Technology is constantly being billed as the saviour of sluggish economies, but as the industry continues to grow Europe appears to be struggling to evolve.
The claim comes in the form of Atomico’s latest report, The State of European Tech. The venture capitalist firm has been producing the report for a number of years now, though with the 5G bonanza creeping closer and closer, the importance of this edition is perhaps compounded. Companies and governments need to have a technology-first mentality to realise the potential, though it appears Europe is slow off the mark.
The research itself is very in-depth, and we would encourage those with a bit of spare time to have a proper investigation, as we are only going to focus on a couple of key data points. The two images below set the scene for us quite effectively:
As you can see, growth in the technology industry is outpacing traditional industries, though economies on the whole around Europe are still heavily dependent on more traditional segments. This might not necessarily be the worst landscape, though as you can see from the image below, the reliance is being placed on the industries which are slumping at best, and declining at worst. Unfortunately, the telcos are some of the worst hit, owing to the disruption poured all over the industry by the OTTs in recent years.
There will of course be numerous reasons for the failure to capitalise on the opportunities which are being laid out in front of us, the skills gap is one, digital divide another and perhaps government policy should shoulder some of the blame, though the situation isn’t as bad as some would think. There are shoots of potential emerging across the continent.
Starting on the investment side, Atomico points to the depth of investments being made across the continent in technology businesses. So far in 2018, $23 billion has been invested in Europe’s technology ecosystem, a $5 billion boost compared to 2013.
Looking at the workforce, Atomico claims there are now 5.7 million professional developers in Europe, up by 200,000 on 2017. What might surprise some is this number easily surpasses the 4.4m in the US, a number that stayed flat year on year. With the US the historical leader of the technology world, but facing a challenge from China, the workforce is certainly there for Europe to make a dent in this increasingly profitable bonanza.
Both of these facts will perhaps create more opportunity than is evident on the surface. Being heavily reliant on traditional industries is not a perfect position, though should there be an ambitious attitude the burgeoning technology world can of course enhance these businesses. This does depend on what most would consider risk-adverse managers, business leaders and policy makers spreading their wings, but the potential for disruption, evolution and growth is certainly there.