The Korean government is encouraging software exports and providing support to the software industry so that the industry can secure its international competitiveness. However, software exports are said to be on the decline.
According to a report on import and export trends in the ICT industry published by the Ministry of Science, ICT and Future Planning on June 17, exports of software (content included) from Jan. to May this year reached US$900 million (100.7 billion won), a 15.5 percent year-on-year reduction. Outbound shipments of software amounted to US$18 million (20.1 billion won) each month.
If this trend continues, this year's software exports are expected to total US$2.16 trillion (241.4 billion won). The estimated number is down 19.7 percent from the US$2.69 trillion of 2014. In general, software exports are on the rise in the latter half of the year. Nonetheless, this year is likely to see a year-on-year decrease in software exports due to a reduction in exports between Jan. to May.
Since the report on ICT imports and exports is based on data compiled by the Korea Customs Service, the weight of cloud licenses or mobile applications is excluded. The actual amount of exports could be higher than that compiled in the report, but apparently there isn't a big difference between the real and estimated amount. It is due to the fact that cloud and mobile apps comprise a small proportion of the nation's software exports.
In fact, the software industry expected that this year's exports will shrink to some degree compared to 2014. The reason lies in the trend that a global software environment is reorganized toward a cloud and mobile-oriented one. Hence, the weight of packaged software is further decreasing.
According to market research firm IDC, in the global software market worth US$1 trillion per year, the cloud industry is predicted to grow an average of 23.6 percent each year by 2017, more than five times bigger than the average growth rate of software. As the share of the cloud in the software market is increasing, multinational companies like Google, Microsoft, and Oracle are sharpening their competitiveness in the cloud through active M&A deals. However, software companies in the country are still doing packaged software-centered business.
As a result, experts are pointing out that the current business structure should be reorganized toward a cloud or mobile-based one.