Slight Growth Forecast for Germany's IT Sector

This year there were only 1,300 companies represented at "Systems," 300 fewer than last year. But that’s peanuts compared to the some 3,000 exhibitors who attended the computer trade fair during the boom years of the late '90s.

The trend is clear: during these lean years of the post-new economy boom and bust, Germany’s high-tech trade fairs are suffering a decline in popularity. Just this week, the country’s largest computer fair and arguably the world's biggest, CeBIT in Hanover, received notice that Hewlett-Packard would no longer have its own stand next year. The American computer company is following in the footsteps of other major international corporations who have decided to steer away from big, expensive exhibitions on the German computer fair circuit.

During tough economic times such as these, IT companies want to focus hard on the bottom line and exhibit attendance -- which used to score high in terms of marketing -- just isn’t as important as it once was. At CeBIT, for instance, the last two years have seen a continual decline in both exhibitors and visitors.

But that may all be a thing of the past, if the industry experts at "Systems" are to be believed.

Turning point for IT sector

According to the Federal Association for Information Technology, Telecommunication and New Media, BITKOM for short, Germany’s IT sector can look ahead to a period of cautious growth.

The head of the sector’s largest umbrella organization, Bernard Rohleder, told reporters at the opening of Systems in Munich on Monday that after "enduring three years of bad weather" in which growth dropped to a negative 2.7 percent, this year’s zero percent growth shows a break in the downwards trend. "Next year we can expect growth of about 2 percent," he said.

Although still miles from the two-digit growth rates of the late '90s, the optimistic forecast was greeted with relief from the exhibitors gathered in Bavaria’s capital. "We have broken the trend," Rohleder said summing up their sentiments.

But BITKOM’s prognosis also came with a warning attached: Unless the current economic and political circumstances in Germany improve significantly, there will be no sustainable growth. No amount of reform patches will help get Germany back on the right track, the BITKOM president said. What the country needs is a complete break with the current welfare system, an entirely new direction for the country, Rohleder explained.

"We need to develop new products, new solutions, and we need to become more innovative," he said. "The problems in the social welfare system and unemployment will be solved automatically when Germany becomes successful on the world market."

Encouraging innovation

Unless Germany does more to improve its position in the development of technological innovation, the IT sector will never fully recover and Germany will lose out in global competition in the long run, BITKOM's head said. For this reason the government must take an active role in supporting companies’ quest for innovation.

And the key to promoting innovation is a modern education system that addresses the demands of a rapidly changing society. Germany needs talented young engineers and scientists. According to BITKOM studies, in the coming years there will be a dearth of 13,000 electrical technicians alone in Germany. Such an absence makes itself felt not only in the domestic labor market, but internationally when Germany is no longer able to compete against countries like China and India, which are churning out highly skilled workers and IT professionals at a much higher level.

But industry experts haven’t given up all hope on Germany yet. In a few years time, Germany could still turn itself around and develop into the number one country for technological innovation. All it takes is for political and economic forces to be mobilized towards the single goal of pulling Germany up out of its current doldrums, Rohleder stressed.

Wishful thinking

For many such talk is nothing more than wishful thinking. The words have been said so many times that they’ve begun to lose their meaning, and still nothing ever changes. So despite BITKOM’S optimistic forecast, few exhibitors at Systems will allow talk of the future to get in the way of what they need to do: focus on the bottom line and sell as many of their product as they can.

Only when the numbers of exhibitors and visitors to the big computer fairs start rising again will the first tentative signals of growth be cause for celebration.