Chapter 3 New Outcomes for Australian Firms in the Global IT Industry Glen Searle and Kevin O’Connor 1. Introduction Australia represents an anomaly in the world of the IT industry. It has a small but high income population, a complex set of business functions and a broad array of international connections. Its telecommunication systems match world standards. It has a large University and Government research infrastructure, some of which has been involved in IT related concerns, recently seen in a significant invention of a “peer-to-peer wireless LAN” in1996 which is now installed on most laptops (Mullin 2012; US Patent Office 1996). However, its IT industry, both hardware and software, has long been dependent upon overseas suppliers. It has not been able to replicate the experience of the small countries that have attracted research attention in recent years (notably Israel and Ireland). That outcome can be traced in part to the small role that the electro-mechanical technologies, which underpinned the evolution and development of the IT industry, have played in Australian manufacturing. That limited the potential for IT machine construction in Australia; accordingly, from an early stage the machines needed to run IT functions were imported. As a result the Australian IT sector came to rely on MNC manufacturers from the US, Europe and Japan. Following this set of connections, foreign MNCs also became the main source of supply of software. However, over time Australian software firms have developed specific products for the domestic market. Some of these have been exported. In addition, some Australian software service companies have moved into world markets. The purpose of this chapter is to identify the factors that have shaped these responses, and to explore the way that this trend to Australian based participation in the global market may evolve. It is well known that success in global software markets for Australian companies has occurred in connection with industries important to Australia which also impact the global economy. Examples here relate to control software in the mining industry and specialist accounting software in financial services. Interviews with some new small local firms suggest that the next stage in the development of the industry might have a new structure as firms take