Portugal - Country Commercial Guide
Information and Communications Technology

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-10-02

Overview

The Portuguese National ICT Sector is a highly innovative and dynamic sector, which already represents nearly 10% of the Portuguese GDP, reaching almost 20 Billion US$ in total turnover, according to latest data available from the National Portuguese ICT Cluster, TICE. With young and highly qualified resources, it employees more than 80.000 people; in the past decade the profile of ICT companies has shifted from traditional ICT providers to highly specified and innovative start-ups. Supported by world-class research developed in partnership with the Portuguese universities.

According to the EU Digital Economy and Society Index 2020, Portugal ranks 19th out of the 28 EU Member States.  Though the ranking has not improved since 2018, there have been positive developments over the last two years in areas such as digital public services and connectivity; however, Portugal is still lagging other EU countries in terms of digital literacy and use of internet services. Portugal is ranked in the 32nd position among 158 countries in the Readiness for Frontier Technologies Index according to United Nations Conference of Trade and Development. Portugal nests innovation with investments in infrastructure, human capital, and technology to enable technological development.

The Government of Portugal, namely through the Ministry of Economy and Digital Transition has implemented measures to promote digital competencies and the digitalization of the economy as part of the second phase of the Indústria 4.0 in addition to launching artificial intelligence and advance computing strategies.

The current pandemic crisis has had a major impact on the use of internet services as isolation restrictions encouraged people and businesses to increase reliance on Internet based services and products. As a result, Portugal reinforced and accelerated measures to achieve a more robust digital transformation and economic recovery ranging from supporting the health system and expanding tools to manage health resources and patients, introducing new and additional online public services to its citizens and business and developing initiatives for digital home schooling and tele-schooling.  Portugal is also deploying high-capacity networks but remains behind comparable nations with implementing 5G.  The 5G spectrum auction has faced several delays and the main bidding phase, launched in November 2020, is still underway. There is no set or expected date for the auction’s conclusion and main operators that showed interest and availability to participate in the auction were Vodafone Portugal, NOS, MEO (Altice Portugal), and Dense Air (UK). Anacom is now promoting a second amendment to the 5G auction regulation to try to boost and end the bidding process.

ICT broadband infrastructure in Portugal has been expanding due to public investment and competition between private operators, for example a local fiber operator recently announced the expansion of its high-speed fiber networks and a new cut in wholesale fiber optic prices following the recommendation of ANACOM. Portugal is also looking to replace the Atlantic submarine cable linking the mainland with the Islands of Madeira and Azores which is reaching end life. A report with recommendations created by an ANACOM chaired working group was submitted in December 2019. On June 1st, 2021, the Prime Minister of Portugal, António Costa, presided over the launch of the first high-speed submarine fiber optic cable linking Europe (Sines, Portugal) and South America (Fortaleza, in Brazil), an essential infrastructure for the digital connection and data transmission between the two continents. The EllaLink will reinforces Portugal’s strategic location for connecting Europe to the rest of the world and is key infrastructure, indispensable to growing Portugal’s digital economy. The city of Sines will also be the place for the Sines 4.0; a 3.5 billion euros hyperscale data center developed by Start Campus, a company held by a U.S. investment fund and by a British company. Sines 4.0 is unique: it will be powered by 100% green energy. Will be the largest renewable data center campus in Europe, designed to handle the ever-growing demand for streaming services, video conferencing, cloud computing, artificial intelligence, and data storage. Once completed, Portugal will have the second largest data processing capacity in Europe (behind Ireland).

As far as digital technology integration, electronic information sharing, big data, cloud services and ecommerce has a significant place in businesses, but it is below EU average and less active compared with other EU countries.  In 2019, the Government launched several initiatives to promote the digitalization of businesses to increase the levels of digital literacy, expand cyber-infrastructure and establish cooperation agreements with other EU countries to explore how to develop and deploy advanced infrastructure such as quantum communication and networks.

The National Initiative for Digital Skills e.2030, Portugal INCoDe.2030, aims to stimulate and ensure the development of digital skills as a tool for paving the way for a future-oriented society, focused on the new opportunities arising from the fast-paced adoption of Information and Communication Technologies. Portugal INCoDe.2030 is structured around 5 strategic pillars: inclusion, education, qualification, specialization, and research. Each of these pillars is associated with a number of public policy goals and measures, which are to be implemented by several institutions and organizations. The Foundation for Science and Technology (FCT) is the coordinating organization for the various measures associated with the five strategic pillars. This is a joint initiative of the governmental areas of Administrative Modernization; Science, Technology and Higher Education; Education; Labor; Planning and Infrastructure; and Economy, of the 21st Constitutional Government of Portugal. It is part of the ICT international context and aims to improve and strengthen Portugal’s position in the European Commission’s DESI Index (Digital Economy & Society Index), increasing the country’s competitiveness by promoting digital skills.

In parallel, Portugal launched the second phase of the Indústria 4.0 national strategy for the digitization of the economy with €600 million in total funding over the next 2 years. In addition, two relevant strategies on Artificial Intelligence (AI) and advanced computing have been launched. Both are strongly focused on improving advanced digital skills.

Startup Ecosystem

The Portuguese startup ecosystem is still young, but it’s one of the best assets Portugal has, with small-scale but fast-paced and steadily growing companies representing over 1% of the country’s GDP. The European Unicorn list is a very limited one, with only 208 companies and Portugal has already produced 5 (Farfetech, Outsystems, Talkdesk, Feedzai and Remote). According to the “Startup & Entrepreneurial Ecosystem Report, Portugal 2021”, at the end on 2020 Portugal accounted for 2159 startups, representing 13% above European startups per capita average.  Portuguese startups looks to international markets, primarily the European Market, taking advantage of the open economic zone. Some startups even prioritize USA markets in their business plans and are born global. Portugal is the 12th Top 100 Emerging Ecosystem according to the Startup Genome Ranking.

Portugal has become a reference in the European startup scene, especially after hosting the WebSummit in 2016, putting the country on the map as in the place to be for technology entrepreneurship. The Web Summit has brought incalculable added value to the Portuguese economy and boosted the growth and diversification of ICT related businesses in the country and enjoys strong political commitment from the Portuguese government and the Presidency of the Republic.

The “National Network of incubators” was created as part of the Startup Portugal Strategy, promoting cooperation and the sharing of resources and knowledge, in order to improve products and services made available to entrepreneurs and companies. From 2016 to 2020, the number of incubators grew by 40%. Portugal has a competitive cost/value environment among its competitors within a European context

The Portuguese government established the “National Digital Competences Initiative e.2030”, an integrated public policy to enhance and foster digital competences. One of its action-lines focuses on promoting specialization in digital technologies and applications to improve employability and create higher added value in the economy.

Cybersecurity and Data Protection

According to the Global Cybersecurity Index (GCI), from 2018 to 2020, Portugal rose 28 positions in the index, and is now in position number 14 between the 182 countries in the survey. When compared with the European overall scoring, Portugal is at number 8.  The result reflects the positive efforts and investments the Portuguese government has adopted in recent years to improve cybersecurity.

Advanced Computing Portugal 2030 is a dynamic and evolutive process aimed to promote and expand Advanced Cyberinfrastructure (ACI) in Portugal by a factor of 100 in the coming decade and until 2030. It considers close international collaborative actions and has been planned in a way to foster all advanced scientific computing fields, as well as mobilizing data processing in an effective and diversified way, among industry and academic communities and in all areas of knowledge and the economy, including health, climate, energy, mobility, and the study of social processes.  The strategy consists of 3 main areas of intervention: to create an infrastructure of supercomputing in the country at the service of research and innovation; to develop and retain high valued people with strong advanced computing skills; and to put in place an info-structure of public policies to fill the gap between the infrastructures and people in a way that fosters the creation of high valued services and software.

The Portuguese National Cybersecurity Center (CNCS) is the operational coordinator and Portuguese national authority specialized in cybersecurity working with State entities, operators of essential services and digital service providers. On April 2020, CNCS published its National Cybersecurity Framework which adopted most of the NIST´s (U.S. National Institute of Standards and Technology) Cybersecurity Framework.  Cybersecurity is a priority for Portugal as cyberattacks increased 79% in 2020 as result of the pandemic and its effects, CNCS already urged increased investment in digital skills, including youth education, artificial intelligence, 5G and cybersecurity asymmetries. This was also a priority during the recent Portuguese EU Presidency, namely investments in networks security and cybersecurity skills as key elements to build a fairer, more resilient, and sustainable Europe able to face future challenges.

The National Data Protection Commission (CNPD) is an independent administrative entity, with legal authority under public law and administrative and financial autonomy. Portuguese public opinion (and Europe) is very sensitive to government access to public data and recent decisions by CNPD against U.S. firms has raised concerns and the need for an agreement on a privacy shield framework.

Artificial Intelligence

Portugal has an active and rapidly growing AI ecosystem, including academia, industry, and the public sector, and must act to fully benefit from this revolution. To be prepared, Portugal must foster a strong investment in AI at national and European terms, mobilize key actors, identify key areas for development and mitigate risks for citizens and society

AI Portugal 2030 is an innovation and growth strategy to foster Artificial Intelligence in Portugal within the European context. This strategy is fully aligned with the Coordinated Action plan of the EU and their Member States and is included in INCoDe.2030, the Portuguese initiative to foster digital skills. The document sets the basis of a national strategy for the development of the Portuguese economy and society using Artificial Intelligence in public and private activities and the consolidation of fundamental and applied research on AI. According to the AI Portugal 2030 document, areas of specialization to drive innovation, research, and opportunities: natural language processing, real time decision making, AI for software development, AI for edge-computing and IoT, urban transformation thru sustainable cities, sustainable energy systems, smart mobility, environment and biodiversity, cybersecurity, health, industry 4.0, AI research and development. A plan to install an AI hub in Lisbon is under discussion and that would entail €1.5 billion of investment per year by private and public entities, leveraging EU funds.

Leading Sub-Sectors

Key segments and topics of interest include cybersecurity, internet of things (IoT), big data, health IT, cloud computing, business IT including ERP, Data centers, smart social business platforms, integrated systems, virtual & augmented reality, and digital factory. 

Opportunities

There is strong demand for U.S. products and services across all the above segments. Key players like Microsoft, IBM, Oracle, CISCO are well established in the market. Cyber training and development are also a focus for the Portuguese government.

The U.S. Embassy in Lisbon and the U.S. Commercial Service Portugal follow closely ICT developments and work with different stakeholders such as associations and multipliers and the American Chamber of Commerce in Portugal to identify opportunities and flag policy concerns.

Resources

AICEP Portugal Global – ICT Cluster (https://www.portugalglobal.pt/EN/SourceFromPortugal/prominent-clusters/ICT/Pages/ICT.aspx)

Portuguese ICT Cluster

Portuguese Regulator for the Communications Sector (ANACOM)

Startup & Entrepreneurial Ecosystem

Science and Technology Foundation

AI Portugal 2030