Kopeiko
A.A.
Senior
Teacher: Rassolova L.V.
Donetsk
national university of economics and trade named after M. Tugan-Baranovsky
OPPORTUNITIES AND PERSPECTIVES OF USING ALTERNATIVE STRATEGIES BY
UKRAINIAN ENTERPRISES TO ENTER THE INTERNATIONAL SERVICES MARKET
National
companies have opportunities to access the international services market. At
that, they can select one of three alternative strategies: clusterization, outsourcing,
or transnationalization.
The use
of cluster approach to entry of national companies onto the international
services market could be explained with the following arguments: first, the
participation in clusters provides companies with the opportunity of getting
access to specialized factors of production, workforce and information; second,
the complementarity of elements and participants is an cluster allows providing
high-quality services «in
a package», as well as
getting a synergy effect of cooperation; third, inside competition among
cluster participants is an incentive to improvement of service quality and
introduction of innovations; fourth, clusters provide the opportunity to view
the services market as a system, and thus, it is easier to investigate
cross-sectoral interrelations and search for opportunities to create innovations;
fifth, clusters combine four elements of the «Porter’s
diamond» required for the
development of competitive advantages; sixth, the companies within a cluster
have more opportunities to lobby interests in administrative authorities.
At the
moment, a number of service clusters are functioning in Ukraine, in particular,
in the regions of Kamyanets-Podilsk, Khmelnytsk, Ivano-Frankivsk (tourist
clusters), and Cherkasy (transport cluster). Nevertheless, there are still no
clusters of business services, in particular, IT clusters.
In the
context of outsourcing strategy, the made analysis enables to determine its
strong and weak points. The strong points are the following:
1. Personnel. According
to unofficial data, there are about 50-60 thousand people in Ukraine whose
qualification allows them to be involved in the outsourcing of different
services.
2. Relatively low
labour costs, which still are a decisive factor in choosing a TNC’s outsourcer.
3. Qualification,
focus on technical sophistication and creative approach.
4. Solid educational
and research base. The literacy rate in Ukraine is 98% (in India - 52%), and 87% of people in our country
get higher education.
5. Location in the
centre of Europe, and the European culture, which encourages attraction of
Westem European clients; simplification of visa procedures for foreigners, and
cancellation of visa regime for EU residents.
6. Availability of
associations that support the development of outsourcing (Ukrainian Hi-Tech
Initiative, Association of Software Producers, Association of IT Companies of
Ukraine).
At the
same time, the disadvantages of Ukrainian outsourcers are the following:
entrepreneurial and managerial skills (lack of experts on project management to
manage big outsourcing projects within budget and time constraints); language
barrier (poor level of English language, lack of outsourcing specialists having
good command of German and French languages); relatively high communication
costs; absence of a single powerful organization that would successfully lobby the
interests of Ukrainian outsourcers (like the Indian Association NASSCOM);
dispersion of outsourcing companies and their small sizes, which does not allow
to perform large-scale projects, which poses a threat of being taken over by
big companies (TNC); lack of agencies on certification of IT-companies (in
Ukraine there is a limited number of institutions that perform ISO 9000
certification, and there are no agencies performing CMM certification); poor
institutional support (lack of specialized legislation, problem of intellectual
property rights protection, etc).
The
emergence of the new trends on the international outsourcing market provides
certain opportunities for national providers of outsourcing contracts, in
particular:
1. Increased
complexity of outsourcing orders. This will encourage the development of
national outsourcers, whose strength is the focus at technical sophistication
and creative approach. The Ukrainian IT-outsourcing specializes on antivirus,
scientific software, system integration, accounting software, and
web-development.
2. Increased demand of
international corporations for outsourcing of specialized software, which is
developed to specific order.
3. Lack of IT-experts
in India in connection with great amounts of orders. According to the NASSCOM,
by 2010 the difference between demand and supply of IT-specialists will make
500 thousand jobs. This preconditions the transfer of western TNCs, as well as
Indian corporations, to countries of Eastern Europe including Ukraine.
The
principal threat for the development of national outsourcing market is the «brain drain». According to estimations of
the Ukrainian Association of Soft-ware Producers, 2,5 thousands of IT-experts
leave Ukraine every year. Another threat is the turning of Ukraine into the market
of cheap labour for outsourcing projects.
The
transnationalization strategy stipulates for access of national companies to
the international services market by means of commercial presence and for
playing an active role in the international trade in services. Unfortunately,
the Ukrainian services market is so far notable for its transnationalization
asymmetry, since it hosts foreign TNCs instead of taking an active position in
this mode of delivery. This situation contributes to searching for the ways to
enter the international services market through cooperation with TNCs
(outsourcing, franchising, international strategic alliances, joint ventures).
In
spite of the fact that not a single TNC of Ukrainian origin has been officially
registered so far, certain preconditions have already been created, including
the following: a)
financial reporting has been adapted to international standards; b) a number of
national companies purchased assets abroad, in particular, System Capital
Management Corporation – in Italy, Switzerland and Germany (in the branches of
telecommunications, transport and construction services), the Pryvat Group – in
Russia, Georgia and Latvia; the Ukrainian industrial capital is present abroad;
c) the volumes of trade in shares of big companies at the First Stock Exchange
Trade System has considerably increased; the consolidation in a number of
services spheres is promising, primarily in banking (to withstand take-overs of
foreign TNCs) and business services (to generate more orders from foreign
customers).
The
formation of transnationalization strategy of Ukrainian service companies
should be based on the determinants of transnationalization of the
international services market. The latter allow answering the following strategic
questions: Which companies have the potential to be transformed into TNCs? In
which branches is it feasible to create TNCs of Ukrainian origin? Whish host
markets to access through commercial presence?
In
order to enter the international services market by means of commercial
presence, the Ukrainian companies find as most promising the countries with the
most open services markets, such as those of Estonia, Moldova, Bulgaria,
Georgia, and Latvia.
Therefore,
Ukrainian companies have certain competitive advantages, and they have
developed the potential to enter the international services market. At that,
the national enterprises should perform a number of tasks, in particular: in view of
intensified market competition – improve the quality of services, provide them «in package», and perform certification
according to international standards; increase outsourcing potential of the
national outsourcer enterprises; improve the information and telecommunications
infrastructure; consolidate enterprises
of the branch; participate in international strategic alliances; from own
transnational capital in order to enter the international services market by
means of commercial presence.
Bibliography
1.
Äåðæàâíèé êîì³òåò ñòàòèñòèêè Óêðà¿íè // www.ukrstat.gov.ua
2.
Ñîêîëåíêî Ñ. Êëàñòåðè â ãëîáàëüí³é
åêîíîì³ö³: Ìîíîãðàô³ÿ. – Ê.: Ëîãîñ, 2004. – 848 ñ.
3. Ukrainian Hi-Tech
Initiative // www.hi-tech.org.ua.