High speed Internet and strong export

Photo: Stock.XCHNG
 
THE INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT) SECTOR IN BRIEF:
• Turnover in 2011 – EUR 2,2 billion;
• Export in 2011 – EUR 461 million;
• Workforce in 2011 – 18 346;
• Largest ICT company: Specialised IT services and solutions company Tieto Latvia Ltd
(turnover in 2011 at EUR 30,3 million).

• The sector consists of large companies with hundreds of software programmers and other ICT specialists, and smaller companies with limited staff but unique products dealing with data processing, cell phone transactions and file management. Start-up enterprises also take their rightful place in developing application software for wider clientele, and specific solutions for business.
• Latvia’s ICT companies have worked out solutions for both the domestic and export markets. Export in the ICT sector, as is the case worldwide, is not measured by product volume, but primarily by export of services and intellectual property, conducting outsourcing within Latvia or on the spot with foreign clients.
• Latvia’s ICT industry, like other sectors, was hit hard by the crisis. Overall turnover in 2009 shrunk 31,8%, down to EUR 1,79 billion. Still, export remained practically the same at EUR 287,3 million in 2009.
• In following years the situation gradually improved in the sector as a whole, and in export specifically. Turnover in 2010 was over two billion euro, climbing about 13%, but in 2011 it climbed an additional 10%, reaching 2,2 billion. Export in 2010 swelled 34% (EUR 386,3 million) but in 2011 – 19,3% (EUR 461 million). ICT’s workforce returned to pre-crisis numbers.
• In recent years a number of co-financed projects from the European Union were concluded, coming to the aid of various companies during the crisis, but the sector considers a major challenge the allocation of funding for the coming period.
• In The Boston Consulting Group’s (BCG) digital activity index, Latvia is in 29th place, with acknowledgment that the Baltic region, Brazil, China and Russia are improving their indicators at quite a rapid pace. In 2011, Latvia found itself below the Organisation for Economic Co-operation and Development or OECD’s average level, but in 2012, had risen close to it. BCG’s e-Intensity Index consists of three sub-indexes: 1) Enablement. How well built is the infrastructure and how available is access? (This has a weighting of 50 percent.);
2) Expenditure. How much money is spent on online retail and online advertising? (25 percent.); 3) Engagement. How actively are businesses, governments, and consumers embracing the Internet?
(25 percent.) Of the three, Latvia’s lowest rating was for engagement, but the highest – enablement.
• Each year the number of e-services available on the joint state and municipal portal www.latvija.lv increases; at end-2012 they were 52 in number with information about 2 073 state and municipal opportunities. Over 780 000 users were counted in a nine-month period in 2012, with the most popular service being registration of place of residence.
• According to Akamai Technologies initial report for 2013, Latvia has the fourth fastest Internet in the world, right behind such technology giants as Hong Kong, South Korea and Japan. Broadband Internet in Latvia has reached average speed at 37,5 megabits per second. These results have come about thanks to the investment from Latvia’s telecommunications companies in development of the optical network.
• Losses in Latvia sustained from computer piracy in 2011 reached EUR 23 million, but its level decreased by two percentage points, i.e. 54% of computer users have used illegal software, according to the international copyright protection organisation Business Software Alliance.

Future strategy
• A pressing matter for the sector as it exits the economic crisis – lack of specialists. Gradually, the sector has arrived at the conclusion that there is no reason to hope for the sudden appearance of new blood; human resources must be "optimized from within the sector itself."
• In 2012, an IT demo centre opened doors in Riga with the objective of assisting the general public in comprehending what can be accom-plished with high technology, how it can be of service in daily life. Also – to show to the world that Latvia can succeed in the IT, ICT and electronics fields. The demo centre holds various events, and has hosted foreign delegations.
• The branch outlet in Riga for the British IT incubator TechHub (opened early 2012) was an important step in the new companies sector which features a joint workshop and various undertakings to support start-ups, including organising events that help to develop ideas and locate investors. Four TechHub Riga members in the incubator’s first operational year have attracted investments in the amount of EUR 600 000. Several success stories followed the advent of TechHub Riga that have earned international recognition, like the info-graphics tool Infogr.am and the address/contacts management tool Cobook.

IT sector TOP 5 in Latvia,
based on volume of IT services sold (million, EUR)

* In latest data, Lattelecom Technology listed separately. Source: Prime Investment


Useful links

Latvian Information and Communications Technology Association (LIKTA) 
University of Latvia, Institute of Mathematics and Computer Science 
Latvian IT Cluster
Latvian-American Business Association of California (LABACA) 
TechHub Riga