Thursday, April 26, 2007 Ng: Paying for intangible assets By Wilson Ng Wired Desktop
ONE of the things that I think has been positive, even for the Cebu market, is that businesses are starting to be more willing to pay for intangible assets, like training or software.
If you see the history of computing, you will note that the United States and Western Europe also did.
In the 60s and 70s, when you bought an IBM mainframe, it was big and expensive, but it came with the software for free.
In fact, when Bill Gates, during the hobbyist conference, created the basic interpreter for the Altair—in what started as among the first products of what would eventually be Microsoft—his ability to do so was expected.
But what generated a lot of debate was his proposal that he should charge for it. Up to that time, creating software for microcomputers was something people did as a hobby and whatever you created, you shared with everybody for free.
But then the rest, as they say, is history. And if there is any big contribution of Microsoft, it was not that it not only helped create a generation of personal computers that were affordable, but in general, it was actually the concept of creating a company devoted solely to the development and sale of software.
Microsoft was one of the pioneers that showed the way that creating something intangible as software was good business.
Our market is starting to appreciate that. In the 90s, you would buy a computer, and it would come with all the applications for free. We are now seeing not only businesses starting to pay for software and services, but are also buying locally.
Yet, there is still a significant number of companies that buy software when the owner goes abroad. I know a good number of companies where the owner goes to the United States, buys applications, like accounting software, and gives it back to the staff to make it work.
There are two things that make it somewhat hard to make it work here. The most difficult thing about a business application is actually the expertise to start it up and to go find somebody capable of technical support if there are any problems.
The other thing is that accounting software from the US is generally not very suited to local conditions. First and foremost, the US does not have a value-added tax, and, therefore, its software generally cannot pass our internal revenue seal of approval for its usage.
Another thing is that most American companies are accustomed to deal only in dollars, and thus, most small company accounting software for US companies generally cannot handle multi-currency issues, something exporters and importers here sorely need.
At any rate, the technology industry in Cebu and outlying areas is growing healthily, and more and more players are entering everyday. We may think that all these business process outsourcing and offshore programming are affecting the US’ employment.
Yet, latest studies show that employment in the US tech sector seems to be healthy, contrary to popular fears that all these outsourcing is resulting in American programmers losing their jobs.
The American Electronics Association, the US’ largest technology trade association, in its reports noted that the US tech industry employed 5.8 million people in 2006, which is up by 2.6 percent from 2005. The industry, in fact, added 147,000 jobs in 2006, which on the same token added 87,400 jobs over 2005.
Software employed more than 1.5 million people, and there were 88,500 new jobs created last year. In fact, according to the study, the unemployment rate for computer scientists for 2006 was 2.5 percent, while for electrical engineers, it was at 1.9 percent.
That is almost called full employment. In fact, the US is supposed to start processing H1B petitions, which allows the US States to process and hire 65,000 workers from abroad in special skilled areas.
As expected, the 65,000 quota was filled in just one day of processing, showing the severe need of American companies to hire more skilled people.
The technology sector is alive, vibrant and growing!
