ECONOMY

Lackluster growth in Greek IT market; local firms lose share

Greece’s information technology (IT) market grew at a slower-than-forecast rate of 6 percent in 2003, mainly in the segments of personal computers and peripherals, according to preliminary data supplied in a report by business consultant firm Strategic International / K. Kataras. Software and services did not do so well, affecting mainly Greek firms, while prospects for 2004 are not particularly bright, with growth forecast at just 2.5 percent, in line with trends in the rest of the European Union. According to Strategic International, a number of factors accounted for the rather lackluster 6 percent growth of the Greek market to 2.23 billion euros, against double-digit initial forecasts based on an anticipated switch to «smart» software and services of high added value. First is the lack of balanced economic growth, which has been centered on the large projects, either subsidized through the European Union’s Third Community Support Framework (CSFIII) or for the Olympic Games, driving the overwhelming majority of enterprises to financial stringency. Some studies go as far as to claim that almost three-quarters of Greece’s 4.2 percent growth rate is due to CSF funds, the remaining one-quarter accounted for by Olympic projects. Another factor was the low absorption rate of CSFIII funds in the IT sector itself. «The frivolous attitude of the large Greek IT firms in relation to the stock market led to their economic exhaustion and a shift by a significant market share to the more efficient multinational players of higher added value,» said the report. The personal computer segment is estimated to have grown by 18 percent in terms of the number of systems sold and by 13 percent in terms of value, largely the result of a rise in the installation of computerized cash registers and receipt-issuing machines. Peripherals followed a satellite course, also aided by the spreading fashion of digital photographic means. Services were hit mainly in the professional rather than in the support segment. Greek firms as such realized a 12 percent fall in turnover and several of them are now facing serious operating dilemmas. The year 2005 is projected to be the first in which Greek firms will account for less than half of personal computer sales. By contrast, in the software segment, Greek firms are still almost the exclusive suppliers of small and medium-sized enterprises, aided by the lack of cheap broadband Internet access which precludes the use of ASP applications.