Estonian IT Services Export to Germany Increases: A Crucial Link for Cybersecurity and Digital Innovation for the German Industry

The landscape of cybersecurity and digitalization needs in Germany is rapidly evolving, with demands far exceeding what local market participants can currently offer. In response, Germany has established the Cyber and Information Space (CIR) as a new branch of the Bundeswehr, emphasizing the critical need for robust cyber defence mechanisms. Furthermore, German companies are encouraged to significantly increase their investments in cybersecurity, highlighting the growing importance of this sector.

German Demand Meets Estonian Innovation

The cybersecurity market in Germany is set for explosive growth, with expected revenues of €6.67 billion in 2024, primarily dominated by security services with a projected market volume of €3.49 billion. With an anticipated annual growth rate (CAGR) of 9.79% from 2024 to 2028, the market volume is forecasted to increase to €9.69 billion by 2028. This upward trend underscores a critical opportunity for Estonian IT and digital service companies known for their leading-edge solutions in digitalization and AI.

Germany imports 22% more of IT services

Estonia has shown remarkable growth in the export of IT, computer and telecommunication services. In 2022, these service exports from Estonia reached €2.3 billion, marking a 23% increase from the previous year. The last quarter of 2023 alone saw nearly €1 billion in exports, reflecting a 17% growth compared to the same quarter the previous year. Specifically, the German import volume of it, computer and telecommunication services from Estonia was €205 million in 2023, an increase of 22% from €160 million in 2022, highlighting Germany's critical role as Estonia's fifth-largest trading partner. In Germany, the average spending per employee in the cybersecurity market is expected to reach €154.60 in 2024, according to Statista, a market insights company.

Success Stories: From Wood Products to Aerospace

Estonian companies achieve remarkable successes in various sectors. Barrus, an Estonia-based manufacturer of high-quality laminated wood products, is a prime example. With a production of 75,000 m3 of laminated timber annually, 80% of which is exported to Scandinavian markets, Barrus' commitment to digital innovation has optimized production and streamlined resource use, securing its leadership position in the wood industry.

Another success is Helmes, an Estonian IT company that has carved out a space in the aerospace industry by becoming an official supplier for Airbus. The collaboration has already led to a custom-made IT solution that improves Airbus's production process, demonstrating the potential of Estonian innovation on a global stage.

Driving Future Growth Through Digitalization

The collaboration between Barrus and the digital solution provider OIXIO illustrates the transformative impact of digitalization. By harmonizing display systems, optimizing wood flow, and leveraging real-time data, Estonian companies not only enhance their operational efficiency but also set new standards in their respective industries.

Estonia's expertise in digital innovation, combined with its growing influence on the German market, offers significant potential for future collaborations. As Estonian companies continue to provide state-of-the-art solutions in cybersecurity, digitalization, and beyond, their role in shaping the global digital landscape is undeniable. The synergy between Estonian innovation and the needs of the German industry is a powerful example of how international cooperation can advance technological progress and economic growth.

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