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Since 2000 there have been remarkable developments in the Estonian ICT sector, which have led Estonia to be one of the most advanced countries in ICT, both in CEE and Western Europe. The most recent developments in the ICT sector in Estonia are the following:
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77% of the population uses the Internet and 98% Internet banking;
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the implementation of e-Elections. In 2007 Estonia held its and the world's first general Internet election and in 2011 parliamentary elections ca 16% of all participating voters gave their votes electronically;
- in 2012 more than 62% of the estimated population of Estonia was enumerated in the e-census;
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more than 1,130 free Wi-Fi Internet zones around the country;
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the popularity of several e-Services (e.g. e-School, e-Health and other electronic Public Services) and electronic ID-card and ID related services.
In the field of Internet and data communications, significant investments have been made in the infrastructure of telecommunications, with fibre optic cables covering the whole country, and direct undersea connections to Finland and Sweden and links to Russia and Latvia, guaranteeing high-standard communications. By 2015 all Estonian households, enterprises and institutions will have access to the broadband network with the data connection speed of up to 100 Mbit/s.
In 2012, ca 2,600 companies were active in the ICT sector, contributing 5% of total sales in business activities in Estonia. The sector sales during the first three quarters of 2012 were 2,4 billion EUR which was more than during the whole 2010. Over 19,000 employees are currently working in the ICT sector – 2,8% of total employment in Estonia.
Total turnover of the ICT sector has increased rapidly over the past four years. In 2009 the sales totalled 1.6 billion EUR, in 2010 2,0 billion EUR, in 2011 3,0 billion EUR and in 2012 Q1-Q3 2,4 billion EUR.
The main activities in ICT manufacturing operations are producing computers and peripherals of computers, electronic components and printed circuit boards, communication devices, commodity devices, and magnetic and optic data carriers. The activities in the service line are mostly wholesale of information and communication technology, software publishing, telecommunications, programming, consultation, data processing, web-hosting, website operations, and restoring computers and communication devices.
Main advantages and strengths of the ICT sector in Estonia
Highly educated, skilled and low cost labour in ICT services offers profitable business opportunities
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Educated labour. High-standard development contributed by strong university and college education, with great efficiency and culture of work. The number of IT-field graduates has been 750-850 every year during past four years, indicating an ongoing interest in IT-based education and the accrual of an educated workforce in the ICT sector.
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Know-how. Due to remarkable research & development (R&D) projects, Estonian ICT entities have developed several solutions currently present only on the internal market, but ready to be exported internationally (incl. several e-Services, finance-telecom solutions and data center solutions). The know-how of Estonian ICT entities is world-class, establishing an advantageous basis for innovation solutions. Also, it is important to note that a critical number of specialists in some ICT fields are locating exclusively in Estonia (e.g. world-leading P2P based programs such as Kazaa and Skype have been developed in Estonia).
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Good language skills. The knowledge of English, Russian and Finnish meets the requirements of international companies.
Well-developed telecommunications and digital infrastructures offer a superior environment for business operation
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High digital infrastructure level. Estonian ICT entities have experience in implementing new ICT-solutions and reforms of the transition society. Estonian companies have had impressive success in the application of new technologies in some fields (e.g. banking and government) and in the development of intelligent user-friendly interfaces (e.g. in the fields of mobile telecommunications and e-Health applications). Estonia has been one of the top countries in terms of the accessibility of public e-Services.
Easy start-up opportunities and low running costs
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Great opportunities for starting a business. Great opportunities for foreign investors to enter the market via merger or acquisition of a smaller ICT company in Estonia, which has established a knowledge and customer portfolio of e-Services solutions. The running costs of companies are far lower than in other EU member countries and starting a business is possible within only two or three hours by using the e-Trade Registry services.
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Competitive labour costs. Numerous foreign companies have found Estonia to be a highly attractive location due to its low labour and operation costs. The average monthly salary in 2012 in the ICT was 1,425 EUR, which is two to three times lower than in Sweden and Finland, key investors in the Estonian ICT sector at present.
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Accessibility and low transportation costs. Estonian ICT companies have the potential to grow in product markets and niches, mainly due to their flexibility and the necessity of being close to the client, as Estonia is the junction of a logistics corridor. This is extremely important, as the whole world is experiencing increasing transportation costs.
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Simple and low taxes. An advantage is Estonia's system of low, flat-rate taxes. The system is simple, with no "hidden extras", and designed to encourage enterprise and maximize profits. The corporate income tax of 21% (of gross amount) applies on the distribution of profit only. The system of VAT (set at 20%) is in line with EU requirements, and social and health insurance of 33% is applied.
Favourable legislation and stable environment
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Favourable legal system. Estonia has been a leader in creating a favourable legal framework for ICT development by adopting such information-related legislation as the Digital Signature Act (2000), Public Information Act (2001) and Telecommunications Act (2000).
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Openness to innovations. Estonia is open to all new information and telecommunications innovations. The government supports R&D extensively and is very flexible in adjusting legislation to fit new ICT innovations. Due to the broad accessibility and the widespread usage of the Internet in Estonia, implementing ICT innovations among Estonians has turned out to be very effective.
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Low level of bureaucracy. Estonia has a low level of bureaucracy, which increases the efficiency of operations in the ICT sector.
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Entrepreneurship support. Companies can apply for several support packages through Enterprise Estonia. Support areas include starting or developing a company, export and innovation, and product development.
Find out what business opportunities Estonian ICT sector offers http://www.investinestonia.com/en/ict/
Sources of additional information
Tallinn Technical University (Faculty for Information Technology)
An opportunity to gain information about R&D projects developed in the university. Further information about education, the services offered and contact details for the faculty.
http://www.ttu.ee/faculty-of-information-technology
Institute of Cybernetics
Areas of research: applied mathematics, mechanics, computer science, control systems and language technology.
http://www.ioc.ee/index.php.en
Tallinn Technival University Innovation and Business Center
Tallinn Technical University Innovation and Business Center is active in the following fields:
- linking R&D and business activities by communicating the needs of industry to research institutions and facilitating the transfer of technology and know-how to companies;
- initiating and supporting small enterprises (e.g. spin-off companies from universities) that are developing research and/or technology-based products and services;
- creating an outstanding physical and cultural environment for innovative enterprises to participate in international R&D, technology, investment, marketing and other networks and events
http://www.ttu.ee/industry-cooperation
The Association of Estonian Information Technology and Telecommunications Companies
The Estonian Association of Information Technology and Telecommunications (officially abbreviated as ITL) is a voluntary organisation, whose primary objective is to unite Estonian information technology and telecommunications companies, to promote their co-operation in Estonia's development towards an information society, to represent and protect the interests of its member companies and to express their common positions.
http://www.itl.ee
ICT Demo Center
The ICT Demo Center in Tallinn, Ülemiste City is the place to see Estonian ICT in action. Its purpose is to showcase the nation's ICT solutions all in one facility, providing visitors with hands-on examples of what they are and how they work. Though it presents individual products, its main focus is offering integrated, holistic solutions.
http://e-estonia.com/ict-demo-center
Estonian Information Society Yearbook 2010 (pdf)
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