Unexpected Record Low Number of New ICT Businesses
ResearchZEW Study on the Situation of the ICT Sector in Germany on Behalf of Federal Ministry for Economic Affairs and Climate Action
![[Translate to English:] Person sits at a desk and looks at a computer.](/fileadmin/_processed_/5/e/csm_AdobeStock_540624608_copyright_Seventyfour-1200x1200_50d4179154.jpg "Unexpected Record Low Number of New ICT Businesses")
The number of new businesses in the information and communication technologies (ICT) sector has fallen to an unexpected all-time low. At the same time, the number of self-employed workers and employees liable to social security contributions has climbed to a record high of just under 1.5 million. These are the findings of the 2024 ICT Sector Profile, a study which ZEW Mannheim conducted on behalf of the Federal Ministry for Economic Affairs and Climate Action and which analyses indicators for innovation and business formation activities as well as the economic development in the sector. Depending on the indicator, the observation period extends to 2022 or 2023.
“Besides its economic importance, the ICT sector has considerable influence on the development of the German economy as a whole, above all because of its innovation capability. Innovations in the ICT industry quickly radiate out to other sectors,” emphasises the study’s co-author Robin Sack, researcher at the ZEW Research Unit “Digital Economy”.
Record low number of new ICT businesses
While the sector still recorded 6,300 new firms in 2022, the number decreased by around 200 to just under 6,100 in 2023. This means there are fewer business formations than ever since the beginning of the observation period in 2002. Overall, the German ICT sector counted close to 100,000 companies in 2023, around 1,000 fewer than in the year before.
However, in contrast to other industries in the analysis, business formation activity in the ICT sector was relatively stable in the observation period, despite the decline in the number of new businesses. In the business formation index, which puts the number of business formations per year in the analysed industries in relation to the 2002 figures, the ICT sector clearly leads by a value of 89 compared to the other industries in the analysis (a value of around 67 for the year 2023).
Record employment figures
At the same time, the number of people working in the ICT sector has steadily increased since 2009. In 2023, around 1.5 million people were working in the sector as self-employed professionals or employees liable to social security contributions. This corresponds to a share of around 5.5 per cent of all the workforce in the commercial sector in Germany.
“It’s a good sign that the number of employees in the sector has been steadily growing since the beginning of the observation period in 2009. Each ICT firm employs on average around 15 people, i.e. roughly one person more than in the previous year. So, the companies are growing,” explains study author Dr. Thomas Niebel, researcher at ZEW’s “Digital Economy” unit.
Public statistics and special analyses
The annual ICT Sector Profile thoroughly examines the economic importance as well as the innovation and business formation activities of the German ICT sector, providing valuable comparisons with other core sectors of the German economy. The data foundation encompasses both publicly available statistics and special analyses from the Federal Employment Agency, Destatis and Eurostat, as well as the Mannheim Innovation Panel (MIP) and, for data on business formation activity, the Mannheim Enterprise Panel (MUP) from ZEW Mannheim.
