Estonia's tech sector weathering downturn better than most

Kaarel Kotkas (front, center) and some of the Veriff team (picture dated 2020).
Kaarel Kotkas (front, center) and some of the Veriff team (picture dated 2020). Source: Veriff

Thanks to a wide global reach and the types of service offered, Estonia's famed tech sector has not been as heavily hit as other parts of the economy, ETV news show 'Aktuaalne kaamera' (AK) reported Friday.

If anything, there has been some growth, as firms look for efficiency gains via improved IT systems, AK reported.

Hannes Linno, development director at Perforce Software, a major international which, among other things, develops software configuration systems, told AK that: "When the economy contracts, firms start looking for ways to save money and how to conduct their current activities more efficiently. Very often the solution to this lies in better use of IT services."

Kaarel Kotkas, CEO of secure online ID firm Veriff and a pioneer in the e-residency program, telling AK that: "The tech sector is a way for the whole world to operate more efficiently, and the technology sector is also growing at a time when more efficient decisions need to be made," said

Ats Albre, head of Nortal Estonia, a  strategic change and technology company headquartered in Tallinn, said that the IT sector in Estonia is very export-oriented and dispersed globally, which also helps.

Albre said: "Estonian companies are represented in different markets, and thanks to that, we continue to be able to deliver quite well. Second, many companies today are focused on the search for efficiency, and IT is something which enables this. So, in some cases, even investments increase. Third, in the current circumstances , while energy prices are increasing, this is not a very large part of the IT sector's input."

While the Estonian economy grew by only a modest 0.6 percent in the second quarter of this year, the main contribution to this growth was made by the IT sector. 

Notwithstanding Veriff's growth, and that of the sector in general, however, tech and IT is not completely hermetically sealed from the currents of the international economy, Kotka said.

"The tech sector is not untouched by what is happening in the capital markets, and growth at any cost is no longer the right route to take, meaning value is also viewed more through the profit margin that companies can create," Kotkas said.

Ats Albre noted that there was no obvious decline in demand in Nortal's international markets, in the US, Germany and Finland, nor at home, though customers have seemingly become more cautious than before.


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Editor: Andrew Whyte

Source: AK

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