Sector outlook In the CIS and Middle East region, Armenia…
The information and communication technology (ICT) industry is having more and more impact in the total economy of any country and plays a key role in the modern life in terms of social and private as well. The infrastructure is the cornerstone of evolution and innovation in new technological and scientific progress in almost every area and sector.
It couldn’t be no different in the case of the Austrian IT sector as the country has experienced significant growth in the past 20 years in this field, despite the global economic downturns from time to time. The local sector is combined from a variation of professional, from specialists to IT consultants, and from hardware products with computer-controlled plants for manufacturing up to global software powerhouses.
One of the largest hub in the country is Vienna, which is considered to be one of the biggest in Europe and the capital of information technology in the central and east European region. There around 9,000 IT companies in the region with a combined annual turnover of €20 billion, that accounts for 75% of total Austrian IT revenues.
Apart from Vienna, there are also other startup centers, technology centers and parts for the ICT sector in other regions of the country. This guarantees that all IT companies in the local market get high level of services. To boost the development of networking and sharing experiences between the companies in the sector, the Federal Economic Chamber holds and annual E-Day.
Austria has a wide range of companies creating software products for every industry ranging from hospital software products up to managing water treatment plants and they have a global distribution.
Some examples of domestic companies that create global products is celum GmbH that develops document management system products for efficient administration of data and its exports account for over 80% of the company’s total revenues, with customers in North America, South Africa, Eastern Europe and further beyond.
RF-iT solutions which operates in the Radio Frequency Identification software and services sector is a market leader and BEKO Holding that focuses on Product Lifecycle Management is also a well-known vendor in its category. One of the biggest companies with a global footprint is Software AG that develops high-performance databases, application development tools and other solutions for the banking, insurance and trade sectors.
Other examples of the thriving domestic market are the Novomatic Group in the gaming industry with more than 6 million fans and eworx a pioneer in email marketing solutions.
As in software, in hardware sector as well there is a wide range of products offered by local companies that are mostly export-oriented. The Austrian creators are building products that include fire alarms, communication and security systems, gauging stations, high quality semiconductors for medical technology and the automotive industry etc.
The hardware producers are competing in the global marketplace successfully and apart from the products itself they are also service focused. Schrack Seconet AG for example is a leader in international level in providing communication and security systems.
ICT as an Economic Factor in Austria
Comparing to other countries, Austria ranks in the upper middle range in the field of ICT applications, research and development. The Federal Consultancy & IT Section of the Austrian Economic Chamber has tens of thousands active IT companies as members. The Austrian exports account to more than 12 billion euros in goods and services and 80% of the local companies have an online presence with about one sixth of them doing business via the internet in a regular basis.
Research and Development
The IT sector is one of the most important drivers in the field of research, development and innovation and within the European Union is the largest and most intensive areas in research account for one fifth of all sending in R&D. In the domestic market the corporate spending in R&D is above the EU average with around 1.5 billion euros in total. More than 80% of this amount came from local companies and a great portion of that from foreign investment.
Although it’s one of smallest countries in Europe in terms of population, Austria has one of the most advanced ICT sectors. The steady growth that the IT sector has experienced over the past years has resulted in creating around 200,000 jobs in the industry and put the country among the top three European research locations.
The infrastructure is well expanded and almost all companies have online access and more than 90% of the companies have a broadband connection. More than half of the broadband connections took place via mobile technology that has enabled services like mobile payments to be feasible. Mobile network operators have introduced NFC technology and sophisticated web applications are used broadly for job related purposes.
From a private standpoint, Austrian citizens are very keen in using web technologies and the penetration of social networks like Facebook, YouTube, Xing (a social network similar to Linkedin) and Twitter is well established.
The network of universities, colleges and research institutions has boosted the information technology sector R&D and the cross section collaboration has a great impact in innovation. This synergy of institutions like Vienna University of Technology, Graz University of Technology, Technikum Wien, FH Hagenberg, FH St.Pölten, or FH Kufstein along with private companies has resulted in a variety of potential innovations.
The most impressive feature of the local government is the offering of its e-government services and has been ranked in first position in the EU that reaches 100% for “full online availability” and “service sophistication”. About 70% of the citizens use these e-government services in regular basis for their needs.
In the health IT sector there is a significant amount of research and development conducted with the implementation of the e-card, a national electronic card to access public health care and the electronic health file for patients is in the works, to be fully operational by early 2017.
Market and Sector Challenges (Strengths and Weaknesses)
The structure of the local companies is made out of 99.7% that are small and medium sized with less than 250 employees and what is more impressive is that over 92% of these companies are very small with less than 10 employees. These companies have a significant advantage being well positioned and in close contact with their clients.
Due to its location, well established infrastructure and its cultural and linguistic ties to the region, Austria is a unique gateway for products and services in the Central and Eastern Europe. There is a great number of organizations in the local market that offer expertise on trading and investing in this region. In the past years, a close tie between Austrian and Canadian firms has been established the offer the latter many advantages in penetrating EU markets and providing high quality production facilities.
Some of the trends that offer opportunities for foreign vendors include health IT infrastructure, smart grid cloud, mobile, big data and connected vehicles.
Based on a survey performed online and further analysis based on statistical data, the main key points of the Austrian IT market are portrayed below:
- The vast majority of the companies consider themselves as IT companies, 75%. Customer specific solutions is the main source of revenues but the sale of own or third party software and implementation services also play a significant role.
- They expect an 8% on average growth of their revenues and an additional 11% in the number of employees.
- Three quarters of the total companies have revenues that flow from international activities with 35% of these revenues occurring in regular basis. Although the focus is on other German speaking territories, the activities on other regions such as East and Central Europe are also significant.
- The cloud and mobile trends are very important and most likely for domestic companies to enter in these types of activities.
- Around 75% of the companies have responded positive whether they have introduced a product or service innovation in the recent years.
The past financial crisis that ended in 2009 didn’t have a deep impact in the Austrian IT industry and the positive expectations have proved to be true and the sector has experienced a good growth over the last years. The structure of the market, the vast majority of the companies that are very small and close to their clients, made them more resilient in addition to the fact of the innovative character of the local market to introduce new products and services are among the factors that helped the IT industry to surpass the crisis.
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