IT Service Firms
The top three IT service providers in Korea are planning to boost their overseas sales based on aggressive targets.
According to industry sources, Samsung SDS recorded 3.1005 trillion won (US$2.9858 billion) in overseas sales last year to reach gross proceeds of 44 percent. The figures were 421.3 billion won (US$404.9 million) and 13.2 percent for LG CNS and 176.4 billion won (US$169.5 million) and 7.7 percent for SK C&C during the same one-year period.
It is Samsung SDS that has the widest global sales network out of the three. The company’s sales abroad broke the 1 trillion, 2 trillion, and 3 trillion won marks in 2011, 2012, and 2013 each. Samsung SDS is planning to increase the ratio to over 50 percent this year.
LG CNS’s goal is to reach 50 percent in or before 2020, although its overseas sales growth is showing some stagnation for now. SK C&C is trying to get to 25 percent by 2017 as well.
What matters for the IT service providers under the circumstances is to go for qualitative stability. In particular, it is said that e-government system projects abroad carry less profits than system integration projects. “The low profit rate is because of dumping, though this may not be entirely true,” said an industry insider, adding, “Another reason is administrative opacity, which is easily found in developing countries.”
It can also be attributed to companies that have accepted low profits for the main projects with most such e-government projects having been for informatization strategy planning, consulting, etc. “The situations will change once the main projects are launched, because the overseas projects focus on profits, unlike the domestic ones, where some losses can be accepted in a strategic perspective.”