Estonia's, and it's cemented its position as one of the world's e-government frontrunners. Now, the country is turning its attention to getting its technology companies to look beyond the home market in favouring of conquering new territories abroad.
The two tech companies in Estonia responsible for generating the most export sales are both foreign-owned: Microsoft's Skype and Israeli-led, Isle of Man-headquartered gaming software company Playtech.
The two companies each employ over 500 people in Estonia (Playtech is one of the biggest taxpayers in the private sector in Estonia's second city, Tartu), while Skype is still the largest of the pair, contributing over €32m or 18.7 percent of Estonia's total IT exports, compared to Playtech's €17m and 9.9 percent.
The two companies were the biggest tech exporters when the Estonian Association of Information Technology and Telecommunications (known as ITL), a trade body for Estonia's information technology and telecommunications companies, created an export-oriented development plan for the ICT sector for the next four years.
While Skype and Playtech were still the country's largest exporters when ITL revisited the numbers in 2011 – and in all likelihood remain so today - Estonia's homegrown firms are increasingly looking outwards.
For a good example of how the focus of Estonian IT companies has moved from the home market to export, look at Nortal — the biggest IT services company in Baltic States, according to Lithuanian investment bank Prime Investment. The company, formerly known as Webmedia, was sixth placed in ITL's export sales ranking for 2011 with €4.2m. In the same year, it made a bold acquisition of the Finnish software company CCC. The deal, along with other strategic moves, helped to increase its export sales to €12.4m in the first half of 2012 alone. The Finnish investment seems to be paying off – according to the CEO of Nortal Priit Alamäe, almost 50 percent of the company's sales now come from Finland.
Nortal, which also has subsidiaries in Lithuania, Serbia, Romania, Russia, Qatar (where, in 2009, the company signed a deal for the development of the state's online government services), Oman and Finland collects 75 percent of its revenue from export. Interestingly, one of the most successful Estonian start-ups, ZeroTurnaround - which develops tools for Java developers - is actually a spin-off of Nortal.
Another notable ICT-exporting firm is Regio, a mapping and GIS software development company. It has a global sales and distribution agreement with Ericsson, and its clients are mobile operators in Slovakia, Saudi Arabia, United Arab Emirates, Argentina, Mexico, and Ukraine. It's also the only local company in Europe that Google has used to do the mapping for Street View.
Looking for new territories
While new local start-ups hope to conquer Western markets, some of their predecessors are already meeting with some success abroad (Transferwise in UK, Erply and ZeroTurnaround in the US, for example) while more mature, traditional companies have tried to work together to find markets in regions such as the Persian Gulf where they're sharing their experiences with local governments and companies.
Take Oman. Last April, the minister of economic affairs and communications, Juhan Parts, and Oman's minister of commerce and industry, Ali Masoud Al-Sunaidy, signed an agreement promoting cooperation in ICT between two states and enabling Estonian IT companies to develop their businesses in Oman.
"Oman is really interested in Estonia's ICT sector experience, especially in e-government, cyberdefence and mobile software. Oman is planning to send a delegation of IT companies to Estonia and we also talked about the possibility of teaching Omani students in Estonian universities," Parts said at the time.
Now nearly at the end of the ITL plan, Estonia's ICT industry has grown significantly and in some areas has already exceeded the targets the organisation set.
In 2009, there were 1932 ICT companies in Estonia, only 42 percent of which sold their products and services outside Estonia, with export only making up eight percent of their total sales. In 2011, the number of ICT companies had grown to 2144, two-thirds of whom were exporting and drawing 19 percent of sales from abroad.
Between 2009 and 2011, the value of exports from Estonia's ICT companies effectively doubled, according to ITL: up from €136m in 2009 to €303m in 2011. It's IT, rather than telecoms, that is seeing the most growth: IT contributed €170m to 2011's ICT export outcome. In 2009, it contributed just €72.4 – more than doubling in two years.
According to industry estimates, the most export-capable areas of the country's ICT sector back in 2009 included financial services, government and healthcare IT, as well as datacentres.
Among the various sectors that make up Estonia's ICT industry, the biggest growth in sales over the two-year period has been in software development, hardware and online businesses which all have more than tripled their sales between 2009 and 2011. However, the most important individual sector in ICT export was, and still is, telecommunications with 43 percent of sales. Whether it will remain the biggest sector isn't certain: should software development, which accounted for 30 percent of ICT export sales in 2011, keep up its stellar growth rate over few next years, it could well start nipping at telecoms' heels.