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Sunday, May 15, 2005

IT & Productivity In Europe

(Via Informationweek) European business technologists see higher spending on IT as helping narrow the productivity gap between the United States and Europe, survey finds.

The so-called jobless expansion of the U.S. economy this decade came from American companies exploiting their IT investments .European business technologists see their businesses trailing their American-based competitors in the global marketplace when it comes to productivity, and most contend that increased investments in IT will help close that gap. IT services firm Siemens Business Services, reports that more than half - 53% - of surveyed European CIOs and chief technology officers say they need to increase spending on IT to catch up with American productivity levels. One in four contend their companies need to outspend Americans on IT to equal U.S. productivity levels.
Citing research by the IMF &IT research firm IDC, Siemens says investments in IT accounted for 2.3% of the gross domestic product, the value of goods and services produced, among "old Europe" - the 15 original European Union nations, known as the EU-15, in 2004. U.S. IT investments amounted to 3.4% of U.S. GDP last year.A related paper is available here. Productivity in Europe is improving, albeit at a slower pace than in the U.S. Productivity in the EU-15 rose 1.3% in 2004, up from an anemic 0.9% in 2003. U.S. nonfarm productivity rose 4% last year, according to the U.S. Labor Department. On average, an analysis by the Conference Board shows, the productivity level of the EU-15 was at 92% of the U.S. level in 2004. Labour regulations,business culture,perceived higher quality of european products demanding more investments in automation were reported as other related factors that could drive productivity high in Europe. No wonder European IT services offshoring is seen to be increasing recently.

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