How the Netherlands is leading the EU toward its tech future

Strategic investments in quantum computing, AI, innovative tech startups and sustainable technology, along with an historically strong background in science and innovation, are propelling the country to technology leadership in the region. But can it stay there?

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Though geographically and demographically small, the Netherlands is positioning itself as a European technology leader, making a name for itself in fields like quantum computing, AI, tech start-up innovation and sustainable cities.

This is good news for IT pros looking to advance their careers and enterprises interested in emerging tech, but the country's hot technology market presents some challanges — first and foremost, it can be hard for businesses to find the tech talent they need.

The Netherlands' emerging tech dominance is being driven to a large degree by the country’s political leadership, industry-watchers said. But there are also historical and cultural trends propelling the Netherlands to a dominant technology position in the EU, some of which have the seeds in its long-standing commitment to making technology a priority.

As it stands now, the Netherlands ranks 69th in terms of world population, yet it’s the 13th-largest technology market in the world in terms of business and government technology purchases, according to research from Forrester.

Software, services are big portion of Dutch IT spend

It’s also among the top 10 countries in the world in technology spend per capita, with 75% of technology investment in the Netherlands dedicated to software and services — including technology consulting and systems integration, technology outsourcing and hardware maintenance, Forrester Principal Forecast Analyst Michael O’Grady said.

Among its peers in the European Union, The Netherlands is the 8th-largest technology market in terms of spending. But its tenacity and agility in the market surpass this statistical rank, O'Grady said.

“We can see this with the simple example of online retail in Western Europe,” O’Grady told CIO. “In 2020 the Netherlands saw the fastest e-commerce growth of all countries in Western Europe, growing more than three times faster than 2019. They were able to leverage their technology and infrastructure to grow online sales despite already being one of the largest online-penetrated retail markets in Europe.”

Some of this technological dexterity likely is because the Netherlands is, overall, very technology- and science-friendly, O’Grady said.  Fifteen percent of the Gross Value Added of the Dutch economy (the value of goods and services minus the costs of raw material and inputs like subsidies) comes from professional, scientific and technical, and administration and support activities, which is significantly more than the 11% average found across Europe, he said. 

Moreover, the Dutch tend to be early adopters in various practices and fields, with technology being no exception, O’Grady said. For example, Dutch companies are more likely than the European average to adopt cloud-based ERP to share information between different functional areas, he said.

Netherlands is also strong in technology for so-called sustainable cities, O’Grady said. While other countries in Europe have since caught up, the bicycle-friendly Netherlands won early accolades for its sustainable-city leadership back in 2015, when both Amsterdam and Rotterdam made the top-10 list of ARCADIS Sustainable Cities Index, a ranking released yearly.

The country also has demonstrated early leadership in deploying wind and solar power as well as sustainable building construction, and one of the world’s first solar-powered cars is being developed by Netherlands-based company Lightyear One.

Netherlands carves out tech leadership niches

In the last decade or so the Netherlands has applied this thought-leadership strategy to a number of key technology areas in which it’s emerging as a leader in the EU.

One is in quantum computing, which is still in its nascent stages of development and deployment globally. The Netherlands just set up the House of Quantum, a national headquarters for Dutch quantum computing research at the campus of Delft University of Technology—a key innovation hub.

The facility serves as a physical location where the greater ecosystem of global quantum-computing researchers can come together to share resources and technology to bolster European leadership in the field.

It’s also meant to position the Netherlands as the thought and technology leader in the field, Freeke Heijman, founding director of Quantum Delta Netherlands and a co-founder of House of Quantum, told CIO in a recent interview.

That the Netherlands is establishing an early leadership in such a cutting-edge technology should come as a surprise to no one given the company’s long history of scientific innovation, she said.

“We have had a strong position and strong scientific basis since the 80s already,” Heijman told CIO. “There were strong groups already then investments, already then investments in research infrastructure, clean rooms that were good to enhance this kind of research. So there was already this seed of science.”

The Netherlands is also booming in terms of its investment and promotion of start-ups. Sixty-eight Netherlands-based start-ups garnered €2.48 billion in venture investment in the second quarter of 2021 alone. In fact, Amsterdam is shaping up to be a hotbed of start-up activity in the region; the city is the home of two of the country’s top start-ups—MessageBird, a unified communications company, and Mollie, which provides an online payments platform.

Some of the success of these start-ups is due to the efforts of the Dutch government, “which is very invested in making Amsterdam a start-up hub,” said Sebastiaan Tan, founder and CTO of Caspar Coding, a recruitment firm for African developers that places technology talent with companies in the Netherlands, among other countries.

The Netherlands governent is subsidizing an organization called TechLeap, which is aimed at building connections between the venture capital (VC) market and start-ups in the Netherlands. TechLeap has been successful at getting Netherlands tech start-ups a seat at the table with VCs in a way that’s been unprecedented for the country, industry-watchers said.

To raise the profile of the organization even further,  TechLeap has as its “special envoy”, Prince Constantijn van Oranje of the Dutch royal family, who lends both credibility and an established public face to the initiative.

“I think it’s a very conscious decision by the Dutch government to position him as the godfather of the start-up scene,” Tan observed.

Betting on sustainability

Sustainable cities are also an area in which the Dutch have had a head start over other countries in Europe.

In addition to building an early leadership in this area in Amsterdam and Rotterdam, the Netherlands has been an early innovator in solar technology as part of its sustainability push — perhaps surprising for a country with such notoriously rainy and cloudy weather.

As part of this endeavour, the country did early experiments back in 2014 in deploying solar technology for bike and walking paths — one of which created in the pattern of Van Gogh’s “Starry Night.”

The Netherlands also has taken its historical use of windmills into the 21st century in its construction of offshore wind farms to generate electricity for the country. Though the country lags behind others in the EU for wind-energy production, it steadily has been building its investment in the renewable over the past decade.

Overall, the EU has set a plan to reach carbon neutrality by 2050, and the Netherlands' bet on sustainability is not only one way to help achieve this goal, but also to maintain its leadership position, O’Grady said.

“I think aligning technology investment to meet Europe’s priorities will be key,” he said. “Emerging business areas in clean energy, clean buildings and smart cities are likely to see significant jobs growth.”

Netherlands has strength in tech education

The Netherlands has a strong history in education, especially in technical and scientific professional development, which also contributes to its emerging position as the EU’s technology leader, O’Grady said.

 Twenty percent of the top 20 universities in Europe are from the Netherlands, he said, while the country has one of the highest number of information workers as a share of total population in Europe.

In terms of technology professional development, Delft and Technical University of Eindhoven are the two top science and technology universities in the country. It’s no surprise, then, that technology business leaders also see the sense in partnering with these institutions.

In addition to the establishment of the House of Quantum at Delft, technical expertise centres also are being set up at Eindhoven, particularly to support sustainable technology initiatives, O’Grady said.  

Eindhoven-based company Serendipity chose the technical university as the place  to test and deploy its Digital Toolbox on Urban Air Mobility, an instrument that helps cities and regions to adapt to digital infrastructure. The initiative received over €800,000 (US$940,000) in investment from the European Commission.

The team behind Lightyear One, one of the world’s first solar-powered cars that also is being developed and produced in the Netherlands, also came from Eindhoven.

“Such investments are also consistent with European Commission investment priorities,” O’Grady said. “I think initiatives that link software and services to sustainability and regional competitiveness will be of particular interest.”

The need to attract foreign workers

There is, however, one giant hurdle not only to the Netherlands' technology leadership in the EU but to the region’s leadership in the world overall, and that is lack of technology talent, O’Grady warned.

“This remains a challenge across Europe,” O’Grady told CIO. “Europe’s workforce [information, communications and technology] skills gap limits innovation and automation. In 2020 Europe’s job market lacked more than 500,000 information and communication technology professionals.”

Tan’s Caspar Coding is trying to fill that knowledge gap by bringing in qualified technology workers from Africa to the Netherlands as well as Germany in Europe. However, it’s not just a problem in the technology workforce, but a population problem in general, he told CIO.

“It’s a birth-rate issue,” Tan said, citing that the overall birth-rate is declining in Western Europe versus regions like Eastern Europe and Africa.  “We are a declining workforce population. We need people, and not just in technology.”

To attract foreign workers, the government in the Netherlands provides tax breaks as incentives, he said. However, the salaries for foreign technology workers in the Netherlands are significantly lower than in Germany, while the cost of living in a city like Amsterdam vs. Berlin, for example, is much higher, Tan noted. This impedes its ability to attract the foreign talent on which its overall technological leadership depends, he said. 

Copyright © 2021 IDG Communications, Inc.

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