Transcript The future of High – Tech industries in Baltic

The future of High – Tech
industries in Baltic
Alvydas Vitkauskas
MicroLink group Country Manager, Lithuania
Vilnius, 2003 10 21
Why Baltic states need High–Tech?
• Current low productivity of the economy
• Insufficient availability of labor resources and
rising labor costs
• Competitive science potential and traditions
• Relatively good quality of education
State of Baltic IT industries
• A lot of IT companies
• 7 or 8 digit turnover numbers of major IT
companies
• Market increases at a rate of 10-15% annually
Size of Baltic IT companies
70
m EUR, 2002
60
50
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…same at different perspective
1600
1400
1200
1000
800
600
400
200
0
The problem
Sales breakdown
Local market
5%
Foreign market
95%
Challenges for Baltic IT sector
• Dependence on local demand
• Small size, fragmentation, low specialization
and weak capital base
• Low value-add efficiency compared to CEE or
Nordic peers
Cure: consolidation and innovation
• Emergence of real pan-Baltic IT companies
• Emergence of export oriented high - tech
companies
• Increased spending on R&D
What’s more?
• Facilitation of entrepreneurship
• Financial support for new companies
• Venture and equity capital
How to create new Nokias?
• Finnish funds invested 391 m EUR in 256
companies
• Danish funds invested 283 m EUR
• 50% of capital goes to High-Tech companies
It means
there are more than
200
new potential Nokias in Finland and
Denmark alone
EU funds for:
• Low cost infrastructure for High-Tech
enterprises
• Substantial improvements in education system
• Investments in R&D and applied science
• Information and communication technologies
for state and municipalities
Case study: SAF Tehnika
• A 18 m EUR Baltic company
• Succesfully competes on global telecom
equipment market
• The only really successful Baltic technology
company
SAF’s sales geography
6.000.000
5.000.000
EU
4.000.000
CIS
3.000.000
CEE
2.000.000
Baltics
China, Asia
1.000.000
0
Jul-Dec 01
Jan-Jun 02
Jul-Dec 02
Jan-Jun 03
What to do next?
• Facilitate R&D, use EU funding to do it
• Facilitate entrepreneurship and provide
infrastructure for new companies
• Consolidate Baltic IT market to form capable
IT enterprises
Thank you!