[krab]

A bit more than half of the added value in Germany is created by companies with less than 500 employees and less than €50M yearly turnover (Mittelstand). There is in fact a lot of specialized machinery vendors providing significant value.

Not sure what are their IT needs, but I guess the larger SMEs are the target market for this service.

[arinlen]

> Not sure what are their IT needs, but I guess the larger SMEs are the target market for this service.

I'd argue that SMEs are the ideal market for cloud services.

Small shops with even smaller teams comprised of jack-of-all-trades are willing to pay a hefty premium for managed services that allow their teams for get things done without having to do everything themselves.

Once your company grows beyond the definition of a SME, its able to roll their own infrastructure and do their thing in more cost-effective ways that don't involve handing over their core business to external and even foreign companies.

[pjmlp]

At the beginning, then they hire the likes of HCL, Infosys, Wipro, TCS,.... because IT isn't their core business, and C levels see it as a cost center and distraction.

Eventually the few devs left get "sold" to the contracting company, with the architects left as management for the contractors.

Have seen this happening already several times since 2007.

[pjmlp]

Which is why most of them hire consulting shops, as they see IT as a pure cost center.

[stnikolauswagne]

The irony is that a lot of the consulting shops that specialize in assisting the mittelstand are utterly horrendous money pits. In my capacity as CTO for a german mittelstand company I have had to fire over 80% of the consulting shops i worked with for either blatant incompetence (developing a plugin that fits none of the design document, deploying it straight to production and in the process blowing up the entire API) or insane overcharging (24 hours of billed work for an adjustment that took me less than an hour of time to reimplement when the next update inevitably broke their adjustment). Everyone else I have talked to in the field has had similar experiences, with truly positive experiences being very rare, yet all the owners I talk to refuse to hire qualified in-house staff because the prospect of paying 60k+ for a SWE is unthinkable.

[zasdffaa]

Sounds like a halfway house of getting good working relations with contractors (as individuals not companies) might be a way out of this. I mean a working relationship, not just one based entirely on pay.

(disclaimer, worked as a contractor)

[pjmlp]

I have been doing consulting in Germany since 2007, after the Nokia sites in Germany went bust.

Usually it boils down to escalations where management gets some goodies from the offshore agency and then everything is good again, from management point of view, naturally.

[ChuckNorris89]

>the prospect of paying 60k+ for a SWE is unthinkable

Everything wrong with EU/German tech industry and why it will never catch up to the US, in a nutshell basically.