Service Providers of the Information Society – Realisation of Customer Demands Main Motive for Service Export

About half of the companies in the economic sector service providers of the information society export their services to other countries. The main motive for these export activities is the realisation of customer demands, followed by the development of new markets. Tax benefits play a rather insignificant role as motives.

Non-export companies of the same economic sector name three main export barriers: the saturated German market, the difficulty in estimating risks and the high costs of opening up new markets. These are the findings of an economic survey among IT-related service providers conducted by the Centre for European Economic Research (ZEW) in Mannheim (further information about the survey at the end of the press release).

Western German IT-related service providers consider the realisation of customer demands to be an important export motive, East German IT-related service providers believe the development of new markets to be the driving force behind export activities. Tax benefits play a rather insignificant role although almost 20 per cent of East German service providers still name it an important export motive.

The realisation of customer demands is particularly important to management consultants, advertising agencies, tax consultants, and accountants. Nearly all exporting companies of those three branches attach great significance to the realisation of customer demands as a motive for service export. The opening up of new markets, however, bears great meaning for more than 80 per cent of both architects and ICT-specialised trading companies that export their services. Technical consultants and planners consider the realisation of customer demands and the development of new markets to be important export motives. By contrast, less than 10 per cent of all companies in the sector IT services and software, architecture, and advertising regard tax benefits as a reason for service export. The IT-related service providers that do not export their services list various export barriers. Most companies of this economic sector are already operating at full capacity on the German market. About 75 per cent of the companies state this as their main export barrier and approximately 60 per cent fear the unpredictable risks of exporting. More than 50 per cent of the companies of each sector indicate that the high costs of entering a new market and the different standards abroad keep them from exporting. Nearly half of the companies name cultural and linguistic differences.

The low demand from abroad plays a rather subordinate role. More than 40 per cent consider this to be an export barrier. The competence of the subsidiaries represents another export barrier for just approximately 40 per cent of the companies. About a third also lists the shortage of qualified employees and less than a 20 per cent of the companies say that the lack of support and guidance by public authorities restrains them from exporting services.

Comments on the projection

To provide representative analyses, the ZEW projects the answers of the participants in the survey to the number of all companies or the number of all employees within the sector.

Contact

Dr. Jenny Meyer, E-mail: meyer@zew.de