Service Providers in the Information Industry Assert Themselves through Innovation

When it comes to maintaining their competitiveness, the renewal and improvement of internal business processes plays a considerable role for service providers. In view of this, service providers in the information industry place particular store in the implementation of new, or significantly improved, technologies (process innovations).

The sales share of service providers in the information industry, which have implemented process innovations within the last twelve months, totals approximately 60 per cent. The sales share of telecommunication service providers, technical consultancies or planners, tax consultancies and auditors, as well as businesses engaged in research and development, totals around 90 per cent.

This is the finding of an economic survey of service providers in the information industry, carried out between September and October 2003, by the Centre for European Economics Research (ZEW), in Mannheim, in cooperation with Creditreform, Neuss. Around 1,200 businesses took part in the survey. Service providers operating in the information industry include those active in information and communication technology (ICT) (businesses providing or leasing computer software, specialist ICT services and telecommunications service providers) and knowledge-intensive services (businesses providing tax consultancy and auditing, architects offices, technical consultancy and planning, research and development as well as advertising).

As well as implementing improved or new technologies, businesses in this sector also make organisational changes in order to optimise internal business processes. Businesses in the various branches of the information industry take advantage of the possibility of changing internal business processes to a greater or lesser extent. Many telecommunication service providers, tax consultancies and auditors as well as advertising agencies, promote increased cooperation. The sales turnover of technical consultancies and planners, architects and specialised ICT traders which have done away with internal hierarchies within the last three years, is significantly above average. The creation of cost or profit centres is a particularly common practice amongst consultancies and planners, tax consultancies and auditors as well as advertising agencies. 

Service providers in the information industry also make use of different ways of organising their work in order to gain flexibility and increase competitiveness. This is reflected, for example, in the fact that the sales turnover of service providers in the information industry which conclude fixed-term contracts, has increased from approximately 70 per cent to more than 80 per cent in the past twelve months. The practice of concluding fixed-term contracts is equally common in nearly all branches of the information industry. It is only in the areas of management consultancy and in specialised ICT trade that fixed-term contracts are more rarely concluded. Two further measures which render work more flexible are the use of freelance workers and the practice of sub-contracting tasks to third-party firms. The use of such practices is particularly common in the case of architects, technical consultancies and planners. Tax consultancies and auditors also make frequent use of these two measures. In research and development, however, they are of very little significance.

Contact

Dr. Margit Vanberg, E-Mail: vanberg@zew.de