One out of four German IT firms already use European or worldwide partners to fulfill services and projects in Germany. Lack of skilled local personnel offers great opportunities for near- and offshoring models.
More and more IT projects in Germany are fulfilled in international cooperation using European or international partners. According to a recent study by German high-tech association BITKOM with 710 IT companies in Germany, one out of four IT companies in Germany currently uses foreign partners in projects and expects to use more foreign capacity in the future. German IT companies use European partners in nearshoring models as well as offshoring to e.g. Asia or South America. European partners are slightly more favorable (26%) than non-European partners (23%).
Continuous years of growth in the German IT sector have led to a dramatic shortage of skilled personnel. German IT tries to compensate this with various measures. One is to establish partnerships, joint-ventures or even acquiring IT companies abroad with suiting skill sets. While near- and offshoring models are not new to the German IT market, the motivation has changed dramatically.
“We see a clear shift in the reasons for near- and offshoring. Ten years ago, the main motivation to use near- or offshore resources was cost reduction. Today it’s often a lack of local capacity”, says Bernd Hoeck, managing partner of the go-to-market specialist bloodsugarmagic.
In addition, many German IT firms have a long track record using near- and offshoring delivery models. Companies like GFT Technologies AG, a German powerhouse for IT solutions for the financial services industry, have almost 20 years of experience using near- and offshore project delivery and act today on a global scale.
“Both vendors and buyers of near- and offshore project delivery have gained a lot more experience over the recent years”, Hoeck adds. “Today German IT companies have made their homework and actively look for either near- or offshore partners. Now is the right time for foreign IT firms to engage with the German market. In order to stand out of the crowd, foreign IT companies need to focus on visibility and reputation building in Germany. We can help with our low cost, high impact services in order to do so.”
bloodsugarmagic has a long-standing experience in go-to-market services for the German IT market. We use influencer marketing, for example press relations, to establish a brand and reputation for our foreign customers. In addition, we run dedicated campaigns for foreign near- and offshore providers to engage with potential German customers.
This market insight is a pre-publication from the upcoming eBook “German IT Market Compendium 2015“ that will cover more market research information for the IT services, software and hardware market in Germany and practical advice on how to enter the IT market in Germany.