ANALYSIS: IT STRENGTHS & WEAKNESSES

Moving Forward

Ecuador is a nation moving to the next level in participating in the global IT market. However, significant advancements must be made in order to achieve recognition as a serious contender in the export market or as a desirable location for investment. Currently, Ecuador has several Web portal sites being used as intermediaries between the markets of the United States and the European Union and Ecuador’s small-to-medium size enterprises. Additionally, there is a relatively large contingent of software developers and e-business solution providers that work in partnership (based either in the US or EU) enabling firms to create e-commerce solutions for Ecuadorian corporations. Although the government has passed legislation facilitating the privatization of the telecommunications sector and established relationships with prominent international organizations, such as the ICC, OECD, ALADI and the Andean Community, infrastructure and accessibility issues remain as obstacles in achieving an Internet-ready marketplace.

Strengths

Ecuador possesses several strong points which could prove valuable for future foreign investors. The IT education system is improving rapidly and supplies the economy with software developers. The economy is currently recovering from high inflation rates and is witnessing a boom in oil production as well as banana exports, thus enabling the private sector to invest in more Internet and global trade activities. Additionally, Ecuador claims membership to the ‘developing country’ category, thus making it a prime target for future privatization of its public sectors as well as permitting market access to its foreign counterparts.

Weaknesses

Ecuador also possesses several weak points that hinder its progress in telecommunication and e-business development. Although there is a high matriculation rate from the technological institutes, these developers are unskilled in cutting-edge processes and technological developments. Ecuador lacks the ISO9000 certification, which is required by all software, hardware and technological firms to conduct business in the international marketplace. The private sector’s inabilities to send executives abroad due to high costs also hinder development. Therefore these developers are unable to learn from other players in this field.

Ecuador suffers from a poor infrastructure with a low-density installation of telephone lines thus making the penetration rate for Internet access extremely low. Additionally, the private sector has yet to establish a platform for conducting transactions and installing payment mechanisms. Obviously, this makes participating in the global e-business arena problematic. Currently, Shigras.com is the only existing B2C site with transaction capabilities. Shigras.com has collaborated with VeriSign (United States) and Mercado Libre (Argentina) to trade products. Additional B2C and B2B sites exist, but transactions must be conducted via the telephone, as a transaction platform has yet to be created.

Conclusion

Ecuador is on the right track for positioning itself to enter the e-business marketplace. Yet, the private sector, as well as consumers would greatly benefit from a relationship between the country and telecom companies with infrastructure development expertise. A knowledge transfer between these kinds of companies would enable Ecuadorian businesses to grow and reap the benefits of new skills and innovative technology, while permitting market access to international companies. Additionally, a knowledge transfer process allows for reinvestment into the country. This differs from the traditional method of borrowing money from an international lending institution, such as the IDB, IMF or World Bank, which reinforces the borrower’s continuing dependence upon the lender. Ecuador must recognize its limitations and emphasize its strengths if it is to find a regional or global niche in the IT sector.

This report was completed in December 2000 for the class Impacts of National Information Technology Environments on Business given by Professor Erran Carmel in the program of Management of Global Information Technology at the Kogod School of Business in Washington DC