Netaş @ Campus …, 2010

SOFTWARE INDUSTRY IN TURKEY
DOĞAN UFUK GÜNEŞ
CHAIRMAN, YASAD
1
Board of Directors
Doğan Ufuk Güneş
Chairman
Korgün Yazılım
Gönül Kamalı
Vice Chairman
Netaş
Zeynep Sarılar
Vice Chairman
Mobilera
Atila Zeybek
Accountant
Model Kurumsal Çözümler
D. Zafer İnkaya
Board Member
Bilin Yazılım
Bülent Erbaş
Board Member
Koç Sistem
Bilgi ve İletişim
Nejat Sağtekin
Board Member
Likom Yazılım
Hayguyi Antikacıoğlu
Board Member
Link Bilgisayar
Sadun Anık
Board Member
Logo Yazılım
2
Agenda
• YASAD – Turkish Software Industry
Association
• Turkish ICT, Telecom and SW Markets
• Why to Invest in Turkey?
• Turkey’s 2023 Vision
3
YASAD - Turkish Software Industry Association
• A non-governmental organization representing the software sector in Turkey
• Established in 1992; celebrating 21st anniversary with 367 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
• 65% of Deloitte Technology Fast50 Turkey software companies
• 45% of Turkish companies in Deloitte Technology Fast500 EMEA
…are
members
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
4
YASAD: As an active leader
Well connected with Ministries
-
Ministry of Transport, Maritime Affairs and
Communications
-
-
Ministry of Economy
-
-
Turkcell, Vodafone and AVEA meetings with YASAD members
Regulations and Incentives for Software 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
-
-
Exporters' Associations – Common projects to increase SW Export with
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 – CO-OP (Cooperative Education) with Bahcesehir Unv.
5
YASAD: The Power in Turkish Software Market
• The largest sector companies with the highest revenues by covering all
sectors are
members…
Source: 2011 Turkey Top 500 ICT Companies Report by Interpromedya
6
Turkish ICT,
Telecom and SW
Markets
7
Turkey: An attractive ICT market
• Huge ICT market growth - 14% CAGR between 2002 and 2010, reaching 20 billion € in
2010 (9th in all Europe and 2nd in Eastern Europe) and estimated 22.3 billion € for 2012*
• 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**
• Broadband Internet: 19.3 million subscribers, increased more than three times in
last four years (6 million subscribers in 2008), which corresponds to almost 50
million Internet users and 67% penetration rate
• Mobile: Total 67.2 million subscribers (40.3 million 3G and 26.9 million 2G) and
90% penetration rate
• Fastest growing ICT companies - 29 of the 500 ICT companies in the EMEA region in
2012 Deloitte Technology Fast500 EMEA Survey
• Others - More than 1.5 M Small and Medium Sized Enterprises who have the capacity
to use IT
Sources: * EITO 2011 European Information Technology Observatory
** Turkish Information and Communication Technologies Authority (ICTA) Q3’12 Annual Report
8
ICT Market in Turkey
Total ICT Market Volume (in Billion €) and Growth
20.93
Rate (%)
19.98
19.15
9.6%
22.30
6.5%
4.7%
4.4%
17.48
9th in all Europe and
2nd in Eastern Europe
* Estimated
ICT Market Volumes of EU25, Turkey, Russia and Switzerland in 2010 (in million €)
•
Market size anticipated to surpass 22.3 billion € in 2012 with 6.5% increase
•
Telecom market is the largest piece, 78.7% in total ICT, 2010
•
Software and IT services are growing rapidly in aligment with overall ICT growth
Source: EITO 2011 European Information Technology Observatory
9
ICT Market in Turkey – IT and Telecom
Total IT Market Volume
Total IT Market Volume – 2012*
Total Telecom Market Volume
Total Telecom Market Volume - 2012*
* Estimated
Source: EITO 2011 European Information Technology Observatory
10
Telecom Market in Turkey
Average: 186
Increase in the number of internet users in Turkey
Compared to EU average**
EU Average
Turkey Usage
7778%
5646%
2069%
168%
245%
1730%
421%
1998-2000
535%
1998-2002
• 7th greatest Telecom Market in
Europe in 2010***
• Rate of Mobile Phone Usage over
than EU Average with the 1st
highest rate*
• Mobile subscribers reached 67.2
million with the 90% penetration
rate in Q3’12****
• Tremendous growth in 3G
subscribers; from 7.1 million to
40.3 million within 3 years****
2922%
632%
1998-2004
757%
1998-2006
833%
1998-2008
1998-2010
• Internet users incread rapidly to
50 million**
• 3rd place at social media
following
–
–
43 million Web users
35 million Facebook users
Sources: *
Wireless Intelligence
** 2011 ITU -- ICT Indicators Database, Eurostat, SocialBakers
*** EITO 2011 European Information Technology Observatory
**** Turkish Information and Communication Technologies Authority (ICTA) Q3’12 Annual Report
11
Turkish Economy - A Rising Star
Foreign Direct Investment Confidence Index 2012*
• Booming Economy - more than tripling its
GDP, reaching 772 B$ in 2011, up from 231
B$ in 2002**
• 18th largest economy in the world and 7th
when compared to the EU Countries in 2011
(IMF, GDP at current prices)
• Stable Economic Growth - an average annual
real GDP growth rate of 5.2 percent over the
last 9 years
• Promising Economy - with a bright future as
it is expected to become the fastest growing
economy among the OECD members during
2011-2017 with an annual average real GDP
growth rate of 6.7 percent (OECD Economic
Outlook No. 86)
• Attractive Economy - fueled by 110 B$ of FDI
in the last 9 years and ranked as the 13th
most attractive FDI destination in 2012 (A.T.
Kearney FDI Confidence Index)
• A Dynamic and Mature Private Sector - with
135 B$ worth of exports and an increase of
275 percent between 2002 and 2011**
Confident, Big, Stable, Promising, Attractive, and Dynamic Economy12
Sources: * A.T. Kearney
** Turkey’s Statistical Yearbook 2011 (TurkStat)
TURKEY’s Position: Fastest growing ICT
companies in the EMEA region
Country Performance Trends in Deloitte Technology Fast500 EMEA Surveys
Order
1
2
3
4
5
Country
France
United Kingdom
Netherlands
Sweden
Norway
Ave.
86.4
80.4
53.4
52.6
49.4
2012
90
74
46
55
52
2011
93
86
53
54
48
2010
94
86
52
65
48
2009
80
87
58
38
50
2008
75
69
58
51
49
6
TURKEY
26.8
29
27
28
30
20
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Germany
Finland
Israel
Republic of Ireland
Poland
Hungary
Czech Republic
Portugal
Belgium
Romania
Denmark
Russia
Slovak Republic
Italy
Rest of Europe
Other
26.4
24.6
22.8
17.6
11.6
7.6
7.0
4.6
4.6
4.0
3.8
3.2
2.2
1.6
24
27
14
20
21
5
4
12
9
4
0
3
1
4
4
2
23
23
18
17
15
2
8
3
7
4
4
4
2
3
5
1
20
22
20
16
6
7
7
6
5
6
3
1
2
1
5
0
32
23
25
18
8
10
5
2
2
4
5
4
3
0
16
0
33
28
37
17
8
14
11
0
0
2
7
4
3
0
14
0
According to Deloitte
Technology Fast500 EMEA
2012 Survey
- 29 companies in Fast500,
two of them in the Top 10:
ELKOTEK, 5th and
TEKTRONIK, 6th
13
Competitiveness in Different Aspects
Labor Market & Management Practices
Infrastructure
Basic Infrastructure
Well
Educated
Engineers
Infrastructure – Technological Infrastructure
Young
Population and
Big Market Size
Doing Business
Technology
Usage High
Doing Business
so Easy
Number of days required
to register a property
Source: IMD World Competitiveness Yearbook 2012, IMD WCY executive survey based on an index from 0 to 10
Turkey has got great investment opportunities
Number of days required
to establish the company
14
Resources in ICT- Highly Qualified
⁻
15,858 graduates from Engineering and Engineering Sciences in 2012*
⁻
Total 274,000 employees working in ICT sector as of Dec 2012**
Availability of Qualified Engineers 2011, 0-10***
Availability of IT Skills 2011, 0-10***
Sources: * Turkey’s Statistical Yearbook 2012 (TurkStat)
** Turkish ICT Report by International Investors Association (YASED)
*** IMD World Competitiveness Yearbook 2011, IMD WCY executive survey based on an index from 0 to 10
15
The Key Comparisons:
Globalization, Flexibility, Adaptability
Great Business Efficiency
Best scores in
• Attitudes toward
Globalization
• Flexibility and
Adaptability
16
Source: IMD World Competitiveness Yearbook 2012, IMD WCY executive survey based on an index from 0 to 10
Productive and Cost-effective Labor Force
Source: EIU, February 2011; Average cost of labor per hour (pay and non-pay costs)
17
Turkey
as Near-Shore Outsourcing Location
Gartner view 2011:
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.
18
Intensity of Computer Use
during Language of Instruction Lessons
Turkey - over
the average
Minutes per week
•
•
Turkey has one of the highest intensity of computer use during language of instruction
lessons, 5th one
Using technology during education is the key aspect in Turkey
Source: OECD, 2011. Notes: OECD average 29 is the average value for the non-OECD participating countries in this survey.
19
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
20
Why to Invest in Turkey?
21
Access to Multiple Markets
22
Why to Invest in Turkey ?
Successful Economy
Population
 18th largest economy in the world and
7th when compared to the EU
Countries in 2011 (IMF)
 The largest youth population when
compared to the EU countries, with
continuous demand for new products
Large Domestic Market
Centrally Located
 50M internet users in 2012, up from 4
million in 2002
 67.2M GSM users in 2012
 54M credit card users in 2012
 131M airline passengers in 2012
 29.3M international tourist arrivals in
2011
 A natural bridge between both EastWest 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
Qualified and Cost-effective
Labor Force
Infrastructure
 New and highly developed
technological infrastructure in
transportation, telecom and energy
 Best in people skills and availability
scores in Eastern European countries
 ~274,000 employees working in ICT
sector
Customs Union with the EU since 1996
 Customs Union with the EU since 1996,
and a total of 22 Free Trade Agreements
(FTAs), 19 in force , 3 pending ratification
and more FTAs underway
 Accession negotiations with the EU since
2005
Liberal and Reformist
Investment Climate
Low Taxes & Incentives
 Tax benefits and incentives in Technology
Development Zones, and Free Zones
 New R&D and Innovation Support Law
 R&D grants from different bodies
 Incentives for strategic investments
 The second biggest reformer23
among
OECD countries in terms of its
restrictions on FDI since 1997
 Business-friendly environment with
average of 6 days to set up a company
(ECD average is more than 12 days)
 Around 30,000 companies with
international capital
Advantages of Turkey –
Jeopolitic, Demographic status and Incentives
• Young Population:
⁻ Average age is 30.1 and 49.9% of population is under age 29
• 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
⁻ 34 TechnoParks, 19 Free Trade Zones, 35 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
⁻ Incentives for ICT Export
• Very Flexible and Enthusiastic Government Approach
24
Structural Reforms - Low Taxes & Incentives





Public Sector Reform
Financial Sector Reform
Social Security Reform
Tax Reform
Enhancing Private Sector’s Role in the Economy
• Opening the Key Markets to Competition, and Regulation by
Independent Agencies
• Improving the Investment Environment
• Accelerated Privatization
• Comprehensive Incentives
 Investment Incentives
 R&D and Innovation Supports
 Incentives for ICT Export
25
Investment Incentives
26
R&D and Innovation Supports
 Supporting Research and Development Activities (Law No: 5746) - Boost local R&D also attracting
R&D sections of global corporations to the Turkey, such as Ericsson, Alcatel Lucent, Huawei, Genband
• Certification as R&D Center – 35 R&D Centers in the context of ICT as of July 2012
• R&D Deductions, Tax and Stamp Duty Exemptions, and Insurance Premium Supports
 Technology Development Zones, TDZs (Law No: 4691) - The development of special investment
areas for investments involving high technology
• 34 TDZs currently operational as of Jan 2013
• Income tax , corporate tax and value added tax exemptions
 R&D fund provided by The Scientific and Technological Research Council of Turkey (TÜBİTAK) –
• 10 National Industry Programs and International Programs (EU Framework Programs, EUREKA,
ERA-NET and EUROSTARS)
• Grants to R&D Projects in the rate of 40%-75%
• 1.5 B$ delivered between 1995 and 2011, 80% of it in 2004-2011
 SME Supports provided by Republic of Turkey Small and Medium Enterprises Development
Organization (KOSGEB)
• Comprehensive scope: Grants from R&D and Innovation to export, training, fair, etc.
 R&D Supprts provided by Republic of Turkey, Ministry of Transport, Maritime Affairs and
Communications - Grants up to 100% and 10 MTL per an R&D Projects
27
Incentives for ICT Export
 Incentives for Service Export - Outsourced SW services by foreign companies to Turkish Companies
• Corporate tax and value added tax exemptions
 Promoting Trade in Foreign Exchange Receiver Services, including ICT sector (2012/4)
• Market Entry Supports – Report, Computer Games, Mobile Phone and Tablet Applications
• International Promotion, Organization (Fair, Convention, etc.) and Search Engine Supports
• Rental Support against International Units
• Certification Support to take international document, certificate and accreditation
• Supports for Trade Commitee and Purchasing Committee
• Consultancy Support
 Improvement of International Competitiveness (URGE) - A Cluster Project with approx. 5 M$ budget
• Training and/or Consultancy, including Requirement Analysis
• Employment
• International Marketing and Purchasing Committee
• Consultancy on the company basis
•
Turquality – The first and only government-backed brandization program in the world
• Aims to develop global Turkish brands - 10 global Turkish brands within 10 years
• Supports in the rate of 50% without upper limit; 127 brands into two programmes
• About 125 M$ financial support as of Nov 2009
• Also offers an opportunity to SW companies: Sell services (ERP, CRM, SCM, etc.) to the
companies in the scope of Turquality when accredited as ICT Consultancy into 3 groups
28
Turkey’s 2023 Vision
29
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
•
Expected Software Export in 2023 = 10 Billion USD
•
Till 2023, yearly increase rates shall be:
•
Total Income
6.7 %
•
Export
12.1 %
•
ICT
13.8 %
30
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
31
Thank you
www.yasad.org.tr
[email protected]
32