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  • 1. PEMINT PORTUGAL – ICT SECTOR Draft version João Peixoto Catarina Sabino Susana Murteira SOCIUS, Lisbon March 2003
  • 2. Table of contents Chapter 1 - Characterisation of the ICT sector in Portugal 1. Introduction 2. The ICT sector in figures 3. Causal factors of the ICT sector development 3.1 Economic modernisation and growth 3.2 Political regulation 3.3 Consumer behaviour 4. Other issues 4.1 Associations 4.2 International situation Chapter 2 – Stocks and flows of foreign labour 1. Research methodology 2. Labour market trends in the ICT sector 2.1. Employment and migration in the ICT sector 2.2. Supply and demand of ICT skills 2.3. Hypothesis: the social nature of ICT skills 3. Foreign labour in the firms surveyed Chapter 3 - Recruitment and assignment decision-making 1. Organisational structures 1.1. Types of firms 1.2. Human resources 2. Internal labour market operations 2.1. Reasons for internal labour market movements 2.2. Internal vacancy and career development systems 3. External recruitment and subcontracting 4. External recruitment 4.1. Reasons for international movements 4.2. Forms of external recruitment Chapter 4 - Mobility constraints and PEMINT variables 1. Mobility constraints 1.1. Labour costs 1.2. Legal framework for migration 1.3. Fiscal and social security systems 1.4. Social and cultural constraints 2. Mobility package Conclusion Bibliography 1
  • 3. Chapter 1 - Characterisation of the ICT Sector in Portugal 1. Introduction Information and communication technologies (ICT) have acquired high importance in the late 20th century, with its growing insertion in all aspects of everyday life of people and organisations. It has been in this period that the idea of information society (IS) has been developed. The aim of this chapter is the characterisation of the ICT sector in Portugal. With this purpose, we proceed, firstly, to an analysis of the main figures of the ICT sector in the framework of the Portuguese economy: total number of firms, employment, business volume, total remuneration and per capita remuneration, and total sales for export. Secondly, the main causal factors of the sector development are examined, particularly the economic modernisation and growth in the 1990s, political regulation and consumer behaviour. Statistical data in this field is very scarce. This chapter is based on data produced by the National Statistical Institute (INE), the more recent ones referring to 1999; and in data presented by the National Communications Authority (ANACOM), the more recent ones referring to 2001. Data produced by the National Association of Information Technology and Electronic Firms (ANETIE) was also used. Besides statistical data, this chapter was based in diverse documents and in interviews with institutional and knowledgeable actors. During 2002, 6 interviews have been made with academic specialists in the ICT sector, government officials, professional experts and one association (ANETIE). Taking into account that the ICT concept may vary from country to country, the OECD definition for the sector was adopted in this report. Following OECD, the ICT sector is a “combination of services and manufacturing industries that capture, transmit and fix in an electronic way data and information” (OECD, 2002). The sector’s main branches are manufacturing industry, telecommunication services and other ICT services. 2. The ICT sector in figures The following set of tables present the main data on the ICT sector in the framework of the Portuguese economy. 2
  • 4. As it can be observed in Table 1.1, about the number of ICT firms compared to the total number of firms in Portugal between 1996 and 1999, the number of ICT firms was at its highest in 1999 (last year with available data), with 7600 firms. Despite the strong growth verified between 1998 and 1999, the sector displays an average annual growth rate (AAGR) of only 0.6%, what suggests that the main boom dates from the end of the decade. In fact, a decline occurred between 1996 and 1997, with a slight reversal in 1998 and a strong surge in 1999. Meanwhile, the relative proportion of ICT firms in the context of Portuguese firms stabilised around 1.3% in the period. Table 1.1 – Number of ICT firms and total number of firms 1996 1997 1998 1999 AAGR Nº % Nº % Nº % Nº % % Total number of 565 417 545 924 540 222 584 644 1.12 firms ICT number of 7 468 1.32 7 053 1.29 7 126 1.32 7 601 1.30 0.59 firms Source: INE, in Table 1.2 presents a more detailed analysis, since it breaks up the ICT sector into its mains branches (or sub-sectors) – Manufacturing industry, Telecommunication services and Other ICT services. During the four years under analysis, Other ICT services, including computer-related services, is dominant, absorbing the large majority of ICT firms in the period (almost 91% in 1999). With a lesser number of firms it appears Manufacturing industry and, lastly, Telecommunication services. Except in the Telecommunication services, where AAGR almost attains 10%, the annual growth of ICT firms in 1996-1999 has not been salient. Table 1.2 – Number of ICT firms by branch 1996 1997 1998 1999 AAGR Manufacturing 558 508 456 555 -0.18% industry Telecommunication services 113 115 146 149 9.66% Other ICT services 6 797 6 430 6 524 6 897 0.49% Total ICT 7 468 7 053 7 126 7 601 0.59% Source: INE, in The dynamics of the sector can be illustrated by the analysis of the business volume generated by ICT firms and shown in Table 1.3. Between 1996 and 1999 the volume of sales has been growing, attaining around 3 240 billions of Escudos (circa 16 162 millions Euros) in the end of the period. Concerning 3
  • 5. AAGR, it must be stressed that it corresponds to almost 12% in the ICT sector, a number far superior to the one that has been observed for the total business volume of national firms (5%). Table 1.3 – Business volume of ICT firms and total business volume (millions of Escudos) 1996 1997 1998 1999 AAGR ME % ME % ME % ME % % Total business 44 306 014 47 004 633 53 197 815 51 533 966 5.17 volume ICT business 2 322 770 5.27 2 614 281 5.56 3 193 020 6.00 3 240 193 6.28 11.73 volume Source: INE, in Table 1.4 contains data on employment on the ICT sector. This sector has been attracting an increasing number of workers, only with a slight decrease in 1999. The total number has varied between 93 128 and 100 021 workers between 1996 and 1999. This corresponds to an AAGR of 2.4%, superior to the one observed for the total number of firms in Portugal (0.8%). Table 1.4 – Employment in ICT firms and total employment in firms 1996 1997 1998 1999 AAGR Nº % Nº % Nº % Nº % % Total employme 3 017 398 3 055 881 3 096 180 3 092 349 0.82 nt ICT employme 93 128 3.09 94 893 3.11 100 417 3.24 100 021 3.23 2.41 nt Source: INE, in Table 1.5 shows data on employment on the ICT sector, split by the three ICT main branches. It is not surprising that the Other ICT services, which revealed in Table 1.2 its predominance among number of firms, has the highest figure on employment, with around 51 thousand workers in 1999. It is followed by the Manufacturing industry (circa 28 thousand workers in 1999) and Telecommunications services (circa 21 thousand workers in 1999). It is noteworthy that Other ICT services is the only branch that has an AAGR superior to the one of the whole sector. Table 1.5 – Employment in ICT firms by branch 1996 1997 1998 1999 AAGR Manufacturing 26 002 26 568 28 061 27 767 2.21% industry Telecommunication services 21 060 20 527 21 817 21 225 0.26% Other ICT services 46 066 47 798 50 539 51 029 3.47% Total ICT 93 128 94 893 100 417 100 021 2.41% Source: INE, in 4
  • 6. Table 1.6 presents an overall growth in remuneration, both total remuneration and remuneration in the ICT sector, during the period under observation. However, the AAGR of remuneration in the ICT sector between 1996 and 1999 (9%) is superior to the one observed in the whole economy (7%). Table 1.6 - Remuneration in ICT firms and total remuneration (millions of Escudos) 1996 1997 1998 1999 AAGR ME % ME % ME % ME % % Total remuneration 3 979 188 4 307 996 4 664 236 4 891 333 7.12 ICT remuneration 240 168 6.04 260 949 6.06 294 488 6.31 312 074 6.38 9.12 Source: INE, in Still considering remuneration, Table 1.7 reveals the evolution of per capita remuneration in the ICT sector compared to total per capita remuneration. As can be observed in the table, ICT per capita remuneration exceed considerably total per capita remuneration during the period. ICT per capita remuneration represent almost the double of total per capita remuneration (circa 97% higher in 1999). Table 1.7 – Per capita remuneration in ICT firms and total per capita remuneration (millions of Escudos) 1996 1997 1998 1999 AAGR ME % ME % ME % ME % % Total per capita 1 319 1 410 1 506 1 582 6.25 remuneration ICT per capita remuneration 2 579 +95.5 2 750 +95.0 2 933 +94.8 3 120 +97.2 6.55 Source: INE, in The last table in this section, Table 1.8, refers to sales for export in the ICT sector compared to total sales for export. In the case of the ICT sector, a growth on sales for export has been observed between 1996 and 1999, reversing the global trend for decrease between 1998 and 1999. Besides, the AAGR of ICT sales for export is more than the double of the one for the total economy. Table 1.8 – Sales for export in ICT firms and total sales for export (millions of Escudos) 1996 1997 1998 1999 AAGR ME % ME % ME % ME % % Total sales for export 3 967 956 4 312 405 5 091 239 4 445 364 3.86 ICT sales for export 338 252 8.52 362 778 8.41 412 625 8.10 414 787 9.33 7.04 Source: INE, in 5
  • 7. Although exact figures for geographical distribution are not available, the concentration of ICT firms in the regions of Lisbon, mainly, and Oporto, is indisputable. For instance, considering data produced in ANETIE, in a study based on 413 firms of the ICT sector, 297 are concentrated in Lisbon and 90 in Oporto. 3. Causal factors of the ICT sector development Although the first ICT firms have appeared in Portugal still during the 1980s, it was on the 1990s that the largest growth of the sector has occurred. The economic modernisation and growth verified during this period, including the increase in the use of ICT by overall firms, constitutes a first explanation for the phenomenon. Particularly, the acceleration of the sector growth that has occurred in the late 1990s was due to the needs caused by the millennium bug and by the proximate circulation of the Euro. A second explanation is based on the political regulation set by the government since 1995, which assumed the information society as a priority. A third explanation is the consumers’ behaviour, since products in this area progressively attracted consumption. Meanwhile, in recent years the expansion gave place to a recession. According to one of our interviewees, “the ICT sector is undergoing a critical phase of economic slow down”, which implies the fact that firms are following cost containment policies. This new reality turns less probable the hiring of labour, either national or foreign, as well as the internationalisation of activities. Presently, the national labour market seems sufficient to respond to the sector’s needs. Next, the main factors that have explained the growth trend of the ICT sector in Portugal will be examined. 3.1. Economic modernisation and growth First, the economic modernisation and growth occurred in Portugal since the middle 1980s explains the development and increased autonomy of the ICT sector. The adhesion to the (then) European Economic Community, in 1986, was responsible for a sustained trend for economic growth, including the substantial increase in foreign direct investment and the modernisation of firms. The main ICT multinational foreign firms became active (entering the country or reinforcing their position), including representatives from hardware, software and consulting. A trend for the largest firms, in other sectors, to acquire ICT tasks in the market (abandoning its internal production in the organisation) has also occurred. Connections between large firms of several 6
  • 8. business areas and autonomous firms from the ICT sector, Portuguese or foreign-owned, became common. In the early 1990s a significant growth of software firms offering standard solutions, instead of specifically tailored software designs, must also be mentioned. The cases of SAP and Oracle demonstrate this assertion, since they developed standard products for management in different areas, which have been widely accepted by large firms. This fact has also lead to the growth of sub- contracting, since other ICT firms specialised in solutions for integration of standard products in large firms. (Other consulting firms, not centred in ICT, also gained positions in this area, since they also developed services of this type.) It was in this favourable environment that the large ICT firms, mainly multinationals, developed and that a set of diverse small and medium firms (SMF) in the same sector gained momentum. To add to this trend, the millennium bug and the proximate circulation of the Euro created needs for adaptation of internal systems. These concerned the universe of firms operating in the market, not only the ICT related firms. Meanwhile, the introduction of ICT products in the vast array of small and medium firms, largely predominant in Portugal, was slightly delayed compared to large firms. The standard products used by major players did not attract them. Therefore it is understandable that the demand for products of large ICT multinational firms has been slowing down, giving place to an increased demand for national firms’ products oriented for the SMF segment. An example is one of the national firms interviewed in the current survey (a software house 100% national), which produces software for SMF and seems to be in counter-cycle. It is undergoing expansion in a recessive context, since its market (national SMF) is far from saturated. In any case, the use of ICT products in Portuguese firms seems to be generalised. For example, considering the Internet use, a recent study by PriceWaterhouse Coopers showed that in the year 2000 around 70% of the largest Portuguese organisations already possessed an Internet site. Besides, 26% were thinking on adopting it that year and only 4% intended to do it later (next three years). 3.2. Political regulation ICT has been adopted as a priority in the political agenda with the creation of the Ministry for Science and Technology in October 1995. In this framework some initiatives were developed, such as the “National Initiative for the Information Society” (aiming to determine the current situation, needs and future opportunities for the Portuguese scientific and technological development); the “Mission for the 7
  • 9. Information Society” (aiming to promote and monitor the development of the IS) in 1996; and the “Green Book for the Information Society” (comprising a concrete set of proposals for action), which became a landmark in the process of creation of the IS in Portugal, in 1997. The publication of the Green Book, a result of an extensive work and a wide public debate in the Portuguese society, was a foremost step. For the first time, a strategic document adopted by the State was under permanent public scrutiny on the Internet. This document identified a vast set of policy measures that afterwards were set in motion, both in the civil society and in state departments. After the Green Book, the “Network Science, Technology and Society” was created, which links to the Internet the schools of the second and third cycles of Basic Education, Secondary Education and Municipal Public Libraries. The engagement of the public authorities in promoting the “digital literacy” lead to the results shown in Table 1.9, about the percentage of schools with Internet access in 2000 and 2001. There it can be seen that Portugal, along with Sweden, obtains the best position, with 100% of schools connected to the Internet either in 2000 or 2001. Table 1.9 – Percentage of schools with Internet access in the UE, 2000-2001 Countries 2000 2001 Belgium 90 96 Denmark 98 99 Germany 90 98 Greece 22 58 Spain 91 95 France 63 97 Ireland 96 99 Italy 87 98 Luxembourg 86 100 Netherlands 91 100 Austria 53 95 Portugal 100 100 Finland 99 99 Sweden 100 100 United Kingdom 93 98 Source: Eurobarometer, in Still in the framework of the political initiatives, the “Digital Cities Program” was adopted and a regime of fiscal deductions for the acquisition of computers and software for domestic use was approved; the “National Initiative for Electronic Commerce” was launched; legislation about Digital Signature and Electronic Invoice was agreed; the “National Initiative for Disabled Citizens in the Information Society” was settled; and the “Internet Initiative” was launched. Initiatives in the area of modernisation of public administration and public services, support to the development of a digital economy and response to juridical issues arising from the IS - can also be cited. Finally, the competence for producing statistical indicators about the IS have been centralised (on the Ministry for Science and Technology, in co-operation with INE). 8
  • 10. In what concerns information technologies, the official policy also generated a set of institutional developments, including the Inter-ministry Commission for the Information Society and the recent Inter-ministry Commission for Innovation and Knowledge. This latter was created in 1992; it is headed by the Assistant Minister for the Prime Minister and integrates representatives from all ministries, as well as the Head of the Mission Unity for Innovation and Knowledge. In the specific case of telecommunications, some political and institutional landmarks for the sector have to be enumerated. These include the beginning of the mobile service sector in 1989, with the full functioning of two operators in 1992; the permission for a third operator, starting in 1997 and entering in effect in 1998; the liberalisation of the fixed phone service, starting in 1999 and entering in effect in 2000; and the concession of four licenses for mobile communications in the UMTS system, starting in 2000 and planned to enter in effect in 2002 (however, this system has not yet started to operate). The increase of competition in the sector has resulted, among other aspects, in a decrease of telecommunication prices and an effective dynamics of the labour market. On the institutional field, the role of the regulatory authority for telecommunications has been attributed to the Portuguese Communications Institute, currently National Communications Authority (Autoridade Nacional de Comunicações - ANACOM). Finally, it must be referred that the policies for the development of the ICT sector have never included in Portugal a migration component, i.e., the access in privileged conditions of skilled foreigners in this area – as occurs in the German (Green Card) and British case. However, in the late 1990s there was some signals of this type of policy. These were manifest in the actions proposed in the framework of the “Internet Initiative”, launched in 2000 by the Ministry for Science and Technology with the aim of developing the Internet in Portugal. The need to study the conditions to attract highly skilled professionals in the ICT sector was then targeted (Ministério da Ciência e da Tecnologia, 2000: 22). 3.3. Consumer behaviour A third factor that contributed to the boom of the ICT sector in Portugal is the attraction for its products on the part of the population. One of the most remarkable aspects is the adhesion to mobile phone services, since around three quarts of the Portuguese population uses currently a mobile phone (see Table 1.10). If, between 1995 and 1997, the percentage of mobile phones used by the total population was inferior to the EU average (less than 20% in 1997), from 1998 onwards it was always superior (more than 60% after 2000). With an average annual growth rate (AAGR) of almost 90% during the 1990s, the number of mobile phones’ users corresponds currently to 74% of the population. 9
  • 11. Table 1.10 – Total number of users (subscribers) of mobile telephone services between 1991 and 2001 (thousands and percentage of total population) Total (thousands) % of total population 1991 12.6 0.1 1992 37.3 0.4 1993 101.2 1.0 1994 173.5 1.8 1995 340.8 3.5 1996 663.7 6.7 1997 1 507.0 15.3 1998 3 074.6 31.2 1999 4 671.5 47.4 2000 6 665.0 67.6 2001 7 607.9 73.5 AAGR 89.1% --- Source: ANACOM, in Another example is the Internet access, a central axis of the IS in what concerns the acquisition of information. Currently in Portugal circa 1 in each 3 individuals is an Internet user (30%), and 74% of these Internet users are frequent users (see Table 1.11). Table 1.11 – Total number of individuals with Internet access (subscribers) between 1997 and 2001 (thousands and percentage of total population) Total (thousands) % of total population 1997 88.7 0.9 1998 172.7 1.7 1999 645.2 6.5 2000 2 110.8 21.0 2001 3 056.0 30.0 AAGR 142.0% --- Source: ANACOM, in 4. Other issues 4.1. Associations In this section the creation and functioning of associations of firms or other organisations in the ICT sector in Portugal will be focussed. According to some of our interviewees, the grouping of firms into associations “is very low”, a trend that has become worse in the last few years, given the economic downturn. Despite this, some associations must be cited. It is mainly the case of ANETIE (National Association of Information Technology and Electronic Firms - Associação Nacional das Empresas das Tecnologias de Informação e Electrónica), generally accepted as the privileged interlocutor for the 10
  • 12. information technology and electronic sectors. It was created in 1994, then as NETIE (Núcleo Empresarial para as Tecnologias de Informação e Electrónica). It mainly represents national technology based firms in the information technology and electronic sectors; it counts with more than 120 associated firms that develop their activities in the electronic, software, information and communication industries. The association has as its main objective to defend the interests of firms in those areas and to promote its sustained growth. Other associations can also be cited, such as the APDC (Portuguese Association for Communications Development - Associação Portuguesa para o Desenvolvimento das Comunicações), claiming nowadays to represent the communications sector and counting with circa 200 associated firms; APSI (Portuguese Association of Information Systems - Associação Portuguesa de Sistemas de Informação), a scientific-technical association that groups several agents in the information systems’ domain, mainly linked to higher education institutions; APRITEL (Associação dos Operadores de Telecomunicações), which aims to contribute to the development of the telecommunications sector in Portugal; and APDSI (Associação para a Promoção e Desenvolvimento da Sociedade da Informação), which aims to develop the information society in Portugal. 4.2. International situation It is possible to say that Portugal, in what concerns the characteristics of the ICT sector, displays a relatively good situation compared to other more developed countries in the European Union. ICT use by firms and individuals is widespread. The activity of the main international corporate players in the economy is solid. As Mamede (2001) suggests, referring to the ICT service sector, the capacity that national owned firms has shown to compete with the larger multinationals is a sign that its performance is not very different from the one that can be found in more advanced economies. Besides, Portugal has been the nest for some high tech innovations that have been exported to other countries. It is the case of Multibanco network, one of the more sophisticated banking networks in the world; Via Verde, the first and only closed system of automatic highway tolls in the world; the Pre- Paid Mobile Phones, that quickly became the payment system with an highest growth rate in the world; and Interactive Digital Television, since Portugal will be one of the first five countries in the world using the system (on Portuguese internationally successful ICT companies, see also Various authors, n.d. 2002). 11
  • 13. Chapter 2 - Stocks and flows of foreign labour International mobility of workers and, particularly, highly skilled agents is a phenomenon of growing relevance in a world in process of globalisation. Either this mobility is of long or medium-term duration, the fact is that the conditions for movement from country to country are installed, being increasingly possible that professional activities are exerted in a different country. This chapter aims to give an overview of the movements of foreign workers in Portugal, as well as brief indications on the outflows of Portuguese workers to foreign countries, concerning the ICT sector. In other words, an analysis of the national labour market trends in the sector will be made, taking as main focus the existing and potential international mobility of workers. First, a characterisation of overall flows and of foreign workers in the ICT sector in Portugal should be made. However, as it will be seen, no aggregate statistics exist on the international flows or stocks of the ICT sector in this country. In absence of those figures, we will proceed to an analysis of the supply and demand of ICT skills and, afterwards, to some considerations on the social nature of ICT skills. Finally, the main information derived from the survey that was undertaken will be exposed, in what respects to the characteristics of the sample and the foreign workers in the firms. 1. Research methodology From the methodological point of view, the present survey was based in three separate steps. First, an analysis of the literature was made, concerning official or other documents and general bibliography on the theme. These references proved to be very scarce in information about the international mobility of workers on the sector and, particularly, the process of recruitment decision analysed in PEMINT. Second, a set of exploratory interviews was made, on the beginning of the research and some months after the beginning of the fieldwork. Third, semi-directive interviews were carried out in several firms operating in the sector. Concerning the exploratory contacts, six interviews were made since January until December 2002, with institutional and knowledgeable actors. These interviews concerned government officials, professional experts, academic specialists in the ICT sector and one association (ANETIE). The aim of these interviews was twofold. First, it was intended to evaluate the main trends of the ICT sector in Portugal and the relevance of international mobility in the sector. Second, the aim was to collect information that allowed a good selection of the sample of firms to be interviewed. These interviews 12
  • 14. gave very positive insights on the theme, although no rigorous map on mobility processes was obtained. Afterwards, semi-directive interviews were made to the firms selected to integrate the sample. The main details of the fieldwork are presented in Table 2.1. There, it can be seen that a dynamic process of sample constitution ought to be made, due to the high percentage of refusals or excessive delaying on the part of firms. Since May 2002, 32 firms were contacted, which were considered to include the main conditions to integrate the sample. From these firms, 14 interviews were successfully conducted (i.e., a rate of success of 43.8%). Some of the overall firms were selected right on the beginning of the fieldwork, whilst other appear on the process since they were suggested as interesting cases by other interviewees (either exploratory contacts or firms). The 14 firms that were interviewed may be said to respect the general criteria set for the national sampling in PEMINT. Its positioning under the criteria set for the ICT sector is indicated in Table 2.2. Most of the “cells” were covered. An effort to substitute refusals or excessive delaying by similar firms was done during the period. The aim was to obtain a balanced distribution of firms in the various “sub-sectors” targeted in PEMINT. The “cells” that finished “empty” or poorly filled represent segments that are not very significant in the Portuguese ICT sector. The four multinational firms indicated to be commonly surveyed in all PEMINT countries were successfully interviewed (IBM, Oracle, Vodafone and Siemens). Large subcontractors and smaller subcontracted companies were gathered. Table 2.1 – ICT firms contacted and interviewed Firm Initial contact Refusal Delaying Interview Altitude Software January 2003 X Cap Gemini Ernst & Young May 2002 X Compaq May 2002 X Critical Software November 2002 X CSC January 2003 February 2003 Enabler January 2003 February 2003 Ericsson May 2002 X I2S’s January 2003 X IBM May 2002 July 2002 Infineon Technologies January 2003 X Microsoft November 2002 X Motorola November 2002 X 13
  • 15. Noesis September 2002 November 2002 Novabase November 2002 X Novis May 2002 X ONI May 2002 June 2002 Optimus May 2002 X Oracle May 2002 June 2002 ParaRede May 2002 X Primavera Software November 2002 December 2002 PT Comunicações May 2002 July 2002 PT Sistemas Informação September 2002 X Q-Free November 2002 X Rumos November 2002 X SAP May 2002 July 2002 Siemens May 2002 November 2002 Solbi January 2003 X S-Tecno November 2002 November 2002 Tempo Real September 2002 December 2002 TMN May 2002 September 2002 Vodafone May 2002 July 2002 Xerox May 2002 X Table 2.2 – Firms surveyed, by PEMINT criteria Hardware Software Telecommunications National Primavera Software PT Comunicações S-Tecno TMN Enabler ONI Noesis Tempo Real EU Siemens SAP Vodafone Non-EU IBM Oracle CSC 2. Labour market trends in the ICT sector 2.1. Employment and migration in the ICT sector As stated in chapter 1, about the “Characterisation of the ICT sector in Portugal”, the ICT sector has been absorbing a growing fraction of the Portuguese labour market. With around 100 000 workers, it 14
  • 16. gathers circa 3% of the Portuguese labour force, revealing an annual average growth rate significantly over the national average (2.4% against 0.8%, between 1996 and 1999). Considering its main sub- sectors, most of the employment is concentrated in Other ICT Services (51% of the sectors’ total), in front of Manufacturing industry (27.8%) and Telecommunication Services (21.2%). As also was saw in chapter 1, the level and increase in remuneration, i.e., individual income, in the sector exceed plainly the national average. Although no rigorous data exists on the issue, it is known that the sector concentrates a higher than the average proportion of highly educated individuals, particularly holders of credentials issued from the tertiary (university level) educational sector. Unfortunately, no aggregate statistics exist on the stocks of foreign workers in the sector or international flows (inflows or outflows) of these professionals in Portugal. The usual aggregate statistics on foreign population and international migration flows are lacking in information on economic sectors or detailed occupations. When economic sectors are considered, they usually respect to “traditional” sectors – not the emerging ICT one. When occupational data are considered, they only gather broad categories of workers. Some specific sources, only available recently, could provide some indications on the level of international mobility in this sector. It is the case of the 2001 Census, issued by the INE, and the most recent set of Quadros de Pessoal, a compilation of information on firms’ human resources issued by the Ministry of Labour. Both of them provide data on economic sectors and nationality of workers. However, the adequate analysis of these sources, which required non previously published material, was not possible in time of this study 1. Due to the absence of adequate data, only sketchy trends on international mobility could be derived from our survey. These were based on qualitative information detected on the documentary analysis, the exploratory interviews and the firm’s survey. The main trends will be described in the next sections. 2.2. Supply and demand of ICT skills If we observe the supply of educational degrees in this area, it can be noted that an increase of tertiary education (university level) degrees related to ICT have been always rising, particularly since the mid- 1990s (for a list of tertiary education degrees directly related to ICT, see 1 Some additional specific sources could be explored, such as computer-related engineers, by nationality, registered in the Order of Engineers. However, this entity did not answer to the data request we made in early 2002. 15
  • 17. Between 1996 and 1999, for example, the total number of tertiary education degrees increased by 3% per year, whilst ICT tertiary education degrees increased by around 6% per year (see Table 2.3). Besides, in the year 2000 ICT degrees represented around 10% of the total supply of tertiary education degrees, the same proportion of vacant places for enrolment in ICT and total tertiary education degrees. However, the number of vacant places for enrolment in ICT degrees decreased, namely between 1999 and 2000: they went from 8530 in 1996 to 8270 in 2000, after settling in a peak of 9855 in 1999 (see Table 2.4). Table 2.3 – Number of tertiary education ICT and total degrees 1996 1997 1998 1999 2000 AAGR Total number of degrees 1 307 1 398 1 433 1 466 1 475 3.1% ICT number of degrees 117 118 137 140 147 5.9% Source: Direcção Geral do Ensino Superior, Departamento de Avaliação, Prospectiva e Planeamento do Ministério da Educação; and Observatório das Ciências e das Tecnologias - in Unidade de Missão Inovação e Conhecimento: Table 2.4 – Number of vacant places for enrolment in tertiary education ICT and total degrees 1996 1997 1998 1999 2000 TMCA Total number of vacant 79 460 84 651 88 179 90 423 82 313 0.9% places ICT number of vacant 8 530 9 090 9 830 9 855 8 270 -0.8% places Source: Direcção Geral do Ensino Superior, Departamento de Avaliação, Prospectiva e Planeamento do Ministério da Educação; and Observatório das Ciências e das Tecnologias - in Unidade de Missão Inovação e Conhecimento: A trend that must be noted is that, contrary to what occurs in general tertiary education, where 61% of students are women, ICT degrees are dominated by a large majority of men (83%). Concerning graduations, i.e., individuals that detain an ICT diploma, the proportion is slightly less unbalanced: 74% men and 26% women. In the year 2000, a total number of 2647 individuals graduated from these degrees. Trends in the supply and demand of ICT skills correspond to the evolution of the sector itself. As referred in chapter 1, factors such as the increased use of ICT products and services by Portuguese firms, the millennium bug, the circulation of the Euro and the liberalisation of the telecommunications market explained the strong growth of ICT activities in the 1990s, as well as a proliferation of firms in this area. The expansion of the labour market was gradually accompanied by an increase of students, thus occurring a progressive adjustment of demand and supply of ICT skills. 16
  • 18. However, during most of the 1990s and, particularly, in the late decade (the period of the most notorious boom), the Portuguese labour market seemed largely unprepared for the sector’s growth and supply did not perfectly correspond to demand. It was often cited in our survey that young graduates in ICT degrees were actively sought by firms and had immediate recruitment by them, settling their own work conditions. In specific cases, ICT firms recruited temporary work from foreign countries or faced a systematic recruitment from abroad – a situation that was rarely set on. These trends will be described in detail in the next sections and chapter 3. After the year 2000, the “optimism” that characterised the economic situation of the ICT sector gave place to a new phase: the world economic recession, besides the end of the short-term motives for growth (millennium bug and Euro), led to a sectoral downturn. In Portugal, the slowing down of the sector implied that the national labour market seemed to become self-sufficient, i.e., supply tended to match existing labour needs. Currently, it is generally admitted a need of cost containment, implying non-recruitment and even dismissals. In some of the contacts done in this survey, it was suggested that the main problem of the firms, nowadays, is more one of “reducing or assigning tasks” to existing personnel, and not one of recruitment. This situation is not also favourable to an increased internationalisation of ICT firms, and hence international recruitment. The existence of a skill shortage or, alternatively, a self-sufficiency of skills in the ICT Portuguese labour market could not be entirely determined in this survey. The rapid growth of the sector in the last decade, together with two successive short-term cycles of opposite meaning (boom in the late 1990s and current recession), disallows a satisfactory interpretation. Some evidence collected indicates that the Portuguese labour market revealed itself to be relatively self-sufficient in ICT skills during the 1990s - despite some overwork of existing employees. The main exception respected to specific skills that only could be found in foreign countries, as occurred with IBM skills disseminated in Brazil (Portuguese universities did not privilege training in this type of technologies). This fact did not necessarily led to international recruitment, since sub-contracting and temporary commitments were also used. The fact that the short-term motives for growth have ceased, the decreasing need for adaptation of IBM technologies, the increased diffusion of new software technologies (Microsoft or Oracle) and an accrued training in the latter – all suggest an increase in self-sufficiency. Few diagnoses seem to exist on the labour needs for the sector in next years. Amongst this type of studies, an enquiry did by ANETIE, in late 2001, to affiliated Portuguese ICT firms on short-term needs of human resources provides some indications. The results, concerning 55 ICT firms of Lisbon 17
  • 19. and Oporto regions, showed that in the short-term around 300 medium-skilled technicians (middle- level cadres) and 640 highly skilled ones (high-level cadres) would be needed. The most requested functions would be the following: programming of computerised systems; management and orientation of Information Society projects (only high-level cadres); Internet programming; and local systems and networks administration. An alternative viewpoint was defended, in another of our exploratory interviews, by an academic specialist in ICT. According to him, the main skill shortage in the Portuguese ICT sector corresponds to medium-level training degrees. In other words, a lack of resources does not occur for engineers and technical engineers, but only to intermediate degrees (medium-level cadres). Using the metaphor of a pyramid, he stated that the Portuguese labour market was abundant in “top” workers (tertiary education trainees, who “conceptualise and identify the problems”, such as systems engineers) and “medium-level” workers (who “execute the tasks”, such as programmers). 2.3. Hypothesis: the social nature of ICT skills In what concerns international mobility of labour, it can be assumed that ICT is a sector apparently prone to international professionals’ circulation. The international dimension of business and products, as well as a widely used lingua franca (the English), would foster mobility. However, there seems to be no evidence, in Portugal, of systematic international mobility in the sector, neither concerning foreigners in Portugal, nor Portuguese professionals abroad. Besides, whenever this circulation occurs, it is linked more with temporary (short and medium-term) than with permanent (long-term) moves. Discarding, for the moment, further evidence gathered in the firms’ survey - both detailed data on mobility and the one pertaining to recruitment decisions -, two hypotheses may be placed to explain the apparent low mobility pattern. First, the peripheral status of the country, relatively isolated from the main hubs and flows in the sector. Second, a specific social nature of ICT skills, which would constitute a friction to mobility. This latter hypothesis was often cited in exploratory interviews and, in a lesser degree - and less systematic manner -, in the firms’ survey. In some of our interviews, it was referred that the pattern of low international mobility is largely due to the specificity of the ICT work. This seems to encompass, in several cases, decisions taken in the framework of complex organisations and the need of communicating with clients. In the computer field, for example, what is often requested is not the production of software, or “systems development”, where technical skills seem really to be transnational. The main professional mission to be accomplished is the adaptation of pre-existing software packages (developed by foreign or national firms) to specific organisations or, instead, the sale of those packages to those organisations. As stated 18
  • 20. in one of our interviews, “labour market demands engineers and managers of information systems in organisations, and not computer engineers producing software”. Knowledge of local environment and ability on local language are necessary to those tasks, thus constituting a friction to international mobility. As stated in the interviews, this is a consequence of the “cultural paradigm” prevailing in the area: the existence of “national organisations, national cultures and national languages” restrains the level of international flows in the ICT sector. This argument can be refined using the idea of different layers in the sector. In one of our interviews it was admitted that the best way to segment the ICT sector is considering the following layers: the infrastructures (“machine house”, computers and systems), large applications (specific packages or middleware) and top consulting services (systems architecture) (this segmentation would be preferable to the one carried in PEMINT between hardware, software and telecommunications). International mobility should potentially occur mainly in the first segment, the basis of the system (for example, the programming industry). The intermediate and higher levels would suffer from diverse social constraints. In other terms, the ICT sector may be generally characterised as “highly cultural”, consequently needing many “local workforce”. As it was also stated in the survey, “information systems are not solely a technical issue”. International flows of highly skilled professionals often do only correspond to strictly temporary stays related to the transfer of know-how. This hypothesis can provisionally explain why the large majority of workers of the foreign ICT firms settled in Portugal are Portuguese – since those firms do not deal with production but with sales and adaptation of standard software packages in the country. It can also be understood why some of the international mobility that occurred in Portugal, namely the entry of Brazilians, has occurred in the least elevated segment of programming – including the case of specific IBM technologies. Taking this hypothesis forward, it can be admitted that a large part of the obstacles to international mobility in the ICT sector, in the framework of the European Union, are related to cultural differences. The weight of other variables, such as fiscal and social security issues (the PEMINT variables), may considered to be lower. 3. Foreign labour in the firms surveyed Table 2.5 synthesises some of the characteristics of the ICT firms interviewed in our survey. Amounting to a total of 14, these firms are distributed by the sub-sectors defined in PEMINT: 2 from 19
  • 21. hardware, 8 from software and 4 from telecommunications. Among them, 8 are of national property (more than half the capital) and 6 represent large foreign multinationals. Firm size is widely variable, existing both large conglomerates and very small firms. The whole chain of subcontracting is present, because both frequent subcontractors and small subcontracted firms were surveyed. Concerning number of employees, a large array of cases is verified: large, medium and small-sized firms. Number of employees varies between a maximum of 10 thousand workers (PT IC 6, a large and long-existing national firm in the area of telecommunications), and a minimum of 16 workers (PT IC 10, a small national firm in the area of software consulting). Even multinational firms display a very different presence in Portugal, varying between a maximum of 1800 (PT IC 12) and a minimum of 90 (PT IC 13). The number of foreign workers is not high in most of the firms surveyed. However, we must distinguish the cases of permanent workers (or long-term stays) and the ones of temporary workers (or short and medium-term stays). This distinction was often relevant, although rigorous numbers on both situations were often lacking in the survey. Concerning permanent workers, the proportion of foreigners is minimal. In two thirds of the firms the absolute number was inferior to 3. The more expressive figure was found in a large telecommunications group (PT IC 3), where only 22 in 1200 (i.e., 1.8 per cent) were foreigners. In relative terms they seemed to be always negligible. Concerning temporary workers (stays until 3 years), the proportion is frequently higher. In 5 of the firms, the absolute number of foreigners can now be counted in two digits, varying between 15 and 50. In relative terms, the figures can be surprising. In some of the cases, such as firms PT IC 2, PT IC 10 and PT IC 13, the proportion is very high: considering the whole set of permanent and temporary workers, the number of foreigners varies between 24 per cent and 58 per cent. However, the status of these workers in the firm may vary substantially: in some cases they are corporate assignees coming from other branches of the same multinational firm; whilst in others they are independent professionals coming under temporary contracts to fulfil specific tasks. Notwithstanding the different channels in action (which will be observed in the next chapters), temporary mobility seems one of the main trends registered in this survey. International mobility in the ICT sector occurs essentially through temporary flows, in the framework of specific projects, training activities, etc. These flows can lead to stays varying between 1 week and 3 years. Permanent movements, as well as long-term stays, appear to be rare and are often caused by personal motives (constitution of family in Portugal). 20
  • 22. Some indications can also be derived from the type of firms surveyed. Concerning national firms, in a panorama where the presence of foreign workers is not very relevant, the most interesting cases are the ones of small firms devoted to software consulting. In our survey, 2 of these firms (PT IC 2 and PT IC 10) employ a large number of foreign workers in a non-permanent basis (many “external consultants”), mostly coming from Brazil. The reasons for this inflow are linguistic (ability in Portuguese) and technical - knowledge of specific technologies (IBM), which is scarce in the Portuguese market. Concerning multinational firms, it is possible to talk of a pattern of “national labour force”. In most of the cases, these firms are concerned with the commercialisation of products developed elsewhere, what turns the contact with clients a prominent feature of their local activity. By this reason, Portuguese language is considered to be an important asset, what contributes to explain the option for a national labour force. However, this trend depends also on the scale of operations. In fact, the main exception to the rule of low mobility is PT IC 13, which has a significant presence of (temporary) foreigners in Portugal. But its small dimension in Portugal justifies that option: it was stated in the interview that the firm wants to invest in local competence, gaining autonomy towards other branches, what will be reflected in less mobility and lower costs. Other characteristics of firms, namely the sub-sector of activity, seem not to be relevant to explain different patterns of mobility. 21
  • 23. Table 2.5 – National sample National or Total number Activities Code Core activities Multinational of employees Presence of foreigners subcontracted Other specificities PT IC Hardware and software production and Multinational Around 300 1 Spaniard (formerly The firm often One of the four 1 consulting. thousand from the Spanish promotes common ICT firms in The Portuguese branch is only devoted worldwide. branch) as financial subcontracting, when PEMINT. to the commercialisation of the firm’s director (permanent). there are skills products, other services and Around 800 in shortages in certain consulting. Portugal. 6 Spaniards (from the areas or overload of Spanish branch) as work. managers and The areas technicians (temporary subcontracted are, stays - 2/3 years). mainly, installation of ICT programs and tools in clients. PT IC Software consulting. National Around 165 in 40 Brazilians as project It is often a 2 Portugal managers, analyst- subcontracted firm (including programmers and (mainly from large ICT permanent and programmers. Most of firms), especially in the temporary these Brazilians stay area of IBM contracts). temporarily in Portugal technologies. (around 3 years). Around 30 in Brazil. 5 French. PT IC Telecommunications (holding). National Around 1800 on Around 22 foreigners At the level of skilled 3 The group includes 4 separate business the whole in the area of fixed and activities, the firm units: fixed communications, mobile group, from mobile promotes communications, information systems which around communications. subcontracting on a and call centres. 600 in Spain. Including 5 French, 4 temporary basis. This Brazilians, 6 coming usually occurs in the from PALOP, and area of roll out and, others (permanent sometimes, in 3rd workers). generation mobile communications 1 Swedish as engineering. administrator. Around 20 Norwegians in top At the level of low 22
  • 24. managerial functions, skilled activities, the middle management firm promotes and technical functions subcontracting on a (temporary stays – permanent basis. It is around 2 years). the case of call centres. Around 20 Spaniards in the area of mobile communications, as technical cadres (temporary stays – around 2 years). PT IC Software production and consulting. Multinational Around 200 in 1 permanent foreign The firm often One of the four 4 The Portuguese branch is only devoted Portugal. worker, from promotes common ICT firms in to the commercialisation of the firm’s Venezuela (computer subcontracting, in PEMINT products, other services and engineer, second line activities that require consulting. of management. know-how on the firm’s technology. Concerning temporary stays, there is an average of 15 workers per year coming from other branches (UK, Italy, Spain, Brazil, USA and India). These are highly skilled cadres in consulting and technical support (temporary stays – 1/3 months). PT IC Software production (software house). National 83 in Portugal. 1 permanent foreign The firm does not 5 worker – German promote subcontracting (software engineer, and does not act as project manager. subcontracted. Concerning temporary stays, there are some flows of technicians coming from partners 23
  • 25. in PALOP, countries; these flows occur in the framework of training (2 weeks). PT IC Telecommunications. National Around 10 Foreigners not The firm does not 6 The firm is part of a holding devoted to thousand in significant among usually promote communications (which also includes Portugal permanent workers. subcontracting. firm PT IC 11). It is concentrated in fixed communications, data At the skilled level, the communications, videoconference and firm awaited currently other products. for 1 Brazilian (pricing and CRM), 1 British and 1 Polish. PT IC Software production and consulting. Multinational Around 140 in 1 Brazilian (formerly The firm promotes 7 The Portuguese branch is devoted to Portugal. from the Brazilian subcontracting on areas the commercialisation of the firm’s branch) as technical such as marketing products, other services and consultant in computer- (gifts and consulting. related engineering advertisement), HR (permanent). (labour medicine, insurance and wage Brazilians, (Belgium), processing), collection British and Germans in of news about the firm temporary stays (2 and software weeks to 6 months), (consulting in certain often for purposes of projects, when no training. internal consultants are available). PT IC Hardware and software production and Multinational Around 1668 in The proportion of The firm promotes One of the four 8 telecommunications. Portugal foreign workers is very subcontracting common ICT firms in The Portuguese branch is devoted to low. whenever there is PEMINT production, commercialisation of the There are 3 situations: shortage of human firm’s products and research and (a) foreigners that work resources (for example, development. in the firm for a long when work was done time; for preparing the (b) workers from other installation of UMTS branches that come to system). fulfil specific technical Subcontracting is also needs (this situation is done for labour practically non-existing recruitment. 24
  • 26. currently); (c) foreigners working for subcontracted firms. Several short-term movements to fulfil technical tasks or for matters of training. PT IC Software production and consulting. National Around 60 in No foreign workers in It is often a 9 Portugal. the firm. subcontracted firm (mainly from large ICT Around 20 in firms), particularly for Brazil. the purpose of specific projects in telecommunications. PT IC Software consulting. National Around 16-17 No foreigners among It is often a 10 permanent permanent workers. subcontracted firm workers in (mainly from large ICT Portugal (plus Around 20 Brazilians firms), especially in the 22-23 non- as non-permanent area of IBM permanent workers - external technologies. workers consultants (temporary It becomes sometimes currently). stays – 6 months to 3 an intermediate part of years). a chain of Around 5 in subcontracting, since it Brazil. also subcontracts Brazilian firms, including its Brazilian branch, and Brazilian independent professionals. PT IC Telecommunications. National Around 1200 in Foreigners not The firm promotes 11 The firm is part of a holding devoted to Portugal significant among subcontracting for communications (which also includes permanent workers. training purposes. In firm PT IC 6). It is concentrated in what concerns mobile communications. International temporary technical software movements for the issues and purpose of training, telecommunications 25
  • 27. mainly in areas such as engineering, training is marketing, network and contracted to suppliers. distribution (movements During the boom, concerning the partners subcontracting was in Morocco, Brazil, often used due to skills Botswana and Angola). shortages. These concerned computer specialists and telecommunication engineers (for example, the maintenance of the network was subcontracted to suppliers). PT IC Telecommunications. Multinational Around 1800 in There always has been The firm promotes One of the four 12 The firm is concentrated in mobile Portugal 1 foreign cadre in subcontracting for common ICT firms in communications. It also displays some Portugal at the top support activities, PEMINT fixed services. managerial level consulting and problem (technological or solving related to financial areas), as specific projects. policy of the holder of the majority of capital In a lesser scale, (this policy can finish subcontracting in the short-term). concerns also engineering projects. There always has also been one or other Subcontracting of foreign worker in national firms is used Portugal, in the for call centres. framework of temporary projects and stays (these workers fulfil specific technical needs). PT IC Software production and consulting. Multinational Around 66 3 permanent foreign The firm does not 13 The Portuguese branch is only devoted thousand workers, all of them promote subcontracting to the commercialisation of the firm’s worldwide. consultants: 1 Brazilian for its core activities. It products, other services and (women), 1 USA (from only subcontracts for 26
  • 28. consulting. Around 90 the USA branch) and 1 wage processing, for permanent British (from the UK the few cases of workers in branch). external training or Portugal (plus external recruitment, 50 non- Currently, 50 non- and for house search permanent permanent foreign for foreign workers. workers workers, all of them currently). consultants. Mainly coming from the USA and UK, but also from Australia, Venezuela and Japan. PT IC Software production and consulting. National Around 220 in 1 Spaniard (recruited The firm promotes 14 Portugal. during the boom) and 1 subcontracting when: Brazilian (transferred (a) it is about to Around 20 in from the Brazilian abandon a technology / Brazil. branch) (permanent). product and wants to concentrate resources Around 15 in Several temporary in new ones; the UK. flows (months), in the (b) a technology is too framework of training specialised and does (Brazil and the UK) not belong to its core and monitoring of activities; products’ (c) wants to develop implementation external tasks to its (Brazil). core business (for example, design of a career system or wage processing). It is also a subcontracted firm (mainly from large ICT firms). 27
  • 29. Chapter 3 - Recruitment and assignment decision-making 1. Organisational structures 1.1. Types of firms The 14 firms that were interviewed constitute a very diversified sample of the ICT firms operating in Portugal. The fact that both multinational and national firms, and both large and small firms, on the diverse ICT fields are under investigation creates a vast potential for comparability; however, it also sets difficult challenges for the analysis. In what concerns the 6 multinational firms in the sample, diverse types of firms were interviewed. Regarding sub-sector (see Table 2.2, chapter 2), 2 are from hardware (main activity), 3 from software and 1 from telecommunications. Regarding size, there are 3 large-scale firms, counting more than 500 employees; 2 medium-sized firms, with between 100 and 500 employees; and 1 small-sized firm, with less than 100 employees (in this latter case, permanent employees). A large part of these differences have to do with the different development phases on the firms in Portugal. Some of the largest are established in the country since decades, long before the 90s (2 firms), whilst others, namely the smallest, are established only from the 90s (4 firms). The different development phases partially explain the different dimensions (in number of workers and business volume) of these firms. The development phase may also have implications in workers’ international mobility, through what we may call an “auto-sufficiency strategy”. Apparently, the more these firms are established and settled in Portugal, the more they get resources on the national labour market, be it at the external and the internal (organisational) level; this fact implies in an accrued auto-sufficiency of the firms regarding the firm’s headquarters or other subsidiaries. Alternatively, the more these firms are recent in Portugal, the more they must rely on their international internal labour market (ILM) to respond to specific business needs. Besides these factors, it shall also be stressed that most of these multinationals (5 from the 6 firms) do not constitute more than commercial subsidiaries, i.e., units devoted to commercialise and run in Portugal the firms’ products developed abroad. This last factor has deep consequences regarding recruitment, since the direct contact with clients become a fundamental aspect of the firms’ activities. This implies that the Portuguese language, and even business and social culture, become key aspects of the employee performance. This trait explains that in most of our cases it is possible to speak of a 28
  • 30. “nationalisation” of multinational firms, in the perspective of human resources, a situation that constrains potential international mobility. In what concerns the 8 national firms in the sample, the variety may also be observed. Regarding sub- sector (see Table 2.2, chapter 2), none is from hardware, 5 are from software and 3 are from telecommunications. Regarding size, 3 are large-scale firms, with more than 500 employees; 2 are medium-sized firms, with between 100 and 500 employees; and 3 are small-sized firms, with less than 100 employees. Regarding date of foundation, most are recent operations: 5 firms started their activities in the 90s, whilst 2 began earlier (including one firm devoted to fixed communications). There seems to be also some association between national firms’ size and international mobility of their employees. In what concerns national larger firms (some of them multinational themselves), the international mobility is mainly verified in the framework of subsidiaries, partnerships or shareholder positions in foreign countries, in a similar logic to what occurs in the movements on ILM of multinationals. In what concerns smaller firms, international mobility is often “external” to the firm. Some of these firms are more committed to production (including production of software) (3 firms), and they opt for ambitious strategies on recruitment in the national external labour market (ELM) – leading to a systematic increase in firms’ size. In this sense, their strategies of mobility may become similar to the larger firms. Other smaller firms are more committed to consulting (2 firms), being more dependent on specific projects with a limited duration; they often opt for subcontracting other firms and individuals (external consultants), avoiding the risks of excessive labour in negative cycles. This external link frequently leads to external mobility. (More details will be given in the next sections.) It must be added that an important organisational development may be now developing in ICT firms, with specific impacts in international labour mobility. This fact was related in one of our interviews with a telecommunication firm (PT IC 11), involving changes in organisational structures and associated mobility. The argument is that telecommunication companies are frequently based, nowadays, in outsourcing, particularly in what concerns technical areas. These firms tend to concentrate on its function of service providers, becoming permanently encircled by various firms in technical areas. For example, in the case under analysis, “the firm qualifies mainly as a service provider, which controls and guarantees quality but does not possess the technical tools”; as such, almost all its workforce is recruited and managed in the country. The “technical tools” are available from the firms’ suppliers (for example, equipment – mobile phones) and consulting firms (for example, software and computer-related issues), which display frequent international circulation of workers (many of them foreigners staying temporarily in Portugal). Therefore, regarding international mobility, firms acting as service providers may display a markedly national labour force, whilst 29
  • 31. subcontracted firms engage in the more abundant international flows of skilled labour. In the telecommunications field and, generally, in the ICT sector, suppliers and consultants may become the main responsible agents for attributing cosmopolitanism to the sector, engaging in international movements to solve specific problems. 1.2. Human resources Concerns about Human Resources (HR) issues and policies exist in the majority of the firms observed. However, it is much clearer in large firms, either nationals or multinationals. This concern is expressed through the existence of Human Resources Departments, specific policies of recruitment, training and career development. Some of this large firms – many of them recent – seem to have perceived the importance of the HR dimension only recently, with gradual autonomisation and consolidation of this organisational dimension, either at the headquarters or the national level. Meaningfully, some of our interviews were made with recently appointed heads of a new HR Department or organisational area. In smaller firms, mainly nationals, the concern with HR is not so visible. Many do not present an HR autonomous area and these questions – including recruitment – are in charge of one the top directors. Their smaller scale and, sometimes, a higher turnover of personnel may explain this larger disregard for HR (it was referred, for example, in one small firm: “why invest in training, if our employees leave afterwards for larger firms?”) Regarding multinational firms, another relevant issue is the degree of autonomy towards headquarters. This autonomy is very large in the majority of cases. Decisions on recruitment, training and career development seem to be taken at the national level, only following very general guidelines from abroad. One firm was a partial exception. PT IC 7 declared to have “few autonomy” towards headquarters concerning HR policies. However, this may correspond to the fact that the HR dimension was priorly neglected at the world and national level, being concrete guidelines only now emerging from abroad. The central co-ordinating role of multinationals may reside on the world or regional headquarters (for example, in the case of a Southern Europe or Iberian division). 2. Internal labour market operations 2.1. Reasons for internal labour market movements As expressed in chapter 2, one of the main trends detected in our survey is the predominance of temporary over permanent international labour movements in the ICT sector. By temporary movements are meant diverse kind of flows, which can last from one week to three years. Most of these temporary flows occur in the framework of ILM of multinational firms – both foreign firms in 30
  • 32. Portugal or Portuguese firms with activities abroad. The motives for the flows are various: training, problem-solving and control. Regarding foreign multinational firms, several temporary movements occur in the framework of their ILM, mainly for motives of training and problem solving. The latter is usually related to projects: as it was stated in one interview, “international mobility in our firm occurs based in projects and not in countries; the expertise reported necessary to projects’ development is sought wherever it exists”. Although traditionally the outflows of Portuguese personnel are due to reasons of training - on job or formal training -, and the inflow of foreign personnel is due to problem solving, this trend is beginning to change. Several situations exist were the entry of foreigners is caused by training, namely to give training in Portugal; in this case, we are faced with de-localisation of training from the headquarters or other subsidiaries, a cheaper option when large numbers of local trainees are involved. In other situations, there is increasing resource to the temporary assignment of Portuguese skilled personnel to solve problems abroad. Most of the foreigners that come temporarily to Portugal are highly skilled. This does not mean that they frequently assume top management functions (see chapter 2, Table 2.5, for details). They are placed in high hierarchical ranks, mostly in the technical area, but which exclude the main decision- making on the firms. Top management functions, including direct project management, are generally attributed to Portuguese personnel. For example, PT IC 13, a software multinational firm, displays almost as many temporary foreigners as permanent national personnel in their daily activities. However, permanent national professionals manage all projects, as deliberate policy. As stated in the interview, “in practice all foreigners report to Portuguese personnel”. The functions performed by foreigners are varied, but mostly act as technical consultants. Some exceptions to that hierarchical position exist, but do not conceal the rule. For example, in PT IC 12, a multinational telecommunications firm, there has been, since the firm foundation in Portugal, a foreign cadre at the top management level (technological or financial area), as an explicit policy of the firm (one of the 4 PEMINT firms). However, it was argued that even this situation will probably disappear in the short-term, becoming all directors Portuguese nationals. This trend on the hierarchical position of foreigners is in line what was said before about the main character of the ICT multinational activities in Portugal. As they are devoted to implement products developed elsewhere, they privilege the direct contact with clients. This requires social and linguistic skills naturally possessed by nationals. This situation may also confirm the hypothesis advanced in the previous chapter about the “social” nature of many ICT activities. 31
  • 33. Concerning Portuguese personnel leaving temporarily in the framework of foreign firms, different situations exist. The absolute number of flows is low (in comparison with total personnel at home), but the variety of destinations and occupations is large. Taking only professional flows (excluding attendance of formal training), in PT IC 1 there are Portuguese in subsidiaries in USA, France, Spain and Ireland; in PT IC 4 the Portuguese follow for subsidiaries in Spain, UK and Portuguese-speaking African countries (PALOP); in the case of PT IC 7, there are Portuguese in Spain, Colombia and Brazil; in PT IC 12 some sporadic cases of Portuguese in UK, Italy and Switzerland were referred; in PT IC 13 the Portuguese are found in subsidiaries in Belgium, USA, Switzerland and UK. The hierarchical positions of these personnel seem to be, at most, intermediary in the host firms; and the functions performed are varied (including software development and consulting, marketing, financial services, etc.). Comparing inflows of foreigners and outflows of Portuguese in foreign multinational firms, at least two of our cases (PT IC 1 and PT IC 4) reported that they are “more importers than exporters”. This situation, meaning that more cadres from other subsidiaries in Portugal than Portuguese cadres abroad are to be found, may be generalised to all foreign firms under observation. Regarding national firms (namely those with international activities), temporary movements in the framework of international ILM are frequently related to their subsidiaries or partnerships established with foreign firms abroad. Motives for flows are varied, including problem solving, control and training. The rationale for moving nationals and foreigners seem now often symmetric to what was found in foreign multinational firms. The expertise developed at home is the main reason why many Portuguese leave for reasons of problem solving and control; whilst foreigners enter for training. The newness or small dimension of many of these firms, compared to their foreign counterparts, may explain some differences. Some cases may illustrate these movements. Firm PT IC 14 has some Portuguese staff assigned for periods of around two years in its subsidiaries in the UK and Brazil and a partner in Germany; several short-term outflows of Portuguese personnel to these countries; and inflows for training, mainly from Brazilian personnel. Firms PT IC 3 and PT IC 11 have shareholder positions in telecommunication firms in foreign countries, such as Spain and Norway, in the first case, and Brazil, Angola, Botswana and Morocco, in the second case; these links originate movements in both senses, in the framework of professional training or formal training courses (movements to Portugal) and problem-solving (movements to other countries). Firm PT IC 5 has partners in the Portuguese speaking African countries (PALOP) whose mission is to commercialise software products developed in Portugal; this partnership implies the inflow of African professionals to receive training in Portugal and the outflow of Portuguese employees to do problem-solving, both flows lasting for few weeks in average. 32
  • 34. Regarding the hierarchical position of Portuguese personnel leaving temporarily, it seems to be often high. In firms PT IC 3 and PT IC 6 there are Portuguese, in different hierarchical levels, in subsidiaries or firms with shareholder positions in foreign countries. This is also the case of PT IC 11, which referred as destinations Brazil, Morocco, Botswana and Angola; the hierarchical positions occupied are of the first and second row. In PT IC 5 Portuguese professionals move frequently to partners in PALOP to solve technical problems. In PT IC 9, the policy is to send Portuguese personnel to manage projects abroad while a permanent branch is not created. Whenever this occurs, the local branch tend to be filled with local personnel; however, the policy for branches abroad always implies that a Portuguese will fill the top management role. In PT IC 14, assignments in the UK, Brazil and Germany are in high managerial levels – although not at the top one. Inflows of foreigners in the internal framework of national firms are less frequent, and occur most often for reasons of training. Several short-term movements of this kind were detected in firms with subsidiaries, shareholder positions or partners abroad such as PT IC 3, PT IC 5 and PT IC 14. Some movements are more complex, mainly when foreign operations become mature. For example, PT IC 14 has a software development centre in Brazil (delocalised software production). This branch has led to a new type of movement from Brazilians to Portugal, compared to the traditional pattern of these flows (to which we will refer later in this chapter). After a first phase of intensive training in Portugal, some Brazilians are now coming to monitor the implementation of products developed by them in the Portuguese market. Recently, one Brazilian was even assigned to the Portuguese headquarters to act as a liaison between Portugal and the German operations. The specific case of training as a cause for movements in the ILM of most of the firms observed must be noted in detail. In almost all of the firms (except in one, the smallest of the sample – PT IC 10) there is an important investment in training as a way of skills’ development. Whenever the firm has international branches, it uses the advantages of scale to train personnel, either on-the-job or through formal procedures. Many of the multinational firms, namely the largest ones, have “universities” with its name, which take care of the training for world members. Even in one of the national firms (PT IC 5), a similar approach was detected: the firm has an “academy” that offer training in the firm’s products, both to personnel and clients. Besides training in foreign countries, there is emphasis in internal local training, done by the majority of the firms. Part of this training is done outside any formal framework, since firms stimulate its personnel to maintain a constant search for skills (in new firm’s products or others). New technologies are increasingly used in training, mainly in large multinational firms. For instance, PT IC 13 referred the importance of their worldwide intranet for the self-training of personnel; and PT IC 4 referred the 33
  • 35. increasing role of e-learning as a training system operating at the firm world level. When there is resource to external training – a situation common in consulting firms – it implies often subcontracting or, alternatively, acquisition of training from large ICT players. However, this latter solution is not always considered as appropriate; PT IC 9 referred to this type of training as too standardised or, using its terms, as “slideware”. Permanent movements in the framework of ILM are rare, and mostly occur by personal reasons. In foreign multinational firms, some permanent inflows of personnel were detected, some dating from early phases of the company in Portugal and other recent ones. A similar pattern (although always recent) exists for the outflow of Portuguese in the framework of national firms. The cases observed were from cadres that asked for permanence or assignment to a specific branch in the sequence of marriage (actual or prospective). This occurred either in foreign multinational firms in Portugal or national firms abroad. For example, many of the few foreigners found to have immigrated to Portugal through the ILM of their firms revealed that type of motive. In PT IC 9 the assignment of a Portuguese cadre to manage the branch in Brazil turned into a permanent flow, since he constituted family in this country. This kind of flows, that may be generally called as heart-related movements, seem to constitute one of the main causes of permanent attraction for foreign ICT talents to Portugal. Finally, it must be noted that whilst the inflows of foreigners to Portugal were found in multiple contexts - the ILM of their firms, subcontracting and external recruitment (this latter less often) -, movements of Portuguese to foreign countries seem to occur mainly in ILM. This was found in the framework of multinationals, either foreign or national firms. 2.2. Internal vacancy and career development systems In practically all the firms observed, the procedure used whenever some specific skill shortage is detected is similar. First, a search in the ILM of the local firm is done. The possibility of training resources is pondered. Next, another search occurs at the ILM at the international level. An assessment of the advantages and disadvantages of any of these types of ILM circulation is done, against the alternative possibilities of subcontracting and external recruitment. No regular pattern on these issues emerged from our survey. Everything depends on time urgency, local and international availability of resources, type and continuity of work. Hence, all of those possibilities may occur as outcome of a given context. The concrete way of searching in local ILM is variable. Both general advertisements and direct contacts with persons who fit the job or are interested on it are used. This last way of searching in local ILM – personal contacts - seems to be the most expanded. The possibility of training internal resources 34
  • 36. is admitted if there are prospects of continuity of work, and interest in pursuing it, but excluded if there is no time available for it. The international ILM channel is highly relevant in the case of multinationals. Search may be done by different means. The use of Intranets seems the most relevant (PT IC 1, PT IC 8 and PT IC 13 share information about the subsidiaries’ needs through their Intranets). Additionally, personal contacts are used (often immediately after a prior search in the Intranet). This search usually appeals to the firm’s centres of competence, and not to all subsidiaries abroad. An assessment is done on the costs of bringing in personnel, compared to their potential benefits. As it is widely known, costs of international assignments are high, particularly for the host firm (see next chapter). Whenever resource to international ILM is promoted, this fact may be understood as a powerful mechanism for international labour mobility, although in a temporary way. Regarding career development, well-defined career plans exist in most of the multinationals, usually conceived at the world level. In some of the cases, they refer the international dimension. However, this latter seldom exists in practice. At the local level, grades and paths exists for pursuing careers, which take into account individual capabilities, job descriptions and organisational needs. At the international level, little evidence of this type was detected; in another words, international career paths seem sporadic. Additionally, in many of the firms observed international mobility is not compulsory for career advancement, although it is considered a relevant asset. Some firms declared as world policy an investment in international mobility (this was the case of PT IC 1 and PT IC 13); however, this policy is seldom transformed into practice. One interesting case was the one of PT IC 12, which has a specific program, common to the firm at the world level, of career development for high potential’ young cadres. In the framework of this program, some young personnel from different countries is selected to pursue a MBA in London, being assigned temporarily afterwards to a foreign branch to acquire professional experience (one Portuguese cadre is currently following this scheme). The situation in national firms is heterogeneous. In larger firms the panorama is similar to the foreign multinational ones. The same does not occur in smaller firms, where career plans are seldom defined. This mainly occurs in the consulting activity, which is more prone to instability and personnel turn over. The strategy of these firms appeared twofold. In some cases, they tend to ignore the career dimension. As was stated to us, “in the consulting activity it is not easy to offer career prospects. What we do is to give conditions for the individuals to plan their own careers, either in our firm or in clients”. The fact that clients usually prefer young consultants favours this option. In another cases, firms turn more often to external uses of labour (with no career plans). 35
  • 37. One of the firms surveyed (PT IC 10) constitutes a good example of this latter case, and also of the importance of small firms and their flexible strategies in the framework of the ICT sector. Centring its activity in large systems based in IBM technologies, this is a family firm characterised by the flexible management of its labour force. It has a majority of “external consultants”, reporting to a minority of permanent workers, which never manage to get a stable contract with the firm. The volume of this external labour force is unstable, depending on the business of the firm. This strategy seems essential to survive in a volatile market. During a crisis, as today, the firm should be suffering had it invested in permanent contracts. 3. External recruitment and subcontracting The sample of firms is very informative about the subcontracting chain in its different levels. Both large subcontractors and small subcontracted firms were interviewed, and they described the main processes followed in this area. Interestingly, the subcontracting chain does not finish with the smaller firms, since these often subcontract individual professionals (or individuals acting as firms) to act as external consultants. One of the outcomes of the survey is that there is not a clear trend on subcontracting, either in favour or against this procedure. There are firms that usually use subcontracting and others that do not use it at all. For example, PT IC 7, a multinational software firm, draws on subcontracting in several business areas: software, marketing, human resources, etc., arguing that it often decreases costs. Alternatively, PT IC 5, a national software firm (a software house) does not make use of subcontracting, but instead “it does everything”. Distinct patterns of subcontracting were seldom detected, whatever criteria of firm classification were used: “producers” or “service providers”, “large” or “small” firms, “foreign” or “national” ones. Regarding the nature of subcontracted areas, there seems to be a trend to subcontract tasks that do not remain to the core activities of the firm. On the survey, references to subcontracting were common in areas such as wage processing, training, recruitment processes, call centres, etc. However, there were also cases where subcontracting was related to the key activities of the firm. This link occurred most often in a temporary basis and as a way of overcoming a short-term skill shortage - although some “permanent” links of this kind also existed. In synthesis, taking into account the behaviour of many of the firms surveyed, we may talk about short-term subcontracting for highly skilled activities central to the business; and long-term subcontracting for less skilled activities lateral to the core activities of the firm. For example, some of the large firms surveyed make use of subcontracting to fill short-term specific needs, usually very 36
  • 38. technical ones, through specialised service providers in a temporary way. In complement, they use subcontracting as a permanent resource in less skilled activities such as call centres. This fact, which corresponds to a majority of situations, may be related with the investment of ICT firms in expertise. In all the firms surveyed there exist a very high percentage of individuals detaining a tertiary education level (university education). The investment in training is also high. In another words, the main investment is on skilled and experienced labour, leaving to a secondary plan less skilled activities that can easily be subcontracted. However, some situations exist where high level subcontracting also occurs. Taking into account subcontracting in core business areas, different situations were detected during the survey. The rationale for subcontracting exists in different situations. First (the most common situation), when human resources are not available both in the ILM and the external one. Professionals in the firm may be not immediately available for a job or may not exist in the firm, being impracticable the resource to ILM. The alternative of external recruitment may be excluded since human resources are rare, or too expensive to recruit, in the external labour market. Second, when a perspective of cost containment is dominant, and subcontracting is a cheaper option than training internal resources or recruiting new ones. Third, in case of urgency of product development or service providing (this was the case of the development of UMTS technology in two of the telecommunication firms surveyed). Fourth, when the firm tends to abandon certain technologies considered outdated, concentrating its efforts in the development of new ones; in this case, it subcontracts to maintain support to clients of the former technology. Fifth, when the firms’ strategy is not to develop an own product (and hence a particular expertise), but to provide services; here, subcontracting is used as a flexible tool, useful to adapt to variable business cycles. Causes for subcontracting have varied in time and vary with firms. During the survey, cases of systematic subcontracting were mostly observed in the some situations, only partially leading to international mobility of labour. The first was a short-term context, caused by the sector’s boom in the country and a correspondent skill shortage. Many of the firms surveyed confirmed that during the boom of the ICT sector in Portugal, in the late 1990s, subcontracting registered a considerable growth. The main reason for this was that a skills shortage was detected in the national labour market, reflected either in absolute shortage or excessive costs to recruit (and maintain) the existing staff. Subcontracting was a strategy to fulfil specific labour needs – in the same sense as circulation in the ILM, from foreign branches, served the same role. Processes of subcontracting led to labour movements either in a national (frequently local) and international dimension, since both national and foreign firms were involved. With the sector’s economic downturn, a decrease in subcontracting was verified. 37
  • 39. During the boom, a particular international link on subcontracting was developed. A labour flow with Brazil was then started, which nowadays maintains a significant expression. It was mainly the activity of firms such as PT IC 2 and PT IC 10 that led to this flow. These firms act as consulting ones (ICT business services), often acting as subcontracted of large players, such as PT IC 1, a multinational hardware and software firm. Since the beginning of the 1990s, those firms started to recruit personnel from Brazil, often in a subcontracting basis. The business areas they intended to develop were based in a specific technology, namely large systems based in IBM software, which was badly known in Portugal (see chapter 2). Since Brazil presented abundance of these specific IBM skills, these firms (and similar ones) became largely responsible for the inflow of Brazilian professionals to the country. The volume of flows attained in this period was large. In PT IC 2 there were years where the ratio between Brazilians and nationals was 140 to 10; in PT IC 10 the absolute number of Brazilians reached a peak of 60 (against 33/34 permanent nationals) in 1999. The relevant point in this flow is that most of these Brazilians were either temporarily recruited (see next section) or subcontracted. Mainly in the case of PT IC 10, they often acted as subcontracted professionals or even subcontracted (individual) firms, being presented as “external consultants” of the firm. Since these national firms were themselves subcontracted, it follows that a large international chain of subcontracting united (and still unites) these two continents. Recently, both PT IC 2 and PT IC 10 have opened small branches in Brazil, namely in Rio de Janeiro. These branches serve mainly the purpose of recruiting personnel to Portugal. In some cases, the formal procedure of subcontracting the Brazilian branch seems also to occur, in order to facilitate the bureaucratic process of migration. Even if the reasons for the sector’s boom (including the millennium bug and the Euro) have faded and the specific IBM technologies are becoming relatively less important, this link is still active in the firms observed. A situation parallel to subcontracting, although a very specific one, was detected, without involving international mobility (for this reason, details were not asked in the interviews). It occurs with the large software producers observed in the survey (for example, PT IC 4 and PT IC 7). Due to the extensive use of their products, they are incapable of implementing and monitoring the use of their products in every firm. They do not face as a strategy to recruit personnel to face this growth (probably because the main firm’s strategy is product development, not so much consulting). As a result, they opt for the system of “partnerships” to carry this work. These “partners”, usually local small firms, acting as ICT consultants and specialised in those products, function as permanent collaborators of the large firm. This form of subcontracting almost turns to a situation of “quasi-firms” (known from organisational studies as a form of business groups). 38
  • 40. 4. External recruitment 4.1. Reasons for international movements The main reason for external recruitment is the shortage of specific skills, or the need of additional skills, in the firm. This decision is pondered against the alternative possibilities of ILM movements, additional training and subcontracting. The precise outcome of a given decision depends on the firm and the business context. The main evidence detected in this field was related to the economic cycle. During the boom of the ICT sector, most of the firms observed grew rapidly, in the sequence of increased recruitment. In the last few years this trend vanished. Currently, few are the recruitment being made. As it was once expressed in an interview, “now we must think carefully before recruiting”. Regarding the international dimension of external recruitment, our survey concluded that currently there is no active search for foreign workers in most of the firms observed. This conclusion is certainly biased by the economic context. During the boom some initiatives of international recruitment existed or, at least, have been considered. In fact, during the period of strongest growth of the ICT sector in Portugal, since the late 1990s until recently (roughly 2002), a skills shortage occurred in the national labour market, which led some firms to face the hypothesis of recruitment in the international labour market. Whilst some firms succeeded in this approach, others were inhibited to do so due to various sorts of difficulties. The main cases were international external recruitment was made were in some small national firms whose strategy have been the recruitment of workers or external consultants in Brazil. Firms PT IC 2, PT IC 9 and PT IC 10 recruited in Brazil mainly in the late 1990s (in the case of PT IC 10 since the early 1990s), reacting to skills shortages at home. Many of the Brazilians were recruited in a temporary or subcontracted model (see last section), a reason why most of them returned subsequently to Brazil. In the case of PT IC 2 and PT IC 10, recruitment had to do with the knowledge of IBM technologies on the part of Brazilians, compared to insufficiency in Portugal. As stated above, this technological niche is currently fading, since these technologies are relatively less used and new software languages are increasingly known by national graduates (Microsoft and SAP, for example). Other national firms faced the possibility of international external recruitment but they did not proceed. Firms PT IC 3 and PT IC 11, both large national telecommunication companies, declared to have faced the hypothesis of recruitment in foreign countries some years ago, around 2000, due to skills shortages in the national labour market. However, this hypothesis was not led to practice. Firm PT IC 3 tried recruitment in Eastern European countries and in India, in technological areas such as 39
  • 41. billing and CRM (areas in which countries like Poland, Belarus and India are very competitive). This search was not achieved due to the various difficulties inherent to a recruitment process: delays in the concessions of tourist visas and high costs of travel to Portugal to do job interviews. Firm PT IC 11 considered the hypothesis of recruiting software specialists and telecommunication engineers in Brazil, Morocco and Poland, usually with a short-term perspective aiming to solve temporary labour needs. However, after weighing up costs and benefits, it concluded by the unfeasibility of the strategy. The main rationale was either that the wages would be superior to the national average or the cost with travel would be excessive. Specifically, in the case of Poland the language barrier would be erected; in the case of Morocco there was no abundant offer of software specialists and telecommunication engineers; in the case of Brazil the costs with wages would be unbearable, since this type of professionals in Brazil have far superior wages than their counterparts in Portugal (what results from the Brazilian legal framework, where the lack of social guarantees in work is compensated with higher wages). During the survey, whenever the possibility of international external recruitment was faced, the interviewees expressed a systematic preference by national labour force. For example, PT IC 12, a multinational telecommunication firm, declared that “whenever a need for recruitment exists, we always prefer national labour force”. And if some years ago, with the boom in the ICT sector, the national labour market could not correspond to the demand by firms, currently this shortage of national expertise seldom occurs. A direct outcome of this “resistance” to international labour market is a major national component of labour force and, sometimes, even a regional one. National ICT professionals predominate, as already seen, in almost all the firms observed. In some firms in the North of the country – namely PT IC 5 and PT IC 14 – a regional picture occurs. Both recruit mostly in universities in the North of the country, particularly in the ones nearer to its headquarters. The low professional mobility between the major business locations in Portugal – particularly Lisbon and Oporto – explains this geographical rigidity. Although the national labour market corresponds currently to demand, its self-sufficiency cannot be asserted, since a wide array of technologies may or will not be handled in Portugal. In this respect, few firms declared to face skill shortages in their daily activities. This was mainly the case of PT IC 3, a national telecommunication firm, and PT IC 7, a multinational software firm, who admitted shortages in specific technical areas (for example, in the case of PT IC 3, the area of billing) . Other firms admitted the possibility of facing shortages in the future, and searching the correspondent expertise wherever they exist. For example, firm PT IC 2, a national software consulting firm, is trying to turn to military business areas, which are not well developed in Portugal; if it will not find the skills in need, it admits the possibility of recruiting in France (the country where a partnership is already established). 40
  • 42. 4.2. Forms of external recruitment Regarding recruitment processes, one trend must be stressed: the increasing relevance of Internet. Almost all firms surveyed declared to have placed advertisements in recruitment specialised sites (mainly foreign entities with a national site – for example, Stepstone), besides referring the use of their own sites on the Internet as recruitment channels. In this latter case, both the roles of voluntary applications and job advertisements have been stated. Other recruitment channels, of a more traditional type, were referred. This was the case of advertisements in newspapers (more specifically in Expresso, a widely used weekly newspaper for job search of cadres) and direct contact with universities, for recruiting in recent young graduates. Some firms mentioned “personal references” as an important channel. Firms PT IC 9 and PT IC 13, both a national and multinational software firms, admitted that most of the recruitment follows the way of personal networks. Specialised recruitment firms did not appear as a regular pattern. There were some cases of this type, but under variable circumstances. For example, PT IC 13, a multinational software firm, makes use of recruitment firms only when there is urgency in recruitment, since these firms possess their own data bases of potential applicants. Firm PT IC 8, a large ICT player, makes use of these firms only for pre- selection of candidates (final decisions are taken in the firm). Firms PT IC 1, 3, 6 and 14, from different nationalities and sectors, draw on headhunting firms to recruit top managers. Regarding lower skilled levels, firm PT IC 3, a national telecommunications firm, uses temporary labour firms to recruit personnel for call centres. Firm PT IC 5 declared a different approach in function of the recruitment level. For top management or highly skilled technical functions, such as a software engineer, it aims to recruit from the whole national labour market, placing advertisements in a national newspaper and in its own site in the Internet. However, for low skilled functions, such as a clerical employee, it recruits in its own region, placing advertisements in a regional newspaper. The specific case of recruitment of young graduates was referred more than once. Some firms are keen on this type of recruitment, establishing direct contact with universities with ICT degrees. This contact is mainly done by direct search in the universities (the case of firms PT IC 6 and 14 and, in an earlier phase, PT IC 5 and 9); and by specific programs of professional training for graduates (the case of PT IC 7). In this latter case, it was stated that the rationale beneath the programs was to have “ten persons with the cost of one”. However, other firms refer to this recruitment as a risky investment, since young graduates must be trained, incurring in high costs for the firm, and its continuity in the firm is not guaranteed. This problem was admitted by firms PT IC 2 and 10, national consulting firms which work 41
  • 43. frequently with IBM technologies (requiring specific additional training for Portuguese graduates), but also by PT IC 13, a multinational software firm. Regarding recruitment at the international level, no much evidence was gathered since this process is rarely put in practice. However, in some cases it was relevant. Firms PT IC 3 and 4, a national telecommunication and a multinational software firms, admitted to have received applications from foreign countries through its web site and a recruitment specialised site. Firms PT IC 7 and 11, also a multinational software and a national telecommunication firms, declared receiving periodically voluntary applications from foreign countries, but not specifically through the web. Recruitment in Brazil was described with more detail, since most of the external inflows have this origin. Both firms PT IC 2 and 10, which have recruited often in this country (see last sections), possess offices in Rio de Janeiro whose main function is precisely the selection and recruitment of Brazilian professionals. In the case of PT IC 2, before the office was opened selection and recruitment of Brazilians were made through partners in the ICT area, acting in the regions of São Paulo, Rio de Janeiro and Nordeste (Fortaleza and Salvador). The national firm adequately rewarded this co- operation. The case of PT IC 10 is a similar one, since it subcontracted Brazilian firms for selection and recruitment of Brazilian professionals. Due to the bureaucratic problems of legalisation that always occurred, the firm opened the office in Rio de Janeiro, whose function, besides selection and recruitment, is to deal with all legal aspects involved in the movements of Brazilians (through contact with the Portuguese embassy and consulates in Brazil). 42
  • 44. Chapter 4 - Mobility constraints and PEMINT variables 1. Mobility constraints 1.1. Labour costs One of the main obstacles to mobility within the European Union (EU) is the disparity of pay between Portugal and other EU countries. This limits not only the flow of foreigners to Portugal but also the emigration of Portuguese citizens. Generally, one might say that higher wages paid in other EU countries represent an obstacle to the entrance of aliens in Portugal, because they must be paid in Portuguese firms’ terms; on the other hand, the lower wages paid by Portuguese firms do not encourage the migration of Portuguese workers to countries with higher living standards. These obstacles must be differentiated according to the type of movement. Regarding temporary movements in the ILM of multinational firms (foreign or Portuguese), it is added to the labour costs of the home country a specific mobility package (see next section), since the employee remains contractually linked to the home country. International assignments and expatriations always involve high costs. Regarding permanent movements, the differential in labour costs appears in a stricter way. Considering temporary ILM movements, trends depend on the companies being foreign multinationals or national. Concerning multinational companies, foreigners in Portugal are paid according to the conditions of their branch of origin and the Portuguese abroad are paid according to the conditions in the Portuguese branch. Consequently, foreign workers in Portugal represent a huge charge to the Portuguese branch; and Portuguese workers are not kin to leave because they will work with colleagues of other branches who receive higher wages. For example, regarding foreign workers in Portugal, firm PT IC 12, a multinational telecommunications company, says that the expatriates keep the link with the country of origin, that leading to higher costs to the host employer and making the Portuguese firm prefer national workers. Also, firm PT IC 3, a national telecommunications firm with shares in companies of Spain and Norway, refers that costs related to temporary assignments of Spanish and Norwegians in Portugal are very high: further to the housing costs, they are paid according to conditions in their countries (this would mean high costs for the holding company in case of long-term expatriation). According to firm PT IC 13, a multinational software firm, one of the main obstacles to mobility is the fact that foreign workers correspond to high costs, not only due to travel and families, but also because 43
  • 45. they are recruited in the terms of its original branches. In the firm’s case, the Portuguese branch must pay a special fee for each of these assignments, in order to support those costs and the “mobility package”. Still according to this firm, it is more advantageous to develop internal competencies in the Portuguese branch, than to remain dependent from resources in other branches. Still in firm PT IC 13, pay gap has been a barrier to permanent integration of foreign workers in Portugal and of Portuguese workers coming from other branches, due to difficulties in the negotiation of work conditions (compromises were made not to “distort the situation of the firm in Portugal”). Regarding Portuguese workers abroad, firm PT IC 7, a multinational software company, points out the lack of motivation to leave, particularly when assignments are towards branches where the Portuguese have to work with people earning higher pay. This firm gives the example of two Portuguese that where supposed to go to India in 2001 but did not go because they would work with people of other branches that were better paid. Still in the case of Portuguese abroad, firm PT IC 9 says that “the assignment of people is very expensive”, as these flows result in high costs (related to high incentives and other benefits). Considering permanent movements in the international external labour market, obstacles to mobility remain. As for the inflow of foreigners to Portugal, according to firm PT IC 11, obstacles to movement in EU derive from pay gap, as in Portugal pay level is lower, thus being a little attractive country. Firm PT IC 5 (which does not recruit from abroad), considering the case of recruiting in other EU countries, says it does not know "whether we have in Portugal sufficiently competitive salaries". For example, it is interesting to see the case of firm PT IC 2 on disparities of pay between Portugal and France: it is easy to move Portuguese to France, but not vice versa; and this because labour costs are higher in France than in Portugal. According to firm PT IC 6, the levelling of pay across the EU would be a facilitator of mobility in EU. 1.2. Legal framework for migration Bureaucracy related to work permits is another obstacle to international mobility cited in the survey; on this point, the situation is comparatively better within EU. Firm PT IC 4, a multinational software company, says that work permits, stay permits and residence authorizations “are cumbersome and demotivating”. However, this situation applies mainly to non-EU workers, since it is them that need most of those permits. According to firm PT IC 13, another multinational software company, “it is a relief to know that the consultant coming to Portugal is English and not American”. In this context, 44
  • 46. this firm argues that “the EU is mainly advantageous in terms of procedures”. This is confirmed by firm PT IC 5, a national software company, by saying that the recruitment of a German worker was no problematic at all (no bureaucracy); the “overload of work” comes only when recruiting from non-EU countries. One may say, as mentioned by firm PT IC 2, that EU regulations facilitate mobility; but that is not the case in mobility to or from non-EU countries. Firms PT IC 2 and 10, employing Brazilian professionals, also refer to bureaucracy arising from legalisation of foreign workers in Portugal. According to firm PT IC 10, legislation is ambiguous and the double taxation convention can be source of confusion (some of these workers are considered as resident in Brazil and not in Portugal). Another problem is the amount of documents needed for legalisation (e.g.: a residence visa requires a contract of employment, which the firm refuses to hand over, and a certificate from the Parish Board). To deal with this hurdle the firm opts for work visas (up to 2 years), easier to obtain due to the existence of a branch office in Brazil: legalisation of the Brazilian workers is made on the basis of a contract between the Brazil office and the head office, which means work visas instead of residence authorizations in Portugal. To meet these problems, this firm says there should be an "experience" period: Brazilian workers would work for some months, but they should be legalized only if the stay was longer. Firm PT IC 5 still mentions another example of bureaucracy related to work contracts with foreigners: the problem occurs since the contract must be handed over to the IDICT (in Portuguese and in the language of the person to be employed, which puts difficulties in the case of people from Poland or Slovenia, but not from Brazil…) 30 days in advance, to be afterwards approved, thus delaying the contracting. Still, according to this firm, workers from non-EU countries "easier" for firms are those coming from Brazil and PALOP (African speaking Portuguese countries), as there is less bureaucracy and work environments are similar in those countries and Portugal. As for Portuguese workers abroad, bureaucracy is mentioned by firm PT IC 3 only. It mentions the example of the delay in issuing the "green card" to Portuguese professionals in Spain. Regarding the qualifications compatibility (including diploma recognition), most of the firms state that this is not an obstacle to mobility. In accordance with firm PT IC 3, it currently exists a great compatibility between the know-how of the Portuguese professionals and of those from other EU countries. It is referred by some of the firms that the Portuguese universities have courses as good as those from other countries. This may be related to the fact that many qualifications in the ICT sector do not require diplomas or authorizations from a professional board, as it is, for example, the case for doctors (the main exception being the one of engineers). 45
  • 47. 1.3. Fiscal and social security systems Fiscal systems and social security regimes in different EU countries, which lie at the heart of what has been called PEMINT variables, did not turn up as relevant obstacles to international mobility. Almost all firms declared that this is a minor question. For example, firm PT IC 14, a national software firm, considered it a “small administrative problem”, that does not hinder mobility. In this firm, the assignment of Portuguese professionals to the UK branch did create some bureaucratic problems, concerning the payment of social security in Portugal; however, it was not due to these motives that the assignments were concealed. Some firms described some problems related to differences in fiscal and social security regimes. It was the case of PT IC 13, a multinational software firm, that admitted a higher cost with foreign workers since it was necessary to subcontract a firm to deal with those issues. Also PT IC 3, a national telecommunication firm, referred problems with the understanding of the Spanish fiscal system on the part of assigned Portuguese professionals (since it is difficult to get information about the system, workers ignore if their income will be damaged or not), besides problems with job insurance of Norwegians assignees in Portugal (despite Norway is not a EU member, difficulties in getting contracts with Portuguese insurance firms, due to administrative and formal reasons, were described). However, this type of problems does not seem to constitute real obstacles to mobility on the EU. Still following the comments of PT IC 3, this may occur since this mobility mainly involve young personnel, that face international assignments as enriching job experiences, besides being temporary ones. This firm bases this argument on its own experience with young Portuguese expatriates in Spain (mostly in the age group 25-35). Despite higher fiscal constraints and higher contributions to social security, mobility of these workers is not affected. One interesting, although isolated case still emerged in the survey. Different fiscal systems and social security regimes in the EU, more than an obstacle, can even reveal themselves as an asset for mobility. Firm PT IC 9 admitted in this respect that national differences might become beneficial. The example of a Spanish firm operating in Portugal, as ICT service provider in the banking sector, was given (although as an exterior case to the firm in question). The Spanish firm employs Portuguese professionals, who never left Portugal, but that are legally considered as Spanish workers. They work in Portugal but with a Spanish contract; hence, their fiscal payments and social security deductions are directed to Spain. The fact that they are paid with the Spanish minimum wage, to which it is added a considerable amount of tax-exempt financial benefits, turns this a cheaper option than the usual contracts. 46
  • 48. Although this type of variables – fiscal and social security regimes – have not turned to be determinant for mobility, and the differences between EU countries can become advantageous in some situations, the case for harmonisation was once mentioned. Firm PT IC 7, a multinational software firm, admitted that a mobility police in the EU would be welcome. This could harmonise taxes and deductions in different countries, although maintaining some of the countries’ specificity. Concerning fiscal issues outside of the EU realm, some obstacles were still cited in the interviews. Firms PT IC 10 and 11, both national ICT firms operating in foreign countries – particularly Brazil -, referred the problem of double taxation as a relevant obstacle to mobility. 1.4. Social and cultural constraints One of the main conclusions of this survey is that the major obstacles to international mobility in the ICT sector are from a social a cultural nature. Factors such as language and social networks of support were cited as the main barriers to inflows and outflows of foreign and Portuguese professionals. Almost all firms referred the issue of language as the main obstacle to mobility. This problem is always derived from the necessity of contacting the clients. As firm PT IC 10, a national software consultant firm, put it, “it is not possible to force the client to speak English”. On this point, the only exception to the rule was the one of PT IC 13, a multinational software firm, where language is not faced as an obstacle to mobility. The firm’s clients do not have problems to deal with foreign consultants, because all them speak English; instead, clients consider the fact that the firm often brings American and English specialists to do presentations or co-operate in projects “an asset”. Maybe this results from the fact that banking and insurance, the activities supported by this firm, are more prone to the English language. Since all foreign specialists in the firm report, as mentioned above, to Portuguese personnel, the “local” component does not become irrelevant. Some cases are illustrative of the linguistic barrier. Firms PT IC 2 and 14, both national software firms, referred the issue of language as very relevant in the specific cases of their business relations with France (firm PT IC 2) and Germany (firm PT IC 14). According to the first firm, the case of France is peculiar since this country does not accept those who are not French speakers, being less receptive to foreign professionals than countries that adopt English more often. Contacts with Germany became difficult also due to linguistic barriers. Meaningfully, a partnership, instead of a branch, was chosen in this country “due to language”; and the professionals assigned from PT IC 14 to its German branch are German speakers. 47
  • 49. Domain of the Portuguese language was often considered as an advantage in the recruitment process. This was the case even in large multinational software firms: both PT IC 4 and 7, an American and a European firm, admitted that advantage, although the firm’s products are basically available in English. By this reason, according to firm PT IC 4, if there are no difficulties of recruiting in the national labour market and if human resources display the same capacities, Portuguese professionals are always preferred. Other firms testified the importance of language as a preferential criterion on recruitment. It was the case of PT IC 9, a national software firm. This prefers the national labour market for recruitment, being the only exception two Brazilians recruited abroad. Although with the firm’s expansion the recruitment of other foreign personnel was justifiable, particularly Spaniards, that has not occurred because the issue of language is very relevant; according to the interviewee, “it is demanded that the firm’s personnel add to the technical skills the linguistic skills”. Firm PT IC 3, a national telecommunication firm, recruited (through its ILM) some Spanish professionals; these worked in the area of “tests”, in which contact with clients is needed, requiring ability in the Portuguese language. Since Portuguese and Spanish are relatively similar languages, this flaw was amended in an acceptable way. Besides linguistic problems, large part of the firms reported cultural problems concerning the inflows of foreigners to Portugal. For example, firm PT IC 14 admitted cultural adjustment problems between Portuguese and foreign cadres, namely in what concerns work habits. Firm PT IC 10 reported problems resulting from the different “way of being” of Brazilians. Firm PT IC 6 referred the “overload of work” resulting from a foreign presence, since this will lead to a difficult process of integration in the country. Firm PT IC 5 declared that, if it would face the hypothesis of recruiting abroad, it will never recruit Indian professionals, due to the cultural shock that could emerge. All this evidence is in line with the hypothesis advanced above about the “social nature” of many ICT skills. Indeed, we must refer the different layers of ICT occupations, being the upper one the most embedded in the national cultural environment. At the most, migrations would occur at the lowest level, the one of software programmers. However, even production of software does not seem prone to receive foreigners. In our survey, some firms producing software were found, either national (for example, PT IC 5) or big multinational ones (for example, PT IC 8), and none counted foreigners in this area. At the contrary, most of foreign flows were found at the consultant firms’ level, either multiple nationalities in the framework of ILM, usually reporting to Portuguese local cadres, or (Portuguese-speaking) Brazilians. (Even the only case of delocalisation of software production found in the survey - firm PT IC 14 - was done in Brazil.) 48
  • 50. Regarding the outflow of Portuguese professionals to foreign countries, one of the most cited obstacles is the force of social networks at home. In another words, according to a large part of the firms, Portuguese are not keen to leave to foreign countries due to family and friendship links maintained in Portugal. Family, girlfriends/boyfriends, and friends are the main reasons invoked by cadres to refuse missions abroad. According to PT IC 12, a multinational telecommunication firm, in Portugal, such as in other Southern European countries, the stronger links to family inhibit mobility; this evidence was also reported in other Southern European operations of the firm. This firm also reported other factors as barriers to mobility of Portuguese professionals, including the combined link to nuclear and extended family (such as grandparents), higher female activity rates and the housing property regime. PT IC 6, a national telecommunications firm, expressed another example of resistance of Portuguese cadres to foreign missions. According to it, “there exist a cultural attitude in Portugal that dislikes departures to foreign countries”. The need to find more concrete factors for inertia emerges from this remark; the dimension of the Portuguese diaspora suggests that resistance is from a different nature. A more pertinent factor was still advanced by PT IC 6. The negative attitude towards leaving may be related, among other factors, to the concern manifested by cadres with “what will occur when they get back”, i.e., what will be their future after returning. This concern is typical from organisational contexts were leaving may mean distancing from local networks of influence and power. The argument was still more specific, since it referred to the current context of firm’s volatility, due to rapid technological and organisational changes. Firm PT IC 14 expressed a similar opinion, according to which permanent (or long-term) mobility is difficult for Portuguese professionals. Their main objective “is not to loose rights when they return to Portugal”. Several firms admitted that resistance to mobility is lower among young personnel. These seem to be more receptive to foreign work experiences, either because they have most of the career in face of them, or because they have not yet constituted family. The only exception to this point was firm PT IC 9, that declared to have faced severe difficulties to assign young cadres to Brazil and Spain. According to the interviewee, there seems to exist a “generation effect”, since the older generation (the one of the firm’s founders) was more prone to international mobility than the current younger generation. For example, it was admitted that it was easier to assign people to Brazil and Morocco, in the older generation, than currently to Spain, despite this is closer and belonging to the EU. However, if there are social and cultural resistances on the part of Portuguese to leave, so resistances have been met on the part of foreign countries that received them. For example, firm PT IC 9 referred its experience with the “superiority complex” of Spaniards and Brazilians: in a project in Spain, the animosity of Spaniards toward Portuguese professionals was only “more or less” overcome three 49
  • 51. months after the launching; in a project in Brazil, Brazilians resisted to the inflow of Portuguese, only having accepted them after having (informally) recognised their expertise. Firm PT IC 14 cited other type of resistance, from a commercial more than a cultural nature, on the part of Spain and France. It adds that Spaniards do not face willingly the inflow of Portuguese, even when they are integrated in larger teams under the co-ordination of international consultant firms. Finally, it may be added that this type of prejudgements also exists in Portugal. According to firm PT IC 7, a multinational software firm, there is a sort of non-acceptance of mobility, which is expressed in the phrase “what does he/she want to do outside that he/she cannot do here?” This firm – a large ICT multinational player - cited the example of a Portuguese cadre that changed to Spain, becoming “badly looked” by his former colleagues. 2. Mobility package A “mobility package” for international mobility exists in almost all the firms surveyed, although with different degrees of formalisation. Generally, this package implies wage increases and financial support at the level of travel of housing. It may also include tax-exempt payments (ajudas de custo) and financial support at the level of sustenance. The high costs incurred by these packages are well known. For example, regarding wage increases, firm PT IC 6 declared that internationally assigned managers duplicate their wage, whilst other professionals augment it between 30 to 40 per cent. As stated in chapter 3, assignments in foreign countries may also lead to a more rapid career progression. Firm PT IC 9 constitutes an example: professionals who leave to foreign countries may ascend two grades in the same year in the consulting career. These career progressions imply an increase in wages that may duplicate the original level, besides a set of benefits including car and a mobile phone’ credit. In this respect, it must be noted that some firms distinguish between short-term and long-term assignments. This was expressed by firm PT IC 8, a national telecommunication firm with several activities abroad. For the short-term movements there is no “mobility package”, whilst for the long- term ones there exists a set of incentives, including wage increases. The resistance of personnel to move abroad may be related to the scarcity or non-existence of attractive mobility packages. For example, firm PT IC 14 declared not to face currently many difficulties to move its personnel abroad. This was related to the availability of an attractive package – bit also, as admitted in the interviewee, pressure on the part of the firm for its employees’ mobility. 50
  • 52. Regarding integration of foreign employees and their families in Portugal, this seems not to constitute a specific policy on most of the firms surveyed. However, in some cases this policy exists. Firm PT IC 4, a multinational software firm, grants all the necessary support to the integration in Portugal of foreign workers and their families, by means of its HR department. Also PT IC 3 gives support, at the level of housing search and helping the spouse’ job search. Smaller firms like PT IC 10, a national software consultant with a vast experience of Brazilian inflows, declared not to assist the integration of foreign workers and their families, leaving that support to the informal networks of Brazilians already established in the country. 51
  • 53. Conclusion The ICT sector in Portugal expanded considerably over the 1990’s, especially towards the end of the decade, due to work associated with the millennium bug and the advent of the Euro. The sector’s growth was impressive, either at the level of business volume, number of firms and number of employees. Labour recruitment in this period was high, and the market had some difficulties on meeting demand. Since recently, the world problems of the sector joined the end of the short-term motives for growth, and the dynamics of the sector became weaker. The sample of ICT firms observed in this survey is a broad one, comprising several categories of firms. 14 ICT firms were interviewed, both multinational and domestic companies, large and small, subcontractors and subcontracted. The three sub-sectors under observation in PEMINT were included: hardware (the smaller fraction), software (both software producers and consulting firms) and telecommunication. One of the main trends detected in the survey, which reflects a low international mobility, is a largely predominant national labour force in the ICT firms. This occurs in all types of companies, even considering the national ownership criteria. Both domestic and foreign multinational firms satisfy that condition. In the case of multinationals, the national pattern may be explained by the fact that they act, in almost all cases, as marketing subsidiaries, giving rise to a preference for recruiting Portuguese nationals. However, this fact does not preclude significant international temporary flows in the framework of internal labour markets. A related finding is that there is almost no internal recruitment of foreigners in the external labour market, except for Brazilians. Particularly during the 1990’s boom, several firms recruited Brazilians, either as permanent or (mostly) temporary workers, or in the framework of complex subcontracting chains. Most of these Brazilians were recruited to meet specific labour shortages related to IBM technology. Still during the boom, some firms also considered the possibility of recruiting abroad; however, for several reasons, only a small number actually did so. At present, firms report that they supply matches demand in the national labour market. In synthesis, the trends on international mobility that emerged from the interviews are mainly temporary in nature. More specifically, we may say that it is possible to identify three types of movement: 1. temporary movements within the internal labour market of multinationals and domestic firms with activities abroad - the most frequent flows; 52
  • 54. 2. the entry of Brazilians, mostly on a temporary basis or in the framework of subcontracting, to meet specific labour needs; 3. lastly, a few permanent movements resulting from personal reasons - the least frequent flows. The internal labour market of multinationals and domestic firms with activities abroad is thus the major driving force behind international mobility. Specific moments of strong sector’s expansion and specific labour shortages – which seem declining - proved to be the main exception to the rule of low international recruitment in external labour markets. These trends may be related with a significant social embeddedness of the ICT sector. The importance of language and cultural skills constitutes a strong explanation for the national component of ICT specialists – and may also explain the preference for (Portuguese-speaking) Brazilians. The finding that the obstacles to mobility are predominantly social and cultural is related with the former argument. That is to say, factors such as language, work habits, friends and family hamper mobility. Other obstacles were met, including wage disparities between EU countries and the bureaucracy involved in obtaining work permits for non-EU citizens. All in all, we concluded that the PEMINT variables did not constitute obstacles to mobility within the EU. 53
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