Software Promotion
The government announced that it will nurture the software sector, but the companies selected to get financial support make up only 10 percent of the industry.
According to the Small and Medium Business Administration (SMBA) on June 17, out of the 156 companies selected as part of the World Class 300 Project, only 13 were software companies. Although the figure increased this year, software firms merely comprise 8.33 percent of the total.
Initiated by the SMBA in 2011, the project supports small and medium-sized enterprises or medium-sized companies which have the potential and willingness to grow. By year, software companies accounted for 2 out of 30 selected firms in 2011, 2 out of 37 in 2012, 2 out of 33 in 2013, and 7 out of 56 companies selected this year.
Once chosen, companies can select one category among research and development (R&D), overseas expansion, manpower, finance, management, or another preferred area. They will be financially supported after a screening process. The total amount of funds for R&D is 1.5 billion won (US$1.47 million) per year, which is the largest. Software companies can get up to 7.5 billion won (US$7.3 million) in funds if chosen in the technology category.
By considering characteristics of the software industry, SMBA lowered the standards for software firms to 10 billion won (US$9.8 million) in annual sales, merely 25 percent of the figure for candidates in other sectors. However, only a very small number of software companies are fully qualified to be a candidate.
According to the National IT industry Promotion Agency, 5,618 (82.6 percent) out of 6,800 software firms in the nation turned over 5 billion won (US$4.9 million) in 2012. 3443 companies reported less than 1 billion won (US$981,790) in sales, which comprised 50.5 percent of total software firms. Against this backdrop, observers say that the government’s decision to select software companies with more than 10 billion won in sales as candidates for the project shows a lack of understanding of the realities of the industry.