LITHUANIAN ICT MARKET TODAY AND TOMORROW

The president of INFOBALT

Vytautas Vitkauskas

Vilnius

2004

2

Lithuania ICT Market Trends

2003 year Lithuanian ICT market size

Total – appr. 1 237 million Eur.

Note: Data on communication equipment and complex IT solutions market are tentative and approximate.

Million Euro

327

610

300

IT – appr.

Communications – appr.

Communication equipment,other IT services andcomplex solutions – appr.

3

Lithuanian ICT sector 2003 (preliminary results)

ICT sector compounds 7.5% of the Lithuanian GDP (2003)

About 500 of ICT and electronics companies

ICT wholesale market increased by 8, to 153 million EUR

15 000 high qualification specialists employed in the sphere of the information technologies alone.

International recognition – in 2003 more than 40 Lithuanian ICT companies exported their products and solutions to the EU, USA, Asian and CIS countries.

During 2002–2003, Lithuanian ICT market has not only been growing 27-30%, but also creating new quality and cheaper products for its users

E-banking growth 50% (about 850 thousand e-banking users)

Mobile communications penetration about 75 %

4

Lithuanian ICT industry export Exports from Lithuania in 2003 increased by 8.7% The average volume of Lithuanian ICT companies

export is 7% Lithuanian TOP 10 IT companies exports increased

from 40 to 80 percent in 2003 Export of IT services in 2003 – about 45 million Euros The main Lithuanian ITT export markets: Germany,

Russia, Belarus, Finland, Denmark, USA, and Latvia

5

Lithuania R&D

In 2003, about 1950 ICT specialists studied in five Lithuanian Universities; 1000 Masters of Science

About 500 ICT specialists are employed in Lithuanian or foreign ICT companies every year

Lithuania’s ICT businesses and the Government have initiated a program of investment into R&D seeking to achieve that by 2008 up to 2.5-3 percent of State budget funds are allocated for R&D projects and enlargement of the related scope of work

6

Other intiatives of Lithuanian ICT industry

Knowledge Economy Forum, the cooperation between science and High-tech industry

Private - public partnership: alliance “Window to the future”, clusters

Copyright agencies to protect IPR Lithuanian computer association (physical

members) Lithuanian electronic industry association Lithuanian laser and light science and technology

association

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• Memorandum of Understanding between 7 political parties and Infobalt of importance of building information society. Year1999.

• National agreement between 15 political parties, nongovernment association of importance of building knowledge based society, Year 2002.

• Infobalt initiated forming Information society developing committees under Lithuanian Parlament and Government.

• Participation in more than 30 working groups for different Government legislatives and strategies.

8

Legal information

Law on Electronic Signatures Law on Copyright and Related Rights Law on Personal Data Protection Law on electronic communications Telecommunication market de-monopolised since

2003

9

Infobalt international initiatives

Member of major international ICT associations (EICTA – 2004, WISTA – 2002)

Participation in 5 EU ICT projects (Electranet, Telebalt, E-content for SME’s BSP – 2000-2004)

Participation in major Lithuanian ICT market research projects (together with WTO, World Bank, Gartner group, IDC).

Multiple participation in main annual exibitions(CeBIT, TIBO (Minsk), TINE (Amsterdam), Outsource World London 2004, SYSTEMS (Munich) and others).

10

Alignment with EU-15

11

Expenditure for researches and development

(from GDP)

Infornation: Europian commission GDP for one inhabitant (Eur.)

12

Knowledge Economy Index

Turkey Romania Ukraine

Latvia Lithuania

Russia Bulgaria

Cyprus

EUCC12

Greece Slovak Rep.

Hungary Portugal

Poland Slovenia

Czech Rep. Italy

Estonia France EU15

G7 Germany

Ireland UK

Finland Sweden

Denmark Netherlands

4,00

5,00

6,00

7,00

8,00

9,00

10,00

4,00 5,00 6,00 7,00 8,00 9,00 10,00 1995

2000-2002

Turkey

Romania Ukraine

Latvia

Lithuania

Russia Bulgaria

Cyprus

12 ŠK

Greece Slovakia

Hungary Portugal.

Poland Slovenia

Czech rep. Italy.

Estonia France 15 VN

G7 Germany

Ireland UK

Suomija Seedan

Denmark Netherland

Evaluation of different countries according to index of knowledge economy

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Current activities of the association of INFOBALT

1. Taxation easement for ITT sector

2. Initiatives for broadrband Internet programs

3. Developing e-skills of population

4. E-government services for citizens

5. Support R&D financing

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Lithuanian ICT market target:

6,10%

1,40%

17,50%

7,70%

2003 2015

Services

Production

In 2003, the ICT sector compounded 7.5% of the Lithuanian GDP

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eEurope 2005 Action Plan Goals

By 2005 EU member states should have:• Modern online public services * e-Government * e-Learning services * e-Health services• A Dynamic e-business environment• And, as an enabler for these * Widespread availability of broadband at competitive prices * A secure information infrastructure

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The eEurope 2005 frameworkeEurope Index Component Indexes

eEurope 2005 Index

Internet Indicators

Modern Online Public services

A dynamic e-Business Environment

A Secure information Infrastructure

Broadband

 

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The eEurope 2005 frameworkComponent indexes Sub indexes

Citizens’ access to and use of Internet

Business access to and use of ICT

Internet access costs

Internet indicators

Modern online public services

eGovernment

eLearning

eHealth

    

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The eEurope 2005 frameworkComponent indexes Sub indexes

A dynamic eBusiness environment

A secure information Infrastructure

Buying and selling Online

eBusiness Readiness

Internet Users’ experience regarding ICT security

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Sectors which will experience the biggest influence of the integration according to made added value

(period of 2002-2009)

• Consumer goods manufacturing (5,34 bln.Eur)

• Wholesale and retail trade (2,6 bln. Eur)

• Agriculture (2 bln. Eur)

• Construction (1,1 bln. Eur)

• Transport and telecommunication (0,9 bln. Eur)

• Energy sector (0,8 bln. Eur)

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Growth of GDP in union countries in 1988-2003

59,157,4

60,161,9

64,2 65,2 65,9 66,6 65,9 66,968,2

64,7

6970,4

72,5 73,1 74,1

78,777

78,1 78,1 78,279,3 79,9 79,2

82,1 82,284,1 83,4 83,8

63,8

66,3

71,1

74,7

78,4

82,5

90,7

93,3 93,5

103,7106,1

112,2

115,2

117,9119,1

63,8 64,8

67,769,5 69,7 70

73,372,2 71,9

69

72,5 72,1

67,7

58,3

119,9

58,5

68

59,459,2

57

67

77

87

97

107

117

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002* 2003*

* Prognozė

ES

vid

urki

s -

100%

Graikija Ispanija Airija Portugalija

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CEEC-10, 16%

EU-15, 84%

Area, % EU-25 Population, % EU-25 GDP size, % EU-25

Source: Eurostat

CEEC-10, 19%

EU-15, 81%

CEEC-10, 5%

EU-15, 95%

EU enlargement: illustrative comparisons

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CEEC productivity: a myth vs. hard reality

37.136.435.132.331.13029.328.2Latvia

41.840.839.836.435.333.53129.7Estonia

41.93834.33232.730.629.228.6Lithuania

48.847.947.645.842.54042.3:Poland

53.753.152.7:::::Czech Rp.

56.25351.74947.44643.742.9Slovakia

62.660.957.656.356.255.253.753.7Hungary

68.466.865.166.563.962.460.358.2Slovenia

78.379.877.77674.172.371.659.5Cyprus

89.889.491.491.9::::Malta

52.250.949.848.546.7:::CEEC-10

100100100100100100100100EU-15

92.892.592.391.991.4:::EU-25

20022001200019991998199719961995

labor productivity per person employed, EU-15=100

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eEurope 2005 Index and GDP/capita

y = -2E-09x2 + 0,0002x + 1,8567R2 = 0,7903

1

2

3

4

5

6

0 5000 10000 15000 20000 25000 30000 35000

GDP per capita

eEu

rop

e 20

05 In

dex

RO

SL

EE

CZ

HU

PO

SK

LT

LV

BG

EU-15 countriesNMS and candidate countries

EU-15 average score = 4,42

EU-15 lower limit = 2,97

Source: INSEAD

DK

SENL

UK

IR

FIN

AT

DE

BE

FRIT

ES

EL

PT

MT

TR

CY

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Impact of the enlargement on industries

Survey Winners:

• Consumer goods retailing• Financial services• Pharmaceuticals• Professional services• Technology• Telecommunications• Transport

Survey Losers:

• Agriculture• Automotive• Consumer goods

manufacturing• Mining and metallurgy

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Mission: to become number one choice for near-shore outsourcing in Europe

Stable economy Strong government support for knowledge economy

and developing the domestic ICT industry Solid infrastructure Strong ICT association Extremely well educated and cost competitive labour Fast growing economy and favorable legal

environment

Project “Outsource2Lithuania”

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Areas of Outsourcing

• Software and Engineering Administrative support Network and Communication Database Development Design and Development Graphic Design and Multimedia consultancy and Skill Development.

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Piešė A. Bunikis

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■>)

Piešė A. Bunikis