An analyst’s view...
The use of outsourcing and nearshoring has become a noticeable pattern
within Spain. While it is not uncommon now across Europe, it seems to be
We asked Saverio Romeo, expert on mobile and telecommunications and
particularly popular in Spain. Previously mentioned NTR Global is a US-based
ICT at analysts Frost and Sullivan, for his thoughts on the Spanish market
company with over 330 franchises in Spain. CEO Lluis Font believes the two
The growth of the Spanish economy in the period 2000-2007 has ways of doing business are “integral” to Spain’s future. “Outsourcing and
“
been impressive. Based on OECD data, the GDP per capita went from offshoring are an integral part of the new global economy. It is a choice any
$21296 (€13641) in 2000 to $29382 (€18821) in 2006, a growth of 38%. The business can make for many reasons at any cycle of its growth. Insourcing is
ICT industry largely contributed to this strong performance with an average also a trend that has also increased since 2006 and can deliver the economies
revenue growth rate of 10.7%.. However, 2006 was not particularly exceptional. of scale and efficiency with a local and national workforce.”
The Spanish ICT industry grew at only 3.2%. The situation improved slightly in “Next-generation technologies, such as SaaS and ‘computing in the cloud’
2007 with growth rates of 5.5% bringing the total industry revenues close to allow any size business to run more efficiently whether they outsource or
€43,500m. Mobile communications were the largest source of revenues. The insource. These technologies offer companies the choice to do what makes
sector accounted for 34.7% of total industry revenues. Fixed communications sense when it makes sense without major business interruptions because the
accounted for 17.3%, audiovisual services for 13.3%, Internet services for 7.9% technology supports either model.”
and business communications for 3.1%. In terms of growth rates, the Internet This is despite the fact that Spain use of the Internet is below the European
services recorded the best performance with 22.4%, followed by business average. As Font points out, Spain is some way behind Finland and Sweden
communications with 12.5%, mobile communications with 11.1% and audiovisual who have 80% usage, or the 60% of France and Austria. Font believes that
services with 7.9%. Revenues for fixed communications decreased at -3.1%. despite this, businesses within Spain are viewing technology differently.
A closer look at the mobile communication space, using Frost & Sullivan’s “Technology has grown from being viewed solely as expenditure with a
data, reveals that the Spanish mobile market has reached saturation. At the profit value that has been difficult to measure, to one of the key areas of
end of 2007, mobile penetration was at 107%. The market was dominated by strategic value for companies. There has been an important increase of ERP
Movistar with a revenue market share of 48.5% followed by Vodafone Espana implementations, which have recently gained momentum. A lot of companies
and Orange Espana. Over the course of 2007, competition intensified with the are considering an SaaS model, although many still prefer to have ERP in-house.
establishment of Yoigo and the advent of MVNOs. The market remains largely The market with the
concentrated around voice and SMS traffic; both contributing to 89.5% of total highest growth rate
revenues. Data services are expected to significantly grow over the next five has been CRM, with
years. Between 2006 and 2007, the sub-sector grew by an impressive 107%. Salesforce, a tool that
Despite 2006 dip, the Spanish ICT industry is growing at a good pace; can be integrated into
driven by mobile communications and content applications on both mobile NTRsupport, in a strong
and fixed networks. The growth of Internet and convergence services, business market position.”
communications, audiovisual services and mobile data services suggests the Mergers and
main business opportunities are in content and infotainment services rather acquisitions specialist
than in infrastructure. Nonetheless, the availability of high speed infrastructure Regent Associates (see
is a prerequisite to wider adoption of advanced services. Both the government page 12-13), noticed
and industry players need to effectively promote broadband Internet access that despite some of
and encourage greater usage of fixed and mobile networks. Based on current the economic issues
market dynamics, the Spanish ICT industry has strong potential to grow. throughout Europe,
www.frost.com Spain has been growing
20 02 MAY 2008
It0808 - 18-21_Spain_Ent.indd 20 2008-04-30 11:53
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