European Software Firms Defy Economic Climate To Invest In R&D

Europe’s biggest software firms increased research and development investments by 20 percent in the last twelve months, defying the ongoing economic challenges facing the continent, according to the eighth edition of the Truffle 100 Europe index.

The annual survey of Europe’s one hundred largest software companies conducted by private equity firm Truffle Capital with the support of Neelie Kroes, European Commissioner for the Digital Agenda, and in collaboration with IDC and CXP Group, reaffirmed Germany’s position as the leading European country, with the UK second and France third.

Truffle Capital 100

“Europe depends now more than ever on its innovative sectors in order to be competitive,” said Máire Geoghegan-Quinn, European Commissioner for Research, Innovation and Science. “The Commission recently surveyed some of Europe’s companies that invest the most in R&D, and they told us that they expect their investments in research and development to grow by an average of 4 percent annually over the period 2012 to 2014.

“The front runner in this group is the software and computer services sector, which expects R&D investment to grow by a very impressive 11 percent per year on average.  This is a welcome call to arms in the fight for growth and jobs.”

The top three individual companies remained the same as SAP, Dassault Systems and SAGE all recording podium finishes, with Hexagon and Wincor Nixdorf fourth and fifth, as revenues among the one hundred businesses increased by ten percent to €4.1 billion, but profits shrank by 8.7 percent to €5.8 billion.

UK places third

Germany boasts 14 companies in the index and accounted for 38.4 percent of total turnover, ahead of the UK, whose 22 firms posted 16.4 percent and the Netherlands, which contributed 12.7 percent despite having only seven companies.

The survey says firms are targeting growth rates of between five and ten percent next year and 93 percent say they will continue to hire in 2014. They also predict that the cloud and mobile applications will be the biggest trends next year.

“Despite an 8.7 percent decrease in profits, [respondents] invested more than they earned, showing faith and optimism in the future,” said Truffle Capital co-founder and CEO Bernard-Louis Roques. “ As a result, R&D investments went up 20 percent and the number of R&D jobs rose by 6 percent. With 63,000 qualified jobs, low outsourcing numbers and €6.8 million invested for development works on future products, the software industry remains an unwavering catalyst for innovation, a key driver of European economic growth, and plays a critical role in job creation policies for generations to come.”

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