The results of the study titled “Current situation and prospects of the Information and Telecommunications Sector” which has been recently presented by the Observatory for the Information Society provides feedback for consideration since they encompass particularly useful information within the framework of an integrated assessment of the progress of these sectors in our country compared to the international developments.
The study has been conducted in cooperation with ΙΟVΕ and the support of the Greek Association of Information and Communications Enterprises (SΕPΕ) and for the first time it has been based on an inventory and not sample-taking analysis of the sector per branch, sub-branch and size.
The Observatory’s study shows that the sector of Information and Telecommunications (ICT) presents a final recovery at an international level following the recession experienced during 2001-2002. This trend seems to prevail during the two following years despite of the small recession during 2005.
More specifically, based on the sector’s financial analysis, the total turnover of the ICT wider sector amounted to € 18.9 billion in 2005, decreased by 2% compared to 2004. However, it is estimated that the sector’s turnover in 2006 will increase by 4.2%, whilst in 2007 the growth rate will be doubled and in 2008 it will be even higher.
With regard to the existing strategies and the future of the Greek enterprises of the sector, the Observatory for the IS for the first time divided the enterprises into three large categories (Consolidated, Rapidly Developing, and Low Performance enterprises) according to the following major criteria: turnover, operation time period and scope of works (services/ commerce) as well as a set of other parameters.
Based on this categorization, the ICT enterprises that are active in Greece are estimated that they should follow a different mixture of strategy so as they gain the benefits from the sector’s wider development.
As far as the “consolidated enterprises” are concerned, it is estimated that the greater benefits will come from the differentiation of their products and services especially in new markets and new client categories. The key component for achieving differentiation will be the development of strategic alliances and partnerships with enterprises from other sub-branches, as well as the increase of the expenditure invested in research and innovation aiming at the development of new services.
The “rapidly developing ICT enterprises” will have great development benefits from placing emphasis on foreign markets and from increasing their investments.
On the other hand, the “low performance” enterprises are facing significant threats.
However, they can also be benefited from the wider development of the sector if they focus on niche markets and seek for strategic partnerships with larger enterprises or for mergers.
With respect to the more specific features and particulars of the sector, the Observatory for the IS recorded the following:
|Composition of the ICT sector
Around 1,900 Greek enterprises are active in the ICT sector (86% out of these in Information Technology and 14% in Telecommunications).
The sector is under-aged since 83% of enterprises have been established in 1990-2005 period and the majority of them (77.2%) are active in Attica.
The appearance rate of new enterprises in the Region is faster than the one in Attica (54.9% compared to 37.8%); however, this fact cannot change significantly the structural image of the domestic ICT sector in the near future. IT enterprises are significantly smaller in terms of size compared to the Telecommunication enterprises. 43 persons are employed in average per IT enterprise compared to 141 persons per Telecommunications enterprise (except for ΟΤΕ).
The exporting activity appears restricted (over 60% of enterprises are active exclusively in Greece) and it mainly comes from large enterprises of trade, distribution, and processing of ICT, while in geographical terms the exporting activity is detected mainly in Balkans. However, the trend of many enterprises –mainly of the IT services’ sector- to expand their activities abroad and mostly in developed markets (USA, Central Europe) by means of promoting high technology services is observed.
|Competition – employment
As far as competition is concerned, enterprises (77.1%) consider competition of prices as the major area of contradiction and competition in terms of marketing and advertisement (20.8%) less contradictory. With respect to business strategies, the key objective is to increase the market share for their existing products released in the existing markets (62.2%). Increase of sales through the introduction of new products and services comes next.
At the same time, enterprises consider the following as major barriers for the sector’s development: the domestic market’s size (38.6% of enterprises believe so), the Internet connection and usage cost (37.3%) and the high cost of ensuring loan capitals (30.6%).
Finally, employment in the ICT sector has an upward trend in 2006 compared to the former 2-year period (especially in telecommunications and IT services).
At the same time, human resources forms a powerful component of the sector and the need of supporting the relation between Universities and enterprises is rather obvious aiming at the faster adaptation of graduates to the market needs.
The study found out that out of the three categories of domestic demand (enterprises, consumers, State), the enterprises’ category forms the largest market (65% of their total turnover) for the ICT sector whilst the consumers come next (25%) and the State comes last (10%). The major clients of the sector are: commerce, industry and telecommunications whilst smaller but significant niche markets are: shipping industry, tourism and health.
The participation of ICT enterprises in the 3rd CSF’s programs appears limited in the sector’s total image and does not exceed 6% of their turnover; it mainly comes from enterprises of large size which participate in the implementation of large projects. Smaller enterprises mainly participate in projects via subcontracts or joint ventures.
The results of the study conducted by the Observatory in 10 sectors of the Greek economy (in 800 enterprises approximately) using the methodology of eBusiness W@tch, showed inter alia that Greek enterprises believe (by 43%) that their position in terms of competition is significantly improved by the adoption of ICT and that they have already been benefited mostly from the introduction of software and office automation applications.
In line with the enterprises’ responses, the trend for further investment in ICT is expected to continue since more than 40% of these enterprises declare that they are ready to reinforce investments in the course of 2007.
This conclusion is confirmed by the apparent turn of Greek enterprises towards new technologies, with the aim to improve their competitiveness in comparison to the more traditional administration methods that have been followed until recently.
|Public and private sector
With regard to the primary demand coming from the Public sector, this is low (10% of the total demand) since it is encumbered mainly due to the ongoing bureaucracy and legislative or administrative difficulties.
Thus the secondary demand created via the projects for the development of digital services, which are implemented within the framework of 2006-2013 Digital Strategy and the Operation Program “Information Society”, becomes much more significant.
On the contrary, the households’ private consumption of ICT goods and services has significantly increased during 2004-2005 and has almost doubled compared to the total raise of expenses during the previous 5-year period.
The consumption of ICT products and service corresponds to a significant portion of households’ total monthly expenditure (€101/per month approximately) and exceeds in total the amount of € 4.3 billion per annum.
The total data of the study is now available in the web page of the Observatory for IS, at the electronic address: www.observatory.gr