These are the findings of the first ever survey of Norwegian ICT industry export revenue, conducted by Menon Economics on behalf of the interest group ICT Norway and Export Credit Norway.
Eighth-largest export industry
In 2017, the ICT industry achieved total international sales of NOK 165 billion, including NOK 136.5 billion generated by foreign subsidiaries of Norwegian companies. Pure exports from Norway amounted to NOK 28.5 billion. Telenor ASA is by far the largest international operator, contributing almost NOK 100 billion in export revenue. Other key contributors include Atea, Evry and Visma.
Considerable export potential in the industry
Otto Søberg, Export Credit Norway
“While the ICT industry is Norway’s third-largest in terms of foreign sales, it is the eighth-largest in terms of pure exports. This tells me that the industry has considerable export potential,” says Export Credit Norway CEO Otto Søberg.
The Norwegian ICT industry’s primary export markets are Sweden, Denmark, Germany, France, the UK and the USA. Overall, exports to these countries account for 61% of total industry exports. Norwegian deliveries to the key Chinese market totalled NOK 300 million in 2017.
Growth, but reduced market share
Menon Economics estimates that ICT exports from Norway increased by about 30% in the period 2012 to 2018, making the ICT industry one of the strongest export-growth performers during this period.
Despite considerable export growth, the Norwegian ICT industry is losing international market share. In the period 2010 to 2017, Norwegian companies’ share of global ICT service exports declined from 0.8% to 0.4%, due to the concentration of Norwegian exports in regions with somewhat lower forecast economic growth rates.
The survey also shows that ICT companies anticipate 20% growth in the period to 2020, implying average annual sales growth of 7%. This is considerably higher than the figure forecast for Norwegian industry as a whole for this period.
“This survey underlines the importance of the ICT industry for value creation in Norway. However, the global ICT industry is experiencing explosive growth, and Norway will lose international market share unless we achieve even higher growth. For ICT Norway, this report represents an important initial identification of what is required to promote efficient growth among Norwegian ICT businesses,” says ICT Norway Director of Industry Policy Liv Freihow.
Barriers to growth
ICT companies encounter a range of barriers to international growth. Almost half (48%) of respondents listed in-house capacity as one of the top three growth barriers. Access to expertise is also a major drag factor in terms of increasing capacity, with some 29% of companies identifying a lack of ICT expertise in Norway as the greatest barrier.
“To avoid losing market share, Norway must do more to help Norwegian businesses make the enormous investments required for international growth. Expertise and capacity are bottlenecks. It is critical that Norway creates more places for students on ICT courses, but the 2019 fiscal budget makes no provision for this. ICT Norway hopes that this analysis will motivate the Government to take steps,” says Freihow.
One in three respondents (30%) identified a lack of capital as the greatest barrier to international growth. This well-known problem is the reason for Export Credit Norway’s efforts to tailor its solutions to the needs of SME exporters in recent years, including through increased marketing and simplification of loan documentation. The Menon Economics report provides valuable input on further facilitation.
“International growth in the ICT industry would probably be even stronger with improved general access to capital. Export Credit Norway has funding available in various categories, and is keen to familiarise the ICT industry with its products and services. Our financing solutions can help to make Norwegian ICT tenders even more competitive, so we encourage businesses to contact us before submitting a bid to a foreign customer,” concludes Otto Søberg.
Published 12. Dec 2018