Prospects of the ICT sector in Greece

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Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications 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 Observatory for the Greek IS 24
Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications 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 Observatory for the Greek IS 25
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