Smart services have to be globally competitive if they are to grow in terms of their significance within the Queensland economy. This is true in two respects: first, only the development of cost-effective solutions to global needs will allow local firms to enter export markets and achieve the economies of scale and scope required to remain competitive in these markets; second, the skilled workers on which the delivery of smart services rely are increasingly mobile, as high-value job opportunities expand in countries such as China, India and Brazil. Correspondingly, smart services industries have to be competitive in two ways: in their ability to deliver world-class solutions in a cost-effective manner, and in their ability to attract and retain the highly-skilled people required to provide the human capital and knowledge base on which smart services depend.
Not all services activities can be classified as knowledge-intensive and not all knowledge-intensive services can be successful in global markets. Many parts of the services sector in Queensland can be currently classified as ‘knowledge-intensive’, however only those firms that have the ability to compete in world markets will be able to contribute to exports and thereby create a significant number of high-skilled, highly-paid jobs.
The notion of ‘sustainable competitive advantage’ can be used to describe the smart services industries in Queensland which are capable of delivering high-value, knowledge-intensive services to global markets. A potential sustainable competitive advantage exists in those smart services sectors that:
In order to identify, and exploit, sources of sustainable competitive advantage, smart services firms need to develop not only technical and domain knowledge, but also ‘market knowledge’; that is, the know-how required to identify and understand changing global needs, and to promote, secure, contract, deliver and support the sale of high-value services in international markets that face these needs. The increasing globalisation of services and rapid technological change create a complex business environment in which smart services firms must learn to effectively operate.
As such, the development and maintenance of sustainable competitive advantage in Queensland’s smart services sectors relies as much on market knowledge as it does on scientific R&D and technological know-how. This is an important aspect in which skills – the right ‘type’ of human capital – are vital to the success of smart services firms.
Current statistical collections do not provide a complete basis for understanding the potential for smart services to contribute to future economic growth, high-value job creation and export expansion in Queensland. In order to investigate the issues and constraints experienced by smart services firms, focus groups were held with four sectors:
While these industries do not represent the only services-oriented sectors in which Queensland may have a sustainable competitive advantage38, these four can be unambiguously defined as knowledge-intensive, and to varying degrees export activities by Queensland firms in these areas are already underway. Importantly, potential sources of sustainable competitive advantage in these sectors can be readily identified, as shown in Table 1.
Smart Services Sector |
Potential Source of Competitive Advantage |
Infrastructure and Resources Services (including Mining Services) |
Queensland’s mining sector has achieved global competitiveness and recognition as a technology leader and has attracted large multinational firms to the State. This mature base has allowed specialised services-oriented firms to emerge, delivering to both the local mining sector and offshore markets. |
Urban Services (including Design, Planning, Construction, Engineering and Architecture) |
Queensland’s tropical and sub-tropical climates, high degree of urbanisation and rapidly growing population provide a unique opportunity for specialised urban services development that could be exported to rapidly growing urban regions in Asia that share Queensland’s tropical and sub-tropical context. |
Environmental Services |
Queensland’s R&D capabilities have generated world-leading technologies and associated services in pollution, water and resource management, and there is a potential to stake a leadership position in environmental services for tropical and sub-tropical environments. |
ICT Services |
Queensland’s sparse population combined with a large geographic area has led to research strengths in remote sensing, distributed data capture and analysis for complex distributed environments. This could be the basis for export of expertise in ICT-enabled services to regions with highly distributed populations. |
The degree to which these potential sources of competitive advantage are reflected in current activities undertaken by Queensland services firms varies across sectors. The mining and resources services sector, for example, has already established a significant presence and reputation in off-shore markets, while Queensland’s ICT services remain fragmented between multinational firms and a large number of high growth SMEs. There are also crossovers in specialisations across sectors, with, for example, many mining and resources services firms relying heavily on information technologies and applications.
The degree to which firms in these sectors are services-based also varies, from the many environmental services firms which base their specialisation around technologies embodied in products and devices, to consulting engineering and architecture firms that deliver ‘pure’ services.
All firms within these sectors, however, can be said to be ‘services-oriented’, in that their business models and specialisations reflect the smart services characteristics – the criticality of human capital, the reliance on a knowledge-base, and the requirement to customise delivery to meet globally relevant needs - as previously defined.