2013 December, Data Mining Concept to measuring performance of Palestinian IT Company in ICT world

Challenges and Future Outlook of the ICT of

software In Palestine under cover of Inflation Informatics

Jamil S. Alagha (Author)

Dept. of Information Technology, Faculty of Postgraduate (Master)

Islamic University

Gaza, Palestine

Introduction

Despite concurrence on specific components in the

1995 Oslo Interim Agreement addressing general

telecommunication issues including the allocation of

telecom frequencies, development pertaining to Area C and the import of equipment in the West

Bank and Gaza (WBG), Telecommunication

operators, Internet Service Providers, and ICT companies

continue to have difficulty acquiring needed frequencies

for existing and potential wireless networks, building

telecom networks in Area C and importing needed

equipment. New restrictions have been imposed by the

Israelis, due to unclear restrictions and policies, including

the refusal to release frequencies needed for the

development of existing mobile networks and the

development of new advanced wireless and mobile networks.[1][2]

In an emerging country with a promising economy

like Palestine, broadband internet connectivity is

becoming an imperative step towards the development of

the ICT sector. Mobile and wireless internet technology

is currently available in WBG. 85% of the population

own mobile phones, and internet penetration per capita in

Palestine is at 7%, which is comparable to that of countries such as Egypt, Syria, Algeria and Tunisia.‎3]

Most recently, Jawwal started to offer internet and

data service through its network, however, the system

still relies on GSM[4] and EDGE[5] technology that is

known for low internet speed in comparison to the more

recent 3G[6] technology. It is crucial to provide wireless

broadband at cost effective rates to consumers while

taking into consideration the Palestinian socio-economic

conditions. Competitive internet connectivity will drive

the prices down to become more affordable, and

providers will be forced to provide better quality of

service. However the development of this sector is

dependent on coordination between the Palestinian and the Israeli sides, as per the Oslo Agreement. [7][11]

Industries Palestine’s software and information

technology services industry is small, fragmented and mostly inward-oriented.

Compared to many other countries, the

Software and Information Technology

Services industry in Palestine is at the very early stages of development.

At present, there are handful companies

primarily engaged in software, Internet web

site and content development and related

services; of these, perhaps only two or three may be considered software developers.

The industry is predominantly selling to the

domestic market and export sales are low.

Most of companies were established based on

developing an idea was 62.1%.

The companies said that political

circumstances are the most difficult

conditions that they encountered at the

beginning of the company's establishment

75.9 %, then followed by the lack of capital,

where the percentage of companies that have faced a lack of sufficient capital are 27.6%

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Business Outsourcing Despite the successes of some ICT companies in the

outsourcing business, there remain several challenges

that prevent the growth of this industry and the

Palestinian firm’s ability to secure outsourcing contracts.

The “Assessment of the Outsourcing Capabilities of the

Palestinian ICT Industry” [8] outlined several challenges that include the following: [9]

International perceptions – Global news media

portrays an image of Palestine that is not conducive for

business. When dealing with this perception, Palestinian

companies must surpass it to win business outside of the

country.

Security of data and concerns about having

important information physically located in the area.

Security of supply, relating to ensuring the

people are able to get to work and that the

networks are robust enough to ensure high

levels of resilience and up time.

The face to face communication challenges

caused by the ongoing security restrictions between Palestine and Israel.

Marketing/business development – The

ability of companies to express their unique

value proposition to a defined customer

profile is sorely lacking throughout Palestine.

At present almost all of the organizations and

individuals assessed do not have the

knowledge or experience at present to

implement a successful regional or global business development program.

Travel impediments – inward and outward –

The Palestinian people have significant

challenges in traveling across cities, into

Israel, and internationally. These delays in

time and in getting supplies hurt the ability to

do business efficiently. Additionally, the

international perceptions of personal risk and

lack of attractiveness for Western visitors

decreases the ability for Palestinian

companies to develop strong relationships with clients.

Scalability of the labor pool – From several

estimates the total number of IT graduates that

emerge annually from Palestinian universities is

around 2000. This is in stark contrast with the

well over 100,000 graduates from Indian

universities. The lack of mass supply will

limit the ability of Palestine to grow into a

global IT outsourcing player.

Marketing Channels Lack of trust to buy Palestinian products

o No proper sector branding

o No industry certification exist for the

back office development and support

operations

Palestine is not well positioned in the global

market

There is no clear understanding of marketing

and sales concepts

The disconnect that exists between the ICT

suppliers and prospective beneficiaries and

customers.[12]

Future Outlook of the ICT Sector The analysis of the future outlook for the ICT sector

will focus on the overall economic performance in

general and its impact on growth in the sector.

Furthermore, it will assess the ability of the sector to

grow and expand in the global market. The analysis will

also take into consideration the growth of the Jordanian

ICT sector in an economy that resembles that of Palestine.

1. Contribution to GDP In a previous section on economic indicators, it

was shown how ICT has a positive growth in

response to new investments in the sector and the

increased internet penetration. In the early years of

the Intifada, the ICT Value Added growth rate was

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negative. However, in the 2 years after, it

increased significantly with over 25% growth in 2003

and over 50% in 2004. During the year 2005, ICT value

added declined mainly due to the decline in overall

economic activities. In the following 2 years, ICT value

added increased by more than 10% and declined

slightly in 2008 compared to previous growth rates.

The increase in these two years could be due to the

introduction of the ADSL services in mid-2005.

Despite the decline in 2008 that could be attributed to the

closure imposed on the Gaza Strip which led to

overall economic decline combined with the prohibition

of import.

In its future outlook report, the PCBS projected a

decline in the overall economic activities and GDP by

3.1% if the current situation of economic embargo and

restrictions continue to be imposed on the Gaza Strip

during 2009. However, if the restrictions and

embargo is lifted combined with the

reconstruction of Gaza and increased number of workers

employed in Israel, there will be a GDP growth of about 3.2%.

In the first scenario of economic decline, the ICT

sector could mitigate for this through an outward looking

strategy for the global market. A strategy that focuses on

the export market could lead to a growth in the

sector similar to that in 2006 and 2007 of 10% growth

rate. A 10% growth rate would lead to an average

increase in the ICT value added by $ 25 million

annually to reach in 2011 $ 307 m.

On the other hand, the adoption of an ICT

development strategy similar to that of Jordan with

involvement from key stakeholders including the donor

community, could lead to growth rates similar or

exceed those of Jordan which averaged 40% annually.

The ICT sector in Palestine has previously

achieved a growth rate exceeding 50% in 2004. A

15% growth rate would lead to an average

increase in the ICT value added by $ 40 million annually to reach in 2011 $ 351 m.

2. Employment Employment in the ICT sector and ICT jobs in

other branches of the economy are estimated at about

15,267 of which about 5,200 jobs are direct ICT sector

employment. It has been shown above that each job

opportunity created in the ICT sector is matched by 3

jobs in other branches of the economy. The Jordanian

ICT sector employment has been growing over the past 5

years at a rate that averaged about 7% annually.

Furthermore, it has been shown that a US$ 1 million

export opportunity generated 40 job opportunities in

Palestine. Taking these two factors into consideration, it

would be reasonable to assume that the Palestinian ICT

sector employment could grow in the range of 3-4

percent annually which translates to 150-200 new jobs

opportunities in the ICT sector annually. These will also

generate 400-500 new jobs in the economy as a whole.

The ability of the ICT sector and other economic sectors

to absorb new ICT graduates depends largely on

economic growth. Further, as most of the ICT business

requires high degree of training, it is not expected that

most of these graduates will have a chance to be absorbed

by the ICT sector unless they receive the proper training

and placement assistance. It is essential to develop

programs that would target new graduates to be attractive for private sector employment.

3. Business Outsourcing The Assessment of the Outsourcing Capabilities of

the Palestinian ICT Industry study found that Palestinian

ICT firms may have an opportunity to develop BPO

activities which include data entry and indexing at the

lower end, clams processing in the mid-range of

complexity, and taking on the full responsibility of HR of

Finance in the most complex cases. For these activities to

succeed, a set of recommendations were made in order to

be able to compete in a very competitive global market for BPO.

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References

1. World Bank: West Bank and Gaza

Telecommunications Sector Note,

Introducing Competition in the Palestinian

Telecommunications Sector, January 2008.

2. PITA:The Palestinian ICT Sector.A Three-

Year Outlook.Based on Economic

Indicators, May 2009.

3. West Bank and Gaza Telecommunications

Sector Note, Introducing Competition in the

Palestinian Telecommunications Sector,

January 2008.

4. GSM (Global System for Mobile

Communications: Second Generation) is the

most popular standard for mobile telephony

systems in the world.

http://en.wikipedia.org/wiki/GSM.

5. Enhanced Data rates for GSM Evolution

(EDGE) (also known as Enhanced GPRS

(EGPRS), or IMT Single Carrier (IMT-SC),

or Enhanced Data rates for Global

Evolution) are a backward-compatible

digital mobile phone technology that allows

improved data transmission rates.

http://en.wikipedia.org/wiki/EDGE.

6. 3rd Generation wireless format. This high-

efficiency data and voice format follows 1G

(analog service) and 2G (digital service).

http://www.ipwireless.com/glossary.

7. Oslo Agreement, Annex III, Protocol on

Israeli-Palestinian Cooperation in Economic

and Development Programs” and “The

Israeli-Palestinian Interim Agreement on the

West Bank and the Gaza Strip (“Oslo 2”—

9/28/95), Annex III, art 36).

8. The Islamic University of Gaza, IUG ICT

Business Incubator, Operation and

Development for Islamic University IT

Incubator, (August 2009).

9. David L. Ross, “An Assessment of the

Outsourcing Capabilities of the Palestinian

ICT Industry”, Palestinian Enterprise

Development Project”, A USAID Project,

May 2008

10. ICT in Palestine: Creating a Development

Dynamics, PITA.

11. PALTRADE(Palestinian Trade Center) ,

Challenges Facing ICT in Palestine (August

2010)

12. The Palestinian ICT Cluster Report,

Palestinian Enterprise Development Project-

A USAID Project, 2006