Information Technology Landscape in

ESTONIA

                                Software Development                              

Estonian software industry began in the late 80's with  IBM PC clones and FoxBase(Pro) DBMS into all sizes of software projects.

During the next period (1993-1996) a lot of new software and technical facilities were purchased and updated that triggered improvements in the quality of information technology. Further software sector developments also prompted the government to make first steps towards anti-piracy legislation.  Development during 1997-1999 has created a situation where most average and large projects use local area networks, client-server architecture, support data-warehouse paradigm etc. The percentage of using licensed software is increasing. All these changes are supported by the new legislation.

Today's Software Market

The two largest Estonian software firms are the information technology divisions of the two biggest Estonian banks (Hansabank and Estonian Union Bank). The IT divisions of these two banks employ over 100 programmers. Other software companies are mostly small and employ 20-50 people. Technology divisions of banks have the most favorable working conditions having the better facilities and no problem with financing. As a consequence, these facilities possess the newest hardware and can support all the programming novelties such as component technology, three level systems, data warehouse paradigm, Internet-banking etc. In addition, the banks employ a lot of Estonian best IT specialists from such well-known schools as Tallinn Technical University.

To benefit from local expertise, many foreign companies have invested in Estonian software houses and started to use Estonia as their base for servicing neighboring markets. Others have outsourced work to Estonian companies for the development of their software products by Estonian specialists.

Therefore, the software companies comparable to the ones owned by big banks are usually the subsidiaries of or established by such well-known international companies as Microsoft, Oracle, IBM, etc. The parent company supplies capital and training. 

Some Estonian software companies mostly develop software for export, for the clients outside the country. Others focus exclusively on the local software needs. This group includes firms, which produce, for example, financial software for Estonian companies, Estonian language-specific text editors, develop Estonian registers or databases etc. Many programming companies are small and are owned fully or in part by foreigners, while almost all of the producers of bookkeeping software for the domestic market are controlled by Estonian capital and private investors.

Players

According to Ranking Estonia's Top Computer Firms article from DT Media Group Estonia's software companies are doing better and better thanks to the government activities aimed at eliminating software piracy. Software companies received very high scores in 2000 among all Estonian computer companies in terms of profit growth and return on assets.

Second place in 2000 was taken by Proekspert, a software company which is 90% owned by private investors and 10% by the stock company Bioekspert. The company received a high score, and it has done well because of growing demand for software development and programming. Most of the company’s clients are foreign.

The third highest score went to Assert, a computer retailer and programming company that is owned by Cell Network AB. Assert does programming work for foreign clients, too, and only 7% of its sales have been to Estonian clients. Assert also sells brand name hardware.