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EU funds to fuel Eastern Europe tech boom

Virtuous circle

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the IT market in Eastern Europe will grow three times faster than in Western Europe until 2007, according to Gartner.

Eastern Europe currently accounts for less than 8 per cent of the European IT market, but this is to increase to around 10 per cent in the next few years. Gartner says that this will be made possible by increased EU financing for accession countries, which will plough much of the funding into major IT projects.

Andrea Di Maio, vice president of research at Gartner, said: "The IT markets in EU accession countries will grow primarily because of an influx of financing from the EU will result in a virtuous circle that will transform local economies."

The largest growth area will be software as some of the less-developed economies will be compelled to comply with EU corporate governance regulations. This, combined with a predicted increase in customer management software, will drive software revenues. Hardware spending is also set to increase. Accession countries are expected to focus on replacing older systems and investment in telecommunications, including broadband and enterprise networking.

Gartner recommends that IT users in the accession countries should work to evolve traditional procurement practises such as purchasing; and that vendors should concentrate on the more competitive niche markets, rather than established markets already provided for by larger vendors.

"IT users will benefit directly and indirectly by forming relationships with vendors to receive EU funding while reducing the costs of procured goods and services," said Di Maio. "If IT vendors haven't started to think about how this issue will affect their business, they need to do so immediately."

Gartner points to complications that will result from the lifting of barriers to workers. The firm says that securing key personnel will be important for local players, and that solutions should be localised as far as possible. It also warns against focusing on "easy" targets in the developing market, such as corporate governance or agriculture.

Lastly, it recommends that countries should encourage private sector investors to match investment from the EU, and to foster strong partnerships between the public and private sectors. ®

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