The IT market in Germany is projected to surge by USD 30.34 billion from 2022 to 2027, registering a CAGR of 4.12%, according to a report by Technavio. This significant expansion is driven by a heightened competition, pushing vendors to undertake various growth strategies including promotional activities and increased advertising expenditure to enhance service visibility.
Market Insights: Vendor Landscape
The report highlights over 15 key market players, including notable names such as Broadcom Inc., Capgemini Service SAS, and Cisco Systems Inc., among others. Other important market segments detailed include end-users, applications, key drivers, major trends and challenges, customer and vendor landscape, and vendor product insights. It presents an in-depth parent market analysis and recent vendor developments, market positioning of vendors, and an overview of the competitive landscape.
Driving force: SMEs adoption of IT solutions
The remarkable growth of the IT market in Germany is significantly propelled by the widespread adoption of IT solutions among SMEs. Accounting for over 99% of all companies in the country, SMEs hold a pivotal role in the German economy. These firms, which span from single proprietorships to those employing hundreds, are recognised for their global presence and innovative edge.
Embracing digitisation
German SMEs are prioritising IT investment to stay ahead in terms of technological advancement. They are deploying technologies like cloud computing, big data, and IoT to increase operational efficiency and spur revenue growth. Digitisation is a core objective, with companies seeking to supplant manual processes with digital workflows and automate various operational aspects. Additionally, German SMEs are adopting ERP solutions and CRM software to boost customer engagement, reducing costs through communication platforms, and leveraging social media for product and service promotion.
Government support for AI as a market trend
Governmental backing for AI is emerging as a key trend in the German IT market. The German government actively promotes AI adoption across different sectors and encourages firms to explore various AI application areas. According to a study commissioned by the Federal Ministry for Economic Affairs and Energy, AI is expected to significantly contribute to the nation’s manufacturing output, with an estimated increase of over USD 34.35 billion by 2023. As part of this strategy, the government plans to invest up to USD 3.44 billion by 2025 in AI development, allocating USD 572.5 million in its 2020 budget alone.
The challenge: IT skill shortage
Despite the promising market growth, a significant shortage of skilled IT professionals threatens the German IT market expansion. The scarcity of suitably qualified and experienced professionals has led to higher salaries for those who meet the requirements. Consequently, SMEs and public sector companies are struggling to recruit apt candidates for IT positions. The federal government is considering overseas recruitment and streamlining immigration laws to address this issue. This ongoing skill shortage, particularly in areas like cloud computing, AI, big data, and IoT, could potentially hinder the market growth during the forecast period.
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