Prospects of the ICT sector in Greece

Study of the ICT sector in 

Greece: Current Situation 

and Future Trends 

Deliverable 14 

Prospects of the ICT sector in 

Greece – policy implications

Study of the ICT sector in Greece: Current Situation and Future Trends 

Deliverable 14: Prospects of the ICT sector in Greece-policy implications 

Title: 

Study of the Information and Communication Technologies Sectors in Greece: 

Current Situation and Future Trends 

Deliverable: 

Prospects of the ICT sector in Greece – policy implications 

Implementation body: Foundation for Economic and Industrial Research 

Version: 

Final 

Date: 30/10/06 

Comments: 

October 2006 

Observatory for the Greek IS 2



INDEX 

1. Executive Summary .............................................................................................4 

2. Introduction........................................................................................................9 

3. The broad economic environment.......................................................................10 

3.1. Global and European Economy .......................................................................10 

3.1.1. The Global Economy..................................................................................10 

3.1.2. The European Economy .............................................................................11 

3.2. The Greek Economy ......................................................................................12 

3.2.1. The economic climate ................................................................................14 

3.3. The economic policy ......................................................................................15 

3.3.1. Directions and Changes..............................................................................15 

3.3.2. Delays-Problems........................................................................................16 

3.4. Public Policies for the Information Society........................................................17 

3.4.1. The current state.......................................................................................17 

3.4.2. The next step............................................................................................20 

3.5. Conclusion ....................................................................................................22 

4. Main Findings - ICTs’ future prospects.................................................................22 

4.1. Basic findings: Sources and Barriers / for growth in the Greek ICT sector...........23 

4.2. Conclusions for the prospects of ICT sector in Greece: growth under certain 

preconditions.............................................................................................................33 

5. Policy propositions for supporting growth of the ICT sector...................................40 

6. Appendices .......................................................................................................50 

October 2006 




1. Executive Summary 

The analysis of the data gathered during the present study, the current developments, the 

obstacles that are still persistent, and the possible sources for further development for the 

ICT sector lead to the conclusion that the growth prospects of ICTs in Greece are moderate 

optimistic. These appraisals are based on several factors: the gradual attenuation of 

demand and supply limitations, especially in the telecommunication sector; the 

macroeconomic environment that favours investments; and the gradual transition of the 

State to the digital era, ameliorating its efficiency by offering more electronic services to 

citizens and firms. However, the verification of these positive expectations depends also on 

certain preconditions, whereas there are actions on behalf of both the firms and public 

policy that could support this growth. More specifically: 

The Global and European economies keep on growing at a rapid rate. Emerging and 

developing economies are contributing more and more to this growth and gradually are 

changing the structure of the international trade. Within this framework, Greek economy 

sustains its high growth rates that outweigh the European averages. These conditions 

create a favourable macroeconomic environment for all firms and therefore the domestic 

ICT sector as well. Domestic demand is high, basically due to private consumption, while 

public investments have also increased. The dynamic elements of the economy, the 

improved business climate, and the expressed willingness for reformatory initiatives imply 

that economic conditions do not constitute an obstacle for the domestic sector. 

Nevertheless, it should be noted that favourable macroeconomic conditions are not a 

necessary and mandatory condition for the sector’s growth. At the same time, the long 

established structural problems of the Greek economy and possible delays in the 

implementation of the planned policy measures and actions create difficulties for all firms, 

touching upon ICT firms as well. 

Domestic demand for ICT products or services (Public, firms, and consumers) remains small 

scaled and problematic. Public sector’s primary demand is not strong and is hindered by 

legislative inflexibilities and bureaucracy. As a result, the main projects are implemented 

with significant delays. However, a secondary demand, that is a demand induced by actions 

that aim at greater familiarization of citizens and firms with ICTs and by the proliferation of 

additional electronic services, is far more important. It offers multiplying benefits and 

increases the potential client base of the whole ICT sector. 

October 2006 




It is mostly firms and then consumers that constitute a far more important market, than the 

Public sector. However, they both face some common problems: lack of information and 

knowledge about ICT benefits, technophobia, population’s limited ICT skills, as well as 

organization difficulties towards the necessary organizational changes required by firms. 

These phenomena, in combination with the fact that some broad sections of consumers and 

firms are not convinced about the tangible benefits of ICT investments - which by the way is 

a responsibility of the ICT firms as well –eventually shape clients of a rather low maturity. 

External demand is increasing, but attracts only a small number of firms. Hence, export 

activity of ICT firms has been limited so far and stems mainly from some large firms from 

manufacturing sectors, trade, with the exception of some smaller export-oriented firms for IT 

services. 

However, there are some indications that domestic demand is strengthening, while firms tend 

to exploit the external demand, at a greater extent. A significant number of large and 

medium-sized firms of the country have already surpassed the stage of connectivity and 

adopt more advanced ICT tools to an extent comparable to other developed countries. These 

firms cooperate throughout their value chain with numerous smaller firms. The later will be 

forced to collaborate, in order to maintain their position in the relevant market and hold on 

their big clients, even if they are not fully convinced about the benefits of ICT investments. At 

the same time, younger and more intense ICT users that are entering in the economic activity 

will leverage ICTs’ diffusion in the country. 

At the same time, State’s role on the creation of secondary demand is also reinforced. Apart 

from its informative and training campaigns, it provides many more electronic services to the 

public and at the same time it improves its efficiency and functions by adopting new 

technologies. Most of the projects under the 3 rd CFS are expected to operate in the next 

couple of years, thereupon offering additional services to customers and firms. These services 

will provide cost benefits, efficiency, and productivity gains in its users. Besides, at the public 

policy level, initiatives and actions concerning directly or indirectly the information society are 

proliferating, while they are incorporated as additional elements in various other policy areas 

(Education, employment, investments policy, etc.) 

Looking at the supply side, it is scattered, small in size, with numerous firms, while it seems 

to lack some intensive efforts for learning and market specialization. The fact that the sector 

is relatively new, in a business area characterized by very fast technological developments, 

may be responsible for the lack of an established entrepreneurial culture. Price competition is 

intense, but all the firms seem to sell similar products / services without any substantial 

differentiation. Despite the fact that the sector can be characterized as innovative, R&D is 

very scarce and limited to a small number of firms. These firms mostly collaborate with 

universities, on the basis however of an interesting, extensive and important research 

agenda. 

October 2006 




One of the basic barriers for the sector’s growth is the limited broadband diffusion and the 

rather low quality of the relevant infrastructures. Improving infrastructures is a basic 

precondition for further growth, as it allows for more attractive, and at a reasonable price, 

services, which can attract broader categories of the population and the firms. Within this 

framework, a seemingly more aggressive effort from the public policy’s side for broadband 

expansion and increased public and private investments in infrastructures especially by firms 

from the telecommunication sector, create some positive expectations for the future. 

Besides, the sector’s growth is benefited by the technological convergence between IT and 

Telecommunications and the innovative value added services that are created, based on 

advanced infrastructures. The triple play services are the result of this convergence. IPTV 

services, video on demand, VoIP (for firms), and integrated solutions for B2B and B2C are 

some the new product / services created that may attract broader categories of users and 

expand the ICT use in the country. 

Firms’ beliefs about their sector are also moderate optimistic, since field research and 

business and consumers’ surveys show an improved economic climate. At the same time, the 

poor outcomes of the past fiscal years seem to be overcome, providing greater liquidity to the 

various subsectors. Furthermore, projections for 2006 and 2007 show an increase in the 

turnover, despite the small recession in 2005. Thus, the positive prospects for the expansion 

of ICT market can be reflected at their financial data in the next couple of years. Therefore, 

employment and investments at the sector (especially in the telecommunications) are 

estimated to increase at the short term basis, while firms report that they intend to intensify 

their efforts for greater differentiation, specialization, and focus on niche markets. Moreover, 

some restructuring actions have been taken, in order to rationalize the sector’s structure, 

while the increased interest from foreign investors indicates that there are some good 

business opportunities in the domestic market. At the same time, the sector gradually 

accumulates know-how and experience, by implementing large scaled and innovative ICT 

projects. This is a competitive advantage that should be further exploited at the international 

level and especially in the neighbouring countries. 

In the same context, apart from know-how and experience assets, human capital constitutes 

another significant advantage in the sector’s effort for growth. There are good and welleducated 

scientists, engineers and managers in the sector and the relevant labour market, 

while also the new graduates are adequately prepared. However, there is a missing link 

between firms and universities concerning their familiarization with market conditions and its 

requirements. The reinforcement and the extension of their collaboration in more areas seem 

necessary and is gradually cultivated. 

To sum up, the preconditions for the verification of the positive expectations are: 

The increase of public and private investments on broadband infrastructures. This will 

increase the competition in telecommunications and consequently in the IT market 

October 2006 




with new value-added products/ services. This will contribute to the further diffusion 

of the Internet. 

The development of some Greek digital context by ICT firms, which will lead to: a) a 

more intense diffusion of the Internet to eager potential users and some dynamic 

firms that are willing to participate in the Information Society, in combination with 

further training, b) the diffusion of ICTs in other sectors of the Greek economy 

The reinforcement of training/ advisory/ educational actions mainly by the State, but 

also by a more consumer-oriented strategy by firms. 

The rapid functional integration of ICTs in Public Administration, so as to offer real e- 

services, and not just reproducing some electronic bureaucracy. Additionally, the role 

of Public as a service provider that facilitates the citizens and firms’ activities should 

be further upgraded. 

Extroversion efforts from those who are capable for such actions, clearing up the field 

from problematic cases from the past, and speeding up the necessary mergers & 

acquisitions, ownership transitions, etc. 

The reinforcement of a more profound and intense collaboration between universities 

and firms, so as to ensure a better fit of market needs and human capital 

preparation, while improving the R&D collaboration as well. 

Concerning some policy proposals that can support the sector’s growth, they can be 

distinguished at three levels: a) ICTs firm level, b) public policy for the Information Society, 

and c) broader policies that have an impact on the ICT sector. More specifically: 

At the firm level of ICTs’ sector 

 

Restructuring actions, M&A, and strategic alliances should be fastened with the aim 

of rationalizing and improving the efficiency of ICTs’ structure. 

 

…with efforts of specialization, market segmentation and focus on niche 

markets –especially mainly by small firms 

…but also innovation and differentiation through more intensive R&D, in 

collaboration with universities and research centres 

Consumer-oriented strategies with the emphasis placed upon a) the cost for ICT 

users and b) the promotion of the benefits that the use of ICTs can entail to those 

that are willing but also to the more cautious potential users 

October 2006 




Investments on infrastructure that allow integrated high value - added 

services but also further collaboration, in order to develop a Greek and 

sector-based digital content. 

Extroversion efforts by those that are capable, in order to exploit 

business opportunities that still exist in the neighbouring countries. 

At the level of public policy for the Information Society 

Improvement of broadband infrastructure, development of additional digital content 

and new e-government higher value -added services 

Emphasis on organizational change if the Public sector, so as to improve efficiency in 

integrating ICTs that lead to a transformation of the actual e-service 

Expansion of ICTs use in Public Administration, in order to improve its functions, 

operation and efficiency 

Integration f the regulatory framework for telecommunications, but also… 

Final decisions for institutional issues of the digital economy that are still 

unresolved (security of transactions, electronic signature, etc.) 

Empowerment of EETT (National Regulatory Service for 

telecommunications) while allowing for a greater independence and 

continuation of its management 

Boosting training concerning ICTs, in order to bridge the digital gap 

…with additional motives not only for the adoption of ICTs by citizens 

and firms, but also for a more intensive use 

…and motives for firms for further education and training of the 

employees that lack those capabilities 

Use of ICTs in the teaching processes and reinforcement of the teaching of ICTs at 

all levels of education, so as all graduates will have developed some ICT skills 

Simplification of the procedures for the public offerings and tenders which will allow 

for a tighter project implementation cycle 

Introduction of a Strategy Unit, assisting the prime minister in relation to the ICT 

sector, which will have an advisory role and will facilitate the coordination of the 

policies for the Information Society 

October 2006 




At the level of broader public policies and State’s functioning that could have an 

impact on the ICT sector 

Boosting entrepreneurship and create financial mechanisms for the initiation of 

entrepreneurial activity 

Simplification of the institutional and regulatory framework of Public Administration’s 

functioning so as to improve the business environment 

Increase of the total expenditures on R&D, providing motives (e.g. tax) to the firms 

for research collaborations with universities 

Greater effort for aligning market needs with academia, so as the graduates fit 

market’s requirements best. 

Effective allocation and management of the resources under the 4th programming 

period, by utilizing the experience and successful mechanisms from the previous CFS 

A more stable and simpler tax environment that will facilitate the strategic planning 

of the firms 

Removal of the barriers for foreign direct investments on the ICT sector 

2. Introduction 

This report constitutes Deliverable 14 in the context of the “Study of the sectors of 

Information Technology and Telecommunications in Greece: Current Situation and Prospects” 

and concerns the final report of ICT sector’s prospects in Greece. Drawing from the empirical 

data and material that was gathered during the previous stages of the project, the basic 

findings are pinpointed. These points concern the current developments and the prospects of 

the ICT sector. On the basis of these findings, both the sector’s prospects and the policies 

that could support them are illustrated. 

The deliverable is constituted by three main sections. In the first section, the general 

economic environment is presented at both an international and Greek level. Its objective is 

to present the current macroeconomic conditions of the European and Greek economies, to 

analyse the basic characteristics of the economic policy, the business climate, and the 

estimated changes of the economic figures. The second section primarily refers to the basic 

findings for the ICTs market’s structure and the changes that take place, and secondarily to 

the basic characteristics of the ICT firms that define their future potential (sources/ obstacles 

of growth). These findings further document the estimations for the domestic ICT sector and 

the preconditions for its further growth. 

October 2006 




In the last section a grid of proposed directions and proposals is presented. These proposals 

concern: a) the actions of the sector’s firms and b) proposals at the level of public policy. 

Policies affect the ICT sector is two ways: first, affecting either directly or indirectly the 

demand for ICTs products/ services, and second, determining the general characteristics of 

the firms’ business environment. These proposals touch upon both the specialized public 

policies for the Information Society (IS) and broader actions that are related rather indirectly 

to ICT firms but affect the domestic environment. The deliverable is also includes three 

appendices, which incorporate several observations of the previous publications. 

3. The broad economic environment 

The following section presents the current macroeconomic conditions of global and Greek 

economies, in order to examine the framework within which the domestic ICT sector is 

developed. The short-term economic conditions are one of the basic factors that will have an 

impact on the activity of the sectors being studied. If the economic developments are 

positive, it should be expected that the ICT sector will grow, under the condition that firms 

will be in the position to exploit the opportunities. Thus, the sector’s prospects are dependent 

on the international and domestic environment within which the ICTs firms operate, but also 

on their specific characteristics and strategies that will define their capability to respond to 

these changes and new conditions. 

3.1. Global and European Economy 

3.1.1. The Global Economy 

In recent years the global economy is undergoing rapid growth. However, the growth rates of 

developed and developing economies considerably differentiate, as the later’s rates are more 

than double than the former (Table 1). It should be noted that China grown during 2005 at a 

rate of more than 10% in comparison to the 3.2 % of the USA. This drift gradually changes 

the importance of the relevant markets, as the commercial flows from and to the developing 

countries are increasing (faster rates of imports and exports). This implies the increased 

importance of the developing economies for the global demand, and the global 

economy. 

In 2007, the global economy is predicted to keep on growing at a high rate, although at a 

slower rate than in 2006. The rise of the world trade also presents a proportional 

deceleration. Nevertheless, these optimistic estimations are dependent on a number of 

economic and political perplexities that may influence the global economy. The possible 

increase of the rate of interests, oil price, and the inflation are indicative of an economic 

insecurity. Furthermore, the continuing war operations at the broader area of Iraq and the 

development of international terrorism are fundamental factors of political perplexities. 

October 2006 




3.1.2. The European Economy 

In EU- 25 and Euro zone, growth slowed down in 2005, because of a large decrease of the 

net exports. Consequently, it was shaped to 1.6% and 1.3% respectively (from 2.4% and 

2.0% in 2004). This fact is attributable to a slowing down of global trade, which influenced 

demand. It is also due to the euro revaluation, which worsened Euro zone’s competitiveness 

and led to a substantial slow-down in exports. At the same time, oil price increases 

contributed to the retention of inflation at a rate more than 2%. 

Table 1:International Environment – IMF (real annual % change) 

2004 2005 2006 2007 

GDP 

World 5.3 4.9 5.1 4.9 

Advanced Economies 3.2 2.6 3.1 2.7 

USA 3.9 3.2 3.4 2.9 

Eurozone 2.1 1.3 2.4 2.0 

European Union 2.4 1.8 2.8 2.4 

Japan 2.3 2.6 2.7 2.1 

Canada 3.3 2.9 3.1 3.0 

Other emerging market and developing countries 7.7 7.4 7.3 7.2 

Africa 5.5 5.4 5.4 5.9 

Sub – Sahara 5.6 5.8 5.2 6.3 

Central and eastern Europe 6.5 5.4 5.3 5.0 

Commonwealth of Independent States (CIS) 8.4 6.5 6.8 6.5 

Russia 7.2 6.4 6.5 6.5 

Developing Asia 8.8 9.0 8.7 8.6 

China 10.1 10.2 10.0 10.0 

India 8.0 8.5 8.3 7.3 

ASEAN4 5.8 5.1 5.0 5.6 

Middle East 5.5 5.7 5.8 5.4 

World Trade 

Imports 



Exports 



ASEAN4: Indonesia, Malaysia, Philippines Thailand 

ΜΕΝΑ (Middle East & North Africa): Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, 

Libya, Morocco, Omar, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates and Yemen. 

Asia: All countries except Japan and the Asia MENA countries 

Sub-Saharian Africa: All countries except the African MENA countries 

Source: IMF, World Economic Outlook, September 2006 

October 2006 




Table 2: Main Economic Indicators (ΕΕ-25, ΕΕ-12, Greece) 

ΕΕ-25 ΕΕ-12 Ελλάδα 

2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007 

GDP 2,4 1,7 2,8 2,4 2,0 1,4 2,6 2,1 4,7 3,7 3,8 3,7 

Consumption 2,0 1,5 2,2 1,9 1,5 1,4 2,0 1,6 4,7 3,7 3,4 3,2 

Total Investment 3,1 3,0 4,9 3,6 2,3 2,5 4,3 3,0 5,7 -1,4 6,3 6,2 

Employment 0,7 0,9 1,4 1,1 0,7 0,7 1,4 1,2 2,9 1,3 1,4 1,3 

Unemployment rate 

(% labour force) 

9,1 8,8 8,0 7,6 8,9 8,6 8,0 7,7 10,5 9,8 9,3 8,9 

Inflation 2,1 2,2 2,3 2,3 2,1 2,2 2,2 2,1 3,0 3,5 3,3 3,3 

Government 

Balance (% GDP) 

-2,7 -2,3 -2,0 -1,6 -2,8 -2,4 -2,0 -1,5 -7,8 -5,2 -2,6 -2,6 

Government Dept 

(% GDP) 

62,4 63,3 62,5 61,4 69,7 70,6 69,4 68,0 108,5 107,5 104,8 101,0 

Current account 

Balance (% ΑΕΠ) 

0,3 -0,4 -0,5 -0,4 0,8 0,0 -0,1 0,1 -9,5 -9,2 -8,5 -8,0 

Πηγή: European Commission, Economic Forecasts, Autumn 2006. 

The European Commission estimates an increase of the economic activity for 2006 and 2007 

at a rate of more than 2%. These forecasts are based on the estimations for an even higher 

domestic demand and on expectations for a positive impact of the external sector in the 

European economy. The satisfactory financial situation of the firms and the optimistic 

business climate that is being developed since the beginning of 2006, is expected to boost 

investments, while the consumption is expected to increase marginally. Labour market is 

rather resistant to economic crises, as employment at Euro zone has been increased by 1.4% 

in 2006 (1.2% in 2007). Correspondingly, unemployment will gradually decrease to 8.0% in 

2006 and to 7.7% in 2007, varying though substantially among the country-states 1 . 

3.2. The Greek Economy 

The Greek Economy has been growing with high rates since 2000. This performance ranks it 

at the higher levels of Euro zone. To a certain extent, this growth was due to the Olympic 

Games investments. However, maintaining such growth rates till today is an indication of 

some stable dynamic elements of the Greek economy. 

Greece achieved the highest GDP growth in 2001 (rate of 5.1%). The slow-down in 2002 

(3.8%) was incidental and was due to the limited influence of the foreign sector on the 

economy. During the following year, GDP increased substantially, because of the increased 

investments for the Olympic Games. 2003-2004 is, thus, a period of strong economic growth, 

while investments constituted 27% of GDP (23-24% during the previous years). The slowdown 

in 2005 was expected and come naturally, as the financial framework was rigorous and 

1 Besides, these conditions seem to reinforce IDC‘s predictions for some 1.5 million jobs in the ICT 

sector in the next 4 years. 

October 2006 




was characterized by limited public investments. However, the growth rate was still higher 

than the mean rate of Euro zone (approximately 2.6%). 

Structurally, domestic demand and more specifically private consumption is the driving force 

of the Greek economy. Despite the slow-down in 2005, Greece maintains high growth rates 

due to the increase of disposable income and because of easier access to credit in an 

environment of low interest rates. Taking into consideration of the latest data available, the 

services’ sector has a higher growth rate than the other sectors of the Greek economy, since 

services constitute approximately the 70% of GDP and employ 65% of the whole employees. 

In contrast, primary sector’s and manufacturing’s contribution is decreasing. 

Table 3: Main Economic Indicators –Quarterly National Accounts 

(provisional data, Constant prices 1995) 

Quarter GDP Final Consumption Investment Exports Imports 

mil. € 

Quarter % 

change 

mil. € 

Quarter % 

change 

mil. € 

Quarter % 

change 

mil. € 

Quarter % 

change 

mil. € 

Quarter % 

change 

2000 94695 4,5% 81727 4,3% 23175 10,0% 24828 14,1% 35215 15,1% 

2001 99510 5,1% 83904 2,7% 24318 4,9% 24568 -1,0% 33390 -5,2% 

2002 103320 3,8% 87571 4,4% 25781 6,0% 22675 -7,7% 32934 -1,4% 

2003 108861 4,8% 90301 3,1% 29310 13,7% 22901 1,0% 34417 4,5% 

2004 113293 4,7% 94240 4,4% 30975 5,7% 25576 11,7% 37630 9,3% 

2005 117437 3,7% 97621 3,6% 30593 -1,2% 26320 2,9% 37173 -1,2% 

a' 2005 29183 3,4% 24285 3,9% 7964 -0,7% 6086 6,4% 9167 2,3% 

b' 2005 29088 3,7% 23981 3,6% 7116 -4,2% 6552 2,2% 8587 -5,8% 

c' 2005 29616 3,8% 24622 3,4% 7584 -0,7% 6910 1,4% 9519 -2,2% 

d' 2005 29550 3,7% 24733 3,5% 7929 0,4% 6772 2,1% 9900 0,7% 

2006 

a' 2006 30383 4,1% 25111 3,4% 8515 6,9% 6193 1,8% 9436 2,9% 

b' 2006 30270 4,1% 24909 3,9% 8105 13,9% 6718 2,5% 9462 10,2% 

Source: National Statistical Service of Greece 

Table 4: Main Economic Indicators (constant prices 1995, annual % change) 

2005 2006 2007 

GDP 3,7 3,8 3,8 

Private consumption 3,7 3,8 3,8 

Public consumption 3,1 2,0 1,1 

Investmentσ -1,4 8,8 7,4 

Exports (goods and services) 3,0 5,3 6,5 

Imports (goods and services) -1,2 6,6 7,0 

Source: Budget 2007 draft, Ministry of Economy and Finance. 

October 2006 




On the basis of the latest predictions and recent estimations made by international 

organizations and the Ministry of Finance, the Greek Economy will keep on growing at rapid 

rates (3.8% or even more) during 2006 and 2007. This result is due to the strong domestic 

demand, a strong increase of investments and the sustainable high rates of private 

consumption. Concerning the foreign sector, exports are increasing at a higher rate in 

comparison to 2005, whereas imports upturn significantly after their decrease in 2005. This 

drift creates an environment of broad domestic demand for the whole range of products, 

including the ICTs products. 

3.2.1. The economic climate 

These favourable conditions converge with the improvement of the economic climate of 2006, 

which results on the basis of the Business & Consumer Surveys of IOBE (Foundation for 

Economic and Industrial Research). In general, the behaviour of the Business Climate Index 

(especially in Greece) follows the electoral cycle. Therefore, as long as the elections of 2004 

were approaching the significant improvement of the expectations pushed the index high. At 

the same time, conducting the Olympic Games was a unique and huge event that 

characterized intensively the previous months. However, immediately after the Olympic 

Games and despite the fact that the Greek Economy sustained its high growth rates, a 

climate of reduced expectations prevailed. The deterioration of the climate could be 

interpreted as an expected turn of the Pre-Olympic euphoria, which had fed high 

expectations, that could not be satisfied in the short term. The fiscal adjustments that were 

implemented, which showed that problems were more acute and required urgent changes, 

contributed to this turn. 

Thus, the Economic Climate Index in Greece was at a continuous drop since mid 2004, which 

was intensified in 2005. However, the climate started to ameliorate at the end of 2005. These 

trends were empowered during the first months of 2006, while they were further intensified 

during the months that followed. Thus, the Index presents henceforth an ascendant course 

and reached its highest level during the last couple of years in September. The improvement 

of the economic climate is mainly attributed to the optimistic business expectations. On the 

contrary, consumers are not optimistic, as their estimations remain intensely negative. 

The improvement of the climate involves all sectors of the economy. In Industry, the 

improvement stems from the estimated increase of demand, while the predictions for the 

following months are also optimistic. In Manufacturing, the climate is at the same pre- 

Olympic levels of euphoria and it is impressively improved. This improvement is intense in 

Retail as well, as the predictions for the firm sales are optimistic. Services show a 

October 2006 




proportional- although slighter- improvement, since a great proportion of firms has an 

increasing business activity 2 . 

Consequently, the improved economic climate in 2006 affirms for the maintenance of the 

economic activity in the majority of economic sectors. This implies that firms move on the 

right track and this facilitates the investment decision making. The fact that these 

investments involve at a greater extent the introduction of new technologies/ procedures in 

the entrepreneurial operations (investment surveys of IOBE) favours the firms of ICTs sector 

and the mid-term business environment. 

Figure 1: Economic Sentiment Indicator 

120 

115 

110 

105 

100 

95 

90 

85 

80 

Ιαν-02 

Μαϊ-02 

Σεπ-02 

Ιαν-03 

Μαϊ-03 

Σεπ-03 

Ιαν-04 

Μαϊ-04 

Σεπ-04 

Ιαν-05 

Μαϊ-05 

Σεπ-05 

Ιαν-06 

Μαϊ-06 

Σεπ-06 

EE-25 Ελλάδα Μέσος όρος ΕΕ (1999-2005) 

Source: DG ECFIN 

3.3. The economic policy 

3.3.1. Directions and Changes 

During the last years, the basic directions of the economic policy concern: a) the effort for 

fiscal conformation in order to reduce the budget deficits and the public debt, b) the 

promotion of structural changes in crucial sectors of the economy, where accumulated 

problems hinder the entrepreneurial activity. Economic policy will move towards the same 

direction the next two years 3 . 

2 In contrast to the improvement of the business climate, consumers are pessimistic. Although the last 

few months their beliefs about the level of unemployment and savings are ameliorated, the consumers’ 

predictions for their economic conditions and the country’s economic state remain pessimistic. 

3 National Reform Programme, State Budget for 2007 

October 2006 




The fiscal policy will be sober, whereas it may be expansionary in certain sectors such as 

Health, Education, and Social Insurance. Concerning tax policy, the gradual reduction of 

business and individual tax rate may boost the total demand (consumption and investments) 

and thus the fiscal policy will have overall a growth impact, despite its restrictive character. 

Concerning structural changes, the reforms that are planned by the government and are 

gradually implemented (National Reform Programme), influence the business environment 

and contribute to the improvement of the aforementioned climate. Although reforms’ results 

have not yet been quantified, this mobility creates optimistic expectations. According to a first 

survey evaluating the implementation of the reforms, firms are moderate optimistic 4 . 

However, the complete enforcement of these reforms is a crucial stage that will determine 

the extent to which the firms can assimilate these changes, their effectiveness and practical 

quantitative implications. Thus, a precondition for the success of changes is their consistent 

implementation, without substantial changes and delays. Nevertheless, this procedure seems 

to have been already delayed. 

3.3.2. Delays-Problems 

Delays are more prominent in the areas that are associated with Public Administration’s 

functions. These problems increase the operating cost of the firms, discourage new 

investments and reduce national competitiveness. More specifically: 

Despite the development of infrastructures, the deregulation and the privatizations, the 

deficiency of entrepreneurial competitiveness is big. Furthermore, Greece remains an 

expensive and bureaucratic country that hinders new entrepreneurial actions. At the same 

time, although the decrease of tax rates drives Greece to converge with the rest of the 

Europe, the broader tax framework remains non competitive. This is more evident in 

comparison with the new member-states of EU-25, which use low taxation as one of the 

basic motives for investments. The lack of changes in the objectivity, stability, and 

transparency of the tax framework create uncertainty for the firms and discourage 

investments. 

Although some good policy measures have been taken in the labour market (e.g. flexible 

working arrangements), Greece ranks among the last in EU-25 concerning young and long 

term unemployment. Besides, there are many issues regarding the quality of education and 

4 Study by FGI (Federation of Greek Industries) and ICAP: “Evaluation of the implementation of National 

Reform Programme within the framework of Lisbon’s Strategy”, September, 2006 

October 2006 




the development of skills of the human capital that have longer-term impact on the 

competitiveness of the country 5 . 

Obviously these issues are related with fundamental strategic changes of the State’s own 

structure. However, despite some improvements, changes come with delays. Public 

Administration is ineffective, limits growth, and impedes the implementation of governmental 

policy directions. As a result, it hinders growth and welfare. Education cannot be independent 

and keep pace with the international developments. Justice is still subject to bureaucracy, 

lags behind, and along with bureaucracy constitutes a basic disincentive of foreign 

investments in Greece. The Social State, despite its high cost of operation, does not ensure 

for services as good and targeted as those of other European countries 6 . 

Consequently, despite the favourable climate and the positive economic developments in 

Greece, there are still many problems and delays in the implementation of the structural 

changes that the Greek economy needs, in order to improve the entrepreneurial and national 

competitiveness. These problems touch upon the entire business and socio-economic 

environment, and consequently impede the ICTs firms, which operate in the domestic 

environment. 

3.4. Public Policies for the Information Society 7 

3.4.1. The current state 

The public policies that are applied to promote the entry of the country into the Information 

Society (IS) draw resources from the European Union and the 3rd CFS. The main guidelines 

are developed in the Operational Programme for the IS. It is one of the biggest relevant 

Programmes in Europe, not only in economic terms, but also in terms of content, actions and 

policy measures it includes. It constitute so far the main tool for the implementation of the 

national strategy for the IS building on actions that support a more rapid diffusion of new 

technologies in socio-economic activities of country and forcing citizens and enterprises into 

the digital economy. Its objective was to create a critical mass of users, infrastructures (in all 

sectors and particularly in the Public Sector), electronic services and mechanisms that support 

the growth of the IS in Greece. These cores could contribute to the effort of ICTs diffusion in 

Greece and to their better economic exploitation, in order to improve the productivity and 

competitiveness of the Greek economy. As a result, the effectiveness of the disposable 

5 The competitiveness of Greek firms, FGI-BCG, 2006 

6 IOBE’s policy position paper about a more Effective State, July 2006 

7 More analytic and extensive description of policies for the Information Society is included in a previous 

deliverable (5b) 

October 2006 




resources is maximized, while new growth possibilities arise, improving gradually the quality 

of life of the citizens. 

However, the exceptionally innovative, complex and inter-sectoral character of the 

Programme created increased obligations throughout its implementation. Its successful 

implementation required the participation not only of many public and private institutions, but 

also the research society and academia. Nevertheless, the structural weaknesses of 

government mechanisms and public services to implement the political directions, the 

legislative difficulties, and bureaucracy had as a result a low use of the Operational 

Programmes financial resources. Although, low performance on absorbing the community 

financial aid is not an exclusively Greek phenomenon, neither the intensity and extent nor the 

time of occurrence and persistence of these difficulties were as significant as in Greece. 

However, apart the aforementioned weaknesses, the implementation of the Programme has 

yielded certain tangible results so far. The progress in Education, is significant while 

important training courses and policy measure were implemented at all levels. In the field of 

reforming the Public Sector, some significant actions have taken place, such as the creation 

of Citizen Service Centres (KEP) and the development of taxisnet. These actions contributed 

to an increase of the electronic services provided to citizens and firms, leading to an 

improvement of citizens’ everyday life. 

Regarding the diffusion of new technologies to firms, subsidizing equipment had some 

positive results in encouraging the adoption of ICTs- especially by SMEs- at various levels: 

first, at the stage of connectivity (connection and familiarization with the internet as a 

business tool), and second in various stages of the process of e-business (e-commerce, 

adoption of integrated information systems managing operational resources, internal 

management and business administration, etc.). An adequate number of firms were benefited 

by these subsidies, as it is mirrored on the improvement of the relative indexes of e-business 

watch. Apart from actions that involve a direct aid to the SMEs, the Programme includes 

other actions as well, that indirectly contribute to this goal. Promotion of electronic commerce 

projects in the local societies mediated by chambers, e-procurement, and the promotion of 

entrepreneurship in new economy sectors (TANEO) are some initiatives that facilitate this 

process and contribute to the familiarization of entrepreneurs with ICTs 8 . 

8 Apart from the OPIS, other programs also influence supply and demand of ICTs, as synergies between 

them are evident. Indicatively, EPAN has financed actions aiming at the reinforcement of firms’ 

competitiveness, subsidizing both tangible (e.g. integrated systems of information technology, 

development of B2B or B2C, ERP, etc.) and intangible investments (e.g. electronic networking of 

October 2006 




Significant delays occurred in the area of broadband investments in infrastructure. 

Broadband constitutes a basic precondition for the convergence of the Greek economy to the 

respective European ones. This is because large-scale projects, such as Sizefxis, that support 

the development of back office infrastructures in the Public Administration, the 

interconnection of its services, and the availability of broadband services at a reasonable 

price constitute strategic directions of the Community’s policies (e-Europe 2005, i-2010). 

In the context of promoting the relevant projects and a more aggressive promotion of 

broadband, the actions of new “Plan for the growth of broadband” are incorporated. These 

actions aim at the development of infrastructures, services, and boosting demand for such 

services. It is a very ambitious strategic plan, whose implementation will have positive 

impacts in the ICT sector. 

We could identify the actual contribution of OPIS in the growth of the domestic ICT at three 

dimensions: 

First, the implementation of large-scale infrastructure projects and subsidy of private 

investments on ICTs form a direct support of the primary demand. However, this 

dimension is rather myopic, although this does not mean, that all available funds 

should not be used. Indeed, the financial contribution to the ICTs’ turnover is 

negligible, considering an extended period of implementation (2000-2008). 

On the contrary, the multiplicative benefits for the ICTs sector via training/ advising 

that support the familiarization of the citizens with new technologies constitute a 

much more significant dimension. In this way, potential new clients of ICTs are 

created, offering longer-term benefits to the sector and reinforcing the secondary 

demand, which is the most significant. 

On the other hand the Programme facilitated the growth of the domestic ICTs sector, 

as the implementation of complex ICT projects provided know-how and experience 

gains. These projects constitute area of expertise and specialization for domestic 

firms and innovative know-how, which can constitute a strategic competitive 

advantage for the domestic sector. 

enterprises, participation to e-marketplaces) of technological and organizational modernization of 

enterprises. 

October 2006 




3.4.2. The next step 

The new interventions and policies within the framework of the 4th Programming Period are 

placed upon the Programme of “Digital Convergence”. The primary objective of this 

Programme is to contribute to the realization of a “Digital leap” to the productivity and quality 

of life, utilizing the ICTs and Internet. Furthermore, it has a strong peripheral dimension, as it 

aims to address the digital gap with these areas. 

The actions, which are included in this Programme, in combination with the actions that are 

already financed by the 3rd CFS, the digital services that can be implemented through Public 

Private Partnerships and motives for investments on new technologies via the new law on 

investments, form the set of actions that characterize the course of the country to the digital 

era. Two basic priorities are identified: a) improvement of productivity and b) improvement of 

the quality of life through the information technologies and faster internet. The six individual 

objectives concern the promotion of: a) the use of ICTs by firms, b) the public digital services 

to the enterprises via the restructuring of the pubic sector, c) the entrepreneurship in sectors 

that incorporate new technologies, d) the support of ICTs sector in Greece, e) improving the 

everyday quality of life of citizens via new technologies and f) digital services that facilitate 

the citizens and have cost saving benefits. 

Advanced broadband infrastructures are the basic precondition for the success of the 

aforementioned objectives. Some critical actions that have been set as top priority issues for 

the period up to 2008, refer to the increase of broadband penetration in the country, 

launching a promoting campaign familiarizing citizens with the new technologies, the 

restructuring of the government processes, promotion of e-procurement, automated 

processes for the most commonly used supporting documents and certificates, as well as a 

one stop electronic services for firms. All these policy measures could arguably lead to a 

removal of some obstacles that hinder a leap in terms of IS 9 . 

Regarding additional actions that contribute directly to the development and distribution of 

ICTs in Greece and are described within the framework of National Reform Programme, it can 

be reported that: 

9 In sum, four other main initiatives were implemented during 2006, besides the plan for the 

development of broadband. These are as follows: a) The intervention (210million €) for the more rapid 

distribution of internet, especially at a regional level b) the foundation of Digital Leap fund of funds, c) 

promotional campaign for Digital Greece with the aim of familiarizing the citizens with the benefits and 

the potential that ICTs offer, d) the action “Digital regional Government” to which regional agents of the 

country can participate, in order to develop their digital services. 

October 2006 




In Manufacturing, emphasis is given to the promotion of innovation and the technological 

modernization of firms under the investment law, which offers incentives for attracting 

private capital in high technology products/ services. Stronger collaboration of firms is 

promoted, while TANEO’s role is strengthened and the possibilities for investments in ICTs 

are broadened. In the Shipping industry the introduction of integrated information technology 

systems is promoted in order to upgrade the harbour services, whereas training and 

education actions of personnel in the use of these new technologies are also included in the 

planned actions. 

In Trade, the development of an integrated information system is being designed, allowing 

the mapping of certain markets and helping antitrust policy measures. At the same time, a 

National Council of Electronic Business was founded aiming at designing a national strategy 

for e-commerce. Furthermore, a portal named as Forum of Consumer will be soon launched, 

a portal which will address the need of consumers for information. It is an action that 

familiarizes citizens with services that can improve their everyday routine, something that 

could have multiplying benefits for the population. 

In terms of privatisations, the primary structural intervention affecting the domestic ICT 

market is the further privatisation of National Telecommunication Company (OTE) till it 

becomes completely private. This development changes the landscape of telecommunications 

market, as the decision making process will ultimately change, allowing no political 

interventions. 

In Education, five platforms of distance learning have been designed, in order to facilitate the 

educational activities at all levels of education. In Health, an integrated information system 

(IASYS), which includes applications supporting the hospitals’ management and operations, is 

going to be developed. Cost benefits from the introduction of that system is significant of 

course. However, the basic impact will be the improvement of the services to the patients, 

allowing citizens to actually conceive some tangible benefits from the introduction of ICTs. At 

the same time, health constitutes a possible field of specialization for ICT firms and a 

significant niche market, since there is a large number of institutions and agents that operate 

in Health. 

Within the framework of e-government, numerous projects are implemented. However, the 

grid of actions under “SIZEFXIS” probably constitutes the most significant large scaled project 

in ICTs that is currently implemented in Public Administration. This is expected to radically 

improve the effectiveness and services of Public Administration leading to significant benefits 

in every day’s routine of the citizens. Upgrading Taxisnet and the introducing new services 

October 2006 




are exceptionally important, because they refer to a platform already known and widely used. 

In the area of procurements, a new National System for E-procurement will be soon 

completed. It refers to the modernization of the framework around public procurements by 

instituting electronic methods for public offerings, thus effectiveness and transparency of the 

processes. 

Finally, there are some delays in the harmonization of the national legislation with the 

European that result to continuous cautions by the responsible Commissioner. EETT is 

strengthening and becomes more independent. Additionally, the law of electronic 

communications is planned, while the new National Regulation of Distribution of Areas of 

Frequencies and the National System of Management and Monitoring of Spectrum were 

published. 

3.5. Conclusion 

By summing up, the domestic ICTs sector is growing in an environment characterized by high 

growth rates and improved economic climate. Despite the small deceleration during the last 

two years, the macroeconomic environment for the ICTs sector remains favourable. Private 

consumption and investments (private and public) can contribute to the further growth of the 

ICT sector, despite the upward trend in interest rates. It should be noted however, that an 

environment of a strong domestic demand and high growth has been shaped since 2000, but 

this did not deter the recession of the international and domestic demand for ICTs. This 

means that the favourable macroeconomic environment is not a necessary and mandatory 

condition for the development and increase of demand for ICTs products and services. 

At the same time, the long established structural problems of the Greek economy and the 

delays in the implementation of the planned reforms create a competitiveness deficit and 

create difficulties that touch upon the ICTs sector as well. Besides, most of the problems, the 

later face, do not differentiate from the usual problems that Greek firms in general face. 

Consequently, the effectiveness of policies that concern the IS is maximized to the degree 

that the long lasting problems of the Greek economy are improved. These policies not only 

increase, as it was stated earlier, but they are also included as an additional dimension in 

other policy areas as well (employment, investment, infrastructures, etc.), while they are 

extended to the entire spectrum of socio-economic activity of the country. 

4. Main Findings - ICTs’ future prospects 

October 2006 




In the following section, some of the basic findings of the study are presented, in order to 

map the basic characteristics of the domestic sector and the factors that support our view 

about its prospects. This section consists by two parts. At the first one, the growth sources 

and the barriers for the ICT sector are explored, while at the second one, these are indexed 

and summarized. 

4.1. Basic findings: Sources and Barriers / for growth in the Greek ICT 

sector 

The domestic demand for ICT products / services is problematic 

The basic characteristic of the domestic demand for ICTs products/ services is its small 

magnitude, which in combination with the limited exports so far lead to a problematic and 

scattered total demand for ICTs. Three are the key client categories that form domestic 

demand: a) Retail which is supported by wholesaling distribution, b) firms (large and SMEs) 

and c) the Public. More specifically: 

The primary demand created by the Public sector is of small magnitude: the 

formation of a secondary demand by more familiarized citizens and firms is more 

crucial and substantial 

Demand from the public sector in quantitative terms is not that important and does not 

create the conditions of a steady and powerful corresponding demand. Furthermore, these 

limited resources are not used sufficiently and efficiently conveyed to the market. Despite the 

precise and correct design, the Public Administration’s problems and the legislative 

difficulties, hinder the implementation of the projects. In parallel, it seems that the emphasis 

is not placed on the actual service to be provided, but rather there is a simple transition of 

paperwork to an electronic environment (electronic bureaucracy). A simple implant of a 

system in the Public sector may lead to an unused and ultimately dead box, if the services 

that it is planned to provide have not undergone any organizational changes 10 . 

The small magnitude of that side of demand provides a good rationale for the limited number 

of ICT firms, which depend their survival on the public sector. Indeed as field research 

shows, the public sector constitutes the basic market only for the 10% of firms, although 

their majority (more that 60%) sells at least 1% of its turnover to the State 11 . Despite the 

opinions for under-priced projects, the large enterprises of the sector participate to the 

10 Field research on ICT firms, 2006 (deliverable 5b), Round table Discussion (6/7/2006), Observatory 

for the IS. 

11 Field research of ICT firms, 2006 (deliverable 5b) 

October 2006 




implementation of important infrastructure projects, as they seem to have the suitable 

portfolio of resources and capabilities, human capital, and know-how to do so. An adequate 

number of small firms participate as subcontractors, while their operation is possibly 

dependant on these subcontracts. However, some small enterprises do not participate in 

such public offerings and focus on specific niche markets, so as to obtain an important 

positioning. Thus, they give more emphasis on their keeping up with these markets rather 

than entering on such projects that may require a different approach and investments in 

human capital . 

Nevertheless, the fact that the primary enhancement of demand by the Public is limited and 

problematic should not ignore the multiplying benefits that the implementation of one of the 

largest Programmes for the IS in the period 2000-2006 entails. The implementation of this 

Programme triggered intense mobility in the sector. This is why ICTs firms point out that it 

constitutes the primary source for the sector’s growth. Besides, the main goal of the 

Programme for the creation of critical mass of users, infrastructures (in the Public and Private 

sectors) for electronic services and mechanisms that contribute to the development of IS in 

Greece, can constitute a pillar for sustainable growth in the long term. 

Demand from firms is larger in magnitude, but also problematic 

The firms primarily and the consumers secondary constitute a more substantial market for 

the ICTs sector 12 . However, both of these markets suffer from some common characteristics 

that keep the specific demand low and also problematic. Despite the fact that the cost of 

ICTs use and especially the cost of Internet does indeed inhibit the diffusion of ICTs, studies 

have proved that it is the low electronic culture of potential clients of ICT firms and their 

limited interest in ICTs products / services that are more significant inhibitory factors. 

Furthermore, neither the attitude of consumers towards ICTs nor the degree of management 

of firms and the possibilities for organizational changes are satisfactory. These phenomena 

have been responsible for the slow progress in moving towards the IS. 

Two are the main barriers identified: First, the lack of training in conjunction to low IT skills 

that result to customers of low maturity. Second, the fact that these agents are not convinced 

bout the true benefits of ICTs to a degree that justifies such an investment. The potential 

users of ICTs do not easily pay for intangible assets, while they focus on the system and not 

on the services and their possible benefits. Thus, investments on ICTs remain at a low 

12 Basic customers come from Trade and Industry, while Tourism, Shipping, and at a very small extent 

Health constitute small niche markets. On the other hand, Banks are a very dynamic section of the 

market, as they have supported the sector during the recession period. 

October 2006 




priority in their investment planning. But ICT firms are also responsible for that, at least to a 

certain degree. The “easy” sales of equipment in the past and the standard products/services 

they used to offer might have been disproportionate in relation to the size of Greek firms and 

the needs of Greek users. Thus, they may have created some sort of mistrust 13 . 

As a result, ICT use in the Greek population has been settled, while firms increase slowly 

their ICT use. Even if an important portion of the population and firms use and apply ICTs to 

a degree comparable with other developed countries, a digital gap has emerged. Significant 

categories of people and firms do not follow these trends. At the same time, there are some 

“rock-steady” parts”, that is large categories of population and entrepreneurs that do not 

accept the ICTs because of technophobia. They claim that there is no reason or any interest 

or any policy measure that would change their view about the necessity of ICTs. 

Thus, although reasonable prices and availability of services may amplify a weak demand, 

training potential customers and awareness of the practical benefits from ICTs are far more 

important and offer longer-term benefits. The first step seems to be the broader diffusion of 

Internet use that will permit for the acknowledgment of more services that could attract 

greater parts of the population and firms. 

…such as external demand, mostly because of the lack of extroversion 

Although more intensive export activity usually constitutes a solution for small – sized 

domestic market, export activity of ICT firms is of small scale: almost 60% of the sector 

operates exclusively in the domestic market. Thus, external trade of ICTs goods remains 

limited and is less than the ICT trade of 2000. Exports comprise just 14% of the total trade 

flows, while in 2005 ICTs goods comprise the 5.2% of the value of the total external trade of 

Greece (7.3% in 2000). European Union is firmly the primary supplier of ICTs products, 

whereas in 2005, it becomes the basic recipient of the Greek exports. This reflects an effort 

for an empowerment of the export activity to more developed countries. 

Therefore, small size of the domestic market does not seem to prompt towards a strategy of 

entering into new geographical areas14. Firms are reluctant and have limited interest in 

investments on export activities, while size affects significantly such behaviour15. Thus, any 

13 In EITO 2005, it is pointed out that this misfit of ICT products / services and real users’ 

needs is at least a european problem. In fact it has led in the past many European firms to 

postponing their investments on ICTs. 

14 Field research on ICT firms, 2006 (Deliverable 5b) 

15 According to the Pan-Hellenic Association of Exporters, the basic problems of the Greek firms to 

demonstrate a more intense export activity are related with their weakness of finding access to financial 

mechanisms, lack of tax incentives, domestic bureaucracy, the high premiums of export credits, etc. 

October 2006 




inclination to extroversion is expressed only by some large firms from some large 

manufacturers of ICTs equipment (besides, the telecommunication equipment dominates the 

exports), or some intensive export-oriented agents for IT services that seem to have gained 

access to foreign markets, mainly the Balkans ones. 

The supply side is fragmented, numerous, and small in size: Many firms for few 

clients and all for every product / service 

The domestic ICT sector is constituted by a large number of firms that deal with ICTs 

products/ services either as a primary or as a secondary activity16. Even though almost 40% 

of them belong to Information Technologies and 37% belong to the relevant wholesale 

Trade, the small percent of 8% operating in Telecommunications represents (2004) 

approximately the 55% and 67% of the total turnover and net profits respectively. 

The viability of that large number of firms, especially in IT services could be considered as 

precarious, as the demand is low. The supply side is scattered, with a large number of firms 

trying to survive in a small sized market. This reflects the need for a restructuring of the 

sector, mergers & acquisitions, and inevitably the closure of some already bankrupted firms. 

At the same time, it is a “new” sector that has been grown (by 80%) during the last 15 years. 

This may account for the lack of a better established entrepreneurial behaviour in the sector. 

The 2 nd generation of entrepreneurs could provide an answer to this problem, if they could 

incorporate the past knowledge and experience in today’s adopted practices 17 . Thus, issues 

of culture and lack of professionalism, along with the fragmented structure of the sector, limit 

the possibility of strong growth for the sector in total. Furthermore, radical technological 

developments that take place and characterize ICT products and services, the convergence of 

information technologies and telecommunications and the remaining open issues concerning 

the regulatory framework, may not permit more integrated and long-term business plans. At 

the same time, the sector is reluctant to enter more dynamically in other promising sectors, 

such as Tourism, i.e. to address the demand by segments and to create stronger niche 

markets. 

In the same line of argument, the average ICT firm remains a small firm. This results to the 

usual functional and competitiveness problems that the average Greek SME faces. It is firms 

of considerable size that have usually greater possibilities for growth, extravert behaviour and 

16 More than 1800 firms found in the business registry of Hellastat (according to the definition of the 

ICTs sector within the framework of the present project). 

17 Round Table Discussion (6/7/2006), Observatory for IS. 

October 2006 




are able to be competitive even at an international level. On the contrary, small firms, in 

order to survive, should adopt more targeted strategies that focus on niche markets or 

operate complementary to large firms-clients. 

Therefore, a major problem for ICTs firms is their “shallowness”, as the sector does not 

“learn”, remains small in size, scattered, and without specialization (“everyone sells 

everything”). The excessive focus on box-moving that characterized past years’ growth has 

been myopic so far, as it led to “easy” sales, but with no longer term prospects. But 

nowadays, the profit margins for these activities are very limited, as the prices have been 

reduced to very low levels. Hence, emphasis should be placed, not on selling the ICT 

equipment, but on selling the service and the actual benefits that the users can acquire. 

Employment in the sector: Slight increase but under precarious conditions 

Employment in the ICT sector in the next couple of years will probably increase, as several 

positive signs have been reported 18 . It seems that the imbalances of the previous years have 

been smoothed. The expected increase in demand, the need for new value – added products 

/ services and the expansion of business activities in new technological areas, in conjunction 

with the healthy economic conditions support these positive trends. The empowerment of 

employment in the ICT sector is crucial, as it involves well trained, highly specialized parts of 

the national workforce. 

However, the individual sector-based particularities should not be ignored. In this framework, 

new vacancies are located mainly in Trade and secondarily in Services. On the contrary, in 

the manufacturing part of the sector (manufacture of ICTs equipment), the trends are not 

positive. Firms from this subsector have to face the competitive pressure from lower cost 

countries. Their products that are imported in Greece have a low price and a relatively good 

quality. 

Furthermore, some exogenous factors stemming from the international environment, (i.e as 

mergers & acquisitions of some important multinationals), should not be ignored. As these 

events are proliferating at the international level, they may affect the internal environment as 

well, leading to possible personnel reductions. Moreover, and in a more longer-term 

perspective, the growth of the relevant ICT sectors in neighbouring countries and their 

18 National Statistical Office’s survey on Human Capital, Field Research on ICT firms, Kantor studies, 

Boyden Athens studies and BCS from IOBE. 

October 2006 




upgrade in know-how in combination with lower wages may lead to a withdrawal of foreign 

investors from Greece 19. 

On the other hand, recent studies of human capital trends report an increase of the demand 

for executives in the ICT sector, converging, thus, with the estimation for an increase of total 

employment in the sector. However, the supply is also continuously growing and it can lead 

to an imbalance between demand and supply of relevant labour in the sector. University 

graduates of ICT sciences increase to a greater extent than the domestic labour demand. 

Hence, there is adequacy in terms of ICT executives, while other types of employment are 

also expanded (external advisors, part-time and non-permanent employment). On the other 

hand this should lead to a reinforcement of entrepreneurship in the sector. Such a trend is 

indeed evident, as there is an increase in the birth of start ups in the sector during the last 

years. Nevertheless, the degree and the quality characteristics of these new ventures are not 

adequate in order to absorb all graduates from the corresponding faculties. As 

entrepreneurship studies reveal, in Greece only 10% of the new ventures can be classified 

among the ICT sector, being mainly a retail firm 20. 

Bu summing up, the trends for total employment in the sector may be considered positive in 

the short term and are certainly better than the situation three years ago. However, these 

positive trends have a sector-based orientation and probably a specific skills orientation. 

Additionally, there is a degree of uncertainty regarding the success of the firms’ growth 

strategies, while external factors may place in danger some job positions in the domestic 

sector. Simultaneously, labour supply in the sector may not balance with the relevant 

demand. 

The human capital is one of the strengths of the sector, but Universities should be 

more aligned with the needs of the firms 

Field research on ICT firms showed that the human capital of the sector is considered as its 

strong advantage. However, there is still some space for improvements. The level of tertiary / 

technical education and training with regard to the ICTs is significant, the syllabuses are 

adequate and complete in terms of context, while the specialized personnel in the labour 

market is also sufficient. Firms are satisfied with the level of human capital in the domestic 

labour market, as there are good and well skilled engineers and executives, allowing a growth 

of the sector. However, a significant part of the business sector is not fully satisfied, as it 

19 However for the time being, an increased foreign investors’ interest is recorded (especially in Trade 

and Telecommunications). This implies the existence of opportunities in the Greek market. 

20 Data of Global Entrepreneurship Monitor (GEM), a research consortium to which Greece is 

represented by IOBE 

October 2006 




pinpoints the need for an even more targeted training, better quality and a more efficient fit 

with the market’s needs. 

Indeed, market needs are not well aligned with the Greek educational system a fact that 

creates difficulties in the improvement not only of the ICT sector, but several other sectors as 

well21. The need for strengthening cooperation between firms and universities and an 

improved preparation of graduates remains high. Firms ask for a greater familiarization of the 

graduates with market terms and functions. Furthermore, other types of cooperation such as 

fieldwork, seminars by executives, and a more intense collaboration in R&D could lead to a 

more effective linkage between education and “production process”. 

Intense competition in terms of pricing and not in terms of technology: Well targeted 

strategies, but difficulties in their implementation 

Prices are the main element of competition in the ICT sector (field research data), while 

competition in terms of marketing and advertising follow next. On the contrary, the business 

environment cannot be characterised as particularly competitive in terms of differentiated 

technological products/ services or in terms of quality and value –added products/ services, 

although demand and competitors’ moves are not easily predicted. Therefore, all firms seem 

to sell similar products, which differ only in price and the means for promotion. This leads on 

one hand to an intense competitive pressure that limits profit margins, but on the other hand 

also creates an opportunity for the innovators, those that try for differentiation and market 

specialization. 

Within this framework, ICT firms’ strategic objectives for the next couple of years is twofold: 

First, to achieve a better market share for their existing products in the market in which they 

are already active, a fact that affirms the room for competitive pressure by attracting 

customers from the weakest opponents. Second, to innovate by introducing new 

products/services, aiming not only to attract customers in the given market (ICTs users), but 

also to attract new customers (ICTs non-users). 

Their profile in terms of strategic actions they follow in order to achieve their objectives, is 

concentrated in four main areas: a) emphasis on the value-added products/ services offered, 

despite the fact that competition in the sector has mainly price and marketing characteristics, 

21 There is also the view that capable executives of the sector have not yet completely exploited their 

skills in large scaled projects- this is also attributable to delays in the implementation of public funded 

projects- which results to underemployment or employment in other fields which do not capture the 

personnel’s skills. 

October 2006 




b) differentiation strategies that place emphasis on similar products/services, c) focus on 

niche markets and d) emphasis on their organizational flexibility. The later strategy supports 

the rest, since it permits to a firm to adjust more easily to changes in the business 

environment. 

Another bundle of strategies involves actions that concern both the external and the internal 

environment of firms: a) emphasis on the human capital, by creating an attractive working 

environment that keeps, promotes, and attracts well trained workforce, b) differentiation in 

new products/ services, c) effectiveness of internal operations and improvement in 

productivity (it refers to actions that a firm can take in order to improve its internal 

operations, to identify its weaknesses and strengths, and thus, to become more competitive), 

d) creating strategic alliances with other firms, as an alternative for the limited inclination to 

M&A. 

By summing up, ICT firms seem to be aware of the points they should focus on: innovation, 

value added, human capital, and flexibility. However, an issue that arises is whether they can 

apply successfully these strategies. Not all firms have the resources and capabilities or have 

the will to commit to a strategic plan with the aforementioned characteristics. There are, 

though, some good examples showing that some firms can succeed towards that direction 

and become competitive at an international level, influencing positively the sector as a whole. 

Business R&D is limited, but there are some research agents that collaborate with 

academia 

Although several firms of the sector state that they carry out R&D, there is rather a limited 

interest in in-house R&D. However, R&D constitutes an important dimension of innovation, as 

it contributes to new knowledge creation, while it supports the transformation of 

technological advancements in innovative products and services. Nevertheless, the definition 

of innovation is quite broad, as it refers to any improved product /service that is launched in 

the market, or an improvement of the internal processes (not strictly technological ones). 

Within this framework, worldwide technological developments support domestic firms. 

Consequently, ICT sector is one of the most innovative in the country, as it is argued by 

innovation surveys carried out by the EU (CIS, SIS22). 

Furthermore, research activity in the most important Greek Universities and research centres 

show that there is a core of firms, which collaborate with the academia, either via 

22 The Greek enterprises of information technology are first in the rank in the Sector-based Table of 

Innovation (Sectoral Innovation Scorecard-SIS) of the European Committee (2004) 

October 2006 




collaborations subsidised by Community and national resources or even with private funding. 

These collaborations offered a significant route against the limited R&D environment in 

Greece, as it is reflected in the increased participation to Framework Programmes since 1984. 

For example, 234 Greek firms participated in the IST Program (5th Framework Programme) 

that included 2203 research projects. This performance ranks Greece 6th in Europe. This 

indicates that Greek ICT firms are substantially represented, in comparison to other countries, 

even those being more technologically advanced than Greece. Is should also be mentioned 

that two important ICT research centres operate in peripheral areas of Greece (Crete and 

Patras) which could support the birth and growth of some spin-offs firms, building on high 

quality resources and capabilities from the nearby universities. 

These facts indicate that there are cores of research activity that in collaboration with 

Research Centres and Universities can promote innovative products/ services for the Greek 

market and give solutions for applications of the new technology, developed abroad. 

Direction for this research activity could involve: adaptation and integration of the existing 

technology in the Greek environment, software adjusted to the Greek firms’ needs, digital 

content, e-government applications, e-learning and e-health, telecommunication networks, 

etc. These activities can add value to the existing products/ services. Thus, they can become 

more attractive for users or give solutions to technical cost issues of the firms, releasing 

resources for other activities. Moreover, they can utilize the advanced capabilities of the 

workforce in the sector, as these capabilities are not yet fully explored. 

Financial recovery after 2002 and possible growth possibilities: turnover increase for 

2006 and 2007 

Although the results of recession in demand during 2000-2002 internationally and the 

misjudgements in investment choices in the internal financial market have not yet surpassed, 

the sector seems to have recovered financially and follows a course of upturn during 2002- 

2004. The general conditions are influenced by the behaviour of OTE (high losses in 2004), 

while a positive picture is noted in the mobile carriers. The remaining firms show some 

satisfactory results in 2004, increasing the turnover and their net profits. 

Small enterprises of 11-49 employees are relatively dynamic, as several of them are the ones 

that contribute to the growth of the whole sector. On the contrary, medium-sized firms (50- 

249 employees) were weak to maintain the important rise of turnover and net profits in 2003, 

which resulted to a deceleration in 2004. Large firms also show some satisfactory results, 

while bad results of specific firms are counterbalanced by good performance of some of the 

October 2006 




important firms in the sector. Besides, large firms have greater profit margins than the 

smaller ones. 

Firms from the IT sector show some good records (especially those employing 11-49 

persons) by increasing their turnover. Some of the most profitable ones further increase their 

profits, while losses are reduced considerably in 2004. Besides, their gross profit margin is 

decreasing at lower levels than Telcos. In the later, the increased competition, the maturation 

of growth rates in mobile carriers, the mobility in the fixed telephony (“alternative carriers) 

market and the substantial decrease of OTE’s figures characterize the relevant financial 

environment (deceleration of revenues, profits), The three basic mobile carrier companies 

represent henceforth the 19% of total turnover of the ICT sector. 

In the relevant sub-sectors, telecommunication services remain the most dynamic part of the 

ICT market, while IT Services hold also their good position. On the contrary, manufacturing 

and software show some disappointing results, while profits in the - heterogeneous and 

volatile to a certain degree – sub sector of ICT Trade are slightly increasing. 

However, this upturn trend seems to cease in 2005 with some low results in sales, revenues, 

and profits. In IT, sales of the large firms hold their last year’s levels while profits decrease. 

In Telecommunications, OTE’s losses keep on having a negative impact on the sector. In any 

case, the restructuring actions in that market (exits/ acquisitions) and the investments on 

infrastructure will influence the next fiscal years. Nevertheless, the telecommunication market 

is growing, attracting the interest of foreign investors as well 23 . However, results of the 

Athens stock exchange listed firms for 2006 and forecasts for the sector (cf. Appendix 3) 

show an increase 3.4% and an even more intense increase (by 6-7%) respectively in 2007 

and 2008. 

Therefore, poor results of the past and the main impacts of the stock exchange crisis in 2000- 

2002 seem to be overcome, despite the fact that there are some pending issues and further 

business actions that need to be completed. Although results for 2005 are not encouraging, 

the financial environment is not as unstable and problematic as it was in 2002. Furthermore, 

increased liquidity seem to support investments, especially in the telecommunications’ sector. 

Basic barrier for the growth of the sector: the limited broadband diffusion 

23 More recent forecasts show that the turnover of ICT sector will be reduced by 3.1% in 2006 (or 

2.1%, if retail trade is excluded). This recession of turnover is more intense in the wholesaling trade (- 

3.8%) and the equipment manufacture. On the contrary, IT services increase their turnover by 4.2%. A 

marginal recession smaller than 1% is recorded in telecommunication services (Cf. Appendix) 

October 2006 




The quality of Telecommunication infrastructures is considered by most of the firms poor 

compared to European averages, limiting the development of new services of high added 

value. Thus, a basic barrier for the growth of the ICT sector in Greece is the limited diffusion 

of broadband. The new improved infrastructures are the precondition for growth, as they will 

allow the development of additional services of higher value - added. This entails benefits not 

only in terms of an extended use by the current users, but also in terms of attracting nonusers, 

as the ICT products/ services become more attractive. The rapid development of 

broadband connections within 2006 is a positive change, but at the moment it reflects a 

technological upgrade (dial-up connections’ upgrade) that reflects the needs of the current 

users. The content and the services (e.g. triple play) that could be developed on upgraded 

infrastructure will broaden the current ICT market as they will attract non-users. Although it 

is the telecommunication market that will be first positively affected, due to the technological 

convergence, IT will also have significant positive spillovers, allowing for a growth of the ICT 

sector as a whole. 

4.2. Conclusions for the prospects of ICT sector in Greece: growth 

under certain preconditions 

On the basis of the aforementioned findings that demonstrate the basic characteristics and 

the operation framework of the domestic ICT sector, along with an analysis of the data that 

were gathered and the trends that were valuated under the present study, what can be 

argued is that the growth prospects of ICTs sector during the next two years are 

moderate optimistic. 

This belief is based upon the restriction of the effect of demand / supply barriers that still 

exist in the domestic ICT sector and on the reinforcement of some positive parameters that 

characterize the sector. Firms are moderate optimistic, although they recognize that the 

market remains difficult and has still more barriers than growth resources. Furthermore, 

although they are more reluctant for the prospects of the whole ICT sector, they are 

significantly more optimistic for their own status. They seem to recognize to themselves 

certain competitive advantages and their capability to survive in an even unfavourable 

environment. This on the other hand means that weak players are still present on the 

market, while there are competitive firms that can lead the industry to growth. The 

verification of these expectations depend however on the intensity of the positive trends in 

the elements of growth and also the restriction of the effect of the relevant barriers. 

The macroeconomic environment is still favourable 

October 2006 




The Greek economy is rapidly and steadily growing. Thus, a favourable macroeconomic 

environment is developed for the domestic ICT sector. Private consumption and investments 

remain at high levels, while the progressive fiscal reinstatement allows an increase in public 

investments. These trends can benefit the growth of ICT sector. The dynamic elements of the 

economy, the improved business climate, and the government inclination towards 

reformatory initiatives and structural changes imply that the economic conditions do not 

hinder the growth of the domestic sector. However, the favourable macroeconomic 

environment does not constitute a necessary and mandatory condition for the sector’s 

growth. Furthermore, the long established structural problems of the Greek economy and the 

delays in the implementation of the planned reform actions create a competitiveness deficit 

and difficulties, which have an impact on all firms. Therefore, to the extent that solutions to 

these long established problems of the Greek economy are progressing, the effectiveness of 

the IS policies could also be improves and maximized. 

Evidence for the reinforcement of demand is strengthened 

Although the problematic characteristics of demand require additional time to smooth out, 

there are clues for its reinforcement. The diffusion of ICTs in developing sectors of the 

economy (such as Tourism, Manufacturing) is considered as a decisive factor of demand that 

can create broader dynamics for the growth of ICT sector. Entrepreneurs’ understanding that 

they can improve their productivity and competitiveness through ICTs is increasing. There are 

strong indications that the medium-sized and the larger firms of the country have moved 

from the stage of connectivity to the stage of adoption of some e-business practises. 

Although these firms constitute only a minority of the entrepreneurial activity, they relate to a 

big portion of employment. 

Simultaneously, a large number of smaller firms operate closely to them and within the 

borders of their productive chain (suppliers/ customers). The smaller firms are already forced 

to keep pace with their large customers and they are expected to be more positive towards 

the investments on ICTs. This is probably not attributed to their beliefs about ICTs benefits, 

but to their need to preserve their position in the market. Besides it is predicted that the ICT 

expenditures will increase in the next 2-3 years, mainly in the direction of IT services and less 

in the hardware 24 . Additionally, as the e-business watch survey indicates, a 40% of the firms 

from 10 important sectors of the economy will increase their investments on ICTs during the 

next year, whereas only 4% will reduce them. 

24 Round Table Discussion (6/7/2006), Observatory for IS 

October 2006 




In consumers’ market, younger clients have strong dynamics and are expected to stimulate 

the use of ICTs in the socio-economic activity in the country, as they participate more to the 

economic activity, but also as sources of knowledge for their close environment. Besides, 

monthly expenditures of the households for ICT products/ services have increased in 

comparison to 1999 (5% opposite to 4%), although they mainly refer to telecommunication 

services. They are estimated to exceed the amount of 4.3 billion € 25 . Telecommunications 

dominate the market, but create also some positive spillovers to the IT market. 

Consequently, the new products/ services that stem from the increasing technological 

convergence of IT and Telcos will have a positive impact on the sector of ICTs as a whole. 

At the same time, the role of State seems to be empowered, not only at the level of motives 

and subsidies provider for the use of ICT, but also the level of e- services that facilitate the 

business operations. These services lead to tangible reductions of transaction costs and 

improve the citizens daily life. However, more advanced and efficient services have as a 

precondition the development of broadband infrastructures that will allow for more services 

and will support the training actions that form a priority of government policies 26 . The degree 

of success of these actions is, thus, one of the factors that will determine the intensity of the 

support of the secondary demand, which is the most significant for the sector. Furthermore, 

most of the projects that are implemented in the country are going to yield results in the 

forthcoming period. This is expected to stimulate the diffusion of ICTs and the penetration of 

the IS in the country. 

Concerning foreign demand, international studies expect a rapid increase of the ICT 

expenditures in the Balkans, East Countries, former members of USSR, and Northern Africa 27 . 

These countries constitute potential opportunities (especially Bulgaria and Rumania due to 

their imminent participation in EU). Greek firms from various sectors have already expanded 

to these countries, while large firms of the domestic ICT sector have also invested on these 

networks. This is a fact that can support, the efforts of smaller firms, as they usually operate 

in their close environment. Particularly, the IT sector can be aided by the expansion of 

manufacturing firms and Banks in the Balkans and be benefited by their practises. 

Besides, examples of intensely extrovert firms are evident, while some of them have already 

entered into the most developed and demanding markets. There are therefore export 

intensive cores in the IT Services subsector that have entered into foreign markets (as 

25 National Statistical Service of Greece (ESYE), Households Expenditures studies 

26 Digital Strategy 2006-2013, OP Digital Convergence, Broadband strategic plan 

27 IT outlook 2006, OECD 

October 2006 




independent units and not via multinationals) offering higher value-added products/services 

that relate to integrated information technology services. These markets and the 

“assumingly” more demanding customers have greater margins of sustained growth for the 

future. Furthermore, they can form a stable clientele for higher value-added products, 

opposite to box moving that may lead to easier sales, but is more vulnerable to the 

international competitive pressure and has lower profit margins than those activities. 

These prospects for greater extrovert behaviour of ICT firms are also reported in various 

sources, such as the estimated increase of the participation of high-tech and information 

technology firms in the country’s exports (Press Bulletin by Minister of Economics, 6/9/2006). 

Besides, recent studies (e.g. Kantor) report that ICT sectors present high levels of 

competitiveness at the international level. Furthermore (STATBANK, Export Leaders), 21 

enterprises of the top100 - in terms of turnover- Greek trade export firms belong to the ICT 

sector, representing 19% of the turnover actually exported. Although, the volume of turnover 

is still limited (less than 400 million € in 2004, with as mean share of exported turnover 

around 25%), these trends and the relevant dynamics in the field can lead the way and help 

other firms of the sector to move towards the same direction. 

These trends, which are more intense in Trade and manufacturing and less in ICT Services, 

converge with the findings of the business & consumers surveys of IOBE. Foreign orders are 

improved, while the Business Climate Index in the manufacturing subsector of ICTs has being 

improved since the beginning of 2006 and henceforth. This is based on more positive 

estimations for the level of demand, while abroad orders have also improved. In ICT 

Services, the Index seems to improve marginally in 2006, despite intensive ups and downs. 

Furthermore, the climate Index in Retail Trade for ICTs also improves. The forecasts for the 

short-term sales are favourable, while the upturn and reinforcement of the commercial 

activity is captured by expected increase in employment. 

Thus, the preconditions for the reinforcement of demand for ICTs are evident not only in 

respect to the Public demand, but primarily on behalf of the firms and secondarily on behalf 

of the consumers. The mobile phones penetration facilitates the development of other valueadded 

services, while the IPTV is expected to be the next “vehicle” of ICTs growth. In 

general, the technological convergence of the IT and the (Communications) entails certain 

benefits that can contribute to the more rapid expansion of the Information Society (IS). Of 

course, such a forecast comes with uncertainties depending on the speed of this process. 

October 2006 




Telecommunications and consolidated services are a driving force for the sector: 

Benefits from the technological convergence of information technology and 

communications 

As previously mentioned, the developments in the telecommunications market lead to more 

positive estimations and prospects for the ICT sector as a whole. Products and services of 

both sectors will be further integrated and consolidated, thus creating higher added value at 

a relatively affordable price (access and use). Triple play services reflect this convergence and 

the new advanced possibilities. They are expected to develop in parallel with the 

improvement of infrastructures and the cost reduction will make them more affordable. 

Simultaneously, the Internet itself can be far more attractive (richer content and multimedia) 

for the potential user. Services such as digital television, video on demand, VoIP (for 

enterprises), and the development of integrated solutions for B2B and B2C (for SMEs) are 

some of these services that can attract new categories of potential users. However, a 

precondition for that is the broader diffusion of broadband, which will significantly contribute 

to the further development of the ICT sector in Greece. 

There are opportunities and activities/ products/ services with wider growth margins 

The fact that there is an increased foreign investment interest and many agents are seeking 

for additional collaborations in order and make some specific investment choices in Greece 

reveals that the domestic market- besides its problems - offers some opportunities that they 

rush to exploit. This trend support higher expectations for domestic demand. The 

development of infotainment is dynamic, while broadband Internet will allow for the 

development of new attractive services (triple play). The profit margins of box-moving are 

limited, while software is not a profitable activity for independent domestic firms. 

Furthermore, their activities are in danger in their current form, since large multinationals, 

which offer similar services, will dominate the market. There are, though, some opportunities 

for parameterisation for the domestic firms, which should adopt the SaaS model (Software as 

a Service) and turn to more integrated information technology services. The environment is 

difficult for the manufacturing subsector as well, because of the international competition’s 

pressures. There is also a prosperous future for Trade, if they manage to broaden the 

portfolio of products and work as supporter of the Services sector 28 . A SWOT analysis for the 

ICT sector and its sub-sectors can be found in the Appendices 1 and 2. 

28 Indeed after some recent closures, a gap has been created in the retail market. The existing 

distribution channels rush to exploit this gap by strengthening their network, while there could be room 

for a new independent network. 

October 2006 




However, there are certain preconditions for the verification of these positive expectations. 

Need for structural changes in the supply side 

The fact that the supply side outbalances the relevant demand in a small domestic market 

could be helped of course by the expansion of demand. However, the scattered supply side 

has indeed hindered a more rapid growth of the sector. The excessive number of small ICT 

firms leads to an intense price competition that narrows profit margins, especially when there 

is lack of differentiated services and specialization, and everybody is trying to sell anything. 

Firms seem to recognize to a greater extent than three years ago that their “shallowness” 

and the limited efforts for learning should be reduced. 

The second generation of entrepreneurs that gradually are entering into the market and the 

consolidation of more concrete business practises, in combination with the flow of mergers & 

acquisitions and the irrevocable closure of firms that had bankrupted, will contribute to the 

sector’s reform. Besides, at the financial level, upturn of economic figures and a satisfactory 

liquidity, which releases resources and permits further actions, are supported by additional 

tools, such as the new law for investments and growth. 

The positive prospects also depend on the degree to which the firms will implement their 

proclaimed strategies and succeed at their goals: more innovation and differentiation, 

emphasis on the added value of their products/ services, utilization of their human capital, 

but mainly an increased effort for specialization and focus on niche markets. These niche 

markets already exist and are further explored in the banks sector, while it is expected to be 

intensified in Tourism and Shipping. They should also touch upon the Health sector, as up to 

now this market is underdeveloped. 

To the extent that these reforms and actions will show a significant progress, economies of 

scale are created and strategies for vertical collaboration (services, commerce) become more 

effective, the supply side could be more rationalized. 

Basic precondition for growth: Investments in infrastructures, increase of broadband 

and development of services and digital content 

Given the importance of telecommunication services for the domestic sector, the 

development of broadband infrastructures and the improvement of the Internet penetration 

are the most significant determinative factors for its growth. The substantial decrease in the 

cost (access and use) has created a positive climate in the market. However, a sustainable 

growth can be achieved only via rich digital content and many electronic services. These 

October 2006 




advanced and innovative services could support a broader demand for ICTs at two levels: 

first, a further expansion of the use of the current users (they are more sensitive to cost), 

and second, the attraction of the non-users. The improvement of Internet connectivity can 

prompt firms to develop more Greek digital content, a factor which could contribute to both 

the increase of usefulness and attractiveness of the Internet. 

The role of the public is important at the level of services infrastructures, digital 

content, and training… 

The actions that are planed at the public policy level towards investments in infrastructures 

(i.e Broadband strategic Plan) create some optimism for the future. At the same time, actions 

of advising/ training are drawn, in order to familiarize citizens with ICTs. Nevertheless, efforts 

for some additional digital content and new electronic services, which improve business 

transactions, should intensify. 

…as the private investments in broadband 

The main body of investments in the ICT sector stems from telecommunications. However, 

private investments have been limited so far, especially in broadband infrastructures. During 

the last couple of years, only OTE proceeded with some investments, in accordance with the 

needs of the Olympic Games. The “alternative” fixed telephony suppliers had not really 

invested in infrastructures, as the imposed regulatory actions to OTE allowed them to enjoy 

low prices in wholesaling, and thus “easy” profits in their retail sales. 

The adoption by EETT of certain motives for attracting investments shows already some 

positive results. The new Law for Electronic Communications, the enforcement of regulative 

obligations to the dominant OTE, and the cost audit, which led to a decrease by 50% of the 

monthly costs in shared access, constitute motives for the attraction of investments by the 

“alternatives” in fixed telephony. These actions, in combination with the greater clarification/ 

integration of the regulatory framework have led some of the most important firms in the 

sector to have already implemented investments in infrastructures for the development of 

their own core network. Thus, they will be able to provide services of added value in a more 

liberalized telecommunications market. The investments during the next couple of years are 

estimated to reach the level of 2 billions, while there is room for further increase, as the 

regulatory framework is finalised and reconciled with the EU’s legislation. Besides, the 

privately-owned core network provides more opportunities for supplying differentiated 

services to their subscribers and allows greater independence flexibility on behalf of the firms. 

October 2006 




To summarize, the growth prospects of information technology and communications sectors 

in Greece are moderate optimistic, while they are dependent on the easing off of the 

restrictive factors of supply and demand, especially in the telecommunication market: the 

favourable macroeconomic environment that sustains private consumption and investments 

at high levels; but also on the inevitable transition of the State to the supply of advanced 

services that facilitate both the citizens and firms. The preconditions for the verification of 

these positive expectations are as follows: 

The increase of investments in broadband infrastructures. These will contribute to the 

further diffusion of the Internet, while they will intensify the competition in the 

telecommunications and consequently the information technology market with new 

value-added products/ services 

The development of Greek digital content by ICT firms that will lead to: 

A more intense diffusion of the Internet to non-users and dynamic firms 

that are inclined to participate to the information society, under the 

suitable training and awareness actions. 

the diffusion of ICTs in other sectors of the economy 

The reinforcement of training/ advisory/ educational actions mainly by the State, but 

also by consumer-oriented strategies by firms. 

The rapid operational integration of ICT systems in Public Administration, so as to 

offer substantial electronic services, and not add to some electronic bureaucracy. 

Additionally, the role of Public as a service provider, who facilitates the citizens and 

the firms, should be upgraded. 

More intensive efforts for exports, speeding up the necessary restructuring action in 

the market, ownership transitions, etc. 

Efforts for a more mature business behaviour, in parallel to specialization and 

segmentation of the market (niche markets) 

The reinforcement of collaboration between universities and firms, so as to ensure a 

better preparation of the human capital and improve the R&D performance. 

5. Policy propositions for supporting growth of the ICT sector 

At the level of ICT firms 

October 2006 




In the previous sections, the basic findings for the ICTs sectors in Greece were presented. 

Furthermore, the parameters that function or could function positively for the sector’s growth, 

but also the threats and the barriers that the sector face and should cope with were 

presented. The following propositions summarize the actions or the directions that the 

sector’s firms should take, in order to support a longer-term and sustainable growth of their 

activities. We should also note our belief that in the domestic sector, there are certain firms 

and entrepreneurs / managers, who can - through their successive strategies - lead the 

whole sector to growth. 

Some signs of reforming towards a more efficient structure in the sector 

The current sector’s structure and its characteristics constrain its faster growth. Thus, 

reforming actions should be intensified (mergers/ acquisitions) and more collaborative actions 

(such as strategic alliances) should proliferate under a consolidation process. Strategic 

alliances for integrated services and collaboration with distributors and content developers 

can conglomerate resources and capabilities that are interspersed in the field and create, 

more efficient vehicles of growth. It is also imperative for all interested parties to understand 

that they should expand or limit their activities to the area where they possess a competitive 

advantage. Identifying these complementarities through collaborations and alliances 

represents a significant strategic action that should attract greater interest from ICT firms. 

With some efforts for specialization and strategies that focus on niche 

markets… 

The efforts for specialization and focus on target groups should be more intensified. Firms are 

aware of their advantages and they should try to focus on them. Despite the limited degree 

of market’s segmentation, there are niche areas that could constitute centers of growth. Their 

identifying and effort for satisfying their special needs with customized products / services, 

can constitute a solution especially for firms of smaller size, which have difficulties in adopting 

strategies that require a larger size. Given the mild positive prospects that were expressed for 

demand, a strategic positioning on a niche market segment at this moment ensures for 

competitive advantages for the future. 

…with more innovation and differentiation via R&D 

A stronger effort for innovation and differentiation is required. The diffusion of ICTs in other 

sectors of the economy requires that ICT firms are in a position to offer value added solutions 

for the specific sectors. Conducting more R&D, in collaboration with academia, can contribute 

October 2006 




to a more efficient acquisition of know-how and technology developed abroad, leading to 

innovative products / services that fulfill the needs of Greek firms. 

Focusing on the willing, but cautious potential ICT users: Targeted useroriented 

strategies 

Although consolidation has been limited until today, the technological convergence of IT– 

Telcos leads to more integrated services of higher added -value. These services work 

beneficially for the sector in two ways: on one hand leading to more extensive use of the 

existing ICT users, as their increasing and more complex needs are being satisfied, while on 

the other hand by attracting new users. These two target groups require different 

approaches: those that are already members of the Information Society (e.g. Internet users) 

seem rather sensitive on issues of cost. Hence, reduction of cost and improvement of 

provided services and content can enhance the use of ICTs. As for the potential users, given 

the technophobia and the “denial” regarding the use of ICTs for certain categories of firms 

and population, the efforts should probably focus on the so-called ‘willing’ potential users, 

those that are still hesitant. Attracting them is important for the enlargement of the sector, 

since they will contribute to achieving an important critical mass of ICT users, which in turn 

could improve the overall level of ICTs use in the socio-economic activities of the country. 

In any case, ICT firms should henceforth approach those potential clients by means of selling 

the services offered and not the system itself. In the past, the emphasis on the system and 

on its technological integrity might have worked positively towards achieving high sales’ 

volume. At this point what should be advertised today are the tangible benefits that the 

adoption of the system will bring to the life of the citizen or the firm. The return on 

investment must be justified in terms of cost, productivity, as well as in terms of convenience 

for the citizen’s everyday activities or even in their entertainment, a field that seems to 

represent a possible growth area for the future. 

Investments in infrastructures: consolidated services, high value added 

and digital content 

Firms from the telecommunication sector should intensify their investments in broadband 

infrastructures, in order to acquire their own core network. This will allow them for more 

flexibility and they will be able to provide a bundle of integrated services. An important factor 

for the slow penetration of Internet in Greece is the lack of Greek digital content. ICT firms 

should turn towards that direction either by developing digital content and relevant software 

or in collaboration with content providers (publications, radio-television firms etc). These 

actions lead to products / services that could attract new categories of users and maximize 

October 2006 




the profits from the acquisition of ICT equipment. The field of entertainment / recreation is 

considered a preferential field of growth, with potentially more intense positive effects in 

larger parts of the population. However, sector-based content that may attract the interest of 

large groups of firms as potential users should also be a field for further exploration. 

Extroversion efforts 

Extroversion is usually the answer to a small sized domestic market, but it is not an easy 

strategy for all. Firms that meet the necessary characteristics of size and capabilities can at 

first turn towards the neighboring countries. Thus, they could benefit from the total 

entrepreneurial activity that is being developed there during the last decade by important 

Greek firms. Till today, this extrovert behavior has involved only the box-moving. However, 

this trend slows down in favor of some integrated IT services. The first area can stimulate 

profitability with ‘easier’ sales, but cannot be applied for a long period of time, since the 

pressure from the local and international competition increases. Emphasis on services of high 

value added could be more enduring and therefore yield more benefits for ICT firms in the 

long-term. 

Firms that are starting to show some extroversion are growing in number, indicating some 

signs of a know-how that can be exported, at least by the innovators. Besides, the 

implementation of important large scaled IT projects in Greece has offered some additional 

experience and has upgraded the local capabilities. In any case, such extrovert initiatives 

should intensify, as time is not an ally. Opportunities may still exist, but the corresponding 

local sectors in the neighboring countries develop rapidly and could soon substitute the role 

of Greek ICT firms in these markets. Thus, they may even represent a threat for the Greek 

ICT sector in the long-term. At the same time, their enforcement may render that 

environment more favorable for investors, this leading to a possible withdrawal of foreign 

investors’ from Greece. Consequently, a rapid undertaking of initiatives towards that direction 

is required, at least from those firms that seem to have this capability. 

At the level of Public policies for the Information Society 

Public policies for the Information Society influence the demand directly or indirectly, but at 

the same time they shape the environment in which firms of the sector operate. We have 

already mentioned the actions and the objectives of the policies that are implemented or 

planned for the future. These policies are well targeted, while their success can in fact speed 

up the diffusion of Information Society in Greece. In the following section, we shall attempt 

October 2006 




to distinguish the priorities that can further support the growth of domestic ICT sector from 

that aspect. 

Improvement of infrastructures, content and services 

The fundamental priority is the growth of broadband infrastructures, digital content and 

services based on the advanced infrastructures. Public investments seem henceforth to be 

enforced, with more aggressive action towards their implementation. Moreover, the 

peripheral character of these actions aims to bridge the digital gap between Athens and the 

regions and acts supplementary to private investments, which are materialized mainly in 

Athens and Thessalonica. The consistent implementation of the Strategic Broadband Plan is 

of great importance and should have the commitment of all involved institutions and the 

broad political consensus for its rapid and effective implementation. 

Emphasis on the organizational change of firms and the Public Sector 

Infrastructures and content are basic elements of the Information Society, but the diffusion 

of new technologies in firms and the Public Sector is neither automatic, nor simple. It 

requires a change of the traditional structures and operation of firms, since it changes their 

way of thinking, the way of organizing resources, business and management techniques, as 

well as human resource management methods. By just implanting systems and software in 

the Public Sector and in firms, without the corresponding organizational changes, the concept 

of Information Society is not being promoted. In view of the implementation of the 4 th CFS 

projects, this aspect should be included in every action or intervention, in order to emphasize 

not only on the improvement of the system, but also on the transformation of services and 

operations that the system supports. 

Expanding the use of ICTs in the Public Administration 

The use of ICTs in the Public Administration can improve its efficiency, and also limit 

corruption and bureaucracy. A vertical electronic linkage of a minister’s various agencies, the 

horizontal linkage of ministries, the e-procurement, and the electronic signature, represent 

some of the actions that can alter the current operation of Public Administration. After all, an 

advanced e-government may function as a motivation for citizens and firms to adopt ICTs in 

order to deal with the Public Sector. 

Integration and consistency of the regulatory framework for 

telecommunications 

October 2006 




Empowering EETT (Hellenic Telecommunications & Post 

Commission) 

The increased regulatory responsibilities created in former monopolistic markets when it is 

privatized, calls for longer-lasting planning and effective regulation imperative. The vague 

regulatory framework in telecommunications discourages private investments in 

infrastructures despite the so called open market (since 2001). Given, though, that the 

process of liberalization is determined to a great extent by the European Union, the quality of 

regulation is finally dependent on the adequacy of the corresponding institution. Hence, a 

powerful and independent EETT, which will not be influenced by any financial ups and downs 

of the relevant firms or any political interventions, is more than necessary. Its independence 

can be ensured by stability in management, long-term financing, and recruitment of highly 

specialized personnel. 

Finding the balance between competition and growth is not an easy exercise. Furthermore, 

institutional issues are still open (LLU, security issues, electronic communications regulation, 

spectrum management issues, etc). Besides, the European Commissioner is constantly 

referring to the lack of essential competition in the telecommunication market, due to delays 

regarding the reconcilement with the Community Regulations. Independency will allow EETT 

to optimize its regulating role and smoothen out the existing irregularities. 

Final decisions on several institutional issues of the digital 

economy 

Several institutional issues remain open. Issues of e-security, e-signature, tele-working, illegal 

Internet content, etc require a solid institutional framework. Their resolution can promote 

ICTs diffusion into the socio-economic activities of the country, as it will increase confidence 

of potential users and constrain the technophobic attitude that citizens and firms hold 

towards new technologies. 

Enforcement of training activities and skills development regarding ICTs 

for everyone… 

The digital gap between the small part of the population and businesses that adopt rapidly 

new technologies and the larger part that still holds back must be bridged. This constitutes a 

crucial priority and challenge for all current policies at a European level and represents the 

third axis of i-2001 policies. The main reason seems to be the lack of advising / training and 

at a smaller degree the cost. 

Therefore, emphasis should be given on the development of skills. Everyone must have equal 

chances of developing the necessary abilities and knowledge in order to actively participate 

and fully benefit from the Internet and the Knowledge Economy. Additional efforts for 

October 2006 




education and training the population and the entrepreneurs are required. Otherwise, Greece 

could be in danger of staying behind on developments regarding the Information Society, 

which could hamper its competitiveness. Public policies aiming at narrowing the digital gap 

and promote the use of new technologies must, therefore, focus on social groups of lower 

educational level and income and older age, in order to inform, train and familiarize them 

with the ICTs. By using the computer labs that have been created in schools for further 

educating older people on ICTs is such an activity. Moreover, motivating groups of citizens 

and volunteers that can support this activity could also be effective. 

…with more motives for citizens and businesses to adopt ICTs… 

The support of the ICTs use by firms is a fundamental priority of the new ‘Digital 

Convergence’ Operational Programme. Subsidies involving equipment and connection to the 

Internet have been and will still be used as a motive, in order to achieve the first step 

towards digital economy. Nevertheless, cost does not horizontally affect every group of 

people / firms at the same extent. That means that cost is not the main deterrent factor for 

the limited use of ICTs in the country. Consequently, apart from these motives, efforts to 

stress the benefits from the use of ICTs must be intensified. Discounts for electronic 

transactions with the Public– since the offered services have been upgraded and expanded 

(e.g. taxisnet) – better e-services through the one-stop shops, but also real benefits of cost 

reductions, could affect the adoption of ICTs rather than just subsidizing equipment. Hence, 

motives should involve this new dimension: promote the use of ICTs and not just a purchase 

of the relevant equipment. The ‘Digital Convergence’ Programme supports actions for more 

digital content and more effective services from the public’s side. These actions in 

conjunction with the provision of specific, for each case, motives for their use (contrary to the 

old procedure), could substantially improve the willingness of citizens and enterprises to enter 

into the digital economy. 

...as well as motives for firms regarding training and further education of 

their employees on new technologies 

Given that one of the main deterrent parameters regarding the slow ICTs adoption from firms 

is the fact that the majority of the employees – especially the older ones– do not master ICTs 

skills, the need for their further education is evident. However, the actions towards that 

direction that firms undertake by themselves in terms of training and further education are 

limited and lie on the initiatives of the owner / entrepreneur. A more active promotion of such 

training activities (subsided seminars, etc) is required, in order for the employees to develop 

an adequate level of ICTs skills, which will help these firms enter into the digital economy. 

Support of ICTs teaching at all levels of education 

October 2006 




The need to enforce ICT courses at all levels of education is necessary for the better 

preparation of graduates, so that they would possess the required ICTs skills in their search 

for a career. These skills will help them claim a well paid job, as well as contribute to the 

technological improvement of the medium-sized Greek enterprise. The induction of computer 

science as a school course, which is already taking place, is not however adequate; the 

partial transformation of the educational procedure is also required. This means that the 

teachers should adopt the practical use of computer science in their courses and support the 

educational procedure by exploiting the existing tools. Therefore, they need for more digital 

(e.g. educational software) and of course more training and advising about the new 

possibilities. 

Simplification of processes of public offerings, acceleration of the cycle of 

implementation 

The implementation of Information Society projects face difficulties for the reasons that have 

been already explained. This delay may cause problems in the sector, but it also functions 

negatively in relevance to Greece’s course towards the Information Society. It is a fact that 

there is room for improvements in the cycle of implementation of these projects. These 

should be spotted, while the cause of delays should be pinpointed, in order to improve 

effectiveness. 

Creation of a Strategy unit next to the Prime Minister regarding ICTs 

The problems of Public Administration and its inflexibilities and technological impotence in 

materializing large-scale ICT projects indicate the need for a more flexible mechanism which 

will more effectively implement government’s decisions. The establishment of a Strategy unit, 

which will provide the independent existing knowledge and experience to the government, 

will promote government’s objectives and communicate their directions to all involved agents. 

Furthermore, it could convert the political commitments and strategies into practice in a more 

effective way. It is noted that in other countries the coordination of the Information Society’s 

policies is supervised by an institution reporting directly to the prime minister. Under certain 

conditions (changes of responsibilities) this Strategy unit could either be the Information 

Society S.A., or the Observatory of the Information Society or some other institution that 

could supplement their work. Long-term evaluation – with both qualitative and quantitative 

objectives – of the effectiveness of ICT expenditures could be a responsibility of such an 

institution, in order to point out the positive / negative points and improve the country’s entry 

into the Information Society. 

At the level of broader public policies that also touch also upon the ICT sector 

This section makes suggestions on general public policies that refer to the country’s economic 

activity and also on reformative actions that affect more or less the sector in question. 

October 2006 




Promoting entrepreneurship 

Recent studies on entrepreneurship in Greece 29 demonstrate a contradictory characteristic of 

the national environment. On the one hand, Greeks feel highly self-confident regarding their 

knowledge and skills required in starting a firm. On the other hand, the fear of failure and the 

social stigma it entails is substantial. This discourages capable individuals from following a 

business career. The reform of the bankruptcy law, which is under preparation, is a necessary 

step that can benefit in two ways: firstly, it will facilitate the closures of those problematic 

firms in order to eliminate unpleasant situations of the past. At the same time, it will give a 

second chance to capable individuals and groups that had business difficulties in the past, so 

as to utilize this unpleasant experience in order to start a new venture with better growth 

prospects. 

Reinforcement of financial mechanisms for the initiation of new 

entrepreneurial activity 

The cost of capital seems to constrain the small and micro firms f the sector, which confirms 

the necessity for new financial tools that are being developed (PPPs, Digital Leap Fund, etc). 

These are tools that might provide solutions for the ICT sector and especially for smaller 

enterprises, which intend to finance innovative activities. In this way, the role of family and 

personal funding of a new venture, as well as the increased risk that generally hinders the 

effort to initiate a new venture in Greece, 30 could gradually be reduced. 

Simplification of the institutional and legislative framework of Public 

Administration operations: improvement of the entrepreneurial 

environment 

The dense network of laws, provisions, and processes that characterize the operation of the 

state obstructs the relationships among the citizens and impedes economic activity, 

hampering competitiveness of the Greek economy. Estimating the effects of every new 

legislative regulation regarding the ICTs competitiveness, and also reforming existent 

legislation, is a crucial issue especially in a rapidly changing environment. Therefore, there 

should be: a) systematic examination of all laws concerning the domestic ICT sector 

(especially in telecommunications) and annulment of those which have no further practical 

application, b) evaluation of the new regulations concerning the ICT sector based on their 

effects on competitiveness, c) simplification of the laws, so that no additional interpreting 

circulars are required, d) establishment of extensive consultation between all parties 

interested during the preparation of new legislation via teleconferences or other means. 

29 Entrepreneurship in Greece 2005-2006, S. Ioannides, A. Tsakanikas, IOBE November 2006. 

30 It should be mentioned, though, that simply implanting a financial mechanism, which is successfully 

applied abroad, does not automatically ensure its success in the Greek environment. This means that 

locating the optimum practices and implanting them in Greece does not automatically solve the 

problems. Adjusting the philosophy behind the mechanism and the corresponding supporting structure 

in the Greek environment is required, instead of copying the mechanism per se. 

October 2006 




Increase of R&D funding 

The increase of R&D funding is a crucial commitment on behalf of Greece towards the 

implementation of the Lisbon Strategy and a basic axis of i-2010 strategy. All relevant 

indicators rank Greece among the lowest in EU-25. Therefore, it is necessary: a) to provide 

additional motives for R&D investments, b) to strengthen the corresponding programs, c) to 

create more favorable regulations for those firms that actually conduct research activity and 

try to transfer research output into the market with commercially available products / 

services, d) to enhance the collaboration with universities, and e) finally to pinpoint the 

excellent, so that examples of fine entrepreneurial behaviour are promoted and thus could 

motivate other firms to move towards the same direction. 

Market needs aligned with higher education programs 

Universities provide an adequate level of education in terms of content and syllabus. 

However, it should be noted that there is still room for graduates to adjust better to the what 

firms need. New graduates should be more adequately prepared concerning not only the 

technological content of their specialization, but also the additional skills required and also 

their familiarization with market rules. Firms and universities should interact more intensively 

not only as far as the R&D sector is concerned – in the past, efforts have been made in order 

to enforce this relation – but also regarding the enrichment of the educational process. 

Seminars and lectures held in the universities by executives in order for the students to 

acquire a broader view of the market, collaborations in the form of training within the 

enterprises and any kind of additional initiatives that extend the interaction between firms 

and academia must be supported by public policies. 

Effective allocation and management of the 4th Programming period 

resources 

The experience gained by the Public Administration in the management of the 3 rd CSF, the 

problems and the erroneous practices applied, but also the effective mechanisms that 

emerged, must be utilized in the management of the 4 th Programming period resources. The 

powerful regional character of the planned actions constitutes a powerful political 

commitment; however the decentralised management might turn out ineffective. The inflow 

of Community funds in Greece will be limited in the future, which means that the resources 

should be used more efficiently. 

A stable and simpler tax environment. 

The non competitive tax framework remains one of the highest problems that firms in Greece 

face. Apart the issue of decreasing the tax rates, that has been already initiated, there are 

still problems regarding their application. The processes of controls, the constantly repeated 

audits and the occasionally announced financial regulations, create an environment of 

October 2006 




disbelief about the firms’ reliability which discourages their business plans. The simple, stable 

and predetermined imprinting of balance sheets affects positively the whole economy, as not 

only the taxpayers know a priori the tax framework, but also the State can plan more 

effectively its revenues. Such a steady tax environment can also allow lower factors, which 

will provide a competitive advantage to Greece in the European environment. 

Removal of barriers in order to attract foreign direct investments in the 

ICTs sector 

Greece’s attractiveness to foreign investments is low. The prospects seem unfavourable, to 

the degree that the institutional reforms and the policies do not constitute a cohesive grid for 

the increase of the economy’s effectiveness. The fall back of Greece in the ranking 

constitutes a danger that affects the ICT sector as well, while the countries of Central and 

Eastern Europe proceed rapidly to reforms that increase their attractiveness. The removal of 

obstacles responsible for the low competitiveness of Greece in attracting Foreign Direct 

Investments comprises the structural weaknesses of the product and labour market, the high 

bureaucratic cost of entrepreneurship, the insufficiency of the educational system regarding 

its interconnection with the labour market, as well as the poor infrastructures in new 

technologies. Hence, additional actions are required which will smooth or even eliminate 

these obstacles, which will also benefit the domestic ICT sector. 

6. Appendices 

Appendix 1: SWOT analysis of domestic ICTs sector 

In the following SWOT analysis table, the possible characteristics, the weaknesses, the 

opportunities and the threats that characterize domestic ICTs sector are summarized. 

Strengths 

Training and education of human 

resources of the ICT sector 

Experience and know-how from the 

implementation of large scaled ICTs 

projects 

Research cores at the universities 

Weaknesses 

Excessive number of enterprises, 

small in size 

Lack of specialisation and market 

segmentation 

Limited R&D 

Lack of private core network 

(telecommunications) 

Limited Greek digital content 

Extroversion of a small degree 

Non smoothened course of demand 

Intense price competition and no 

differentiation 

October 2006 




Opportunities 

Technological convergence of information 

technology and telecommunications 

Increase of foreign demand: Balkans, 

neighbouring markets 

Progressive increase of demand, 

especially from the enterprises 

Public investments in broadband 

infrastructures 

New services of added value 

Diffusion of ICTs in other sectors of the 

economy 

Restructuring actions 

Investments of large Greek companies 

from various sectors in neighbouring 

countries 

Operation of all ICT projects implemented 

during the period 2000-2006 

Threats 

Intensification of ICTs sectors in 

neighbouring countries 

Delay of complying with the EU 

institutional framework in 

telecommunications 

Lack of more efficient mechanisms in 

implementing the ICT projects by the 

Public 

Off the shelf solutions from abroad 

(threat for small Greek enterprises) 

October 2006 




Appendix 2 : SWOT Analysis per sector 

ICTs Sub-sectors Strengths Weaknesses Opportunities Threats Future –Trends – prospects 

Equipment 

manufacture 

ICTs equipment 

Trade 

Telecommunicatio 

ns, Internet 

service providers 

Know-how and high 

quality of products 

Good export records 

Branded distribution 

networks even abroad 

Good marketing 

strategy 

Emphasis on marketing 

Convergence of 

information technology 

and communications 

Overwhelming 

possession of mobile 

phones 

Lack of 

innovativeness 

Orientation to cost 

leadership strategies 

Financial instability 

Limited profit margins 

Conflicts with OTE, 

dissatisfied customers 

Excessive number of 

firms 

Support of ICTs 

diffusion in the 

domestic market 

Foreign Investment 

interest 

Broadband 


New unified services of 

added value (eg IPTV) 

in an evolving market 

Pressure of international 

competition from low cost 

countries 

Pressure of international 

competition from low cost 

countries 

Entry of foreign companies 

in retail 

Delays in the reconcilement 

of legislation, completion of 

institutional framework 

Subcontracting software 

services in developing 

countries 

Need for technological modernisation 

Emphasis on the markets abroad 

Strategic alliances and collaborations with 

enterprises from other sub-sectors 

Positive prospects with the completion of 

reformations 

Support of distribution of the Internet in 

Greece (equipment and content) 

Infotainment, consumer electronics, new 

media products 

Triple play in affordable prices 

Mergers of alternatives and strategic 

alliances with producers of content: Creation 

of vertical integrated enterprises that 

possess infrastructures, network and 

content. 

Information 

technology 

services 

Software 

Well skilled human 

capital 

Cooperation with 

Universities 

Big multinationals in 

Greece 

Scattered supply, lack 

of specialisation 

Standardised 

products 

High cost of 

customized solutions 

for small Greek 

enterprises 

Niche markets in 

Tourism, Shipping, 

Health 

Broadband 


Growth of internet 

creates new 

requirements in 

software skills 

Opportunities for 

parameterisation 

Broadband 


Focused and 

differentiation strategies 

Strengthening of 

neighbouring to ICTs sectors 

Standardised products from 

abroad 

Need for consolidation 

Focus on niche markets 

Extroversion 

Growth of integrated solutions for B2B, B2C 

Dominance of multinationals 

Very small margin for small Greek 

enterprises (Provided that they focus on 

segments and offer specialised solutions in 

affordable prices) 

Need for transitions to integrated IT 

solutions (SaaS) 

October 2006 



Deliverable 14: Prospects of the ICT sector in Greece- policy implications 

Appendix 3 : Forecasts for the turnover of ICT firms 

Fiscal Year of 2005 

According to the available results for the fiscal year 2005, (1120 firms, roughly 92% of the 

2004 turnover) the total of the ICT sector (as it has been defined previously) shows a 3.1% 

decrease in its turnover. If OTE is excluded from the analysis, the decrease is slightly more 

intense and reaches -3.4%. Furthermore, if the three mobile carriers are also excluded, the 

turnover will decrease by -3.2%. However, it is obvious that important part of this decrease is 

due to retail trade, since removing it from the analysis, narrows the decrease at the level of - 

2.1%. Out of the 45 companies that belong to this category, the four larger ones show an 

8% increase of turnover in 2005, but the remaining ones seem to limit their turnover by - 

30%. 

At a sectoral level, the decrease is more intense in the IT sector (-6.5% or -4.5% without 

retail) and lighter in telecommunications (-2.5%). In terms of sub-sectors: 

In ICT Manufacturing, the decrease f turnover is 9.9%, mainly due to the 

restructuring of INTRACOM (-47%), since one of its important parts (INTRACOM IT) 

is now classified in the sub-sector of IT services. If it is excluded from the analysis, 

this sub-sector extends its turnover by 11.4%. 

In ICT Trade the decrease is 6.2%, which is mainly due to the big retail networks. If 

retail is excluded, the decrease is limited to -3.8%. 

In telecommunications/internet service providers, a marginal decrease of 0.9% is 

reported (0.7% without OTE). 

In Software products, an increase of 1.9% is reported. 

In IT Services, a 4.2% increase of turnover is reported, while an important part of 

this increase is due to the entry of INTRACOM IT. 

Finally, if we isolate - for 2005 – firms that operate mainly in NACE 72 (Information 

technology and relevant activities), these show an increase of 4.9% n their turnover. 

Furthermore, the presence of OTE influences by 1% the total turnover of the subset of firms 

form the NACE 64.2 sector (Telecommunications) (– 0.4% to +0.1%, if OTE is excluded or 

included respectively). 

October 2006 



Deliverable 14: Prospects of the ICT sector in Greece- policy implications 

Fiscal Year of 2006: Estimates 

For the fiscal year of 2006, the only available at the time financial figures are the ones of the 

Athens stock exchange listed companies (results on the first semester). First, estimation of 

the total turnover of these companies is made for 2006. Then, the estimations for the total 

figures are based on the share of these firms to the total ICT turnover (42%-44%), but also 

on the annual change and their relation with the total change of the sector. According to the 

analysis, the total turnover of ICTs sector will increase by 1.5% - 5%, while the average will 

be approximately 3.2%. If retail trade is excluded, the turnover may increase by 4%. 

In terms of the two main sectors (excluding retail trade), telecommunications seem to have 

an advantage, as they will increase approximately at a rate of 4.5%, while the IT sector will 

increase by 3.7%. In terms of sub-sectors, all subcategories seem to recover, except for 

manufacturing, which will decrease by 4.2%. IT Services can achieve even a two-digit 

increase (more than 12%), while wholesale trade of ICTs equipment is estimated to increase 

by 5.2%. Telecommunications/Internet services providers turnover will exceed 6%, while the 

turnover of Software products will increase by 7.8%, based on the customized software of 

large multinational companies. 

Fiscal Years 2007-2008: Estimates 

The estimates for the next two years are calculated based on the 2002-2006 trends, but they 

also incorporate certain basic assumptions, which have been described in this deliverable. 

Therefore, it is excepted that growth rates can be even higher in comparison with the ones of 

2006, given that the positive growth expectations (and more specifically the increase of public 

and private investments in infrastructures that will lead to the improvement of broadband 

infrastructures; the increase of electronic services provided by the state; the expected 

support on expenses for ICTs, especially by firms, etc.) flourish and the basic barriers smooth 

out (infrastructures, content, training actions). 

In this framework, estimation for the top-50 enterprises (without retail) is made. Their 

performance is more or less similar with the performance of the whole sector (although the 

usually perform better). Thus, it is estimated that the increase in 2007 and 2008 can exceed 

6%. The IT sector shows a more positive trend at a rate that can exceed 9%, while in 

telecommunications the increase may be approximately 5%. In any case, it should be noted 

that the gradual transition of all firms to the IFSS till 2008 could potentially cause more 

intense changes and also decrease the aforementioned positive estimations. 

October 2006 


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Prospects of the ICT sector in Greece

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