Germany really looks at the IT industry of Latvia and the Baltics with great respect, especially in the field of digitalization of the public sector, in which all three countries have proven themselves very well. Of course, there are industries that are highly developed in Germany, such as the automotive industry, however, as the representatives of the delegation themselves admitted, it is precisely in digitalization that the Baltic States have created many examples of good practice, from which even much larger economies can learn.
In the digital competitiveness ranking (Digital Competitiveness Ranking) last year Latvia was ranked 40th out of 64 countries. Although this is a slight drop from 34th place in 2022, the ranking highlights the ability of IT companies to innovate and integrate digital technologies. The readiness of the sector for future challenges is also rated relatively highly. Latvian IT companies regularly receive international recognition and attract the attention of investors, demonstrating much higher competitiveness than we sometimes believe. This is also confirmed by the interest of the businessmen of the world’s third largest economy – Germany – in opportunities for cooperation.
German entrepreneurs are still actively looking towards the Baltics and Latvia
By cooperating with German companies and gradually analyzing this target market, both opportunities and challenges can be clearly seen. The geopolitical situation has undergone significant changes, so German businessmen are increasingly actively looking towards the Baltics and Latvia. What attracts them here? This is clearly the already mentioned experience of Latvian IT companies, as well as talents whose competitiveness at the international level is no secret, and the battle for professionals has long been taking place outside the borders of national states. The interest is fueled by the knowledge and education of these talents, the experience of companies in the industry, as well as the prices of services, which are more competitive compared to Western European companies.
Our IT industry demonstrates good value for money, which is noticed and appreciated. In addition, it should be noted that Latvia and Germany are traditionally united by active economic cooperation. Germany is one of our biggest foreign trade partners, besides, Germans are also close to the Latvian mentality, our friendliness and openness, which also helps in building business contacts.
Competitiveness of Baltic IT talent
Helmes Group has experience working with several German brands, for example, when the financial services company Bonnfinanz left the group in 2019, they needed to set up their IT systems in less than 18 months, while the construction company Kurt König Group needed to create a completely new business model – 24/7 access to DIY construction tools and equipment through a mobile app. These projects have clearly demonstrated the competitiveness of the Baltic IT talents – the ability to work professionally, promptly and according to modern standards.
A high NPS can also help in conquering new markets (Net Promoter Score) indicator that measures customer loyalty and how likely they are to recommend a given company to others. According to the data of the international research company “Statista”, the average score among software developers is 44 points, while in our company it is 76, which we also emphasize when developing operations in new markets. It is an international indicator that is known almost all over the world, so it does not require further comments.
Chooses responsible cooperation partners who take care of the environment and employees
Germany is also a socially responsible economy, so when choosing cooperation partners, care for the environment and efforts to reduce the CO of the IT industry are also an important aspect2 foot. By drawing attention to the fact that the IT sector also creates a significant impact on the environment, for example with a large amount of emissions, and by calling for the choice of sustainable software, we can also encourage much larger economies to think about these issues. Since trade unions are very developed in Germany and companies pay attention to the care of employees, this aspect is also taken into account when thinking about new collaborations.
A decentralized market with different consumer needs
Looking in the direction of Germany, it should be taken into account that this market also has a series of challenges that may have to be faced. Many companies are worried about the large population, which can also mean the need for more complex and larger IT systems, but the real thing to watch out for is fragmentation. The administrative division of Germany consists of 16 federal states, for example Berlin and Hamburg are separate states. Therefore, when choosing to cooperate with, for example, Hamburg, the story is essentially a country within a country. Each state has its own needs, which can vary greatly, so decisions are made in a decentralized manner.
It should also be noted that Germans are also very reserved and cautious, especially in matters of data security. A large part of society still wants all information to be provided in analog format, but digitization plays a crucial role in making services more accessible. This means that a relatively large amount of work still needs to be invested in educating potential customers and changing the paradigm of thinking.
When it comes to cooperation with the public sector in Latvia, we often highlight the long decision-making process, heavy bureaucracy or the fact that there is a lack of iterative processes in the development of important, national-level systems (agile) approaches when the development takes place in iterations or in stages. However, in Germany, the mentioned aspects are even more pronounced – the planning process can sometimes be so long that after the development and implementation of the system, it may not be relevant.
Germany, like any potential target market, combines both opportunities and challenges, but it is important to take into account that there are many aspects in which German entrepreneurs and representatives of the public sector look at Latvian and Baltic IT companies with great respect. This once again reminds us that Latvia can, and often even much better than we think.
