German Internet Industry to Create 80,000 New Jobs By 2016

Study by eco - Association of the German Internet Industry and Arthur D. Little forecasts an on-going boom in the Internet branch.

Germany's Internet industry will grow annually by around 11 percent a year until 2016, creating a total of 80,000 new jobs. The industry’s revenue will reach 87,4 billion euros in three years. These are just some of the findings of the study "The German Internet Industry 2012–2016: Figures, Trends, and Hypotheses," conducted by eco and consulting firm Arthur D. Little.

“The German Internet Industry is continuing to boom”, said a delighted Harald A. Summa, CEO of eco. “Throughout the entire industry we are expecting growth of more than eleven percent, in Services and Applications as high as 33 percent. And – this I can say from a look at the industry trends – past 2016 there is still room to grow.”

The employment market will also profit from this development: In 2011 there were 210,000 people employed in the German Internet industry. This number will rise rapidly in the next few years. eco and Arthur D. Little forecast that by 2016 there will be 290,000 people who earn their living through Internet-related products and services. Dr Nicolai Schättgen, Global Head of M-Commerce at Arthur D. Little, sees a big challenge here for German companies: “The increasing need for specialist personnel will require businesses to invest in their staff: Opportunities for advancement, interesting duties, appropriate salaries, and a focus on a good work-life balance make German companies attractive.”

Cloud computing and paid content on the rise

The biggest growth drivers are the areas cloud computing and paid content. Cloud computing, the provision of scalable IT services over networks, is already a part of the IT landscape. This area of the Internet industry, according to the study, will grow dramatically until 2016: by 35 percent annually.  For the area paid content, the analysis also forecasts an increase: Contrary to all fears of a payment-free culture in the Internet, creative companies are earning better and better from the digital distribution of their content. With an average of 15 percent growth per year, the estimated revenues for 2016 stand at more than 9 billion euros.

For the Manager of TIME Practice at Arthur D. Little, Lars Riegel, the sustained boom is internationally alluring: “The German Internet industry, with its current growth rates, will become increasingly interesting for foreign investors. Private equity investors and strategic investors are watching the market very closely and will invest strongly in German companies in the future.”

Five trends responsible for Internet boom

This remarkable success is being shaped by 5 influential trends. Mobile Internet is providing a considerable boost: On the one hand, wide availability of the Internet increases the attractiveness of offers like non-cash payment or cloud services. On the other hand, this will require appreciable investment in the extension of the mobile broadband network. Higher data throughput rates allow more various and more valuable content, which is the second large trend in the branch: The consumption of media content is being seamlessly transferred to the Internet and is facilitating new distribution channels and business models.

The third trend in the Internet branch is the area M2M: The transmission of information directly from machine to machine. This technology offers diverse possibilities for application, from fleet planning in logistics, through the remote maintenance of wind-power generators, to automatically controlled heating in private households. The fourth big area is security. With the increasing spread of Internet services into all areas of life, protection against unauthorized access is growing in importance. The fifth driver is the theme “big data”: The data accumulated in the Internet can – subject to data protection laws – be utilized to develop completely new services.

Expansion of broadband will strengthen the economy

The various fields of activity within the Internet branch are closely linked with each other. This means that a stronger investment in broadband expansion will not only allow the infrastructure providers to grow. It will also make the commercial use of cloud services more attractive, as they will be more easily accessible and more comfortable to use. If broadband expansion is accelerated by even one percent, the market volume of cloud services will grow.

eco CEO Harald A. Summa stresses: “Support from the federal and state governments for broadband expansion will not only bring advances for the Internet industry. Thanks to new business models and the increase in efficiency, the expansion will result in an upswing in the entire Germany economy. In this way, broadband expansion will partly finance itself through increasing tax revenue. The reverse is also true: A neglectful handling of the theme will weaken Germany’s economic growth.” The association therefore hopes that the goal of the broadband strategy of the Federal Ministry of Economics and Technology, to equip three quarters of all households with data transfer rates of at least 50Mbit/s by 2014, can be implemented as far as possible.