Germany has been a leader in technology and engineering for several decades.
Hence, it’s not surprising that it’s driving innovation through digital offerings. The IT market in Germany is driven by the increased adoption of cloud-based services and strong digital infrastructure. A Deloitte study showed that the technology market has doubled by 104% between 2000 and 2020. It accounts for 7% of Germany’s economic output. The study further reveals that the revenue of Germany’s technology industry will grow up to 280 billion euros by 2022. Product modernization has become a priority for German companies
While this spells good news for Germany, the increased competition in the IT sector globally, along with other challenges, could pose a threat to the progress.
Let’s look at both opportunities and threats of Germany’s software product landscape and what it means for their future
The Opportunities And Threats Of Germany’s Software Product Landscape
Opportunities: Germany is at the cusp of the digital revolution. Germany is currently spearheading the worldwide emergence of Industry 4.0. There is also an increased focus on smart cities. Technology has become the main enabler for all sectors including, finance, insurance, and health. Germany’s technology boom has been further boosted by the advent of IoT, analytics, AI, and 5G. This will give rise to further innovations in different sectors. It will help companies build innovative products such as connected devices, self-driving vehicles, digital health products, etc. Companies will need both new-age hardware and software expertise to leverage the potential of these technologies to build modern digital products.
Threats: According to a BitKom study, there were 1,24,000 open vacancies in Germany as of January 2020. It also revealed that 40% of companies said that it takes time to fill the tech positions. There are over 32% open positions for programmers, 13% for data scientists, and 12% for product managers. The skills gap and difficulty in filling the positions are posing challenges for the companies. To add to the woes, Germany also has stringent employment rules that are restrictive. The recruitment cost is high too. It takes almost six months to fill a vacancy. Considering that technology is moving rapidly, companies face a tough time finding the right person and innovating. It acts as an impediment to their progress and is losing their competitive edge. It could eventually also impact the country’s economy. That’s why companies are on the lookout for resources that are skilled and not expensive.
How Can Germany Fix It?
Product modernization requires resources with modern skillsets. For example, companies are making products with new user interfaces for AR and VR, and IoT devices. To build such innovative products, companies need resources who are experts in designing AR and VR interfaces. Given the challenges German companies face, adding new team members with the right skills can be challenging. Also, the need for such skillsets changes rapidly. So, it can be difficult for companies to add new resources or train them as the learning curve can be steep, and innovation could take time.
-Saves time and cost: Companies can save costs on hiring and training through resource augmentation. These resources come with experience. They require minimal training to get started. Companies can also save time on recruitment and instead spend that time thinking of ways to innovate.
-More control on resources: While outsourcing projects might be an obvious choice for many companies, it could pose challenges when it comes to tracking their progress. It’s difficult to have control over them. There’s also the fear of IP theft. With resource augmentation, companies can have more control over the resources and track their progress. There’s also less fear of privacy or data risks.
-Faster go-to-market: In a dynamic market, companies need to launch their products faster in the market. With less time spent on hiring and training and as the resources are already experienced, companies focus on developing and launching the product in the market quickly.
-Scalable: Companies can add or reduce resources depending upon the project needs. It’s also profitable as the resources are temporarily staffed.
However, companies need to ensure that they have skilled resources in their team. They must partner with a resource augmentation company that understands their business well enough to send the right resources to the team.
At OTPC, we help German companies with resource augmentation to enable them to build innovative, modernized products without worrying about skill shortage.
For more details, contact us.