Open First Whitepaper: Open Markets

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Economic Impact

Public administrations adopting policies on open standards and OSS have an positive impact on the economy by creating an open marketplace for providers of all types of support. Any support business with sufficient software development competencies can add new features and fix bugs in the software. OSS use may better support businesses and expertise in Canada.

As early as 2006, the European Commission, looked at Economic impact of open source software on innovation and the competitiveness of the Information and Communication Technologies (ICT) sector in the EU and estimated that OSS-related services could reach a 32% share of all IT services by 2010, and the OSS-related share of the economy could reach 4% of European GDP by 2010. OSS directly supports the 29% share of software that is developed in-house in the EU, and provides the natural model for software development for the secondary software sector. By providing a skills development environment valued by employers and retaining a greater share of value addition locally, OSS can encourage the creation of expertise and jobs. The high share of European OSS developers provides a unique opportunity to create new software businesses and reach towards the Lisbon goals of making Europe the most competitive knowledge economy by 2010.

Research from Institut Mines-Telecom found that France’s policies on OSS are helping to create a market for French ICT service providers and that there is a direct link between the government’s policies and the rapid growth of OSS firms.

A PAC report on the impact of OSS in France 2015-2020 (French) shows that the market for OSS related services increased 33% from 2012 to 2015 and the predict that it will continue to grow 9% per year to reach 6 billion $ by 2020. That is equivalent to 13% of the software and related services sector in France, up from 5% in 2012. OSS accounted for more than 50 000 jobs in that sector in 2015.

An article from IGI Global on The Impact of Open Source Software on Employment in the USA, drawing on US employment projections for 2008-2018, predicts OSS will have a positive impact on employment growth in well-paid salary jobs across multiple sectors of the US economy. OSS-related software development jobs are widely diffuse throughout the economy, help build a skilled labour force and offer wages significantly above the national average. OSS is thus believed to be a strong contributor to growth in high-value employment in the US. The authors also posit that, as industries are exposed to the benefits of OSS as a result of the broad diffusion of OSS-related jobs, open innovation processes outside software development may be adopted through a process of learning and imitation.

Increase Use of Canadian Resources

As a small number of large foreign companies become increasingly influential in the current global technological ecosystem the government of Canada’s (GC) procurement process has come to reflect this. As a result, Canada has become overly reliant on foreign services and businesses rather than directing government funds to promoting the development of Canadian industry or investing in developing in-house talent. The GoC should take advantage of this opportunity by reducing its reliance on commercial software and increasing its promotion of Canadian industry and talent.

According to Public Services and Procurement Canada between complex non-military goods and services and basic services the government spends approximately 6 billion dollars. The complexity of the government’s procurement process reduces the viability of small and medium sized Canadian companies to bid on and win contracts. Efforts should be made to ensure small and medium sized companies are in a competitive position to benefit from the large purchasing power of the GoC. By reducing its use of expensive monolithic commercial software smaller Canadian companies are provided with an opportunity to grow by supporting, developing, or maintaining, software used by the GC.

Risks and Drawbacks

Existing Relations with Software Companies

Some companies with existing contracts with the GC may not agree with a new direction from that would stop entrenched practices that lead to vendor lock-in situations.

But many of the very companies that have been selling closed-source software to the GC over the last decades have taken drastic changes to their development practices and adoption OSS due to the rapid pace of the industry and now have different business models that support OSS.

And, upon the creation of the Open Source Advisory Board, companies, small and large, lined up to voice their readiness to support a clear adoption of OSS in the GC.

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