Strong Karlsruhe IT as a crisis anchor

Karlsruhe’s strong IT sector is paying off during the coronavirus crisis. Because digitalization is the trend and IT companies are coming through the pandemic relatively unscathed, trade tax revenues in 2020 have fallen less than in other cities.

“Municipalities with large automotive plants and many suppliers to the automotive industry have had significantly more problems,” says Matthias Hornberger, Chairman of the CyberForum high-tech entrepreneurs’ network. In recent years, the proportion of trade tax revenue generated by IT companies has risen continuously from eleven percent in 2007 to almost 50 percent today.

Expressed in figures, this means In Karlsruhe, trade tax revenue of 325 million euros was expected in advance for 2020. By comparison, the figure for 2019 was 350 million euros. After the lockdown, this estimate was revised downwards by 65 million euros. Currently, the city treasury is conservatively forecasting trade tax income of 265 million euros for 2020. However, if the economy continues to pick up, it could even be ten million euros more. “Things are looking better than initially expected,” says the city treasury with regard to the municipal budget.

Digitalization will continue to advance

For Hornberger, however, the IT sector has been an important crisis anchor not just since the start of the corona pandemic. “Digitalization will continue to advance after Corona,” he predicts. One advantage of Karlsruhe’s IT scene is the “broadly diversified” network of several hundred small and medium-sized companies. “This means that Karlsruhe is not dependent on the success of a few large companies,” says Hornberger.

According to press spokeswoman Kristina Stifter, the transport service provider PTV Group has only postponed a few orders during the crisis so far. “The public sector has become cautious when it comes to investments,” says Stifter. On the other hand, local authorities now have more time to look at innovative concepts for optimization and this could give the industry a boost sooner or later.

At INIT , the coronavirus crisis has even led to new orders. “Digitalization helps us keep our distance. That’s why cashless payment solutions were in demand,” says INIT press officer Andrea Mohr-Braun when asked by karlsruhe.digital. The core business has hardly been affected by the crisis. Neither INIT nor the PTV Group had to announce short-time working.

Some companies have been hit with the full force of the crisis

However, Hornberger warns against excessive euphoria, saying that the IT sector should by no means be seen as a crisis winner. “Anyone offering digital solutions for the trade fair business or the hospitality industry has of course been hit with the full force of the crisis,” he says.

One of these companies is Nesto Software GmbH. The Karlsruhe-based start-up has developed a software solution for demand-oriented staff planning in the food service industry. “When the restaurants had to close in April, we didn’t get any orders,” says Nesto founder Felix Kaiser. And when the first customers filed for bankruptcy, there was already a lack of budgeted income. With short-time working and a lot of perseverance, Nesto managed to get through the summer and Kaiser now sees light at the end of the tunnel again.