Service Providers of the Information Society - About 50 Per Cent of the Companies Sell Services to Foreign Clients

In the third quarter of 2005, almost 75 per cent of IT-related service providers confirm to have foreign competition on domestic markets.

At a share of more than 80 per cent each, the proportion of companies that face foreign competition is particularly high in the sectors, telecommunications, research and development, technical consultancy and planning as well as IT service providers and landers. The smallest share in this context was recorded among tax consultants and accountants (about 10 per cent).

This is the result of a business survey among German IT-related service providers that the Centre for European Economic Research (ZEW), Mannheim, and the credit reference agency Creditreform, Neuss, conducted in September and October 2005. About 1,000 companies participated in the survey. The economic sector IT-related service providers comprises the Information and Communication Technology (ICT) service providers (firms in the branches of software and IT services, ICT-specialised trade as well as telecommunication services) and knowledge intensive service providers (firms in the branches of tax consultancy and accounting, management consultancy, architecture, technical consultancy and planning, research and development as well as advertising).

The export potential of the services provided by IT-related service providers is not only reflected in the presence of foreign suppliers on the German market, but also in the export activity of German service providers. In the third quarter of 2005, about half of the companies in this sector stated that they sold services to foreign clients. The highest share of exporting companies in this period of time was recorded in the research and development sector (70 per cent). But also the share of IT service providers and lenders as well as of telecommunications service providers exporting their services to foreign countries is above average (more than 65 per cent each). Not even eight per cent of tax consultants and accountants export services. This is the smallest share recorded. In all branches of the economic sector, the share of exporting companies is smaller than the share of companies competing with foreign firms on the German market. This difference is most apparent in the advertising industry. There, almost 75 per cent of the companies state that they compete with foreign firms on the German market. By contrast, only about 25 per cent of them do business abroad.

To successfully compete with foreign companies, IT-related service providers keep relying on product innovations. That means they offer new or significantly improved services. The share of companies that introduced product innovations between autumn 2004 and autumn 2005 stands at more than 60 per cent. The highest share of product innovators can be found among telecommunications service providers. In the branches business consultancy, technical consultancy and planning as well as in ICT trade, the share of product innovators is below 50 per cent each. In addition to product innovations, process innovations, i.e. the use of new and substantially improved technologies in service provision, enable companies to increase their competitiveness. In the third quarter of 2005, more than 70 per cent of IT-related service providers stated that they had introduced at least one process innovation between October 2004 and October 2005. This share represents an increase of more than 10 percentage points year-on-year. Telecommunications service providers display the highest share of process innovators. But also architects severely affected by sluggish construction activity attach great importance to process innovations.

Remark on the projection

To ensure the analyses' representativity, the ZEW projects the answers of the survey participants with the turnover value of the businesses with regard to the entire economic sector service providers of the information society. The phrasing "share of the businesses" therewith reflects the share of turnovers of the businesses.

Contact

Jörg Ohnemus, Phone: +49(0)621/1235-354, E-mail: ohnemus@zew.de

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