Rapid advances in information and communication technologies (ICT) are reshaping the global market. IT outsourcing services are flourishing as a consequence of the ongoing globalization. Hence, the Serbian ICT sector developed into the strongest part of the economy. In the past year alone, the sector generated more than 650 million euros.
Software development outsourcing services are becoming independent of the location. Like many eastern European countries, Serbian companies choose to outsource their services. One of the main reasons is the large English-speaking talent pool and cost-effectiveness.
Local ICT growing potential has increased its visibility on the global market. But since it is a relative newcomer will it be able to sustain predictions of the new European IT hotspot? Hence, the government has weighed its potential in an attempt to move the ICT sector up the value chain.
ICT Sector and Market Overview – What Serbia Offers
According to the World Bank, Serbia is ranking high on the global market in technological readiness and innovation. Although it has strong competition in the region, it is generating 10% of gross domestic product (GDP) in IT.
As the ICT world market evolves, it has focused on outsourcing services. Asia was a preference just a few years back. Now the Western countries orient toward Eastern European countries. Serbia became one of the top-ranking countries for business. Predominantly because of its geographical position, education level and attractive labour costs.
Foreign companies are engaging with what the local tech scene has to offer. Within the last decade, the promotion of the IT sector has increased tenfold. Considering the tough global market, in 2021 Serbia ranked 7th on the European IT Competitiveness Index.
Serbia’s Geographical Location
Serbia is at the very centre of the Balkan peninsula. Home to seven million people spreads on the territory of 88,499km2. It is a link between European countries on the west and the vast market in the East.
Situated at important crossroads, it is often referred to as the Gateway of Europe. Like many surrounding countries, Serbia uses Central European Time (CET GMT+1).
The country offers good connectivity with important locations. European main corridors are through River Danube, International highway and railroad. For more distant locations Serbia has two international airports Belgrade and Nis.
The proximity of European markets is one of the benefits for foreign investors. Serbia offers 14 import and export zones that are free of customs, VAT, and clearance.
Additionally, IBM Institute for Business Value pointed out the advantages of Serbian eastern ties. It has acknowledged that Serbia is the only country in the world that has a Free Trade Agreement with the Russian Federation.
Serbia’s Talent Spot
In 2020 EF English Proficiency Index (EF EPI) ranked Serbia as 15th out of 100 countries in business English skill level.
The Serbian IT sector is one of the east European talent spots. Mainly due to the 60% of qualified workers in comparison to all other industries in the country.
The Serbian education system is well-known, it ranks globally as one of the top 300. Besides Belgrade University, the country has five university centres with 47,500 students. More than a third of graduates has a degree in electrical engineering, computer science, and software engineering.
Foreign companies opt for business in Serbia because of education, attractive labour costs, and English language knowledge. Infostud, the local job portal, surveyed over 100,000 members in language proficiency. Two-thirds of the respondents are fluent in the English language.
Profitable ICT Sectors
According to IBM Global Business Services, Serbia is the top investment destination country in the world. Government officials state that the ICT sector’s increase of 10,2% is boosting the economy.
Serbian business culture and work ethic align with western European neighbours. Hence the western side of the hemisphere is one of the main markets with the largest number of clients. The largest part of total income comes from leading European countries while the second-biggest client is the US.
Serbian companies offer first-class solutions to global markets overseas. The most common projects are:
- system integrations,
- outsourcing services,
- web development,
- mobile app development
- telecommunication providers.
The importance of ICT in Serbia is showing growth in the software-oriented sector. 400 software development companies are employing over 13,000 people. Tech startups and medium businesses are resilient to the domination of multinational companies. Most of them reside in big cities like Novi Sad and Belgrade.
Goals and Objectives of the Serbian Government
A third of the total economic investments of the government are in the ICT sector. The potential that the Serbian officials see in ICT, is in its 68% productiveness.
For the past decade, the Serbian government has improved the efficacy of the ICT industry. The support comes from the importance the sector has on the economy.
Hence the Serbian ministry of economy is adamant to use the ICT potential. Not only to enhance the economic status but also to improve the Serbian competitiveness on the market. The goal is to place the country at the core of the regional ICT industry.
By creating a centre for sophisticated technology development, the government attracted foreign investors. Additionally, the reform of regulations and legislation has made business easier. One of the most influential reasons for an increasing number of investments is a low 15% corporate tax. The government treats software exports as both product and service making Serbia more accessible.
For several years, the outsourcing software development industry is favouring Asian countries. However, as recent studies show, Serbia has only begun to gain momentum. It is asserting its presence in the European market.
The local companies have proven many times that they can provide high-quality software at a reasonable price. Why is Serbia a promising ICT destination? Highly skilled talents, with a strong understanding of Western culture and language.