ZEW Survey among 4,440 Companies – German Businesses Rely on National Partners when Outsourcing IT Services

Approximately 87 per cent of German companies have outsourced their IT services such as system support, hardware maintenance, software programming, or user support to a greater or lesser degree to external providers. They rarely take advantage of the possibility to subcontract IT services to low-income countries (offshoring).

The large majority of 94 per cent of the German companies that outsource their IT services to external providers exclusively work with other German enterprises; only six per cent collaborate with foreign partners. Forerunners in offshoring are, above all, large manufacturing companies with at least 500 employees. About 18 per cent of them work with foreign IT service providers. The overall share of companies that receive services from outside the EU has been very small so far, accounting for less than one per cent. These are the findings of a representative survey among approximately 4,440 companies with five and more employees in the manufacturing industry and selected service industries. The survey was conducted in the fourth quarter of 2004 by the Centre for European Economic Research (ZEW), Mannheim, and partly funded by the “Landesstiftung Baden-Württemberg”.

The ZEW survey further shows that the outsourcing degree varies considerably between individual IT services. About two thirds of the companies partially or completely outsource system support and hardware maintenance to external providers and approximately 63 per cent subcontract software programming services. More than half of the companies entrust external partners with user support, IT training and IT security. About 50 per cent of the companies outsource the tasks of creating an internet presence and installing new hardware or software. So far, the possibility to outsource computing capacities has been used by just about 22 per cent.

The most commonly encountered reason for outsourcing IT services is that companies want to focus on their core business (91 per cent). About 84 per cent think that they are too small to provide all services themselves and 86 per cent refer to the high quality of services rendered by external providers. Three quarters of the companies note that outsourcing saves time and/or money. Others subcontract their IT services to third parties due to legal reasons (63 per cent) or difficulties in the search for qualified workers (45).

Contact

Dr. Julia Häring, E-mail: haering@zew.de