By Neena Bhandari

Sydney, 01.06.2011 (AMCHAM Australia): With growth in Internet and Globalisation, American Information and Communications Technology (ICT) companies have been quick to clinch business, trade and investment opportunities that Australia offers.

A significant research infrastructure, highly skilled and experienced workforce, technology-hungry and solutions-driven customer base, strategic geographical position offering proximity to Asia-Pacific, and an English-language base with multi-lingual capability make Australia an attractive destination for U.S. ICT companies.

Major Fortune 500 companies including Microsoft, Alcatel-Lucent, IBM, Dell, AT&T and Google, amongst others, have set up offices and built research and product development facilities in Australia.

For example, Microsoft uses Australia as a regional hub to service the Asia-Pacific, Google Maps and Warner Bros use their bases here to develop international digital content for business and entertainment sectors, and Alcatel-Lucent runs advanced technical assistance centres for operations around the world from Australia.

As the company’s Australia Managing Director, Mr Andrew Butterworth said, “Alcatel-Lucent has had a presence in Australia since 1895. Prior to its merger with Lucent Technologies, Alcatel was involved in the construction of the country’s very first telephone exchange and has maintained a strong presence in the national telecommunications infrastructure”.

Today, Alcatel-Lucent Australia provides telecommunications equipment and solutions to a range of local partners and currently employs close to 1,000 staff.

“Telecommunications is a very competitive market, but our strong local presence, skilled staff, innovation and global experience have helped position us strongly. Australia is entering a very exciting period of opportunity when it comes to telecommunications and broadband infrastructure, and Alcatel-Lucent is a proud leader in that environment”, Mr Butterworth added.

Fully realising the benefits of the digital economy through the National Broadband Network (NBN) would help Australia become a world-leading digital economy by 2020 said Australia’s Minister for Broadband, Communications and the Digital Economy, Mr Stephen Conroy, while launching the National Digital Economy Strategy at the CeBIT conference in Sydney on May 31.

“By connecting to high-speed broadband, households will benefit through savings generated from time-saving activities such as telecommuting for remote work and study and improved access to business and job opportunities, health, education, social and government services,” Mr Conroy said.

The Economist Intelligence Unit’s (EIU) 2008 IT Industry Competitiveness Report highlighted Australia’s high IT intensity, noting Australia had a Broadband penetration of population at 33 per cent (compared to Singapore at 20 per cent, the U.S at 23 per cent and the UK at 26 per cent), and it ranked ninth highest in IT spend per population (i.e. high density of market).

As Microsoft’s Director of Corporate Affairs (Australia & New Zealand), Mr Simon Edwards said, “Australia’s investment in high speed broadband and the continuing focus on productivity improvement augurs well for Microsoft’s business in the years ahead. The further advancement of Australia towards a highly sophisticated technological economy coupled with the undoubted innovation and creativity of Australians offer substantial opportunities for Microsoft in Australia”.

Majority of Australians with home internet access use broadband technology. According to the Australian Bureau of Statistics (ABS), in December 2007 there were 7.1 million internet subscribers. Digital subscriber line (DSL) continued to be the main access technology, used by 3.82 million or 73 per cent of non-dial-up subscribers.

Most of Australia’s 39 universities and TAFE (technical and further education) colleges offer undergraduate and graduate courses in ICT fields, including a wide range of digital content courses. The country’s technological sophistication creates a ready and receptive market for smartphones, tablets and other consumer devices and for applications and services provided via the internet (cloud).

In 1983, when Microsoft founded its Australian subsidiary, the development of the personal computer and PC software was still in its infancy. Given the demand for PC software and the enthusiasm of Australian software pioneers, the company found it an appropriate time to establish the subsidiary in Australia.

“With over 14,000 partner businesses in Australia, we have continued to grow through the success of Australian enterprises and entrepreneurs. The Australian commercial sector is established, purposeful and forward looking and the opportunities for collaboration are significant”, said Mr Edwards.

The ICT industry accounts for 4.6 per cent of the GDP which rises to six per cent if in-house software development was included. The Centre of Innovative Industry Economic Research estimates that there are 502,000 people or 5.5 per cent of employed Australians engaged in the industry.

Microsoft Australia employs directly over 800 people across the country. In addition, it partners with thousands of Australian technology companies, small entrepreneurs and software developers.

“Almost 150,000 work in the Microsoft ecosystem or with the Microsoft platform. This partnership is assisting these companies to innovate and generate their own intellectual property (IP) and we estimate that for every $1 Microsoft generates in revenue, the Australian businesses which develop related IP or distribute our products generate almost $11 in revenue,” Mr Edwards added.

The 30,300 ICT businesses in Australia generate revenues in excess of AUD 120 billion. In 2006, Australia exported ICT goods and services valued at $5.7 billion. During the same period, Australia imported ICT goods and services valued at $26 billion, according to the Australian ICT Trade Update 2007.

The ICT industry contributed to about 85 per cent of productivity growth in the manufacturing sector and up to 78 per cent in the services sector over the last two decades, according to a March 2006 Australian Government report.

Between 2003 and 2008, the ICT industry in Australia registered a strong compound annual growth rate of 12.8 per cent, faster than Japan, Hong Kong, Singapore, South Korea and Taiwan.

Comparative low development costs and a highly skilled workforce have attracted strategic ICT investment thereby benefiting the AUD 2.7 billion software industry, according to Microsoft Australia’s Local Software Economy Initiative: Annual Report 2007. Companies such as IBM and Google have built major software development facilities in Australia.

IBM has invested in the establishment of a new global research and development laboratory in Melbourne and expanded its resources capabilities with the formation of a Natural Resources Solution Centre in Perth. In 2010 the company, which has a 78 year history in Australia, grew its business by 3.1 per cent to AUD 4.3 billion.

Laying the platform for future growth, IBM continued to diversify its client base last year and signed nearly 250 deals in excess of AUD 1 million each. For example, an AUD109m deal with the Department of Health and Ageing for the provision of IT infrastructure services over five years; a new five-year infrastructure services agreement with The Westpac Group; and a multi-year agreement with the National Australia Bank to manage and drive greater efficiencies from its technology infrastructure within Australia.

IBM is partnering with the Australian Government on large-scale infrastructure transformation projects, including a two-year deal to host core business functions for the National Broadband Network, and systems integration work with Energy Australia for the Smart Grid Smart City initiative.

The company’s Brisbane-based Business Transformation Outsourcing and Asia Pacific Technical support centres provide services and support to the company’s customers in the region, including Japan, Korea and China.

Australia’s time zone is used by leading software and technology development companies to pursue round-the-clock applications development. For example, Oracle has set up facilities in Australia for the productivity benefits offered by the country’s cultural and business affinity to Asia, Europe and the US.

For AT&T, Australia is the Service Delivery Work centre supporting the entire Asia Pacific region and the main hub for the enabling, implementing and managing its client networks across the region. Since 2002, the company has invested significantly in Australia to build an Internet Data Centre in Sydney plus a state-of-the-art MPLS network with six nodes.

With head office in Sydney, the AT&T established its operations in Australia in 1992 to provide high quality data communications and networking services to multinational corporations. A decade later, it established a direct go-to-market model to better cater to the needs of its customers. Today, it employs over 160 staff with local account management and operation support teams in Australia.

The 2008 IMD World Competitiveness Yearbook ranks Australia fourth in the world for the development and application of technology after the U.S, Canada and Taiwan, but well above Japan and Germany.

The Australian Government supports ICT innovation and excellence to develop sustainable competitive advantage. The government committed AUD 380 million over 10 years (to 2011) to establish and operate National ICT Australia (NICTA) centre of excellence for research, training and commercialisation.  Important research is also being conducted by the Australian Government-funded Commonwealth Scientific and Industrial Research Organisation (CSIRO) ICT Centre.

Total ICT research and development expenditure in Australia is now almost AUD 3 billion a year, accounting for around 24 per cent of Australia’s total expenditure on research and development.

The Australia Government has been providing some R&D tax concessions. For instance, multinationals in Australia are eligible to access the 175 per cent Premium Tax Concession on incremental spending on R&D where the intellectual property is not held in Australia.

More and more leading international companies use Australia as the base to develop and trial new applications and solutions with global applicability. For example, Alcatel-Lucent, Novell and Honeywell, have established R&D facilities in Australia.

Red Hat, the provider of Linux and open source technology, continues to expand its regional engineering and support headquarters in Brisbane. The centre also hosts the company’s main translation team responsible for making Red Hat products available in 13 languages and providing services and support to customers around the globe.

EMC, the US company which is a leading provider of storage hardware solutions that promote date recovery and improve cloud computing, has one of its four global support centres in Australia, offering 24/7 support to EMC customers worldwide and catering to out-of-hours requests from the U.S and Europe.

The 2008 EIU IT Industry Competitiveness Report ranked Australia second only after the US in terms of ‘legal foundations for technology development’. A stable political system, regulatory transparency and strong protection and enforcement of intellectual property rights are added incentives for multinational firms developing new technologies.

Google, founded in 1998 by Stanford University graduate students Larry Page and Sergey Brin, employs over 350 people in Australia. `Search’ has been at the core of Google, whether it is checking news headlines, sports scores, weather forecasts or looking up the address of a restaurant or for that matter researching this story, information is only a click away and universally available.

ICT has, indeed, become integral part of our lives whether it is the crucial issue of climate change and resource management or online banking and education. Australia ranked fourth, after the US, Hong Kong and Sweden, out of 70 countries for its e-readiness, which is a measure of a country’s ICT and the ability of businesses and consumers to use ICT to their advantage, according to EIU’s E-Readiness Report 2008.

As Dell’s General Manager for Public-Large Enterprise Business in Australia, Bernie Kelly said, “Dell continues to see growing demand for the solutions we provide that help Australian customers solve problems, operate more efficiently and concentrate on running their businesses.”

Dell, which ships more than 10,000 systems every day to customers in 180 countries i.e. more than one every second, began selling IT solutions to customers in Australia in 1993. Its headquarters are located in Sydney with offices in Adelaide, Brisbane, Canberra, Hobart, Melbourne and Perth.

Some of the other major American ICT companies in Australia are: Hewlett Packard, Tech Media and Telecommunication Norton Rose Australia, Lenovo (Australia & New Zealand) Pty Ltd., Symantec (Australia) Pty Ltd., Macquarie Telecom, Oracle Corporation Australia Pty Ltd., Warner Bros Consumer Products – Australia & New Zealand, The Walt Disney Company (Australia) Pty Ltd., Bloomberg LP, SMS Management & Technology, Primus Telecom, and Thales Australia.

American ICT companies have also made a significant contribution to the Australian community through volunteering, providing cash and equipment grants, conducting mentoring programs for disadvantaged students and providing employment opportunities.

For example, In November 2010, Microsoft Australia reached the milestone figure of AUD 100 million software donation through DonorTec to non-profit organisations in Australia. The company also donated more than AUD 1million in cash in the last 12 months to its leading charity partners.

Earlier in April 2009, Microsoft Australia and Vision Australia announced an expansion of their strategic relationship with the provision of Microsoft’s biggest software donation grant in Australia to date, valued at over AUD 6.6 million.

Microsoft has also trained 142,000 teachers through its Partners in Learning program and since 2004 provided approximately AUD 30 million in free downloads to students through its DreamSpark program. The company supports a network of over 300 Computer Technology Learning Centres across Australia with free digital literacy training programs.

Similarly, Dell is stimulating learning on multiple levels for both students and teachers through its education-specific technology solutions – the Connected Classroom program. It also supports Red Cross and Bear Cottage, a New South Wales-based hospice for children from across the country.

AT&T has donated over US$125,000 in the last three years to The Smith Family’s Learning for Life suite of programs that support disadvantaged Australian children to create better futures through education.

The Australian Chamber of Commerce in Australia (AMCHAM) has been supporting these companies grow, providing a forum for linking with other businesses, keeping in touch with major issues and connecting with the decision-makers of the day.

As AMCHAM celebrates its 50^th anniversary, its National Director, Mr Charles Blunt said, “The ICT industry is one of the most dynamic industries in the world and in Australia also. Over the years there have been waves of change based on technology and also comparative advantage. Australia has some great home-grown innovators and US companies have the capacity to work with them to commercialise and take their innovation to the world”,

“Many US companies have acquired interest in or purchased outright Australian innovation in IT and these products are now part of a worldwide offering. This trend will continue. Australians will continue to move to the United States to work in the IT sector and Americans will continue to come to Australia to see what the innovation of Australian entrepreneurs can add to the global offer”, added Mr Blunt, who has been at the helm for the past 10 years, working towards promoting US-Australia trade and investment ties.

Some of the innovative Australian ICT companies doing business in the U.S include CargoWise, a leading provider of high value supply chain management software and integrated logistics solutions, ediEnterprise; Sportstec, a global leader in the design, development and marketing of innovative solutions for sporting organizations; Marathon Targets which has created `smart targets’ by applying state-of-the-art robotic technology to live-fire marksmanship training; Biometix which provides commercial biometric consulting and evaluation services to a wide range of government agencies and organizations around the world; Tigerspike, a personal media company with a specialisation in mobile; and iOmniscient’s suite of products which offer the entire range of intelligent surveillance.

The Internet and e-commerce have boosted the international competitiveness of Australian businesses. Internet income for Australian businesses increased from AUD 24.3 billion in 2002–03 to AUD 56.7 billion in 2005–06. About 94 per cent of large businesses and 60 per cent of medium businesses in Australia had a website in 2006, while over 37 per cent of all businesses placed orders for products and services online.

But the story of the ICT industry in Australia would be incomplete without a mention of how Australians were quick to embrace new technology even in the 19^th century. In1832, Tasmania was the first colony to establish a post office as a Government Department and soon Australia’s government run and regulated mail network was started. For the next 150 years, Australia’s communications services continued to be owned, maintained and managed by the government.

In 1853, nine years after the first telegraph appeared in Europe, Australia adopted the new technology and in 1872 Australia’s first international telegraph link was set up connecting Asia and in turn Europe and America. However, overseas airmail was not introduced until 1934. This was followed by the setting up of the first Sydney-based public telephone exchange in 1882.

In 1901, the Australian Constitution’s Section 51(v) entrusted all postal, telegraphic, telephonic and ‘other like services’ to the Federal Government. The introduction of the Marconi wireless radio system in 1905 marked the beginning of Australia’s broadcasting industry and the first Australia-wide broadcasting service was established in 1928 followed by the first television broadcast from Sydney in 1956.

In early 1960s, the country had begun to experiment with data services, sending computerised stock exchange and business information over the telephone system. In 1965-66, with the launch of international communication satellites, INTELSAT I and II, Australia was linked with North America and Europe.

In the late 1970s, Australia had its own computer information network linking selected Australian universities and research institutions. By 1984, Australia’s own domain, .au, and a year later the country’s first geostationary communications satellite were launched.

So over the next decade as the ICT industry underwent major transformation with the birth of the Internet, Australia was in an ideal position to participate in this new technology dominated economy.

The country’s first commercial Internet provider, connect.com.au, began operating in 1992. The Government passed a new Telecommunications Act in 1991, which paved the way to opening the market to full-scale competition in 1997. The laws governing foreign investment in the Australian media and communications industries were also eased and since then 30 players have entered the telecommunications market.

Australia is second in Internet take-up rate only to the U.S. and the country is rapidly moving towards digital mobile telephones and digital television. Its creative digital industries have generated in excess of AUD 23 billion per annum, according to ARC Centre of Excellence for Creative Industries and Innovation, Queensland University of Technology. The digital game development sector alone generated AUD 136.9 million in 2006-07, with 93 per cent derived from exports, according to ABS, Digital Game Development Services, Australia, 2006-07 report.

Today Australia is at the forefront in many ICT areas, including software development, systems integration and wireless networking, e-commerce, smart cards and computer games, which have been the key driver of the country’s strong economic growth and innovation.

As Australia embarks on this journey to maintain its global competitiveness and become the top five OECD countries by 2020 in the percentage of businesses and not-for-profit organisations using online opportunities to drive productivity improvements, expand their customer base and enable jobs growth, U.S ICT companies have enormous opportunities for investment in innovation and enriching collaborations.

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