Tunisia ’s IT service sector does not show a clear export-oriented development strategy. Many of the initiatives carried out by the government are designed to foster the creation of the local IT market, almost inexistent five years ago. Exoneration of imported goods, subvention in prospecting foreign markets, as well as exoneration of VAT associated to company formation are examples of these programs. Technological parks, like Pôle El Ghazala des Technologies de la Communication, have created “technology green houses” where entrepreneurs have favourable conditions to set up IT firms. These efforts have produced good results in term of number of IT firms created. However, further development requires a coherent and focused strategic plan that addresses the following main issues of the sector:
 Move away from low wages–based advantages . Wages of Tunisian IT specialists are very low compared to those in developed countries, as occur in many other industrial sectors,. For example, the hourly cost of a Tunisia IT specialist is 8.8 euros compared to 70 euros in France. In spite of this relative advantage to European countries, competition for the de-location of software production comes from developing countries with which Tunisia’ salaries do not offer clear competitive advantages. This is the case of Morocco, for example, where Tunisian average salaries are only 11% cheaper.
Improve total cost of software production . Low wages represent only one of the sources of low-cost production in the IT sector. Development process influences enormously the total production cost of software. Best in class procedures and methodology know-how are two key factors in building low-cost software production capabilities. Fixing mistakes accounts for about 50% of typical development time and late fixes during the development process can cost 50 to 200 times the effort of an immediate fix. All of this without mentioning the impact of low quality development has on customer satisfaction and reputation. Apart from few firms, Tunisian software development firms do not master the programming process and project management know-how at level that they could be considered as competitive advantages This situation easily undermine any Tunisia’s wage advantages in the eyes of multinational IT companies.
Increase workforce qualification level . Most of the Tunisian IT workforce is made of young profesionals with only few years of programming experience. The lack of aboundant high-level skills professionals limits the kind of services Tunisian companies are able to export.n Low to medium level skills professionals are suitable for services related to data processing, basic programming and entry level code generation. The offering of more specialized services in leading edge software platforms (e.g. mobile applications) still remains limited.
Focus production capability on key market areas . The size of Tunisian IT companies is very small to perform big software development projects. Most of the IT professionals work in companies with less than 10 employees (300 companies out of 345). In 2002, only 510 professionals or 8% of sector workforce were working in 47 firms with foreigner participation. Additionnally, the annual inflow of new manpower into the IT sector’s workforce is very small compare to other countries. Approximately 800 new IT professionals enter in the job market every year, of which only 22% are software designers. India, in comparison, has 67,000 new IT professionals per year (83 times the number of Tunisian new graduates) with an educational infrastructure of more than 850 private training institutes. This situation limits the potential of Tunisia to be an all-propose strategic place for for big international software companies, one of the driven forces behind the IT industry internationalisation process. However, a clear specialisation or niche market development strategy for the sector could help to focuslise its resources on specific areas where strenghs can be developed.
3) The risk of an export-based IT development strategy
Following an “off-shore” development model for the IT sector (similar to one implemented for the manufacturing industry) can prove to be very risky for the Tunisia overall economy. The IT sector is more than just another sector adding up to the GDP of the country; it plays a critical role in the efficient development of almost every activity of the economy. The success of many MNC is linked directly to their IT strategies, as more and more of their competitive advantages are based on technology and knowledge know-how.
According to some analysts the retard accumulated in terms of computerization of Tunisian enterprises is estimated at between 7 to 10 years, while the retard in technical capacity of IT Engineering Service firms is estimated at 3 years compared to the world standard. This is related to the fact that m ost of the investment Tunisian small and medium companies make is for buying computer hardware, whereas investment in specialised software such as supply chain management, workflow and ERP is very minimal and in many cases it is considered of low value. This situation suggests that the low IT adoption by Tunisian domestic firms is related to much of their overall low productivity compare to their European peers.
A strong local IT sector rather than a leading export IT sector should play the pilar role in the future competitve advantage of the overall Tunisia economy. The analysis of the current situation of the on-shore IT sector will be the topic of the second part of this article.
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