TBY talks to C. Müjdat Altay, CEO of Netaş, on Turkey’s role as an ICT hub, his outlook for R&D, and the changes the company has undergone.
TBY Turkey is looking to raise its annual R&D expenditure to 2% of GDP. Why is this figure important for Turkey, and is the country on track to achieving it?
C. MÜJDAT ALTAY If we look at the picture immediately after 2002, Turkey was only investing less than half a percent of GDP on R&D. That’s a low figure. The 59th and 60th government programs, and also the ninth seven-year plan released by the State Planning Organization (DPT), stressed the importance of investing in R&D. As a result, we see today that this spending has increased from 0.48% to 0.84%. So it’s almost doubled. But keep in mind that Turkey has also shown tremendous growth in GDP over the past few years, and in brute terms the amount of money spent on R&D had actually trebled by 2005. So yes, Turkey is on track, and we are expecting to reach the 1% mark soon enough, but it’s going to take some work.
Nevertheless, both the private sector and the government are committed to the 2% goal. As you know, R&D is very important for both developed and developing countries. Developed countries like the US, EU, and Japan spend around 2% per year on R&D. Turkey also has to attain this figure to keep up with the developed world. Also keep in mind that we have a young population. New technologies, especially ICT, are well suited to a country with a young population. Investing in R&D is crucial in terms of realizing the huge youth potential that our country has. Given the right resources, we have the potential to become a true creator of technology in the near future. In the ICT area Turkey is already growing very rapidly, and that is a very positive sign.
While Turkey is a large market with a young population, what other strengths does it have as a potential ICT hub for the region?
Turkey’s geographic location is of great importance in itself. I know it sounds clichéd, but Turkey is a bridge, not just culturally but also economically. It’s a bridge in the global energy sector, with its gas and oil pipelines. It’s also a transportation hub in terms of roads, airways, and railways. If you look at global R&D expenditures and the number of patents before 2000, you’ll find that more than 50% were accounted for by Western countries. But now more than 50% is accounted for by Eastern countries. As technology has begun shifting East, wealth has also begun shifting from the West to the East. Turkey has become an important bridge in the other direction. Turkey’s importance has concomitantly improved in terms of air travel, highways, and railways. For example, in the last seven years the Turkish government has built more than 14,000 kilometers of new two-lane highways. Also, in 2011, the budget allocated to the railways has exceeded that which was allocated to roads for the first time. Then there are other high-profile projects such as the Marmaray tunnel under the Bosphorus, and also plans to build a third bridge spanning the Bosphorus. Istanbul has also become a major center for air travel, and there are flights from Istanbul to the four corners of the globe. All in all, Turkey is a major bridge for transportation, natural resources, and also technology.
In terms of ICT, Turkey has also become a major hub. Keep in mind that satellites aren’t enough anymore for global telecommunications. You need fiber optic cables, and you need bandwidth. Turkey has already become a very important fiber hub. Many fiber links pass through Turkey, making it a crucial link in terms of data and broadband communication. In many respects, Turkey is already a major
However, we should also keep in mind the massive increase that’s been seen in trading volumes over the last few years between Turkey and North Africa, the Middle East, and the Turkic republics in Central Asia. The volume of imports and exports combined has been increasing between 20% and 30% per year. You can pretty much reach everywhere in three hours if you’re in Istanbul or Ankara, be it Europe, North Africa, the Middle East, Russia, or Central Asia. Economies in those regions are also growing very fast, and Turkey’s central location is crucial in terms of doing business.
In terms of R&D, how capable is Turkey of producing the right human capital?
Turkey has a very high number of well-qualified engineers. There are many excellent engineering schools in Turkey. It’s the most prestigious profession among the young generation, and that also bodes very well in terms of Turkey’s potential to become a real and globally competitive producer of technology in the near future. Netaş employs many engineers, too. We have around 850 employees, and around 95% of our employees are engineers. About 700 of those employees are in the research and technology field. They’re mainly working on development projects for North American and European companies, and we’re also developing some projects for the Turkish Armed Forces.
Where are you currently focusing your project resources?
Our main focus is ICT. Our technology people work on four main areas with outside companies: carrier voiceover IP (VOIP), enterprise VOIP, optical, and GSM technologies. We also have another team of around 100 people who work on local technologies, mainly carrier-grade switching for the Turkish Armed Forces, including the army, navy, gendarmerie, and the air force, together with the Ministry of the Interior.
What changes has the company undergone over recent years?
Over the last five years we’ve grown 20%, and we’re now worth $179 million, which is a good result for us. Over the past five years we’ve focused on system integration and defense technologies. From 2006 until now our technology group has grown from 200 employees to almost 700, and the other areas have grown remarkably as well. If you’re in systems integration, you have to be into technology too. We develop technologies for GSM, VOIP, and for the optical field. Because those are the main parts of the ICT sector, we know those technologies very well. We don’t just provide customers with ready-made products, we also offer experience and consulting to suit the needs and expectations of our clients. The success of those last five years has led us to expand into 20 countries, mainly in North Africa, the Middle East, the Turkic republics, and Eastern Europe. These countries are growing fast and they need ICT solutions, so business is very good.
What’s your vision for the future of the company?
Netaş has a lot of accumulated knowledge. When you look at the last 30 years, this company has generated a lot of technology, from private branch exchange (PBX) to rural switches, big switches, analog, digital, VOIP technology, optical, GSM technologies, and so on. In that regard, Netaş is a very strong company. With our strategy of being a regional systems integrator with a force of 700 R&D engineers, we believe that Netaş’s future is very bright indeed. We’ll continue to implement our growth strategy, and carry our knowledge, experience, and know-how to foreign countries.
© The Business Year