annual Report, Information and Communication Technologies Authority (BTK)
Hardware 44%
IT Services
33%
Software 23%
IT Market - 2012*
IT Market in Turkey – Hardware, Software, Service
7,0 7,5
8,2 8,7
2,9 3,3 3,6 3,8
2,5 2,5 2,8 2,9
1,6 1,7 1,8 2
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
10,0
2009 2010 2011 2012*
Total IT Hardware IT Services Software
Total IT Market Volume (in Billion $) - Hardware, Software, Service
*Estimation
Source: Interpromedya Informatics * ICT Market Research Company, 2011 14
Turkey IT Market: Software is the rising star
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Distribution of Software Companies in Sectors %
• The percentage of Software companies on Public Charitable Fun and Manufacturing & Automation reaching the half
• Telecom, Electric & Electronics
Products and Finance & Insurance&Account increasing
• Booming software sectors in
Textile, Education, Defense, Health, Tourism
Turkey’s Software Export
• As a Gateway to its region; exporting more than 70 countries • Germany and USA are the leading export countries • Great ICT export opportunities within inner-circle neighborhood: EU, North
Africa, Middle-East, Caucasus, Turkish Republics
Germany 12%
USA 11.9%
UAE 8.5%
Libya 7.6%
England 7.4%
Azerbaijani-Nakhcevan
5.7% Switzerland
4%
Others 42%
Turkish Software Export by Regions
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Turkey initiates huge ICT projects • E-Learning/Teaching/School Mobile Information System
– FATIH - Education system with tablet and interactive boards • 15 million tablets to be bought and Completely digitalized content
– Intel Teach&Learn Programs for Teachers and Students respectively – Cisco Networking Academy Project, Microsoft Innovate Teaching Program – WEB Based Educational Content Development Project and Dyned Language Project
• GEN6 - Governments ENabled with IPv6 - IPv6 upgrade of e-Government Network Infrastructures, e-Identification, Services and Applications (Germany, Spain, Netherlands and Turkey)
• PARDUS - National Operating System
• Satellite - First National Communications Satellite: TURKSAT 5A
• Automotive - A local car brand – A consortium to be built to implement a local car brand in Turkey
• Healthcare - A medicine tracking system – First version launched with a 2D barcode system, Second to track each medicine box on its way
• Defense - Developing a local defense vehicle – First version delivered and exported to Malaysia , Second version is on its way 17
ICT in Turkey – Target 2023
• In the top 10 economies of the world in 2023
• Economic size = 1,700 Billion USD
• ICT share = 160 Billion USD
• Export = 500 Billion USD
• Preferred sectors = Software, Optics, Bio-Technology, Nano-Technology • In 2010 export of SW, HW and Service = 730 MUSD
• In 2023, target is 5 Billion USD, 16% rate
• Expected ICT Export in 2023 = 15 Billion USD
• Till 2023, yearly increase rates shall be:
• Total Income 6.7 %
• Export 12.1 %
• ICT 13.8 % 18
ICT in Turkey – Target 2023
• Reaching 30 million broadband subscribers • Supplying 50 percent of the ICT sector with domestic
products and services • Reaching 8 percent of GDP as the ICT sector’s share • Becoming one of the top 10 countries in e-
transformation • Providing all public services electronically by 2019 • Having 80 percent of population computer literate
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