European IT Sector Shows Rapid Growth Despite an Overall Weak Economy

By Wayne Rash  |  Posted 2015-01-29 Print this article Print
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"Germany is strong in engineering," Frese said. "It's a world market leader. To be market leader again, it's a must for companies to invest in IT."

German factories, Frese said, are working to fold IT into all phases of their manufacturing processes as well as into all their business operations. "This is a good chance to use big data," he said.

But it's not just Germany that is supporting strong IT growth. Much of the strength in European IT is coming from within the broad European Union because European companies of all types are following Germany's example, Frese said.

"Other European nations realize [that] they have to invest, as well. Same is true in Italy," Frese said. "They will invest in making production more efficient. The Baltic States have made a big investment in digitalization. We have good networks—especially mobile networks."

Frese also noted that more European companies are making the Internet part of their daily activities. Germany and other countries in Europe are making sure that small and midsize companies are fully connected to the Internet, he said. "The European market is big," Frese said. "The machinery sector is doing well. We have a safe political situation not too strong [on] regulation. And we have the euro."

Frese said that although the euro is declining compared to the dollar, it is still a stable currency. This monetary stability, coupled with overall political stability, is doing a lot to give companies the confidence to invest in IT, he said.

The weak euro also gives EU IT companies the ability to sell hardware and software at a substantial discount over their U.S. and Asian counterparts. As long as that imbalance persists, Europe's IT market should remain strong.

European companies are keenly aware of competition from the U.S. and China, and they know that if they don't invest in IT now, there are plenty of U.S. companies that will be there to take their places, Frese said. "If European companies don't do it, companies from other countries will," he said.

Frese said that another factor in favor of EU companies is that customers are worried about where their data is being stored. This is of particular concern to German companies because data is protected by very strict German privacy laws.

However, Frese also noted that the rules about data storage are changing. He said that recent reports about increased data sharing between European nations could have an effect on how the IT industry is perceived in Europe.

Many of these issues about how to jump-start European economic growth and the effect that EU regulation might have on the IT industry will be discussed at CeBIT.



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