IT Outsourcing Opportunities in Germany, New Zealand, and Australia

IT Outsourcing Opportunities in Germany, New Zealand, and Australia

IT Outsourcing Opportunities in Germany, New Zealand, and Australia 150 150 infrastructure

I attended two workshops recently (well the latter one was more of a social forum) and learned a great deal of stuff.

At the “Cracking the German Market” seminar, I found out that:

  • As Europe’s largest market, Germany exports high tech goods to the value of EUR 110 billion — making it the top high tech goods exporter in Europe and third worldwide.
  • Near-shore software providers may be what many Philippine software development companies see as competition in terms of IT outsourcing but it’s more expensive to work with these companies in Central and Eastern Europe (CEE) especially as you move to Russia, in which $37/hr is the average cost for software development. I’m not saying you won’t see a company in the Philippines charging you $37 per hour though. Of course, certain skill sets will definitely have premium values.
  • Anyway, cost is not the main driver for outsourcing anymore.
  • Germany has the record of the lowest labor cost growth at 2% (2000-2008) while its CEE counterparts such as Czech Republic and Poland have grown by at least 7%.
  • Stuttgart, Fellbach, Kartsruhe, Potsdam, Paderborn, and Darmstadt comprise the network of municipalities that are focused in Information and Communication.
  • In Central Germany alone, there are approximately 700 IT and IT-related companies that employ a workforce of over 25,000 — which is about half of the Philippines’ employed IT professionals.
  • Total ICT workforce in Germany is around 850,000, making it Germany’s second largest employer in terms of industry.
  • There are about 75,000 ICT companies in Germany and ICT forecast is 4.3% growth in 2012 (from EU 137 billion).
  • Germany is Europe’s largest ICT market in terms of revenue volume, which is 20% of total EU market volume, and 4th in the world after USA, Japan, and China.
  • ICT services worth EU 12.8 billion are exported.
  • With 70% of Germans online, Germany has the most Internet users in the EU — creating significant potential for e-Business.
  • Around 10 million Germans use their mobile phones to go online.
  • With 82 million inhabitants, the German market is very attractive to foreign ICT companies seeking to increase their market share.
  • Germany is still a net importer of ICT products, especially of hardware and consumer electronics. According to BITKOM, 71% of ICT providers expect overall growth in 2012, with software houses and IT service providers being the most optimistic towards the future.
  • ICT growth areas include: cloud computing, embedded systems, games, Internet business, IT security, and mobile data services.
  • On cloud computing, the most important sector is Software as a Service (collaboration, CRM apps, finance & accounting solutions), which is expected to grow to EU 4.8 billion in 2015. In addition, large companies are expected to build their own large “private clouds”.
  • On Internet business, highest growth rates through 2012 are expected in the e-commerce, transaction services, online platforms, and online advertising segments.
  • Mobile data services, mobile commerce, mobile enterprise solutions, mobile advertisement, and mobile entertainment are becoming increasing hot market areas in Germany.

 

At the Philippines-New Zealand Business Council (PNZBC) forum, I met Ambassador Reuben Levermore, Bala Muniraju from Datacom, Quentin van Meerbeeck from Santa Fe relocation services, folks from NZTE and Comfac.

IT Outsourcing Opportunities New Zealand

Beng Coronel of Pointwest talked about their company’s success story in doing business with New Zealand companies.

It was my second time to attend a PNZBC event and I’m glad I met some new faces. New Zealand Trade & Enterprise (NZTE) has been very accommodating and has given us the opportunity to be part of these business events, not just in New Zealand, but also in Singapore, with the help of Jill Tan and Eileen Vizmonte.

New Zealand, just like Germany, is one of the more export-driven economies. Of course, New Zealand is known for its dairy industry, but according to the Technology Investment Network (TIN 100) Report 2011, New Zealand ICT and hi-tech companies surpassed the $7 billion revenue mark in 2011.

I’ve another source that says ICT is big business in New Zealand, contributing around $20 billion a year to the economy (a third of it generated by telecommunications services). There are around 2,300 businesses in the sector employing about 46,000 people, that’s almost as big as the Philippines’. (I think the difference is where the telecomms players come in, but $7 billion is still big, so that may mean more intellectual property instead of services, given the scale of employed professionals.) Employment grew by 25% from 2005 to 2010, and demand is expected to stay high as the importance of computers, networks, the internet and mobile communications continues to grow.

A 2009 survey of ICT employers found that about half were having trouble recruiting experienced technical staff. Employers currentlyrely heavily on overseas applicants to fill some of the jobs in highest demand. What does this mean for IT outsourcing companies? Big business opportunities.

So now, given these information, what do we do and what’s going to be our strategy? Obviously, we can’t just go there and immediately start selling. We have to know who we’re selling to, what we’re going to be selling, and most importantly, what the market needs. (That means more work for me!)

As in any case, to succeed in selling a product or a service, you need to meet what the market really wants, and not what you think it wants, as Dr. Linda von Delhaes-Guenther of AHP International GmbH & Co. KG said.

Now, I’ve got the full presentations from the “Cracking the German Market” session, nothing from the PNZBC forum though, but I have Martin Conboy’s presentation on “Cracking the Australian Market” — drop me a note if you’d like copies.

And please — feel free to share your comments and information you may have on these markets (or even other markets).

Related:

Philippines Software Industry Growth

Why Outsource to the Philippines

Innovation Mindset and Challenges to Growth

Exist Information Technology Forecast for 2012