2007 Report on the largest IT companies in Poland

Introduction
In mid-2007 PMR Research, the research division of our partner company PMR, conducted a primary survey among Poland’s 200 largest IT companies. It was the fourth edition of their annual survey of executives at Poland’s leading IT firms. The results of the survey were used for the purposes of this year’s report “IT market in Poland 2007. Development forecasts 2007-2010”.

All participants chosen to be surveyed were professionals with extensive knowledge of their industry and with high expertise to offer opinions and forecasts about the Polish IT market. The whole group of participants consisted of 76% executives, managers or marketing and sales professionals, executive board members or other department managers. Almost one quarter of them represented marketing experts (26%).

The survey intended to gather the newest information about the current condition of the Polish IT market and predict its growth over the next two years. This research also helped to identify the likely future directions of the sector’s development and the most promising segments of the whole IT industry in Poland. Furthermore, the survey also identified what boosts and what seems to restrict growth of the Polish IT market. Other more specific objectives embraced assessing the situation in the market for IT outsourcing as well as its growth possibilities over the next two years. Finally this report informs about current export activity of Poland’s largest IT firms and makes predictions about their foreign expansion in the near future.

It is assumed that the results of the conducted survey are representative for the entire group of Poland’s 200 largest IT firms. Moreover, given that the respondents were seasoned experts with comprehensive knowledge of the IT market, the findings may also serve as a valuable resource in assessing current trends and prospects for the Polish IT market as a whole. The 200 firms targeted by the survey account for around 90% of the Polish IT market by value. It is therefore legitimate to assume that the survey’s findings are an accurate reflection of the Polish IT market as a whole.

200 largest IT firms in Poland canvassed
The research evolved around a question about the rate of increase or decrease of the Polish IT market last year. According to respondents’ opinions the value of the Polish IT market grew by 16% in 2006. PMR’s research from April 2006, showed that respondents expected the market to grow by about 13% in 2006. Comparing statistics from the last year and the data obtained from people surveyed this year, it is possible to say that the actual rate of increase proved slightly higher than that expected by last year’s surveyed companies.

The graph above shows annual growth dynamics of the Polish IT market between 2003-2006 as perceived by IT companies that took part in PMR’s surveys conducted between 2004-2007. On average, the participants predicted that the Polish IT market will grow by around 16% in 2007, thus maintaining a similar trend of previous years.

Participants also answered a question about a potential increase of new foreign competitors planning to enter the Polish IT market in the upcoming two years. 40% of respondents expected one or two competitors to enter the Polish market over this period (down from 57% in 2006). 30% of those surveyed believed there would be three or more major new foreign companies on the market in two year’ time, (up from 17% in 2006). Another almost 30% believed there will be no big foreign companies trying to enter the market (up from 26% in 2006).

Compared to the last two editions of the report, this year indicates a rise in the percentage of respondents expecting three or more new major foreign competitors to appear on the Polish market in the next two years (although it remained lower than in 2004), while the number of respondents who said one or two major new foreign entrants would appear declined this year and was close to its 2004 level.
The percentage of respondents who predict no major new foreign entrants will appear on the market has remained almost unchanged over the past four years, floating between 20% and 30%. In the opinion of 63% of respondents who expected some new entries over the next two years the most possible way to enter the market by new competitors is through establishing representative offices in Poland. 56% thought entry would involve acquisitions of small and medium-sized Polish firms, while 31% believed that the new entrants would enter by taking over large domestic companies.

In the previous edition of our survey, conducted in April 2006, “establishing a representative office” was mentioned by the largest percentage of respondents (55%) as the most probable entry strategy. But this year’s survey indicates important shifts in support for the other response categories. Last year, just 41% of respondents believed that the new entrants would start their business in Poland by buying out small and medium companies, but this year the percentage jumped by 15 points. On the contrary, last year 52% respondents thought acquisitions of big Polish IT businesses was the most possible way to enter the Polish market, however this fell by as much as 21 points in 2007.

The last question all respondents were asked was whether their company is considering to merge or take over a rival over the next two years. One in three companies answered affirmatively; the remaining two thirds anticipated no such actions over this period. These results are sharply different from those obtained last year, when slightly more 21% of companies confirm their strategy to merge with or acquire a rival within the following two years. As a conclusion, we may suggest that a tendency for consolidation has strengthened over the past year in the Polish IT sector.

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