A perspective for a Service and Product players…

The total market for software and IT Services in EU amounted Euro 218 Billion in 2008. IT services has been the larger of the two segments and the value of this segment has been almost three times the value of the European Software Market. In the years to come growth rate for Software and IT services market is expected to be slightly lower in the range 4% to 5.9%.

Software / Products

The size of the European software market is around 59 Billion Euros. For the European software market, the main driver today is the European SME. These companies are still under-equipped and are expected to invest more in Application Software. The market for upgrades and installation of ERPs will be on strong positive swing. In last two years growth was mainly driven by product categories such as Financials, Human capital management and procurement. In the field of CRM mostly banking and insurance sector companies are investing heavily and can open opportunities for small and medium CRM software companies. In the manufacturing sector there is a strong demand for Supply Chain Management (SCM) products.

Currently top 20 players have more than 75%. This market is dominated by local subsidiaries of American companies and omnipresence of SAP. But the trend is changing and European customers prefer innovative solutions over big brands. This is highlighted by success of product companies like Movex, CDC, Jeeves, IFS, IBS, Simcorp, TIA etc.

IT Services:

IT Services market in EU is worth around 160 Billion Euro. IT services market in EU has entered a phase of globalization. Despite this trend it was observed that EU countries are still home to leading local service providers. European services market is characterized by more national leaders (ranking in top 3) than in the software market. The main reason for this situation is that (especially for services) it is necessary to have local IT experts who ideally speak the local language. But since 2004-05 European IT companies are facing a severe shortage of IT professionals, which has opened opportunities for offshore vendors – this fact has been underlined by increasing presence of Indian IT vendors like Infosys, TCS, Wipro, HCL, Patni, ITC Infotech and also European companies opening delivery centers in India.

Offshoring / Nearshoring is gaining more acceptance in SMEs. In fact nearshoring destinations like Poland and Ukraine are coming up with distinct value propositions, which have resulted in the opening of delivery centers by global players at these locations.

Looking at the current situation and severe downturn in US economy, the EU IT market is opening doors of opportunities for Services vendors and Product companies.