South Korea will invest over 560 billion won ($422.6 million) to foster software development companies and experts, with the goal of accelerating the country's push for digital innovation, the Science Ministry said.

The Ministry of Science and ICT announced its plans for advancement of the software industry at an economic meeting Friday, intending to build on the fundamental strength of digitization and support the sector’s overseas expansion. Its yearly budget for the project stands at about 563 billion won ($424 million).

“Software is the foothold that drives innovation and growth in new digital technologies, so it's important to have a strong foundation,” said Lee Jong-ho, minister of science and ICT. “We’ll carefully consider key policies such as fostering digital talent, developing basic technologies and improving institutions to create the foundation for a great leap forward as a digital model nation.”

The government will invest in securing hardware-aware software to achieve low-power consumption and optimization. As data and computing power surge with the spread of generative artificial intelligence, it sees the development of system software technology capable of high-efficiency computing as essential.

The ministry will also fund the development of software technologies that have a high potential to go global.

Promising software will be selected based on growth potential and export competitiveness. The government plans to intensively support the research and development process of selected software for two years starting this year. Collaboration tools, manufacturing industry software, and medical and pharmaceutical software have been mentioned as some of the investment targets.

Additionally, the ministry will try to find software technology needs that can increase the competitiveness of industries such as manufacturing, automotive, shipbuilding and space through inter-ministerial collaborations.

It plans to support the development of universal software that can be used for automobiles, robots and urban air traffic from 2025 as well.

Seeing Software as a Service, a software distribution model as a new opportunity for the country, the government has set a goal of increasing the number of domestic SaaS companies from some 1,100 in 2021 to more than over 10,000 by 2026.

“Major global firms are moving from a business structure centered on package software sales and systems integration to SaaS-centered,” the ministry said. “The online nature of distribution and sales makes it easier for local software companies to grow and expand overseas.”

Under the plan, the government will help SaaS companies struggling with marketing and sales after entering the global market by organizing global tech partnership events to promote the country’s software competitiveness in connection with AI conferences of these overseas big tech companies.

It has further set a goal of increasing the number of software companies belonging to the so-called “100 billion club,” a league of Korean companies that made 100 billion won in annual sales, to 250 by 2027, while nurturing 200,000 professionals in the related field.