The Netherlands is a financially strong and healthy country. Economic growth in 2018 was 2.7%. Due to global tensions, economic growth is expected to decline to 1.6% for 2019 and 2020.
According to the World Economic Forum’s Global Competitiveness Report 2019, the Netherlands ranks 4th after Singapore, the United States and Hong Kong.
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Growth in IT Services
The Netherlands has more than 55,000 IT companies. The largest segment consists of software companies (54%, more than 30,000 companies), followed by system integrators and IT service providers (27%, 14,800 companies), technology and Internet companies (8%, 4,000 companies), hosting and cloud providers (6%, 3,000 companies), hardware companies (5%, 2,800 companies) and data centers (0.5%, several hundred companies).
The number of Internet companies, hosting, cloud providers and data centers is increasing. The majority of the IT staff (55%) are employed by software companies that represent 41.9% of the total turnover in the IT market. Hardware vendors account for 29.8% and systems integrators and IT service providers for 15.8%.
The IT sector is almost as large as the construction sector and has surpassed the agricultural sector.
Source: European Commission
The Dutch market for IT services and equipment has a total turnover of 90.3 billion euros and is expected to continue to grow in the coming years. Total revenue growth was 7.4% in 2018 and IT companies are also positive about the future. More than half expect an increase in turnover or even a strong increase in turnover over the next three years.
ABN Amro expects growth of 5% in 2019 and 4.5% in 2020. ING is more conservative, but still expects growth of 3.5% in 2019 and 3% in 2020.
The industry is highly dynamic with new emerging players introducing new business models.
Many small businesses
The vast majority of IT companies are small. 56% of companies are self-employed and 88% have 5 employees or less.
0.6% of IT companies have more than 100 employees. This is above the Netherlands average of 0.4% for other companies. For a young sector, IT is mature in terms of size classes.
High Tech campus
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Despite the strong growth in recent years and the optimistic expectations, IT entrepreneurs are worried. The main obstacle is lack of personnel. Somewhere between 17% (according to ABN AMRO) and 40% (source: ING) say they suffer from this. The industry has always had a structural shortage of well-trained IT personnel, but due to economic growth and low unemployment, this problem has become acute and includes other function groups within the industry.
What does this information mean to you?
- The Netherlands is a healthy economy with companies that want to expand, but are not able to attract enough trained personnel
- In marketing terms, the Netherlands is a “Red Ocean”: Unless you are providing new or innovative IT services for this market, you have to work in a market where boundaries are defined and accepted. The competitive rules of the game are known. Foreign companies have to outperform the competition
- The expected growth in the IT industry and the simultaneous acute shortage of well-trained IT personnel indicates that an influx of well-trained IT personnel is needed. Global companies such as Cognizant and Capgemini therefore bring virtual or physical staff from Asia to work on projects in the Netherlands
What can you do to increase your chances?
- Demonstrate the availability of well-trained IT personnel (CVs, company profiles, references)
- Build relationships with local IT providers. They do have customers, but also a shortage of well-trained IT staff