© 2005 IBM Corporation
Cross-Border Supply of Services:The Private Sector’s Experience
Douglas GregoryVice President, Governmental Programs EMEAIBM Corporation
© 2005 IBM Corporation
IBM Today
Operations and customers in over 160 countries
140K people work in the US, 180K outside of the US
Nearly 60 percent of revenue from outside of the U.S.
Nearly half of revenue from services
Nearly two-thirds of revenue from software and services
Serving global customers from worldwide network of interconnected data centers and software development labs
– Cross-border delivery of services is growing
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6% 7% 7%5% 5%
7% 7%6% 6% 6% 5% 5%
16% 17% 17% 18% 18%15% 14% 15% 14% 14% 15%
16%
57%
52%
49%50% 49%
48%47%
44% 43% 43%
39%
34%
20%
23%
27% 26%28%
29%32%
35%37% 38%
41%
45%
'91 '92 '93 '94 '95* '96* '97* '98* '99* '00* '01 '02
0%
10%
20%
30%
40%
50%
60%IBM Revenue - Percentage by Segment 1991-2002
Hardware
Services
Software
Other
* Reclassified to conform to future years' presentation Source: IBM Financial Reports
Services and software accounted for 61% of IBM's revenue in 2002
IBM's Transformation to a Services-Led Company
6% 7% 7%5% 5%
7% 7%6% 6% 6% 5% 5%
16% 17% 17% 18% 18%15% 14% 15% 14% 14% 15%
16%
57%
52%
49%50% 49%
48%47%
44% 43% 43%
39%
34%
20%
23%
27% 26%28%
29%32%
35%37% 38%
41%
45%
'91 '92 '93 '94 '95* '96* '97* '98* '99* '00* '01 '02
0%
10%
20%
30%
40%
50%
60%IBM Revenue - Percentage by Segment 1991-2002
Hardware
Services
Software
Other
* Reclassified to conform to future years' presentation Source: IBM Financial Reports
Services and software accounted for 61% of IBM's revenue in 2002
IBM's Transformation to a Services-Led Company
© 2005 IBM Corporation
IBM Research Worldwide
Beijing1995
Watson1961
Zurich1956
Haifa1972
Almaden1955
Austin1995
Delhi1998
Tokyo1982
© 2005 IBM Corporation
IBM Research & Development
World’s largest IT research organization
– Innovation-driven, customer focused
– More than 3,000 scientists and engineers
– 8 research laboratories and 24 development laboratories worldwide
– 5 Nobel prizes (high-temperature superconductivity, scanning tunneling microscopy)
– R&D investment: more than $5 billion per year
Strong focus on Services
– On-Demand Innovation Services (ODIS)
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Benefits from Information Technology
Enhanced productivity and efficiency, reduced costs, and increased economic competitiveness across a broad range of manufacturing and services sectors
63 ITA participants have recognized these benefits and encouraged IT deployment by agreeing to eliminate customs duties on IT products
Computer and Related Services (CRS) provide the next step in realizing the benefits of IT
Liberalization of CRS, including cross-border delivery, will help to spread the benefits of IT
© 2005 IBM Corporation
Opportunities in Cross-Border Services
The Internet facilitates cross-border delivery of Computer and Related Services and other CRS-enabled services
The Internet enables the integration of a variety of CRS into a single offering
Interconnected worldwide data centers provide capability for:
– Efficient allocation of data processing resources in a global grid computing environment
– Remote back up and disaster recovery for global customers
Cross-border delivery via networks, including the Internet, makes CRS available to a broader set of users in a cost-effective manner
Cross-border delivery via networks enables service providers from developing countries to reach export markets that otherwise would be out of reach
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Evolving Computer Services
The Internet was not a consideration during the Uruguay Round (1986-1994)
New developments include the Web, application hosting, remote data centers and backup storage, grid computing, on demand computing, and e-commerce
Information technology and IT services will continue to evolve
Trade agreements for IT services need to be designed so they do not quickly become obsolete
Technology neutrality of the GATS ensures that Mode 1 (or Mode 2) commitments cover delivery via the Internet
– Internet gambling case finding
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Business Process Outsourcing
IT-enabled services to help a business or government organization run its operations
IBM sees this as an enormous US$500B market opportunity
May include Computer and Related Services alone or in combination with Management Consulting Services under the GATS
Cross-border delivery via networks creates opportunities:
– Organizations have access to the best services at the most competitive prices
– Service providers from both developed and developing countries can serve global markets
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Doha Round Objectives
Commitments for full liberalization in CRS
– Cover technologically evolving services
– Commitments at “2-digit level” (CPC 84)
Commitments for full liberalization in Management Consulting (CPC 865) and Services Related to Management Consulting (CPC 866)
Liberalize for services that can be delivered electronically
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WTO Friends of Computer Services
Informal group of countries formed to promote liberalization of CRS
– Includes developed and developing countries
FOCS group of 14 countries issued joint statement on 25 February 2005
– CRS as “tool for economic development”
– Statement calls for full liberalization of CRS
• “by making full market access and national treatment commitments for the sector as a whole (CPC 84)”
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Friends of Computer Services
Australia Korea
Canada Mexico
Chile New Zealand
E.C. (25) Norway
Hong Kong Singapore
India Chinese Taipei
Japan U.S.
The following countries signed the FOCS joint statement endorsing full liberalization of Computer and Related Services:
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Conclusion
The Internet has enabled much greater cross-border trade in services, including CRS
Liberalization of CRS enables economic development and job growth
The Doha Round is an economic development opportunity for both developed and developing countries
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