Outsourcing market: CeBit 2004

Table of contents

The state of the German IT sector

In 2003 the German ICT sector grew about 0.3%. The expectation for 2004 is 2.5% and 3.7% for 2005. After three difficult years demand grows the first time in 2004. The market value of the German ICT market in 2004 is expected to level at Euro 131.4bn while the market growth is predicted to reach Euro 136.8bn in 2005 (the same as in 2001 which was a record year). The growth in the telecommunications sector is the fastest: 4.3% forecasted for 2004 and 2005. In 2003 the revenue of software producers declined 2.5% while for 2004 a 2.5% growth is expected (5% for 2005).

Focus on SMEs and compliance

Trend

A new generation of entrepreneurs had opened or taken over (family owned businesses for instance) their small-, medium sized businesses. These entrepreneurs are more open for IT solutions and technology adaptation. Even large IT suppliers recognize this as a business opportunity.

Small-, medium sized companies offer new opportunities also for giants: IT companies providing small and medium enterprise solutions got their special exhibition area in Hall 6. Most of the exhibitors were also small to medium size companies, however the large suppliers of enterprise systems (such as SAP) offered SME solutions.

The new buzzword: compliance: Governments all over the world seem to be generating plenty of business for the IT industry. First of all they are pressing on expensive e-government implementations, which generates business for IT solution providers at national and local government level as well. They are also imposing new regulations on businesses that demand extensive IT intervention to achieve compliance. After Y2K and Euro conversion, COMPLIANCE is the next great challenge which will generate large amount of business for IT companies. Compliance became outmost important partly because of the large corporate scandals of late and also because of regulations had changed a lot in the last few years. BASEL II, the International Accounting Standards (IAS) and the Sarbanes-Oxley Act (SOX or SarbOX) place complex new burdens on a great many companies.

SarbOX: The Sarbanes-Oxley Act of 2002 mandates a comprehensive accounting framework for all public companies doing business in the US. The Sarbanes-Oxley Act of 2002 legislates acceptable conduct regarding the retention of records; electronic and paper for public companies, executives and the general population. It establishes new standards for corporate accountability as well as penalties for corporate wrongdoing. The legislation contains 11 titles, ranging from additional responsibilities for audit committees to tougher criminal penalties for white-collar crimes such as securities fraud.

Companies will be required to disclose all pertinent financial performance information publicly in a uniform, transparent manner. Any hint of subjective or creative interpretations of financial performance by companies is to be eliminated. All financial performance results must have substantiating data readily identified and easily available for follow-up audits. The key element of the new SOX regulations is the requirement that companies must establish, and then maintain, bullet proof accounting procedures that eliminate any possibility of creative accounting. The new systems must promptly identify any personnel that attempt to alter established accounting methods or any existing financial records in an effort to enhance their company�s financial performance reports. All involved companies must comply by July 15, 2005.

More on SOX: Sarbanes-Oxley.com :: Sox-online.com ::

Look for: "sarbanes-oxley" or "sarbox" in your preferred search engine

BASEL II: The Basel II Capital Accord is an amended regulatory framework governing risk management practices, developed by the Bank of International Settlements (BIS). The framework had been developed by the Basel Committee on Banking Supervision. This committee meets every three months at the Bank for International Settlements in Basel, Switzerland; its members are banking supervisors and regulators, drawn from central banks. Basel II is intended to improve the stability of the world�s financial system through enhanced market discipline, based on capital adequacy and improved transparency and disclosure. BASEL II will force financial institutions to make changes the way they manage data and issue reports. The accord is due to come into effect in 2006. According to Datamonitor the cost of compliance will be enormous, about USD 4bn globally, over the next two years.

More on BASEL II: Basel Committee on Banking Supervision

EU countries and German states are looking for cooperation

EU countries and the states of Germany had their collective stands at CeBit offering general and business information, information on investment opportunities and business cooperation. For instance, NORTRADE in Norway and the German state of Baden-W�rttemberg offer on line partner search for IT companies:

NORTRADE

Baden-W�rttemberg