UN gives nod to open source software

On the eve of the first World Summit on the Information Society (WSIS), the United Nations (UN) has issued its third E-Commerce and Development Report, which focuses on information and communications technologies (ICT).

Media have focused on the report’s observations on offshore outsourcing. However, there are other interesting bits in the report.

For instance, the report gives a positive nod to open source software:

This development [free and open source software (FOSS)] challenges preconceptions about how software should be produced and distributed and has important development implications….

it allows collaborative development in software production, easier integration with other programmes that can be produced by independent programmers, and customization of software to meet the commercial, regulatory, cultural and linguistic requirements of users…

Experience so far has shown that open-source environments often produce reliable, secure and upgradable software at a comparably low cost to users….

The use of FOSS can have an anti-monopolistic effect on the IT market and industry in a country and globally….

To take advantage of these benefits, the report recommends that developing countries consider adopting FOSS as a means of bridging the digital divide.

Offshore outsourcing
The report refers to this practice as business process outsourcing (BPO) and says that these services are available in “finance, insurance, health care, human resources, mortgage, credit cards, asset management, customer care and sales and marketing.”

Read the report for a history of outsourcing; it notes that offshore outsourcing began in the early 1990s, with Indian programmers porting software to different operating systems.

The total value of BPO is projected at $300 to $585 billion within two years. While these numbers sound huge, they are one-third to one-half of the total e-commerce volume for 2001; e-commerce is less than 2% of all retail sales. In other words, it’s small change in the total market for business services.

However, the impact on jobs is real. The report quotes a Forrester Research estimate that offshore outsourcing will displace 3.3 million US workers by 2015; most of these jobs are expected to go to India.

Forbes reports that the US businesses have already cut 3 million jobs since 2001; others state that 750,000 high-tech jobs have been lost (13%) in the past two years.

Trying to decipher employment statistics almost requires a college degree; data at the Bureau of Labor Statistics (BLS) give credence to the cliche about lying with statistics.

BLS data: In October 2000, there were 132,445,000 non-farm jobs (seasonally adjusted); in October 2003, that number was 130,198,000.

Without a doubt, the current administration is on track to join Hoover, who has the dubious distinction of being the only (until now) administration to preside over a net job loss during the course of a presidency. Slate columnist Daniel Gross also notes that “[s]ince 1900, the only incumbent Republican presidents to lose second-term bids have been named Hoover and Bush.”

Innovative marketing
An intriguing opportunity is to use the technology to market third-world country agricultural exports; the report examines tea and coffee. Brazil, Guatemala, Kenya, and Nicaragua currently have annual online auctions for coffee, and India has launched services for marketing tea.

Agricultural markets, in general, are marked by heterogenous products (ease of substitution) as well as an imperfect ratio of sellers (farmers) to buyers (conglomerates like Cargill). If technology can shift the market to a structure more like “perfect competition” … theoretically third world countries would reap more dollars for their agricultural goods.

Other interesting points

• Slightly less than 10% of the world’s population had access to the Internet in 2002. (What digital divide, right?)
• In 2002, 51% of those using the Net in the US and Canada were female; that number drops to 43% in the UK, 41% in Japan, 39% in China, and 35% in Indonesia.
• In 2002, there were 591 million Internet users worldwide, reflecting an annual growth rate of 20% (trend is slowing); 32% lived in developing countries and only 29% lived in North America.
• E-commerce has its strongest hold in Nordic countries, the United Kingdom (UK), and the United States (US), where 38% had made online purchases. The e-commerce share of the retail dollar remains tiny; it was only 1.5% in the US and European Union (EU).
• From 2001 to 2002, online sales in the US increased 25.64%; at the same time, overall retail sales increased only 2.9%, suggesting that confidence in the medium continues to grow. Where are the sales? Data suggest 32% of software, 17% of tickets to events, and 12% of books sold in the US were sold online.
• The report suggests that dot-com death notices were premature; at the end of 2002, 40% of surviving dot-coms and 70% of US online retailers were profitable.
• In the US, investment in information technology in 2002 fell by 6.2%; however, investment in e-business budgets increased 11%.

Worth downloading
The report contains a wealth of data; authors have compiled statistics from a variety of sources to create this comprehensive, 228-page report. Download the PDF and reach your own conclusions.

Links: BBC; Business Report (South Africa); cNet; Financial Times; Internet Magazine (UK)