Europe’s IT and telecoms industries bounce back

Europe’s IT and telecommunications industries have bounced back from the low-point of 2002 and are now worth as much as EU500 billion, according to the latest ‘EuroView’ report by analyst group Ovum. But the days of double-digit growth across all sectors may have gone forever, fuelling consolidation among suppliers.

Growth in Europe’s high-tech markets will keep pace with gross domestic product (GDP), at about 4% excluding inflation. The highest growth area will be the Internet services market, which Ovum analysts believe will be the only sector to enjoy double-digit growth by 2006, driven mainly by the spread of broadband. The report also describes mobile communications and IT outsourcing as the “lifebuoys” of the IT industry.

Unsurprisingly, perhaps, Ovum says more than half the European IT industry is concentrated in just three countries: the UK, France and Germany, with the UK the “most robust” of the three and Germany providing the “greatest opportunities”. The high-tech sectors in Germany and the UK reported growth rates of up to 15% in 2003, although Ovum expects this to fall back to around 6% in coming years.

IT outsourcing is another sector where the UK has a lead. Ovum says the UK gained a “10-year lead” by liberalising employment laws and privatising many of its national utilities in the 1980s. Today, as Europe plays “catch-up” on traditional IT outsourcing, the UK is “trail-blazing” in business process outsourcing.

Ovum analysts contrasted the UK’s approach with what it regards as protectionist measures in France against offshore outsourcing. “But if history is any guide,” says the report, “where the UK leads, the rest of Europe ultimately, if somewhat reluctantly, follows.”

Avatar photo

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

Related Topics