Electronics Production | January 18, 2007
Manufacturing drives Czech IT market
Preliminary IDC data suggests spending on IT in Czech Republic rose nearly 11% in 2006 to pass $3.45 billion.
According to a recent IDC study, high levels of foreign direct investment, coupled with the eastward migration of manufacturing jobs, has continued to pump revenue into the already strong Czech economy. And while the Czech IT market is showing distinct signs of maturity, it is likely to continue expanding by an average 9% to 10% annually over the next five years, with storage and software being the fastest-growing segments (though storage is starting from a small base) and IT services the largest. Manufacturing is center stage in the Czech Republic, contributing more than a quarter of the nation's GDP and employing more than 1.2 million people. This is also true of the IT market, where the two main manufacturing segments, process and discrete, ranked second and third in terms of IT spending in 2006. For both segments, software and then services represented the largest areas of IT investments, with companies racing to install or upgrade enterprise management suites, supply chain management applications, and business analytical tools to both streamline operations and meet international standards. Communications was the single largest vertical in the Czech IT market. According to IDC, the mobile services market is thoroughly saturated (penetration exceeds 100%) and the fixed-line incumbent is losing customers while shifting to a commodity model based on broadband services. "IT services represents the fastest-growing segment among telcos," said Heather Keyes, research analyst, Vertical Markets, IDC CEMA. "To stay competitive with each other and the alternative telcos taking advantage of loosened last-mile access regulations, operators must invest in a combination of services ranging from basic customer relationship management to in-depth data mining that can identify hidden growth opportunities." The banking and government sectors were also important to the Czech IT market. Although the banking sector is the fourth largest in terms of IT spending, it has slowed compared to the rest of the market, having invested heavily in IT over the last few years to both modernize and meet regulatory and transparency standards. By contrast, spending growth in the government sector will stay in double digits for the next few years.