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 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 Observatory for the Greek IS 26
Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications 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 Observatory for the Greek IS 27
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Prospects of the ICT sector in Greece

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