Germany is the largest country in the European Union with a population of 83 million people. Its economy is the third largest in the world, following the United States and Japan. Germany's neighbor to the west, France, has the fourth largest economy in the world and a population of 60 million people. Together, Germany and France represent 44% of the buying power in the 15-country European Union compared to 18% for the United Kingdom.

Germany is comprised of 16 states, or "Länder," that are comparable in governance to the 50 states in the United States. One of these "Länder" is the Saarland. This part of Germany, unknown to most until recently, is rapidly developing into one of the high growth e-commerce international business clusters in the European Union. One might think of Amsterdam and Brussels as competing in this space, but both these venerable business centers are burdened with a very pricey labor market, expensive office space and a severe shortage of multilingual employees.

The Saarland is located approximately 100 miles southwest of Frankfurt, Germany's International hub for airlines and top commercial center. The Saarland, on the border with the Alsace-Lorraine region of France, is 200 miles east of Paris and also shares a frontier with Luxembourg. The Saarland has a population of just over one million people with it's capital, Saarbrücken, about the size of Peoria, Illinois.

Educated IT workforce

Education is very important to the people of Germany, and this is also true in Saarland. There are two large universities in Saarland: University of Saarland (17,000 students) and Hochschule für Technik und Wirtschaft (4,000 students). Also there are several research institutes that work closely with businesses that locate in Saarland. These include the German Research Center for Artificial Intelligence, The Institute for Business-Oriented Information Science, the Max Planck Institute for Computer Science, the Fraunhofer Institute of Biomedical Engineering, the Forgis Institute, KIST, and the Institute for New Materials. These institutions of higher learning provide a solid and exciting framework for the people and the businesses of Saarland, with over 1,000 students studying foreign language translation at any given time.

The most important of these organizations for the Information Technology industry, is the IAI, the Institute for the Society for the Promotion of Information Sciences. IAI is one of only two such institutes in Germany, charged with research and development of multilingual language processing, in particular, machine translation. The Institute is actively seeking information technology firms to partner with in order to foster the commercial adaptation of new translation and related technology into the marketplace. Its web site is www.iai.uni-sb.de/en/corporate.html.

Multilingual on call

European consumers are becoming more cost conscious and have more choices because of the tariff changes with the European Union agreements. One of the results of this is that telemarketing is growing at a rate of 25% annually. While European consumers are increasingly making purchases through the Call Center channel, most Europeans are very sensitive about the language capability of the person with whom they are talking. The person in the Call Center must not only speak the language fluently, but in many cases it is important for the person to have an accent that is readily accepted throughout the country. Saarlanders speak their German and French with accents that meet this standard.

Equally important, is the growing demand by the thirty Saarland call centers for custom software development. A good example is the need for them to customize their CRM software to support the delivery of customer and technical support services to clients in the European Union. As Germany's number one call center cluster, the demand by the Saarland Call Centers for a variety of software development services is experiencing continued growth, as this bilingual part of Germany solidifies and expands it position as a leading EU e-commerce center.

Saarland is a non-urban area, and that translates to lower costs for real estate, personnel, and supplier support. Rental and building costs are 20% lower in Saarbrücken than in larger cities such as Frankfurt, Amsterdam, and Brussels, and these costs are 40% lower in the outlying villages and towns of Saarland. Salaries and wages are 20% or more for information technology professionals compared with the rest of Germany. These cost advantages continue to fuel the development of fulfillment operations to support the processing of orders over the Internet.

As to the demand side, software development companies that want to locate a sales and technical support office close to a Call Center or in the middle of a variety of world-class computer systems development clients will find in the Saarland an excellent choice. Fifty percent of Europe's Gross Domestic Product (GDP) is located within a 200-mile radius of the Saarland. The key markets of Frankfurt, Paris, Luxembourg, Brussels, Zurich and Geneva are a 45 minutes to a 3-hour road or train trip from the Saarland.

While location and people are key factors for successful and economic IT operations, there are other requirements that must be met. International financial support is available in Saarland through corporations such as Deutsche Bank, Credit Lyonnais, and Citibank. There are several marketing firms that provide advertising, public relations, direct marketing, marketing research, and promotional support. There are also "mail house" companies that support direct mailings for marketing, billing, and customer information needs. And there is a choice of credit card authorization companies that offer pan-European approval information.

Government incentives

The government of the Saarland offers a range of incentives to new companies that wish to engage in business in their state. Two of the more relevant incentives for information technology firms are the capital equipment incentive and the training incentive.

In accordance with the Joint Project for the Improvement of Regional Economic Structures, Saarland provides 18% direct subsidy for a three-year period for investments in equipment, buildings (excluding land and motor vehicles) and office leases. In the fourth, fifth, and sixth years, the company can apply for a supplementary subsidy of 15% by increasing its staff by 15%. The training incentives are up to 80%, covering up to 800 hours per employee per year. In addition, should a company hire the unemployed, it can obtain, in addition, a salary subsidy of approximately 30-50% of wages for six to twelve months. Other support is available depending on circumstances. Collaboration with gwSaar can also help keep Government regulations to a minimum. When the Call Center for America Online (AOL) was established in Saarland, the first call was taken just eight weeks after the press announcement.

Germany is a big country that has undergone significant changes in the last few years, and its regions have many differences. There are many myths about "Germany" that are outdated or do not apply to every part of Germany. There are many people, for example, who believe that businesses are not allowed to operate 7 days a week, 24 hours a day. Saarland has businesses that engage in round-the-clock operations, as permitted by law. As Joachim Herzog of Bertelsmann Distribution states: " The main reasons for choosing the Saarland is its central location in Europe, its ability to provide a qualified, multilingual workforce, and the flexible and non-bureaucratic practices of the state government."

Bernard F. Sergesketter is Chairman of SERGESKETTER & ASSOCIATES (www.sergesketter.com), a consulting firm located in Winnetka, Illinois, USA. He is a former Vice President–Global Markets for AT&T. E-mail: theath@sergesketter.com.

Marshall S. Ferrin is Director, International Business Development, The Mason Enterprise Center (www.masonenterprisecenter.org/intl), George Mason University, Arlington, Virginia, USA. E-mail: mferrin@gmu.edu.

Additional Web Links

• gwSaar, GmbH - www.gwsaar.com
• Welocalize.com - www.welocalize.com
• German Research Center for Artificial Intelligence - www.dfki.uni-sb.de
• Max Planck Institute for Computer Science - www.mpi-sb.mpg.de