ZEW ICT Survey among 4,300 Companies – In Terms of IT Outsourcing German Businesses Rely on National Partners
ResearchNowadays, about 64 per cent of the companies in Germany entirely or partly subcontract IT services such as the installation of hardware and software as well as programming services to external providers. However, the outsourcing of IT services beyond national borders (IT offshoring) is performed rather rarely. All in all, just 6 per cent of the outsourcing companies have their IT services generated in other European or non-European countries.
These are the findings of a representative survey among approximately 4,300 companies in the manufacturing industry and selected service sectors (trade, transport and postal services, banking and insurance, EDP and telecommunications services, technical service providers and other corporate service providers) with at least five employees. The survey was conducted by the Centre for European Economic Research (ZEW), Mannheim, in the beginning of 2007 with financial support of the Landesstiftung Baden-Württemberg.
In terms of IT outsourcing, the manufacturing industry shows a higher outsourcing intensity (71 per cent) than the service sector (63 per cent). With 83 or 81 per cent respectively, companies of the banking and insurance sector as well as of the chemical industry make up the biggest share of IT outsourcing companies. Far beyond average, though, lies the IT outsourcing performance of transport service providers (46 per cent) and EDP and telecommunications services (48 per cent).
The ZEW ICT survey further suggests that the outsourcing intensity of different IT services varies. Approximately 49 per cent of the companies outsource the installation of hardware and software at least partly. Second in place are programming services, transferred to external providers by 45 per cent of the companies. IT-related consultation and planning is subcontracted by 42 per cent of the companies, management and operation of the IT infrastructure by 31 per cent. However, only 14 per cent of the companies use the outsourcing of computing capacity such as for instance application service providing (ASP). What can be observed in all sectors is that the IT outsourcing intensity increases with the number of employees
IT services are rarely transferred beyond national borders (IT offshoring). All in all, merely six per cent of the companies within the regarded sectors have their IT services generated in other European or non-European countries. Still, the transfer to European neighbour countries significantly dominates global outsourcing.
The ICT sector, (containing the ICT user industry in the manufacturing industry and the service sector) purchases IT services abroad more frequently than average. More than 12 per cent of the companies within this sector buy services from another country. By way of comparison, the manufacturing industry and the service sector (both without the ICT sector companies) achieve a value of about six per cent each. “Contrary to the frequent assumption that IT offshoring was widespread, it now becomes clear that especially businesses in the IT user industry rely on regional proximity when purchasing services”, says Dr. Irene Bertschek, head of the ZEW research group Information and Communication Technologies (ICT).
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