Service Providers of the Information Society – Companies Intensify Investment in ICT and Outsource IT Services

In the past three months, more than a third of the IT-related service providers increased their expenses on information and communications technologies (ICT). About 35 per cent of the companies expect a further growth of ICT expenses in the coming twelve months.

In addition to that, almost 20 per cent of the companies subcontracted IT services to external providers in the last twelve months. In this context, especially West German companies of the economic sector play a pioneering role. Over the last twelve months, about 20 per cent of these companies have outsourced IT services in contrast to approximately five per cent of East German IT-related service providers.

These are the findings of a business survey among service providers of the information society conducted by the Centre for European Economic Research (ZEW), Mannheim, in cooperation with Creditreform, Neuss, in March 2007.

The companies of the telecommunications services industry in particular increased their ICT expenses in the past twelve months. For the coming twelve months, about 83 per cent of the telecommunications service providers estimate further growing expenses on ICT. The companies in the advertising industry also intensified their investment in ICT over the last year. About two thirds of the advertising companies confirm the risen ICT expenses. However, these companies do not plan to further increase these costs. Approximately 70 per cent of the companies in the advertising industry expect their expenses to remain at the current level. Tax consultants and accountants as well as telecommunications service providers scarcely increased their ICT expenses in the last twelve months and estimate a similar slight growth of these costs for the coming year. About 20 per cent of the tax consultants and accountants speak of higher expenses for ICT and a fifth assumes to spend more money on ICT.

In terms of IT outsourcing, though, tax consultants and accountants as well as telecommunications service providers are particularly active. More than half of the tax consultants and accountants outsourced their IT services to external providers in the past twelve months. In the same period of time, about 20 per cent of the ICT-specialised trade companies subcontracted IT services and other corporate activities to external providers. Business consultants, architects, technical planners and the sector in research and development make use of outsourcing and IT outsourcing to a varying extent. Whereas in the past twelve months approximately 15 per cent of the business consultants outsourced IT services, only 6 per cent subcontracted other business activities. In contrast to this, in the research and development branches, technical consultancy and planning and architecture, the companies rather outsourced other business activities instead of IT services to external providers throughout the last year. More than a third of the companies in the research and development sector subcontracted other corporate activities; only about 4 per cent did the same with IT services. In the last twelve months, more than 25 per cent of the architects outsourced other company activities. On the other hand, just about 10 per cent of them made use of IT outsourcing. The share of the technical consultancy and planning companies subcontracting other company activities to external providers is 18 per cent larger that the proportion of companies that outsource only IT services.

The economic survey conducted by the ZEW/Creditreform

About 800 businesses participate in the quarterly survey. The economic sector service providers of the information society consists of information and communication technology (ICT) service providers (businesses of the branches software and IT services, ICT-specialised trade and telecommunication services) and knowledge intensive service providers (businesses of the sub-sectors tax consultancy and accounting, business consultancy, architectural offices, technical consultancy and planning, research and development and advertising).

Overview of the ZEW/Creditreform economic survey  (in German language)

General methodological indications (in German language)

Description of the applied ZEW/Creditreform projection procedure

Comment 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

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