SOFTWARE
DEVELOPMENT
The Ecuadorian marketplace has seen rapid changes in exportation and has become a regional center for specialized software development for the financial sector. However, the country needs to improve education and training and promote stable macroeconomic policies before local firms can compete on a global basis.
Exploiting
Niche Markets
Ecuadorian-developed software has achieved high recognition and boasts a clientele of both domestic and international corporations. According to Ernst Hennche, resident of Quito and director of the Fisa Group, which markets banking software to numerous Latin American countries, “There is very good potential here: this is a tremendous chance for this country [Ecuador].” A 1999 report published by Price Waterhouse Coopers in conjunction with the Business Software Alliance (BSA), “Contribution of the Software Industry to Latin American Economies,” reported that multinational corporations are actively seeking to establish relationships with Ecuadorian firms in the financial and natural language software sectors. Ecuadorian firms have sold systems for automatic teller machines to the U.S. Navy and other Latin American Banks. In the trust sector, systems have been established in both Ecuador and Venezuela. The natural language software programs created by Ecuadorian companies have been positioned as the “most comprehensive and advanced” and have been incorporated into several Microsoft products (Corpei, 1999). Overall, firms have been successful at exploiting regional niche markets.
Current
Ecuadorian Software Development Firms
Ecuadorian software development firms export to over 60 financial institutions in 11 Latin American Countries and are establishing themselves in the U.S. market by teaming with NCR and Phoenix International. The Ecuadorian firm, Decision, C.A., created the first electronic signature verification software. The firm Signum developed the Spanish tutorials for the Microsoft 2000 package, while the firm Carrasco & Asociados Consultores has marketed its human resources and financial management software to Bolivia, Panama and Peru and Western European companies, such as Nestle (Switzerland), Ericsson (Sweden) and ABN Amro (Netherlands).
Low cost labor is Ecuador’s comparative advantage in this sector. Universities have released graduates with relative skill in software development. Additionally, Ecuadorian companies have adapted their products and services to mesh with the idiosyncricies of the ever-changing Latin American Market.
Obstacles to Ecuador’s
Penetration into the Global Software Market
Although Ecuador has been successful thus far in positioning itself in the regional software development market, obstacles still remain. The international arena is a hotbed of technological and entrepreneurial activity. Unfortunately, the local universities in Ecuador do not possess the trained faculty to prepare students for cutting-edge development and exportation. Ecuadorian software developers are striving to achieve the ISO 9000 accreditation that is required for international software exportation. Additionally, a common problem found in most Latin American countries is that there are few managers who possess the skills needed to negotiate and manage the exportation process of software applications and services. Volatile inflation rates and bank crises, which have led to a bank lending rate of 16%, have severely limited the abilities for improvement/advancement on the part of the software firms. High costs have prohibited firms from attending international technology forums. Exposure to cutting-edge technology is paramount in maintaining a solid position in the marketplace, therefore Ecuador needs to address macro-environment issues if firms are to become globally competitive.
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