SPECIFICS OF SCALING IT COMPANIES ON EUROPEAN MARKETS

Abstract

The aim of this article is to explore the specifics of scaling IT companies, particularly Ukrainian ones, on European markets. Article highlights its relevance by emphasizing that scaling into international markets is not merely an opportunity but a strategic imperative for ensuring sustainable growth and mitigating risks. Which is especially relevant given the ongoing globalization, digital transformation, and the impact of external factors like the COVID-19 pandemic and the full-scale war in Ukraine. The article analyzes and systematizes key scaling strategies: establishing local teams, collaborating through partner distribution channels, and acquiring existing European IT companies. The article gives examples of successful scaling by IT companies on European market using the strategies provided in the article. The article highlights significant challenges to scaling, including stringent regulatory requirements such as the General Data Protection Regulation (GDPR), which mandates strict data protection and requires data storage within the EU. The article also addresses the substantial linguistic and cultural fragmentation of European markets, where 24 official EU languages and diverse cultural norms necessitate tailored approaches for scaling. The practical purpose of this article is in thorough explaination of the importance of localization for IT products and services, encompassing translation of interfaces, documentation, website content, creating local domain for the website and the integration of regional functionalities like multi-currency payment and VAT processing. Furthermore, the article details the necessity of adapting scaling strategies by IT-companies to the specific characteristics of various European regions: Northern (e.g., Sweden, Denmark), Central (e.g., Germany, Austria, Switzerland), Southern (e.g., Italy, Spain), and Eastern (e.g., Poland, Czech Republic). The conclusion underscores that successful scaling demands in-depth research of local markets and meticulous preparation to overcome these considerable limiting factors, ultimately ensuring potential benefits outweigh the necessary investments into scaling.