Offering global services despite the crisis
Information and communications technology (ICT), in brief:
- turnover in 2009 – 1.8 billion EUR;
- exports in 2009 – 288 million EUR;
- number of people employed – 16 765;
- the largest provider of ICT services: Exigen Services (turnover in 2009 – 20,5 million EUR).
Latvian information and communications technology (ICT) companies have world-class abilities. ICT exports are strong, and have proven themselves. Companies presently mainly selling mainly to the domestic market have the opportunity to grow and develop exports by transferring experience gained on the domestic market to neighboring countries and the wider European market.
- The Latvian ICT industry has both enterprises with hundreds of software developers and other ICT specialists, and small enterprises, where small specialized teams offer unique products in database administration, mobile payments and document management. A new specialty, which is developing fast, is software testing. The Latvian Software Testing Qualification Board is an organization, which affirms the qualification of testers.
- The Latvian ICT industry has developed solutions both for domestic and for export markets. ICT exports, as elsewhere in the world, are not measured by an amount of physical goods. It is mostly the export of services and intellectual property, as when outsourcing is performed inside Latvia, or on site for foreign clients.
- The Latvian ICT industry has suffered from the economic crisis, as have other industries. In 2009, the overall turnover of the sector decreased by 31,8%, amounting to 1.79 billion EUR. However, ICT exports remained almost unchanged – in 2009, exports have amounted to 287.3 million EUR, in comparison to 287.8 million EUR in 2008. In 2009, the number of people employed in the ICT sector has also decreased to 16,765, from 18,900 in 2008.
- In 2010, the situation stabilized somewhat. Orders from the state and municipalities, which are now actively developing e-government solutions, helped the ICT industry in Latvia to overcome the crisis and to continue growing.
- As stated in the Notice about European Digital Competitiveness published in 2010 Latvia increased its indicators in many sectors and approached the average EU level. The fastest progress is noticed in internet distribution except rural area and companies where progress was not noticed during 2009 and 2008. The number of internet users (61% of all residents) slightly exceeds the average EU level (60%). However areas of internet usage are very different. Dramatically increased a number of people who are reading news on the internet, using internet bank, are distributing information on the internet, are educating online, at the same time the use of e-commerce is considerably under the average EU level. Fast yet still insufficient growth is registered in e-governing development. According to Eurostat data in 2010 Latvia introduced 93% of 20 basic electronic services (average EU level - 84%). As a single point of contact with national and local government services Latvia introduced internet portal www.latvija.lv. Information about more than 1600 services is available in the public service catalogue. Since June 2010 it is possible to electronically register new company in the Enterprise Register.
- According to the data published in June 2011 by internet research company Ookla Net Metrics internet speed measurement on speedtest.net in Latvia downloading speed was 23,5 Mbit/s and uploading speed was 14,4 Mbit/s taking the 6th and the 4th place respectively amongst 172 countries. These results were achieved due to investments in optical network innovations undertaken by the biggest telecommunication companies in Latvia.
- A level of computer piracy, according to the data provided by the international computer programs copyright protection organisation Business Software Alliance, in Latvia in 2010 remained on the level of 56% (it did not change since 2006), whereas damage caused by piracy to Latvian economy reached almost 21 million euro. It is possible to reduce a level of computer piracy by introducing free and open code programs. In 2010 such program were used by 25,4 % of all companies.
- In the area of electronic communication in 20 May 2011 were registered and were active 396 electronic communications businessmen. In the postal area the universal postal service is secured by the joint stock company "Latvijas Pasts", but in the sector of express post are active 55 postal businessmen.
The leading ICT companies
- One of the major ICT wholesale dealers in Eastern Europe, Elko Group, (for several years, it has also been the largest enterprise in Latvia), is headquartered in Latvia. During the 9 months of 2010, its turnover has amounted to 384.5 million EUR, an increase of 17% over the corresponding period of the previous year.
- The joint-stock company Capital, a computer equipment seller, with turnover in 2009 of 10.5 million EUR, is also one of the leading enterprises in the area of computer assembly, mainly for the domestic market.
- According to the Lithuanian investment bank Prime Investment’s regular survey of the ICT industry in the Baltic States, Exigen Services is the largest ICT service provider in Latvia and in the Baltic states, with comparatively large exports in proportion to total turnover. The company specializes in the rationalization of business processes through the development of solutions for various industries Exigen Services customers include Wachovia Securities, Intronis, a US company which provides backup and recovery services, the Swedish mobile communication group Tele2, as well as CSC, the US medical laboratory management software company.
- Second place among Latvian ICT enterprises is taken by the Lattelecom group, followed by Tilde, which specializes in IT solutions related to languages and translations, as well as Nexum IT, its subsidiary company, which specializes in insurance solutions. One of the main export markets for Nexum is Scandinavia. The "Top 5" list of the ICT service manufacturers of Latvia concludes with Rix Technologies, which develops e-government solutions.
The TOP 5 list of the IT branch of Latvia, according to the amount of the sold IT services, in millions EUR
The first half of 2010
Added value for 1 employee in 2009
- Companies, which have been acquired by foreign investors and included in a larger corporate group as local subsidiary companies, should also be counted among the most powerful ICT companies of Latvia. At the end of the 90s, Tieto (during that time – Tieto Enator), the ICT solution company from the Nordic countries, acquired the Latvian company Konts, which developed payment card solutions. Now, Tieto’s main center of payment card solutions, serving customers around the world, is in Latvia. In 2009, the turnover of the Latvian Tieto enterprise has amounted to 16.82 million EUR, which is 9,6% less than the year before. According to the business newspaper Dienas bizness " DB Top 500" yearbook, the Latvian branch office of Accenture, which is mainly oriented towards Western markets and high added value services, was one of the few Latvian ICT companies, to experience minimal decrease in turnover (-5%) in 2009 At the end of 2010, Accenture announced their intention to employ an additional 50–100 new programmers.
A strategy for the future
- The industry has close connections with educational and research institutions, as well as with business incubators. The younger generation of ICT businessmen gather at the regular Open Coffee events, in order to share experiences, and sometimes – to meet venture capitalists and other investors.
- The non-profit organization "Latvian American Business Association of California (LABACA)" was recently established in order to facilitate Latvian ICT exports. Its goal is the active support of the cooperation between the intellectual and financial resources of Latvia and America, especially California, by means of creating a high-tech ecosystem, which would be able to prepare the Latvian ICT enterprises for successful activities on the American, as well as on the global market. With the help of this organization, in 2011, four ICT companies will be represented a technology and innovation incubator in Silicon Valley, USA. These include the Latvian data center DEAC, the social network Draugiem.lv, E-Tag – a company, which protects identity in internet, as well as Real Sound Lab – the sound processing enterprise.
- The major IT companies of Latvia work together in the Latvian IT Cluster, which takes part in international projects for sharing experience and knowledge, as well as searches for cooperation opportunities, both mutual and with partners abroad.
- The major investors and the strongest owners in the telecommunication branch of Latvia are from Sweden. 51% of the capital of Lattelecom, which offers fixed network telephony, IPTV and subscription television, as well as a little more than 60% of Latvijas Mobilais Telefons (LMT) – both directly and indirectly – belongs to the TeliaSonera group from Sweden. The second largest mobile communication operator – Tele2 – belongs to the Swedish telecommunications group Tele2 AB. The third operator, Bite, belongs to private investors.
- The Latvian IT Cluster
- The Latvian Information And Communications Technology Association (LIKTA)
- Institute of Mathematics and Computer Science, University of Latvia
- Latvian American Business Association of California (LABACA)