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The industry association Bitkom calls it a “bright spot in the recession”: it estimates that the German ITK market will grow by 4.6 percent to a volume of 232.8 billion Euro in 2025.
The KfW (Kreditanstalt für Wiederaufbau) has just reduced its GDP growth forecast for the new year in November 2024 from 1.0 to 0.5 percent. The Council of Economic Experts (Wirtschaftsweisen) expects only a 0.4 percent increase. In this context, the growth figures expected for the German digital industry are a ray of hope, as Bitkom reports in its forecasts, which are based, among other things, on IDC data.
These figures even exceed the growth rates of the two previous years, which were plus 2.4 percent in 2023 and plus 3.3 percent in 2024. The forecasts, driven mainly by AI, almost reach the “ITK special economic boom” triggered by the coronavirus in the second and third years of the pandemic, when revenues increased by 6.6 and 6.8 percent.
AI is accelerating rapidly
Contrary to fears that AI will also cost jobs, Bitkom expects around 20,000 new jobs to be created in the ITK sector by 2025. At that point, the industry will employ 1.371 million people. In 2024, only about 9,000 new jobs were created.
“The digital economy offers a ray of hope in difficult times, boosts revenue, and creates new jobs. Meanwhile, the ITK sector is Germany’s largest industrial employer. According to forecasts, the business of most companies in the IT and telecommunications industry will run positively in 2025. The direction in IT is right,” says Bitkom President Dr. Ralf Wintergerst. At the same time, he links this with demands on politics to “do everything to accelerate the pace of growth.”
Artificial Intelligence (AI) is one of the key drivers of this development. According to Bitkom, revenues from AI platforms for training and operating AI applications are expected to increase by a substantial 43 percent to 2.3 billion Euros by 2025.
Collaboration and Cloud Also Driving Growth
Revenues from collaboration tools like Microsoft 365 for teamwork and mobile working in companies are expected to increase by 12 percent to 1.4 billion euros, while those in the security software sector are projected to rise by 11 percent to 5.1 billion euros.
The cloud market is anticipated to grow by 17 percent to a volume of 20 billion euros, with revenues for IT services increasing by 5.0 percent to 53.8 billion euros. Hardware, once a concern for the ITK industry before the pandemic and the so-called “special economic boom,” is also seeing an upturn due to these developments. Revenues in this sector are expected to rise by 3.3 percent to 53.7 billion euros by 2025. The biggest growth driver here is Infrastructure-as-a-Service (IaaS), which includes rented servers, network, and storage capacities. This segment is projected to increase by 24.4 percent to 6.2 billion euros, the market for wearables by 5.1 percent to 2.6 billion euros, and for mobile PCs by 4.5 percent to 6.0 billion euros.
Only traditional consumer electronics continue to decline. Following a negative growth of 5.8 percent in the previous year, Bitkom expects a further revenue decline of 7.5 percent to 7.2 billion euros. The reasons for this, according to Wintergerst, include persistent inflation and economic uncertainty.
ITK Infrastructure Benefits from Development
When it comes to the ITK market, investments in infrastructure are picking up again, according to Bitkom. Overall, the market is expected to grow by 1.8 percent to 74.3 billion Euro. Telecommunications services account for the lion’s share with 53.5 billion Euro, although the increase of 1.4 percent is rather modest.
Revenues from TK infrastructure, on the other hand, are set to grow by 3.5 percent to 8.0 billion Euro, and those for TK end devices by 2.7 percent to 12.8 billion Euro. “Network operators are massively accelerating the expansion of gigabit networks and mobile communications,” praises Wintergerst.
Overall, the investment willingness of ITK companies remains high. 17 percent of them plan to invest more in 2025, 59 percent aim to keep their spending constant, and only 23 percent intend to scale back. Particularly large sums are flowing into software, research, and development.
Technical and Organizational Solutions Available
Solutions to these challenges already exist, as both national and international examples demonstrate. Technological innovations such as the so-called micro-trenching, which Axians successfully employs, enable faster, more cost-effective, and sustainable laying of fiber optic cables, as I have previously explained for Digital Chiefs. This method involves cutting narrow trenches, significantly reducing construction time. Utilizing existing infrastructures, such as power lines, could also accelerate the rollout. Additionally, overhead installation of fiber optic cables allows for a much faster and more cost-effective expansion, particularly in rural areas, as this article illustrates.
At the same time, Open Access models, successfully implemented in Sweden, could also provide new impetus in Germany. In Sweden, once fiber optic cables are laid, they must be shared by all providers. This prevents costly and inefficient duplicate structures and allows network operators to focus on new expansion areas. Another exemplary case is Spain, where fiber optic rollout is centrally coordinated. Simplifying bureaucratic hurdles and clear prioritization significantly accelerate progress here. In Germany, a centrally controlled strategy could also help overcome fragmented structures and make the rollout more efficient.
Germany ranks 4th internationally
According to projections, the German ITK market will reach 4th place in 2025 with a global share of 4.1 percent, just behind Japan (4.6 percent). Estimates predict a global market growth of 6.6 percent, reaching a volume of 5.2 trillion euros. The USA takes the largest share with 38.8 percent, followed by China with 11 percent.
India’s digital economy is growing the fastest internationally at 8.0 percent, the USA’s growth rate is 7.3 percent, and the rest of the EU excluding Germany still achieves 7.1 percent. However, the expected ITK revenue for Germany lags slightly behind the global revenue growth of 5.4 percent.
Bitkom President Achim Berg accompanies the projections with suggestions for further strengthening the IT industry. For instance, more capital needs to be mobilized for companies, and the shortage of skilled workers needs to be alleviated. Moreover, the time is ripe for a dedicated digital ministry at the federal level. Furthermore, Germany must become digitally more sovereign and free itself from one-sided dependencies.
Source header image: Adobe Stock / WS Studio 1985