The European e-Business Report The European e ... - empirica

The European E-Business Report 2005
used in different ways. Therefore, the two reports of 2005 have focussed on the analysis of e-business
key issues which are related to activities that build the core of IT services. These activities can be
summarised in the slogan of several IT service providers to “plan, build and run” IT systems.
Industry background
The IT services sector is of significant importance for the prosperity and growth of the European
economy. The IT services industry itself has a substantial economic power: in 2001, there were about
445,000 IT service companies in today’s EU-25. These companies generated a production value of
more than €260 billion, created a value added of about €140 billion and employed about 2.4 million
people. 94
The IT services industry, as a knowledge intensive sector, plays an important role for the creation of
high-skill jobs. More importantly, goods and services provided by IT services companies affect the
productivity and competitiveness of other industries. The deployment of IT-based solutions throughout
the value chain may increase the overall efficiency and competitiveness of the user companies. Thus,
innovations within the IT services sector can enhance the prosperity and growth of the entire
economy.
2.10.2 ICT and e-business adoption in 2005
IT service companies are intensive users of ICT and e-business tools
Information technology and e-business services are not the only output of the IT services sector.
Rather, they influence crucially the way in which this output is produced, promoted and provided. In
this specific way of using ICT, the IT services sector differs from the other industries analysed by e-
Business W@tch. Companies in this sector are intensive users of ICT and e-business tools. The
usage rates for all main e-business application areas discussed are above the weighted average of
the 10 sectors covered by the e-Business Survey 2005. Companies from the IT services sector
apparently set benchmarks for the use of ICT infrastructure and customer facing e-business
applications.
Results also prove the potential of ICT and e-business technologies for SMEs, which account for
about 99% of enterprises in this sector. In fact, in almost all e-business application areas discussed in
the sector studies of 2005, small IT services enterprises constitute a significant share of users. This
holds true even for the use of more complex software that was initially designed for the needs of large
companies, such as Enterprise Resource Planning (ERP), Customer Relationship Management
(CRM) and knowledge management systems.
Use of offshore IT services by marginal share of IT services companies
A large share of companies in this sector actually outsources IT services. However, this activity takes
place mainly within national markets. Only a marginal share of IT services companies currently
outsources IT services to offshore or near-shore regions like India or Eastern Europe. Business
examples of offshore user companies presented in the sector reports indicate that the establishment
of offshore relationships is best done step by step and therefore needs time. A major motivation of the
users interviewed is to manage peak demands by outsourcing non-core tasks. Finally, it turned out
that language skills are an important criterion for the selection of suppliers.
Open Source Software (OSS) widely used
Open source operating systems, databases and internet browsers are widely used by this sector’s
companies, regardless of the company size. In comparison, the use of OSS components by
companies in other sectors seems to be relatively low. However, software vendors also have the
opportunity to integrate OSS components into proprietary solutions and increasingly do so. Therefore,
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Source: Eurostat New Cronos / DIW Berlin 2005. See sector report (July 2005) for more details.
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