ICT sector drives rapid economic diversification - Joyce

New Zealand's information and communications technology sector's growing value of exports, increased spend on research and development and expanding workforce is helping to diversify the nation's economy, Economic Development Minister Steven Joyce says.

The Ministry of Business, Innovation and Employment today released a report on the ICT sector showing exports of IT services have grown at an annual pace of 14% to $930 million in the six years ended 2014, R&D spending expanded at an annual 14% in the decade through 2014 and employment rose 6.5% a year in the 10-year period. The sector now accounts for about 1.7%, or $3.09 billion, of gross domestic product, growing at an annual pace of 9.3% between 2008 and 2013.

"These reports are starting to give us a real measure, a real baseline, from which we can show real growth and real diversification of the New Zealand economy," Mr Joyce said at the launch of the report in accounting software developer Xero's Wellington headquarters. "This report suggests this performance is literally just the beginning, that NZ's export sector in IT is very much in scale-up mode."

The ICT report is part of a series of papers documenting various aspects the government is focusing on to deliver its Business Growth Agenda, a core plank of which is to lift exports to 40% of GDP.

Mr Joyce today said, even if the ICT sector's export growth slows to an annual 10% pace, it will reach $1.5 billion by 2020, though he expected local firms to strive harder than that, saying "$2 billion by 2020 has a rather nice ring to it."

Xero [NZX: XRO] chief executive Rod Drury told the audience he was "excited" to see the increase in the number of technology companies listed on the NZX, which now account for 10% of the market capitalisation of the stock market's main board. Xero listed on the NZX in 2007 and has been joined by a number of software developers in recent years wanting to raise money to fund international expansion such as Orion Health Group, Eroad, Wynyard Group, SLI Systems and Vista Group.

The government plans to set up three IT graduate schools in Auckland, Wellington and Christchurch to help meet the demand for skilled labour in the sector and Mr Joyce said he would be making further announcements on that shortly.

When asked about how the government planned to support small and medium-sized ICT firms as a buyer of services, Joyce said it was a case of ensuring government agencies adopt the procurement rules.

(BusinessDesk)