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PEMINT




PORTUGAL – ICT SECTOR



      Draft version




                           João Peixoto
                        Catarina Sabino
                        Susana Murteira

                        SOCIUS, Lisbon
                           March 2003
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
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
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 www.umic.pcm.gov.pt/site


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 www.umic.pcm.gov.pt/site


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
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 www.umic.pcm.gov.pt/site.


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 www.umic.pcm.gov.pt/site


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 www.umic.pcm.gov.pt/site



                                                        4
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 www.umic.pcm.gov.pt/site.


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 www.umic.pcm.gov.pt/site.


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 www.umic.pcm.gov.pt/site.




                                                           5
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
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
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 www.umic.pcm.gov.pt/site


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
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
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 www.umic.pcm.gov.pt/site


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 www.umic.pcm.gov.pt/site


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
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
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
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
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
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 www.umic.pcm.gov.pt/site).


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
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: www.umic.pcm.gov.pt/site




 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: www.umic.pcm.gov.pt/site




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
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
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
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
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
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
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
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
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
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
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
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
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
“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
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
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
Portugal ict sector
Portugal ict sector
Portugal ict sector
Portugal ict sector
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Portugal ict sector
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Portugal ict sector
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Portugal ict sector
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Portugal ict sector

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Portugal ict sector

  • 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 www.umic.pcm.gov.pt/site 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 www.umic.pcm.gov.pt/site 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 www.umic.pcm.gov.pt/site. 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 www.umic.pcm.gov.pt/site 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 www.umic.pcm.gov.pt/site 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 www.umic.pcm.gov.pt/site. 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 www.umic.pcm.gov.pt/site. 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 www.umic.pcm.gov.pt/site. 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 www.umic.pcm.gov.pt/site 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 www.umic.pcm.gov.pt/site 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 www.umic.pcm.gov.pt/site 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 www.umic.pcm.gov.pt/site). 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: www.umic.pcm.gov.pt/site 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: www.umic.pcm.gov.pt/site 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