t may be an old adage, but size does count -- at least as a factor influencing location decisions for high-tech companies entering the European market. Germany, with its population of 82 million and its workforce of nearly 39 million, is Europe's biggest market and, after the UK, is viewed by overseas IT investors as an essential point of entry to the continent. This fact is borne out by "The Future of North American Software Companies in Europe," a new report from Oxford Intelligence, in which the majority of companies questioned had selected Germany as one of their initial European points of presence.
The country's position as a gateway to Central European countries, such as the Czech Republic and Poland, and to such major German-speaking markets as Austria and Switzerland, is undoubtedly one of the key drivers influencing the country's attractiveness. However, the report identifies the most significant factors affecting the choice of location to be the availability of suitable labor and proximity to potential customers. Germany, with its burgeoning high-tech clusters in areas such as Bavaria, Berlin and, increasingly, Frankfurt, provides a strong magnet for North American IT providers looking to extend their reach into Europe.
Bavaria for example, which includes high-tech hot spots such as Munich and Nuremburg, is one of Europe's strongest regions economically. A third of Germany's 25 largest software companies can be found in the Munich area, where the state government is building a major new software campus. Most of the key global software players, including Microsoft, Netscape, Intel and Oracle, have established facilities in what Bill Gates calls this "High-Tech Mecca." In addition, Bavaria invests 2.8 percent of its gross national product in research and technology, which is above the German average and places the state in the leading group of European regions.
Bavaria's high-tech dominance is increasingly being challenged by emerging locations, such as Eastern Germany, where the pent-up creativity released following German reunification in 1990 and the relatively inexpensive access to R&D resources is resulting in explosive IT growth. The Berlin area alone boasts 903 companies (such as Sony, Oracle and IBM) in the IT sector, employing 52,874 people in total.
Looking forward, the biggest challenge facing German competitiveness in the IT sector will be the country's relatively restrictive employment laws, which place emphasis on worker rights and impose certain restrictions on job mobility.
"The Future of North American Software Companies in Europe" is available (price US$1,400) from Oxford Intelligence on
sales@oxint.com. Oxford Intelligence is a UK-based firm of business analysts, specializing in economic development issues. For more information, visit the company Website at
www.ipaworld.com. Tel: +44 1908 521477.
