ICT in Serbia at a Glance

english

ICT in Serbia
At a Glance

January 2012

Picture

ICT in Serbia
At a Glance

January 2012

Published by:
Vojvodina ICT Cluster
In cooperation with
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Program for Private Sector Development in Serbia ACCESS


GIZ/ACCESS

Office Novi Sad
Vojvodjanskih brigada 28
21000 Novi Sad
Serbia
Tel: +381 21 21 00 306
office@ vojvodinaictcluster.org
www.vojvodinaictcluster.org

Office Belgrade
Makenzijeva 24/5
11000 Beograd
Serbia
Tel: +381 11 240 03 71
Fax:+381 11 240 03 70
www.giz.de

2

GIZ Consultants:
Jürgen Kappenmann

juergen.kappenmann@karer.com

Milovan Matijević

milovan@mineco.rs

January 2012

3

CIP - Каталогизација у публикацији
Народна библиотека Србије, Београд
004(497.11)”2010/2012”
KAPPENMANN, Jürgen

ICT in Serbia : at a glance / [Jürgen Kappenraann, Milovan Matijević]. - Novi Sad :
Vojvodina ICT cluster, 2012 (Novi Sad : ABC studio). - 61 str. : graf. prikazi, tabele ; 24 cm
Tiraž 200. - Str. 3: Foreword / Milan Šolaj - Terminology: str. 52-54. - Bibliografija: str. 57-59.
ISBN 978-86-87737-50-1
1. Matijević, Milovan, 1960 - [аутор]
a) Информациона технологија - Србија - 2010-2012
COBISS.SR-ID 190597900

Vojvodina ICT Cluster is a recognized partner in the development and application of new ICT products
and services with high profit potential, and an important partner in the development of individuals,
companies and regional businesses.
The mission of Vojvodina ICT Cluster is to create conditions for ICT development through coordination of
both our and our partners’ efforts towards a strong positive influence on the social and business
environment. To our members, the cluster serves as the platform for cooperation and provides a
portfolio of services, such as building capacities and competitiveness of its members through training
and education at the Cluster Academy, building links with the education system, creation of new
business opportunities, access to new markets, lobbying activities etc. The cluster also plays an
important role in building tighter bonds in the triple helix Business – Education – Government.
For further information on the Vojvodina ICT Cluster, please visit www.vojvodinaictcluster.org

Working efficiently, effectively and in a spirit of partnership, we support people and societies in
developing, transitional and industrialized countries in shaping their own futures and improving living
conditions. This is what the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) is all about.
Established on 1 January 2011, it brought together under one roof the long-standing expertise of the
Deutscher Entwicklungsdienst (DED) gGmbH (German Development Service), the Deutsche Gesellschaft
für Technische Zusammenarbeit (GTZ) GmbH (German Technical Cooperation) and Inwent – Capacity
Building International, Germany. As a federally owned enterprise, we support the German Government
in achieving its objectives in the field of international cooperation for sustainable development.
For further information on GIZ, please visit www.giz.de.
ACCESS is a Program implemented by GIZ on behalf of the German Ministry for Economic Cooperation
and Development (BMZ). It aims to promote the Serbian economic development and to facilitate the
future membership of Serbia in the European Union (EU) by supporting the implementation of the
Serbian “National Strategy for Development of Small and Medium Sized Enterprises and
Entrepreneurship” as well as the “National Strategy for EU Accession”.
ACCESS assists Serbian intermediaries in their support to SMEs in selected sectors to make better use of
their production, employment and growth potentials and to explore new markets in South Eastern
Europe as well as in the EU. The overall objective of the project is the improvement of the
competitiveness of small and medium-sized enterprises and start-up companies in selected sectors and
regions.
The ACCESS project works with a diversified implementation structure (including public and private
institutions). Consequently, the elements of the projects are (i) support to local and regional economies,
(ii) support to industries, including associations and clusters, and (iii) creation of a climate favorable to
business and investment. The support components include advising the Government and institutions,
companies and groups of companies, as well as training of local labor through both international and
national experts, and providing local subsidies for seminars, trainings and promotional activities.
For further information on GIZ/ACCESS, please contact tobias.stolz@giz.de.

1

TABLE OF CONTENTS
TABLE OF CONTENTS

FOREWORD ....................................................................................................................................... 3
FOREWORD ....................................................................................................................................... 3
INTRODUCTION ................................................................................................................................. 4
INTRODUCTION ................................................................................................................................. 4
GENERAL BUSINESS ENVIRONMENT ................................................................................................... 5
GENERAL BUSINESS ENVIRONMENT ................................................................................................... 5
ASSESSMENT OF THE SERBIAN ICT SECTOR ......................................................................................... 9
ASSESSMENT OF THE SERBIAN ICT SECTOR ......................................................................................... 9
A. STATISTICAL OVERVIEW OF THE ICT SECTOR ...................................................................................9
A. STATISTICAL OVERVIEW OF THE ICT SECTOR ...................................................................................9
IT Market Value and Structure.......................................................................................................9
IT Market Value and Structure.......................................................................................................9
IT Spending and Investments ...................................................................................................... 13
IT Spending and Investments ...................................................................................................... 13
Overview of the Telecommunication Market ............................................................................. 17
Overview of the Telecommunication Market ............................................................................. 17
IT Industry ................................................................................................................................... 20
IT Industry ................................................................................................................................... 20
IT and Internet Usage.................................................................................................................. 27
IT and Internet Usage.................................................................................................................. 27
ICT Clusters and Support Organizations ..................................................................................... 29
ICT Clusters and Support Organizations ..................................................................................... 29
B.
B.

EDUCATION AND HUMAN RESOURCE DEVELOPMENT ................................................................. 30
EDUCATION AND HUMAN RESOURCE DEVELOPMENT ................................................................. 30
Overview of the ICT Labour Market............................................................................................ 30
Overview of the ICT Labour Market............................................................................................ 30
ICT and Tertiary Education.......................................................................................................... 31
ICT and Tertiary Education.......................................................................................................... 31

C.
C.

RESEARCH AND DEVELOPMENT .................................................................................................... 36
RESEARCH AND DEVELOPMENT .................................................................................................... 36
Current Situation Regarding R&D in Serbia -- in General and ICT Related .................................. 36
Current Situation Regarding R&D in Serbia in General and ICT Related .................................. 36
EU Support Dimension ................................................................................................................ 43
EU Support Dimension ................................................................................................................ 43

OUTSOURCING – Opportunities and Barriers for Serbian IT Companies on International Markets ...... 46
OUTSOURCING – Opportunities and Barriers for Serbian IT Companies on International Markets ...... 46
CURRENT SITUATION, TRENDS AND POTENTIALS ............................................................................. 48
CURRENT SITUATION, TRENDS AND POTENTIALS ............................................................................. 48
APPENDIX ....................................................................................................................................... 52
APPENDIX ....................................................................................................................................... 52
Terminology ................................................................................................................................ 52
Terminology ................................................................................................................................ 52
Abbreviations .............................................................................................................................. 55
Abbreviations .............................................................................................................................. 55
References and Key ICT Publications .......................................................................................... 57
References and Key ICT Publications .......................................................................................... 57
List of Tables ............................................................................................................................... 60
List of Tables ............................................................................................................................... 60
List of Figures .............................................................................................................................. 60
List of Figures .............................................................................................................................. 60

2
2

FOREWORD

Soon after its inception in 2010, Vojvodina ICT Cluster has emerged as one of the strongest Serbian
institutions in the field of ICT. Our strategic documents keep focus on long-term effects: Serbia as the
place of choice for development of sophisticated software, Novi Sad as the hotbed of regional ICT,
moving from pure outsourcing towards solution providing etc. Immediate focus, however, is distributed
on several types of activities aligned together to help in achievement of those goals.
This entire process requires positioning of our organization and seeking cooperation with multitude of
different stakeholders. Among them, German Organization for International Cooperation – GIZ, stands
out as the partner who recognized our potentials and made the strategic decision to support and assist
us on a long-term basis.
What you are reading now represents one of the results of this cooperation. The second edition of the
study, ICT in Serbia – At a Glance, would have never seen the light of day without the engagement of
GIZ, their consultants and the resources it committed to this project. ‘ICT in Serbia…’ is the only
publication on the topic that comprises all relevant data in one place, saving a lot of time and research
for those who want to learn more about the topic. Thus, it is already becoming the key reference for all
interested in doing business in the ICT field in Serbia.
Whether you are an investor or a scholar, a businessperson or a student – we hope that you will also
find this study interesting and useful. We welcome your interest and look forward to seeing you in
Serbia!

Milan Šolaja
Chief Executive Officer
milan.solaja@vojvodinaictcluster.org
+381 21 21 00 306

3

3

INTRODUCTION

Information and Communication Technologies (ICT) undoubtedly constitute one of the key innovations
Information and Communication Technologies (ICT) undoubtedly constitute one of the key innovations
of the last century. ICT are composed of a wide range of products and service technologies including
of the last century. ICT are composed of a wide range of products and service technologies including
computer hardware, software and services and a host of telecommunication functions. ICT strongly
computer hardware, software and services and a host of telecommunication functions. ICT strongly
influenced the fields of socio-economic development, international development and human rights. The
influenced the fields of socio-economic development, international development and human rights. The
basic hypothesis behind the approach is that more and better information and communication furthers
basic hypothesis behind the approach is that more and better information and communication furthers
development of a society (whether to improve income, education, health, security, or any other aspect
development of a society (whether to improve income, education, health, security, or any other aspect
of human development).
of human development).
Various studies define the ICT sector differently. OECD defines ICT sector as a combination of
Various studies define the ICT sector differently. OECD defines ICT sector as a combination of
manufacturing and service industries, whose products capture, transmit or display data and information
manufacturing and service industries, whose products capture, transmit or display data and information
electronically. In addition, “The production (goods and services) of a candidate industry must primarily
electronically. In addition, “The production (goods and services) of a candidate industry must primarily
be intended to fulfill or enable the function of information processing and communication by electronic
be intended to fulfill or enable the function of information processing and communication by electronic
means, including transmission and display” (OECD, 2007). This includes also production of electronic
means, including transmission and display” (OECD, 2007). This includes also production of electronic
components.
components.
In this report will be applied the traditional and simple definition of the ICT sector. According to this
In this report will be applied the traditional and simple definition of the ICT sector. According to this
definition, the ICT sector comprises two sub-sectors: telecommunications and information technologies
definition, the ICT sector comprises two sub-sectors: telecommunications and information technologies
(IT). Furthermore, the IT sub-sector comprises three segments, which are hardware, software and
(IT). Furthermore, the IT sub-sector comprises three segments, which are hardware, software and
services. The main reasons for choosing this definition are: whether a clear and simple review of the
services. The main reasons for choosing this definition are: whether a clear and simple review of the
particular sub-sectors (IT and telecommunications) which still have not significantly converged in Serbia
particular sub-sectors (IT and telecommunications) which still have not significantly converged in Serbia
is possible, and finally, since it is the focus of this study, to enable presentation of IT sub-sectors
is possible, and finally, since it is the focus of this study, to enable presentation of IT sub-sectors
(Hardware, IT Services, Software) characteristics. The chart below gives an overview of the
(Hardware, IT Services, Software) characteristics. The chart below gives an overview of the
segmentation described.
segmentation described.
T a b lle 1
Tab e 1

IIC T S e c tto rr D e ffiin iittiio n
CT Sec o De n on

Industry

Sector

ICT Industry

Telecomunication Sector

IT Sector

Sub-sector

IT Hardware

Software

IT Services

With a two-digit annual growth in the years prior to the crisis, ICT is among the most vibrant and the
With a two-digit annual growth in the years prior to the crisis, ICT is among the most vibrant and the
fastest growing sectors in Serbia, which illustrates this sector’s development potential. However, the
fastest growing sectors in Serbia, which illustrates this sector’s development potential. However, the
economic crisis hit Serbia heavily, creating significant negative consequences to the ICT industry as well.
economic crisis hit Serbia heavily, creating significant negative consequences to the ICT industry as well.
In 2009 alone, the IT market in Serbia fell by 22.2%. Results from 2010 show that market value of €405
In 2009 alone, the IT market in Serbia fell by 22.2%. Results from 2010 show that market value of €405
million, which equals a year-to-year drop of 5%. After two years of decrease, in 2011, Serbian IT sector
million, which equals a year-to-year drop of 5%. After two years of decrease, in 2011, Serbian IT sector
shows all signs of stagnation.
shows all signs of stagnation.
This study presents an overview of the ICT sector in Serbia. The structure of this analysis consists of four
This study presents an overview of the ICT sector in Serbia. The structure of this analysis consists of four
thematic areas: General Business Environment, Assessment of the ICT Sector (Statistical overview of the
thematic areas: General Business Environment, Assessment of the ICT Sector (Statistical overview of the
Serbian ICT sector, Education and Human Recourses Development, Research and Development), SWOT
Serbian ICT sector, Education and Human Recourses Development, Research and Development), SWOT
and a review of the current situation, trends and potentials.
and a review of the current situation, trends and potentials.
The study with its analyses and information was designed to serve primarily companies interested in
The study with its analyses and information was designed to serve primarily companies interested in
business and investment related to the ICT in Serbia.
business and investment related to the ICT in Serbia.
4

4
4

GENERAL BUSINESS ENVIRONMENT
This chapter provides the following information:


overview of current business environment in Serbia



legislation framework – in general, and ICT related

General Statistics










Population: 7.36 million
Capital: Belgrade
Territory area: 88,361 km2
GDP (absolute): €29.5 billion (per capita: €3,994)
GDP - composition by sector: Manufacturing (18.3%); Real estate, renting and other business
services (16.4%); Wholesale, retail and repairs (12.8%); Agriculture, hunting, forestry and water
works supply (11.2%); Transport, storage and communications (8,1%) and Others (33.1%)
Percentage of GDP spent on R&D: less than 0.8% (Government fund estimated on 0.5%) (EU10
average)
Percentage of GDP spent on Education: 2.4%
Percentage of GDP spent on Healthcare: 3.5%

Current Business Environment in Serbia
Ten years after democratic change, the Serbian economy is still in transition, having a roller coaster ride
between years of growth and recovery and economic stagnation. Although Serbian economy grew
healthily in the period 2004-2007 with an average GDP growth rate of 6.8% (with peaks of 8.4% in 2004
and 7.5% in 2007), it reached only 70% of the country's 1990 GDP. In the period of on-going economic
crisis, (2008-2011) the Serbian economy has been mostly stagnating. According to World Bank
estimates, even with solid annual GDP growth, it will take many years before Serbian GDP reaches the
previous solid level.
To overcome this situation, economic development policies in Serbia mainly focus on the attraction of
FDIs. However, since achieving a maximum in 2005 with $5.47 billion USD, a dramatic reduction of FDI
inflows becomes apparent. The main reasons are slow process of joining the EU and the global financial
crisis. Among key reasons for not having more FDI in Serbia are bureaucratic and insufficiently reformed
public administration and high level of corruption.
Serbia has a problem with macroeconomic stability. The inflation rate is above 10% and unemployment
is above 18%. Based on the Global Competitiveness Index (GCI) for 2010-2011, Serbia is placed 96th 14
(among the 139 economies), behind almost all European countries. This position of Serbia could
discourage foreign investors. However, such a bad Serbian position should not cause concern that much
since the reasons for it are mainly found in presentation of the weak qualitative indicators (source:
Forum’s executive opinion survey) instead of quantitative ones (marked with * in Table 2, source: data
from international organization and national sources).
Significant discrepancies between qualitative and quantitative indicators highlight the criticism
expressed by the surveyed, which could be perceived as a positive point, since the respondents wish the
situation to be improved, but could also lead to wrong general conclusions.

5

5

T a b lle 2
Tab e 2

D iis c rre p a n c iie s b e ttw e e n Q u a lliitta ttiiv e a n d Q u a n ttiitta ttiiv e G C II IIn d iic a tto rrs s e lle c ttiio n
D sc epanc es be ween Qua a ve and Quan a ve GC
nd ca o s se ec on

1st pillar: Institutions
1.01 Property rights

1.02 Intellectual property protection
1.21 Strength of investor protection*
1.21 Strength ofofinvestor protection*
1.21 Strength investor protection*
ndnd
22nd pillar: Infrastructure
2 pillar: Infrastructure
pillar: Infrastructure
2.01 Quality of overall infrastructure
2.01 Quality ofofoverall infrastructure
2.01 Quality overall infrastructure
2.08 Fixed telephone lines*
2.09 Mobile telephone subscriptions*
5th pillar: Higher education and training
5th pillar: Tertiary education and training
5th pillar: Tertiary education and training
5.02 Tertiary education enrolment rate*
5.08
5.08 Extent ofofstaff training
5.08Extent of staff training
Extent staff training
6th pillar: Goods market efficiency
6.02 Extent of market dominance
6.04 Extent and effect of taxation
6.05 Total tax rate*
6.07 Time required to start a business*

Rank/139
Rank/139
Rank/139

7th7thpillar: Labor market efficiency
pillar: Labour market efficiency
7th pillar: Labor market efficiency

Rank/139
Rank/139
Rank/139

122122
122

7.01 Cooperation in labor-employer relations

111111
111

7.05 Redundancy costs*
7.07 Reliance on professional management
7.09 Female participation in labour force*
7.09 Female participation in labour force*
7.09 Female participation in market development
8th pillar: Financial labour force*
8th pillar: Financial market development
8th pillar: Financial market services
8.01 Availability of financialdevelopment
8.01 Availability of financialservices
8.07 Soundness of banks
8.01 Availability of financial services
8.09 Legal rights index*
9th pillar: Technological readiness
9.01 Availability of latest technologies
9.02 Firm-level technology absorption
9.04 Internet users*
9.06 Internet bandwidth*

59*59*
59*
122122
122
41*41*
41*

57*57*
57*
49*49*
49*

130130
130
138138
138

120120
120


46*
46*
46*
45*


45*
45*

135
135
47*
47*
128
128
59*
59*
128
135

47*

59*

111
111
115
115
111
20*
20*
115

20*

117
117
134
134
54*
54*
134
30*
30*
117

54*
30*

Source: WEF, Global Competitiveness Index (GCI) for 2010-2011
Source: WEF, Global Competitiveness Index (GCI) for 2010-2011

As a measure for reducing the negative impact of the current economic crisis, the Government has
As a measure for reducing the negative impact of the current economic crisis, the Government has
increased a package for foreign companies interested in setting-up their businesses in Serbia. Besides
increased a package for foreign companies interested in setting-up their businesses in Serbia. Besides
having one of the lowest corporate tax rates in Europe (10%), the Serbian Government is giving nonhaving one of the lowest corporate tax rates in Europe (10%), the Serbian Government is giving nonrefundable grants reaching up to €10,000 per employee. Recently, these measures have also become
refundable grants reaching up to €10,000 per employee. Recently, these measures have also become
available to Serbian companies capable of investment in new factories.
available to Serbian companies capable of investment in new factories.
IT Environment, Drivers and Barriers
IT Environment, Drivers and Barriers
T a b lle 3
Tab e 3

K e y P a rra m e tte rrs ffo rr tth e S e rrb iia n IIT M a rrk e tt F o rre c a s tt,, iin Q 4 --2 0 1 1
Key Pa ame e s o
he Se b an T Ma ke Fo ecas
n Q4 2011

Factor
Factor
Power
Power

Economic and Political Factors
Economic and Political Factors

Factor Value
Factor Value
(Intensity)
(Intensity)

Modest growth in gross domestic product. Projected real growth of around 2% in
Modest growth in gross domestic product. Projected real growth of around 2% in
2011.
2011.

3
3

25
25

50
50

75
75

Investments. The slowdown in foreign direct investments.
Investments. The slowdown in foreign direct investments.

2
2

25
25

50
50

75
75

Exchange rate. Stable Euro-RSD exchange rate (around psychological boundaries of
Exchange rate. Stable Euro-RSD exchange rate (around psychological boundaries of
100)
100)

2
2

25
25

50
50

75
75

Accession to EU. The slowdown in the accession process.
Accession to EU. The slowdown in the accession process.

1
1

25
25

50
50

IT economy. The need for IT investment (yearly growth of at least 20% until 2015).
IT economy. The need for IT investment (yearly growth of at least 20% until 2015).

1
1

25
25

50
50

Companies without a serious profit, postpone their investments and IT investments
Companies without a serious profit, postpone their investments and IT investments

2
2

25
25

50
50

Governance and budget institutions may initiate several major tenders before the
Governance and budget institutions may initiate several major tenders before the
end of the year
end of the year

1
1

25
25

50
50

IT replacement cycle. Annual delivery of more than 350,000 PC
IT replacement cycle. Annual delivery of more than 350,000 PC

2
2

25
25

50
50

Company competitiveness decrease. SME IT players in escalating problems.
Company competitiveness decrease. SME IT players in escalating problems.

2
2

25
25

50
50

Financing options (loans, leasing...) for investments getting weaker
Financing options (loans, leasing...) for investments getting weaker

1
1

25
25

50
50

Consumers
Consumers

75
75

IT Market
IT Market
75
75

Source: Mineco 2011
Source: Mineco 2011

Legend: Factor Power 3 – very strong factor; 2 – strong factor; 1 – moderate factor
Legend: Factor Power 3 – very strong factor; 2 – strong factor; 1 – moderate factor
Examples for Factor Value:
Examples for Factor Value:
25 50 75
25 50 75
Indicates a barrier for IT sales, which reached 75% of the maximum 100 % intensity
Indicates a barrier for IT sales, which reached 75% of the maximum 100 % intensity
25 50
25 50
Indicates a driver for IT sales, which reached 50% of the maximum 100% intensity
Indicates a driver for IT sales, which reached 50% of the maximum 100% intensity
6

6
6

From the perspective of local companies operating in ICT sector, FDIs perception turns out to be more of
a threat than benefit, due to the limited human resources available on the market. Namely, foreign
companies tend to attract good ICT experts with higher salaries, often putting national companies in the
situation where they cannot compete.
Although the quality of Serbian ICT infrastructure is not at the level of EU countries, it is getting better
each year. Quality of the ICT infrastructure has improved impressively during the past few years. In
addition, the quality of ICT infrastructure does not present a significant obstacle for doing business in
Serbia since most of the ICT companies are concentrated in Belgrade, Novi Sad and to some extent Nis,
where the quality of ICT infrastructure is much better than in other parts of the country.
A general conclusion is that the demand from foreign partners importing from Serbia appears to drive
the standardization of Serbian companies. Requirements for standardization also relate to the nature
of the produced goods. For instance, embedded industry produces innovative goods in the field of
medical appliances, which requires sector-related standards.
Legislation Framework
Doing business in the ICT field in Serbia is not easy. Although legislation has impressively improved in
the recent years, remaining obstacles are still numerous. Due to out-dated regulations and bureaucracy,
business operations in Serbia are still expensive.
Conduct of business in telecommunications received better regulation than in the IT sector. In 2009,
there was a harmonization of the new Law on Electronic Communication with the EU Regulatory
Framework from 2002. Due to its size, the telecommunications sector has attracted some of the major
multinational companies in that sphere (such as Telenor and VIP in terms of mobile phone providers).
However, state-owned Telekom Srbija remains the major provider of public voice telephony services.
The Republic Telecommunications Agency (RATEL), an autonomous national regulatory authority,
regulates the telecommunication sector. RATEL developed into a strong agency with a strong
reputation, among all actors in the sector. Since 2006, RATEL publishes an annual overview of the
telecom market in Serbia, which presents a good source of information in this field.
However, doing business in the IT sector has far more difficulties, mostly due to its small size,
segregated/fragmented industry, lack of specialization, small turnover and many other issues, which
mostly come from inconsistent appliance of regulations. Most misunderstandings relate to VAT and
custom regulations.
The old regulations, which cannot adequately resolve the IT sector issues, bring about uncertainties.
Export of software has also not seen proper regulation since it is not yet clear whether the export of
software is considered as export of goods or export of services (there is a significant difference in the tax
base). All companies that calculate export of software as a service have to pay a significant tax penalty.
Expectations are that the new regulation will be in line with best EU practices.
The ICT sector also faces common business difficulties in Serbia. Difficulties in obtaining necessary state
licenses (especially construction licenses), long trials at court and insufficiently transparent public
procurement are only some of the numerous obstacles that cause harm to the business sector in Serbia.

7

7

Finance (Demand and Supply)
Finance (Demand and Supply)
The expensive credit market in Serbia presents an obstacle for a company dealing with wholesale of IT
The expensive credit market in Serbia presents an obstacle for a company dealing with wholesale of IT
hardware and software. However, due to the small scale of the ICT sector in Serbia, especially its IT part,
hardware and software. However, due to the small scale of the ICT sector in Serbia, especially its IT part,
this obstacle is not so significant for those companies that are focusing primarily on outsourcing. On the
this obstacle is not so significant for those companies that are focusing primarily on outsourcing. On the
other hand, for companies trying to increase the level or their operations obtaining the needed capital
other hand, for companies trying to increase the level or their operations obtaining the needed capital
this does present an issue. Developing, patenting and marketing of own products take not just the time
this does present an issue. Developing, patenting and marketing of own products take not just the time
but also the capital that Serbian IT companies are lacking. At this moment, there is no seed or early
but also the capital that Serbian IT companies are lacking. At this moment, there is no seed or early
stage capital available and there are almost no venture capital funds active in this market (especially
stage capital available and there are almost no venture capital funds active in this market (especially
focused on SMEs).
focused on SMEs).
That is why instead of developing products IT companies are focusing on outsourcing projects (which do
That is why instead of developing products IT companies are focusing on outsourcing projects (which do
not generate any IP/patent relevant knowledge or directly marketable product) and only the time left
not generate any IP/patent relevant knowledge or directly marketable product) and only the time left
between outsourcing contracts is used for work on their own products which is hardly sufficient.
between outsourcing contracts is used for work on their own products which is hardly sufficient.
Outsourcing is not an option of choice or following a well-defined strategy and business model but
Outsourcing is not an option of choice or following a well-defined strategy and business model but
rather a mechanism and necessity for pure survival. It is also symptomatic that clients looking for a
rather a mechanism and necessity for pure survival. It is also symptomatic that clients looking for a
Serbian company to do outsourcing do not ask for a specific reference list from a company. Instead, they
Serbian company to do outsourcing do not ask for a specific reference list from a company. Instead, they
ask for CVs of all personnel and select the programmers on their own, which is also kind of a constraint
ask for CVs of all personnel and select the programmers on their own, which is also kind of a constraint
for a company to build its image and profile as well as its field(s) of expertise.
for a company to build its image and profile as well as its field(s) of expertise.
Serbian companies aiming to develop their own product are in need of additional capital on all levels of
Serbian companies aiming to develop their own product are in need of additional capital on all levels of
the business cycle: from patenting the product, through market entry and finely maintaining the stability
the business cycle: from patenting the product, through market entry and finely maintaining the stability
of the company:
of the company:
 It takes about 5-7 years, sufficient funds provided, to prepare a company for IPO.
 It takes about 5-7 years, sufficient funds provided, to prepare a company for IPO.
 Work on development of a new product requires about 20 people/programmers.
 Work on development of a new product requires about 20 people/programmers.
 Companies such as DMS and Typhoon are already successful examples of Serbian companies
 Companies such as DMS and Typhoon are already successful examples of Serbian companies
developing and internationalizing their own products.
developing and internationalizing their own products.

8

8
8

ASSESSMENT OF THE SERBIAN ICT SECTOR
A.

STATISTICAL OVERVIEW OF THE ICT SECTOR

This chapter provides basic information needed for an insight into the Serbian ICT sector, such as:


Market value



Market structure



Geographical market dispersion



Number of companies, employees, income/turnover in Serbian ICT industry



IT spending and investment in Serbia



Usage of IT by households and business in Serbia

IT Market Value and Structure
After two years of decrease, in 2011, Serbian IT sector shows all signs of stagnation. Results from 2010
show that market value was €405 million, which is a year-to-year drop of 5%. In comparison with the
year 2008, where market value reached its record of €545 million, IT sector shrank for one quarter! The
structure of investments in this area remains the same: IT hardware dominates with 63% share,
followed by IT services with 25% and software with remaining 12%. According to the European
standards, this structure visibly illustrates the modest situation on the market that is still in the early
stages of IT maturity.
Table 4

Serbian IT Market Value in 2010 and Trends for 2011 -2012 [€ million]

IT MARKET
IT SERVICES - TOTAL
IT services

2010

2011

2012

99,4

107,6

120,5

99,4

107,6

120,5

SOFTWARE – TOTAL

48,7

51,6

58,8

System software

22,3

24,1

27,0

Application software

26,4

27,5

31,8

IT HARDWARE - TOTAL

255,7

272,3

300,0

Server and Storage Systems

27,4

30,9

33,2

156,7

164,4

178,9

Peripherals

41,4

44,7

52,0

Networking equipment

30,2

32,3

36,0

403,8

431,5

479,4

Personal computers

TOTAL
Source: Mineco 2011

9

9

F iig u rre 1
F gu e 1

S e rrb iia n IIT M a rrk e tt a n d G rro w tth R a tte s ffo rr 2 0 0 8 --2 0 1 2 .. ((% ))
Se b an T Ma ke and G ow h Ra es o 2008 2012
%
Value (million EUR)
Value (million EUR)
Value (million EUR)

600
600
600

Growth Rate (%)
Growth Rate (%)
Growth Rate (%)
60%
60%
60%

545.5
545,5
545,5
474.6
474,6
474,6

500
500
500

423,8
423,8
423.8

400
400
400

403,8
403,8
403.8

50%
50%
50%

429,0
429,0
429.0

40%
40%
40%

300
300
300

30%
30%
30%

19%
19%
19%

200
200
200

6%
6%
6%

100
100
100
0
0

0

2008
2008
2008

-100
-100
-100

2009
2009
2009

2010
2010
2010

2011
2011
2011

20%
20%
20%

11%
11%
11%

10%
10%
10%
0%
0%
0%

2012
2012
2012

-10%
-10%
-10%

-5%
-5%
-5%
-22%
-22%
-22%

-200
-200
-200

-20%
-20%
-20%

-300
-300
-300

-30%
-30%
-30%

Source: Mineco 2011
Source: Mineco 2011

Key observations:
Key observations:
Serbian IT market will most probably stay in the “tunnel” for almost 5 years in the period 2008-2013.
Serbian IT market will most probably stay in the “tunnel” for almost 5 years in the period 2008-2013.

IT Hardware
256
Software
49
After the two digit turbulences of +19% (in 2008) and -22% (in 2009), IT market growth has stabilized
After the two digit turbulences of +19% (in 2008) and -22% (in 2009), IT market growth has stabilized
IT Services
99.4

in 2011. This financial toboggan caused closure of a few hundred IT companies and significantly
in 2011. This financial toboggan caused closure of a few hundred IT companies and significantly
24.6%
404
changed the order of the leading IT companies
changed the order of the leading IT companies

IT Market Structure
IT Market Structure
F iig u rre 2
F gu e 2
256
49
99.4
404

12.1%

63.3%

S e rrb iia n IIT M a rrk e tt S ttrru c ttu rre iin 2 0 1 0 .. R e v e n u e a n d P rro ffiitt
Se b an T Ma ke S uc u e n 2010 Revenue and P o

IT Hardware
Software 24.6%
24,6%
24,6%
24.6%
IT Services

47
35
155

19,8%19.8%
19,8%
19.8%

IT Hardware
IT Hardware
IT Hardware

IT Hardware

237

12,1%
12,1%
12.1%

12.1%

47
35
155
237

63,3%
63,3%
63.3%

63.3%

14,8%
14,8%
14.8%

14.8%

65,4%
65,4%
65.4%

SofSoftware
Software Software
tware

IT
IT Services Services
IT Services
IT Services

65.4%

Source: Mineco 2011
Source: Mineco 2011
19.8%

Key observations from the above figure:
Key observations from the above figure:
IT Hardware

In the IT market structure – segment of the IT hardware with 63.4% share is still dominating in 2010;
In the IT market structure – segment of the IT hardware with 63.4% share is still dominating in 2010;
Software
followed by IT services segment with 24.6% and IT Services 12% come from software distribution.
followed by IT services segment with 24.6% and remaining 12% come from software distribution.
remaining
14.8%
65.4%
Although IT hardware drives the IT market in Serbia, profit margins of hardware companies are close
Although IT hardware drives the IT market in Serbia, profit margins of hardware companies are close
to zero and consequently their profit is very low. The biggest available capital (almost 2/3)
to zero and consequently their profit is very low. The biggest available capital (almost 2/3)
preserved the companies from the IT service segment.
preserved the companies from the IT service segment.

10

10
10

IT Services Structure
Table 5

IT service in Serbia - Market Value in 2010 and Forecast 2011-2012 [€ million]

IT Service

2012

2010

2011

Hardware Support and Installation

28,6

29,8

31,7

Software Support and Installation

16,0

17,9

20,6

IT Training and Education

3,3

3,7

3,8

Network Consulting and Integration

9,0

9,3

10,6

Systems Integration

13,3

14,2

16,5

Outsourcing – nearshoring

3,7

4,0

4,8

Application Consulting and Customization

8,4

9,8

11,5

Custom Application Development

12,1

13,4

14,7

IT Consulting

5,0

5,4

6,3

99,4

107,6

120,5

Total
Source: Mineco 2011
Figure 3

Structure of IT Service in Serbia and Compound Annual Growth Rate (5 year period)
Value (million EUR)
Value (million EUR)

30.0 30,0 28.6

CAGR (%)
CAGR (%)
30.0%
30,0%

28,6

25.0 25,0

25.0%
25,0%

20.0 20,0

20.0%
20,0%
16.0 16,0

15.0 15,0

13.3 13,3

10.0 10,0

10% 10%

13%
13%

9.09,0
11%
11%
5.0
5,0

10.0%
10,0%

5.0%
5,0%

0.0%
0,0%

2%

IT Training and
IT Training and
Education
Education

Outsourcing -

Outsourcing nearshoring[1]
nearshoring[1]

IT Consulting

Consulting and
Integration

Network Consulting
Network
and Integration

Application

Consulting
Application and
Customization
Consulting and
Customization

Application
Development

Systems
Integration

Systems
Integration

Software
Support and
Installation

Hardware
Support and
Installation

3.7
3,7

3.3
3,3
2%

IT Consulting

0,0

7% 7%

6%

Software Support
and Installation

0.0

15.0%
15,0%

12%
12%
8.4 8,4
10%
10%

11% 11%

Custom Application
Development
Custom

5,0 6%

Hardware Support
and Installation

5.0

12.112,1

Source: Mineco 2011

CAGR – [%] Compound Annual Growth Rate for the five year period (2006-2010)
While the hardware support and installation market will see continued demand in the future, its share
of the total services market is expected to contract.
The four major vertical markets – Government, finance, manufacturing, and telecommunications – are
likely to be the largest spenders on IT services in Serbia in the coming years. As Serbia continues to
stabilize both economically and politically, it has the potential to increase FDI. As in other developing
countries in the region, these four sectors have been the prime beneficiaries of the inflow of FDI, which
has fostered spending on IT services.
Significant part of IT services is internal (End-user companies rely on their own IT departments). These
services are not included in the analysis.

11

11

Strength and number of international vendors operating in the region and Serbia will increase and will
Strength and number of international vendors operating in the region and Serbia will increase and will
have the following implications:
have the following implications:
Because service business requires more intricate and specific solutions, local services firms will have
Because service business requires more intricate and specific solutions, local services firms will have
Strength and number of international vendors operating in the region and Serbia international and will
to form strategic partnerships with traditional product vendors or with will increase service
to form strategic partnerships with traditional product vendors or with international service
have the followingin order to meet customer demands.
companies in order to meet customer demands.
companies implications:
Because service business requires more intricate and specific skilled employees and firms will have
A number of local IT services companies are staffed with highlysolutions, local servicesthe acquisition
A number of local IT services companies are staffed with highly skilled employees and the acquisition
to form strategic can be a useful tool for international vendors or with international service
of these companiespartnerships with traditional productvendor entry into one of the IT markets,
of these companies can be a useful tool for international vendor entry into one of the IT markets,
companies in order to meet customer CEE region.
as it has already been seen all over the demands.
as it has already been seen all over the CEE region.
A number of local IT services companies are staffed with highly skilled employees and the acquisition
Application Software Structure
of these companies can be a useful tool for international vendor entry into one of the IT markets,
as it has already been seen all over the CEE region.
F iig u rre 4
F gu e 4

P rro d u c tts iin S e rrb iia n S o ffttw a rre IIn d u s ttrry
P oduc s n Se b an So wa e ndus y

Figure 4

Apps
infrastructure
8%
E-commerce
7%

CAD/CAM
3%

Products in Serbian Software I ndustry

ERP
13%

Acconnting
11%
Portali
10%
SCM
6%
Business
intelligence
10%

Content
management
10%

Source: Serbian Chamber of Commerce 2009
Source: Serbian Chamber of Commerce 2009

Document
management
9%

CRM
11%

In 2010, theChamber of Commerce 2009 application software reached the value of €26 million. ERP hold the
In 2010, the Serbian market for application software reached the value of €26 million. ERP hold the
Source: Serbian Serbian market for
largest part, constituting nearly 13%, followed by Accounting, CRM, Business intelligence, Content
largest part, constituting nearly 13%, followed by Accounting, CRM, Business intelligence, Content
management, Document management and Portals -- everyone with a market share of around 10%
management, Document management and Portals everyone with a market share of around 10%
respectively. Serbian market for application software reached the value of €26 million. ERP hold the
respectively.
In 2010, the
largest part, constituting nearly 13%, Accounting Accounting, CRM, Business intelligence, Content
Local software producers dominate the followed by and ERP market in Serbia, given their flexibility in
Local software producers dominate the Accounting and ERP market in Serbia, given their flexibility in
management, Document management and Portals - everyone with a market share of around for a
developing custom software applications. Custom application development represents an option for a
developing custom software applications. Custom application development represents an option 10%
respectively. of companies (particularly SMEs) seeking a software solution.
large number of companies (particularly SMEs) seeking a software solution.
large number
Local software producers dominate the Accounting ready-made and custom developed packages – will
Increasing demand for software applications – both ready-made and custom developed packages – will
Increasing demand for software applications – both and ERP market in Serbia, given their flexibility in
developing custom foundation market in the period 2011-2015.
drive growth in this foundation market in the periodapplication development represents an option for a
drive growth in this software applications. Custom 2011-2015.
large number of companies (particularly SMEs) seeking a software solution.
Increasing demand for software applications – both ready-made and custom developed packages – will
drive growth in this foundation market in the period 2011-2015.

12

12
12

IT Spending and Investments
Figure 5

10

IT Spending and Investments in Serbia

(%) IT spending as a Percentage of Revenue
(%) IT spending as a Percentage Employees
(%) IT Emloyees as Percentage of Totalof Revenue
(%) IT Employees as Percentage of Total Employees
10

5

10,0%

6.3
6,3

6.0%
6,0%
5

CAGR [%]
CAGR [%]
2006-2010 in SRB
2006-2010 u SRB 10.0%

5.0%

5,0%

4.0 4,0

4.0%
4,0%

1.5
1,5
0.50,5
0

0.0%

0

(%) IT spending as a Percentage (%) IT Emloyees as Percentage of
(%) IT spending as a
(%) IT Employees as
of Revenue
Total Employees
Percentage of Revenue
Percentage of Total Employees
World
World

Serbia
Serbia

0,0%

CAGR [%] 2006-2010 in SRB
CAGR [%] 2006-2010 in SRB

Source: Mineco 2010, Gartner – IT Spending and Staffing Report 2008

Serbian companies invest in IT round 0.5% of their revenue - significantly lower than the competitive
international companies do. Taking into consideration that revenues of Serbian companies are
low, the absolute amount of their IT spending looks even smaller.
Similar situation is with IT employment. Diagram above shows that Serbian companies employ even
four times less IT experts than their competition abroad.
The growth rate of IT investments (6%) as well as the growth rate of IT employment (4%), are above
the world average, so detected gap could be overcome, but quite a few years will be needed to
accomplish this.
It is a paradox that the backbone of the IT investments in Serbia is composed of households,
entrepreneurs and micro companies followed by the Government and financial sector – when the
medium and large business sector should be in the lead! In decomposition of this order lies the huge
growth potential, although it is hard to believe that this goal will be achieved by 2012. The election year
favors spending and causes a slowdown in short-term investments, especially in case of the coalition
Government that has to stick to the populist agenda.
The Government, with its relevant ministries and public agencies, has started the project of eGovernment Services development. Based on a UNDP study, current status of implemented eGovernment services is above the SEE average (UNDP 2010), with Serbia providing G2B at an average of
56,67% (SEE average 50,54%) and G2C at 41,88% (SEE average: 37,06%). However, development of eGovernment portals at the national and local level did not significantly improve market opportunities in
Serbia, contrary to what the majority of local IT business had expected. As discussed above, the
recipients of e-Government contracts were the international and Belgrade-based companies, leaving
local companies behind the market.

13

13

Why Information Systems?
Why Information Systems?

According to GDP, IT investments in Serbia are below 1% of GDP, while EU standards are 2-3% of GDP.
According to GDP, IT investments in Serbia are below 1% of GDP, while EU standards are 2-3% of GDP.
High unemployment rate and modest purchasing power make the Serbian long awaited recovery more
High unemployment rate and modest purchasing power make the Serbian long awaited recovery more
uncertain. While the companies, which are IT end-users, were ready to invest in technology before
uncertain. While the companies, which are IT end-users, were ready to invest in technology before
economic crisis, at present they get involved into new information systems or similar infrastructure
economic crisis, at present they get involved into new information systems or similar infrastructure
projects very carefully. Although there is a need for this type of investment, every ROI (Return on
projects very carefully. Although there is a need for this type of investment, every ROI (Return on
Investment) analysis, in the conditions where the companies are working without a profit, provides
Investment) analysis, in the conditions where the companies are working without a profit, provides
additional reason for saving. Without serious profits, there will be no serious IT investments.
additional reason for saving. Without serious profits, there will be no serious IT investments.
Due to the economic crisis, IT purchasing power of Serbian companies drastically declined in 2009,
Due to the economic crisis, IT purchasing power of Serbian companies drastically declined in 2009,
though there were signs of a slight recovery in 2010. Running business in Serbia also troubles the low
though there were signs of a slight recovery in 2010. Running business in Serbia also troubles the low
payment of contractual obligations and debts, which maintains a high demand for money. Besides, most
payment of contractual obligations and debts, which maintains a high demand for money. Besides, most
companies have trouble with cash flow and liquidity. The business sector is waiting for a ‘miracle’ to
companies have trouble with cash flow and liquidity. The business sector is waiting for a ‘miracle’ to
happen and recover the economy. Whenever that happens, the IT sector will for sure continue with the
happen and recover the economy. Whenever that happens, the IT sector will for sure continue with the
two-digit annual growth.
two-digit annual growth.
However, it is certain that the recovery and transformation of Serbian society are not possible without
However, it is certain that the recovery and transformation of Serbian society are not possible without
transformation and huge development of information and communication technologies -- in all
transformation and huge development of information and communication technologies
in all
segments/sectors.
segments/sectors.
Where is Serbia on EU Technological Map?
Where is Serbia on EU Technological Map?
The diagram of IT investment according to economic strength (presented by GDP), best illustrates the
The diagram of IT investment according to economic strength (presented by GDP), best illustrates the
economic competitiveness as well as the society organization and its transparency.
economic competitiveness as well as the society organization and its transparency.

14

14
14

Figure 6

IT Investment according to Economic S trength (GDP).

1400 1400

Sweden Sweden

1200 1200
United Kingdom
United Kingdom
Netherlands
Netherlands
FinlandFinland

1000 1000

IT spending per capita [€]

IT spending per capita [€]

France
France
Austria
Belgium
Belgium
Germany
Germany

800 800

Austria

600 600

mediana

Italy

400 400

Czech Republic
Czech Republic

Portugal
Portugal

Hungary
Hungary
Scroatia
Scroatia
Slovakia
Estonia
Slovakia
Estonia
Poland
Poland
Latvia
Latvia
Serbia
Lithuania
Serbia
Lithuania
Montenegro
Montenegro
Bulgaria
Romania
Bulgaria
Macedonia
Macedonia B i H Romania
Albanija
Albanija
BiH

0

0

0

5 5

10
10

Italy

Spain Spain

Slovenia
Slovenia

200 200

0

med ian a

Greece
Greece

15
15
2020
25 25 30
GDP per capita [000 €]
GDP per capita [000 €]

30 35

35
40

40

Source: EITO 2007, Eurostat, Mineco 2010

Key observations for the above diagram:
North and west European countries have strong economy and high IT investments (all significantly
above average) in visible correlation.
Mediterranean countries characterize strong economy but low IT investments. Provocative,
pejorative acronym PIGS for these countries (Portugal, Italy, Greece and Spain) indicate that they
belong to the “second league”.
All the countries from EU 10 (10 new members, which joined the EU in 2004) are lagging behind: they
are in the quadrant of weak economy and low IT investments.
There is a few decades long technological gap between Serbia and its Northwestern neighbors.
Serbia’s positioned in the root of the coordinate system together with Albania, FYROM,
Montenegro, Bosnia and Herzegovina, Romania and Bulgaria.
According to the key observations above and treating the IT investments as the early indicator of
economic and social trends, the following hypothesis can be formulated:” If the IT investments in Serbia
do not double in the following 5-year period, Serbian economy and society will descend to even deeper
crisis. In order to “catch up with the EU train”, it is necessary to triple IT investments in Serbia in the
period 2011-2015.”

15

15

Why IT Investments in Particular?
Why IT Investments in Particular?

Investments are always important, especially in the crisis. Since information technologies are in the base
Investments are always important, especially in the crisis. Since information technologies are in the base
of every optimization, the crisis is the right time for strategic investments. The main reasons are:
of every optimization, the crisis is the right time for strategic investments. The main reasons are:
(1) IT infrastructure is the important condition for economy, society and Government development;
(1) IT infrastructure is the important condition for economy, society and Government development;
(2) For taking part in global economy, IT industry requires significantly smaller resources than other
(2) For taking part in global economy, IT industry requires significantly smaller resources than other
industries;
industries;
(3) IT industry is significantly cheaper but more profitable than other industries;
(3) IT industry is significantly cheaper but more profitable than other industries;
(4) ICT industry development prevents the “brain drain”.
(4) ICT industry development prevents the “brain drain”.
Trends and Potentials - New IT Goals for the Period 2011-2015.
Trends and Potentials - New IT Goals for the Period 2011-2015.
T a b lle 6
Tab e 6

S e rrb iia n IIT M a rrk e tt V a llu e a n d S ttrru c ttu rre ,, 2 0 1 0 a n d P o tte n ttiia lls 2 0 1 1 --2 0 1 5 [[€ m iilllliio n ]]
Se b an T Ma ke Va ue and S uc u e 2010 and Po en a s 2011 2015 € m
on

IT MARKET
IT MARKET

2010
2010
Market
Market

2015(v2)
2015(v2)

2015(v1)
2015(v1)
Share (%)
Share (%)

Market
Market

Share (%)
Share (%)

Market
Market

Share (%)
Share (%)

IT Services
IT Services

99,4
99,4

24,6%
24,6%

211,8
211,8

29,5%
29,5%

325,5
325,5

32,1%
32,1%

System Software
System Software

22,3
22,3

5,5%
5,5%

42,0
42,0

5,8%
5,8%

60,5
60,5

6,0%
6,0%

Applications
Applications

26,4
26,4

6,5%
6,5%

49,4
49,4

6,9%
6,9%

71,1
71,1

7,0%
7,0%

Server systems and storage
Server systems and storage

27,4
27,4

6,8%
6,8%

41,8
41,8

5,8%
5,8%

53,9
53,9

5,3%
5,3%

Personal computers
Personal computers

156,7
156,7

38,8%
38,8%

226,3
226,3

31,5%
31,5%

282,5
282,5

27,8%
27,8%

Peripherals
Peripherals

41,4
41,4

10,3%
10,3%

86,8
86,8

12,1%
12,1%

132,4
132,4

13,0%
13,0%


30,2
30,2

7,5%
7,5%

59,8
59,8

8,3%
8,3%

88,7
88,7

TOTAL
TOTAL
CAGR (%) Annual Growth Rate
CAGR (%) Annual Growth Rate

403,8
403,8

100,0%
100,0%

717,9
717,9
12,2%
12,2%

100,0%
100,0%

1.014,5
1.014,5
20,0%
20,0%

8,7%
8,7%

100,0%
100,0%

Source: Mineco 2011
Source: Mineco 2011

Key comments on the table above:
Key comments on the table above:
The potential of Serbian IT market is significantly higher than the realization shows. For the needed
The potential of Serbian IT market is significantly higher than the realization shows. For the needed
progress (double digit IT market growth of 20% CAGR (v2) -- CAGR (v2) -- Compound Annual
progress (double digit IT market growth of 20% CAGR (v2) CAGR (v2) Compound Annual
Growth Rate with which Serbian economy could catch up with EU countries), the basic
Growth Rate with which Serbian economy could catch up with EU countries), the basic
precondition is a yearly GDP growth bigger than 4%.
precondition is a yearly GDP growth bigger than 4%.
In the following five years (2011-2015) it is necessary that Serbian IT marked growth rate exceeds
In the following five years (2011-2015) it is necessary that Serbian IT marked growth rate exceeds
12,2 % CAGR (v1) (CAGR (v1)- Compound Annual Growth Rate under which Serbian economy
12,2 % CAGR (v1) (CAGR (v1)- Compound Annual Growth Rate under which Serbian economy
will fall deeper into economic crisis), or the Serbian economy is going to fall in even deeper crisis.
will fall deeper into economic crisis), or the Serbian economy is going to fall in even deeper crisis.
It is obvious that Serbian economy in 2011 and 2012 will be under this required level. It is
It is obvious that Serbian economy in 2011 and 2012 will be under this required level. It is
necessary to compensate whatever missed in the period 2013 – 2015.
necessary to compensate whatever missed in the period 2013 – 2015.
In their previous analysis, MINECO gave the projection of 17% CAGR (v2), for the period (2005-2010)
In their previous analysis, MINECO gave the projection of 17% CAGR (v2), for the period (2005-2010)
which did not materialize. Trend was good up to 2008, but the year 2009 was catastrophic for IT
which did not materialize. Trend was good up to 2008, but the year 2009 was catastrophic for IT
and influenced the average growth rate for period 2005-2009 to fall to modest 8,5% CAGR.
and influenced the average growth rate for period 2005-2009 to fall to modest 8,5% CAGR.
Stagnation in 2010 lowered this rate to 5.5% CAGR that is three times less than required in
Stagnation in 2010 lowered this rate to 5.5% CAGR that is three times less than required in
MINECO projections.
MINECO projections.

16

16
16

Overview of the Telecommunication Market
Informatics and Telecommunication in Serbia, as two separate segments of ICT Industry, have had
different performances and trends: while IT characterizes a fragmented and liberal market with
significant present of SME segmentation, more mature telecommunication sector practically consists of
three big mobile operators and one cable operator. As this analysis has been obtained primarily from
the perspective of potential investors in new ICT areas, the focus is on the SME segment and IT service
companies. For that reason, the Telecommunication part has been reduced to a few key observations.
According to RATEL’s data, the revenues from telecom services in 2010 amounted to €1.46 billion. The
average annual growth rate of the telecom sector revenues in the period from 2005 to 2010 was 9.4%.
The share of telecom sector revenues in GDP was around 4.98% (cf. 4.76% in 2009). The total
investments in the telecom sector in 2010 amounted to €274 million.
In terms of different services, in 2010, the largest share of total revenues, approximately 53%, went to
the mobile market, whereas VoIP services with 0.2% represented the smallest share. Accordingly,
investments in the mobile market had the largest share in the total revenues, 48% in 2010, whereas
investments in VoIP only 0.1%. The structure of telecommunications sector revenues is provided below
(Figure 7).
Figure 7

Revenue and Investments by Telecommunicati on Services, in 2010

0,2%
0.2%
5,9% 3,4%
5.9% 3.4%
9,0%
9.0%

Mobile
Mobile

11,6%
11.6%

Fixed
Fixed

28.9%
28,9%

Mobile
Mobile
Fixed
Fixed

12,7%
12.7%

Internet
Internet
52,7%
52.7%

0,2%
0.2%

48.2%
48,2%

Media contents
Media contents
distribution
distribution
Broadcasting
Broadcasting

Internet
Internet
27.4%
27,4%

VoIP
VoIP

Media contents
Media contents
distribution
distribution

VoIP
VoIP

Source: RATEL

Telecom service baskets represent monthly expenditure per subscriber. The low usage basket shows the
average monthly expenditure for basic telecom services, which include TV, fixed and mobile telephone
services, whereas the high usage basket shows using Internet and CATV in addition to the basic package.
In 2010, the cost of the basic package equaled 4.8% of the average monthly salary, and that of the
extended package amounted to approximately 13%.
ICT Development Index
In 2007, the International Telecommunication Union (ITU) initiated the process of creating a single Index
used in measuring the development of information society, the so-called ICT Development Index (IDI).
This single IDI Index serves as a benchmarking tool for measuring the development of the ICT market in
U N Member States, digital divide between the developed and developing countries; developmental
potential of the ICT market.

17

17

F iig u rre 8
F gu e 8

IIC T D e v e llo p m e n tt IIn d e x ,, IID II S ttrru c ttu rre
CT Deve opmen
ndex
D S uc u e

ICT Readiness
(infrastructure,
access)

ICT
Development
Index

ICT Use
(intensity)

ICT Impact
(outcomes)

ICT Capability
(skills)

Source: RATEL
Source: RATEL

This Index combines 11 indicators divided into three sub-groups: (1) ICT Readiness (infrastructure and
This Index combines 11 indicators divided into three sub-groups: (1) ICT Readiness (infrastructure and
access); (2) ICT use (primarily by individuals, but also households and entrepreneurs) and the intensity of
access); (2) ICT use (primarily by individuals, but also households and entrepreneurs) and the intensity of
use; (3) ICT Capability (skills necessary for the effective use of ICTs).
use; (3) ICT Capability (skills necessary for the effective use of ICTs).
The value of IDI Index for the Republic of Serbia in 2010 amounts to 5.10, which shows a significant
The value of IDI Index for the Republic of Serbia in 2010 amounts to 5.10, which shows a significant
growth compared to 4.23 in 2008 and 4.80 in 2009. Considering the previous ITU data, we may
growth compared to 4.23 in 2008 and 4.80 in 2009. Considering the previous ITU data, we may
anticipate that, based on the IDI Index value, Serbia will secure a place among the first 40 countries on
anticipate that, based on the IDI Index value, Serbia will secure a place among the first 40 countries on
the list.
the list.
The fact that indicators for ICT access have significantly higher values than indicators for ICT usage is
The fact that indicators for ICT access have significantly higher values than indicators for ICT usage is
apparent and serves as an illustration of the disparity between the capacity of the existing
apparent and serves as an illustration of the disparity between the capacity of the existing
telecommunication infrastructure and its use in terms of services transmitted through such
telecommunication infrastructure and its use in terms of services transmitted through such
infrastructure in Serbia. The same applies to usage of broadband Internet services. On the other hand,
infrastructure in Serbia. The same applies to usage of broadband Internet services. On the other hand,
ICT skills indicators are of the appropriate value.
ICT skills indicators are of the appropriate value.

18

18
18

Serbian Internet Services Market in 2010
Total revenues earned from provision of Internet services reached 13.5 billion RSD (around €135 million)
in 2010, which represents a growth of 22% compared to 2009. Incomes multiplied six times in
comparison to year 2006 when this trend was recorded for the first time. [See Terminology - no
difference between income, revenue and turnover as used in this text]
Figure 9

Incomes Earned from Internet (in millions of RSD)

16.000

16,000

Year on Year Growth140%
(%)
140%
Year on Year Growth (%)

Internet Access in Households (%)
Internet Access in Households (%)

13.527

14.000

13,527

14,000

12.000

120%

120%

11.108

12,000

100%

11,108

10.000

100%

8.762

10,000

80%

8,762

80%

8.000

8,000

60%

6.000

4,743

40%

40%

4.000

4,000

2.000

60%

4.743

6,000

2,166

2.166

20%

20%

2,000
0

0

2
2
2
2006 0 06 2007 0 07 20080 08

20
2009 09

20
2010 10

0%

0%

Source: RATEL [Republic Telecommunication Agency]

Internet Operators 192 Internet operators were registered in Serbia in December 2010, approximately
the same number as it was in 2009.
Table 7

Total Number of Internet Operators in Serbia

Period

2006

2007

2008

2009

2010

Number of operators

109

159

197

199

192

Source: RATEL [Republic Telecommunication Agency]

Internet Penetration: The number of Internet connections per 100 citizens was approximately 23 and
the number of broadband Internet connections per 100 citizens was approximately 19.
Broadband Internet Penetration: Unless 3G mobile network subscribers are taken into consideration,
the penetration of broadband Internet access amounts to 9.2%, which is above the average in the SEE
region (8.01%). However, the penetration of broadband Internet access in Serbia is significantly below
the EU27 average (24%).
Taking into consideration all relevant parameters, the Serbian Internet market has projected a constant
growth in the following few years. Assumption is that the number of broadband connections per 100
citizens will reach the present level in developed European countries by 2013.

19

19

IT Industry
IT Industry
For the needs of this report the 2007, OECD ICT sector definition (ISIC Rev. 4) is used.
For the needs of this report the 2007, OECD ICT sector definition (ISIC Rev. 4) is used.
T a b lle 8
Tab e 8

O E C D IIC T S e c tto rr D e ffiin iittiio n
OECD CT Sec o De n on

ICT manufacturing industries
2610 Manufacture of electronic components and boards
2610 Manufacture of electronic components and boards
2620 Manufacture of computers and peripheral equipment
2620 Manufacture of computers and peripheral equipment
2630 Manufacture of communication equipment
2630 Manufacture of communication equipment
2640 Manufacture of consumer electronics
2640 Manufacture of consumer electronics
2680 Manufacture of magnetic and optical media
2680 Manufacture of magnetic and optical media
4651 Wholesale of computers, computer peripheral equipment
4651 Wholesale of computers, computer peripheral equipment
and software
and software
4652 Wholesale of electronic and telecommunications
4652 Wholesale of electronic and telecommunications
equipment and parts
equipment and parts
5820 Software publishing
5820 Software publishing
61 Telecommunications
61 Telecommunications
62 Computer programming, consultancy and related activities
62 Computer programming, consultancy and related activities

IT industry
IT industry

IT Converged
IT Converged
industry
industry
Y
Y

PC Hardware
PC Hardware
Y
Y
Y
Y
Y
Y
IT Channels -IT Channels
Wholesale and retail
Wholesale and retail
Y
Y
Software
Software
Y
Y
IT services
IT services
Software
Software

631 Data processing, hosting and related activities; Web portals
631 Data processing, hosting and related activities; Web portals
951 Repair of computers and communication equipment
951 Repair of computers and communication equipment
IT services
IT services

Y
Y

The IT industry in this study consists only from those companies whose real activities fall within the
The IT industry in this study consists only from those companies whose real activities fall within the
above presented NACE classes. This is not an easy thing to do in Serbia and presented analysis is excerpt
above presented NACE classes. This is not an easy thing to do in Serbia and presented analysis is excerpt
from the study “Serbian IT Industry 2010”, which treats this issue in detail.
from the study “Serbian IT Industry 2010”, which treats this issue in detail.
In order to get the precise insight of Serbian IT industry structure, in “Serbian IT Industry 2010”, IT
In order to get the precise insight of Serbian IT industry structure, in “Serbian IT Industry 2010”, IT
companies are grouped into four clearly defined categories, relying, at the same time, on new NACE
companies are grouped into four clearly defined categories, relying, at the same time, on new NACE
classes. Those categories are: (1) IT Channels -- Wholesale and retail, (2) IT services, (3) Software and (4)
classes. Those categories are: (1) IT Channels Wholesale and retail, (2) IT services, (3) Software and (4)
PC Hardware. All those companies that did not have clear product portfolio and by their size belong to
PC Hardware. All those companies that did not have clear product portfolio and by their size belong to
micro companies, belong into the category “Other -- unclassified”. This report also includes companies
micro companies, belong into the category “Other unclassified”. This report also includes companies
with noticeable dealing in information technologies but coming from the converging industries:
with noticeable dealing in information technologies but coming from the converging industries:
telecommunication, office equipment and consumer/home electronic. These companies are in the
telecommunication, office equipment and consumer/home electronic. These companies are in the
category “Converged industry”.
category “Converged industry”.
Characteristics of the IT industry in this report rely on non-consolidated publicly available data of IT
Characteristics of the IT industry in this report rely on non-consolidated publicly available data of IT
companies taken from their financial reports for 2010. The SBRA (Serbian Business Registers Agency) –
companies taken from their financial reports for 2010. The SBRA (Serbian Business Registers Agency) –
Register of Financial Statements and Solvency, provided the data contained in the report on Mineco’s
Register of Financial Statements and Solvency, provided the data contained in the report on Mineco’s
demand. Following is the presentation of Serbian IT industry through the number of IT companies, their
demand. Following is the presentation of Serbian IT industry through the number of IT companies, their
size, structure and number of employees. The terms: revenue, added value and net asset in Serbian IT
size, structure and number of employees. The terms: revenue, added value and net asset in Serbian IT
sector are used for the whole IT sector where all active IT companies revenues, added values and net
sector are used for the whole IT sector where all active IT companies revenues, added values and net
assets are summarized, respectively [see Terminology].
assets are summarized, respectively [see Terminology].
In 2010, 1,614 active enterprises, which accomplished revenues higher than 400,000 RSD, formed the
Serbian IT industry. Total number of employees was 13.816 and represented 0.9% of the total workforce
Serbian IT industry. Total number of employees was 13.816 and represented 0.9% of the total workforce
in Serbia. Average number of employees was 8.6 and average revenue and added value -- per employee,
in Serbia. Average number of employees was 8.6 and average revenue and added value per employee,
were €80,034 and €26,598 respectively.
were €80,034 and €26,598 respectively.
In their study on the Belgrade Service Sector, FREN claimed that productivity of ICT companies was 68%
In their study on the Belgrade Service Sector, FREN claimed that productivity of ICT companies was 68%
higher than any other business sector in Serbia and more than three times higher than the Serbian
higher than any other business sector in Serbia and more than three times higher than the Serbian
average (FREN 2007). They also found that ICT companies have the highest average gross wage.
average (FREN 2007). They also found that ICT companies have the highest average gross wage.
20
20
20

Number of IT Companies in Serbia
Serbian IT industry. In comparison to 2009, the number of IT companies increased for 2.8%, where the
share of software companies raised for 1 percentage point, similarly to the number of IT service
companies. IT Channels - Wholesale and retail companies, decreased their share in total number of IT
companies.

IT Channels - Wholesale and retail
IT services
Software
PC Hardware
Other – unclassified
Converged industry
Total
Total [%]

10
19
3

32
225
13,9%

4
36
2,2%

1
3

4
0,2%

Total

25
102
52
14

15
244
336
253
355
146
1349
83,6%

Big
enterprises

Medium
enterprises

IT industry sub-sector

Small
enterprises

Micro
enterprises

Table 9 Number of IT companies in Serbia, 2010 according to the IT Sub-sector and Company size

51
368
391
267
355
182
1614
100,0%

Source: Register of Financial Statement and Solvency, SBRA, prepared on Mineco’s demand

Key comments for the above table:
Serbian IT industry has only four big IT enterprises (with more than 250 employees), three of them
with international owners and defined corporate standards.
A huge number of micro companies (1,349), which have low financial capacities, insufficient
technological and managing skills, visibly characterize Serbian IT industry. In contrast, positioned
in between, SME segment shows strong vitality.
SME segment with 261 enterprises represents 16% of all IT enterprises. Almost half of companies
from the SME segment have been active in IT services segment (121 of 261). Investments and
support to SME segment could be the decisive factor in the fast development of IT industry.
Figure 10 Structure of IT Companies in Serbia, 2010

11% 3%
11% 3%

IT Channels
IT Channels
23%
23%

IT services
IT services
Software
Software

22%22%

PC Hardware
PC Hardware
17%

17%

Other - unclassified


24%

24%

Converged industry

Converged industry


21

21

Workforce in Serbian IT Industry
Workforce in Serbian IT Industry
Serbian IT industry employed 13,816 workers in 2010. This is a modest number in comparison to 1.45
Serbian IT industry employed 13,816 workers in 2010. This is a modest number in comparison to 1.45
million, which is the number of the entire workforce (without entrepreneurs). However, the estimate is
million, which is the number of the entire workforce (without entrepreneurs). However, the estimate is
that this number is just a smaller part of much bigger ICT work corpus of nearly 50,000 ICT specialists.
that this number is just a smaller part of much bigger ICT work corpus of nearly 50,000 ICT specialists.
Besides IT industry, the estimates indicate that around 35,000 ICT specialists work in
Besides IT industry, the estimates indicate that around 35,000 ICT specialists work in
telecommunications sector, end user companies (which are IT users) and entrepreneurial ICT sector.
telecommunications sector, end user companies (which are IT users) and entrepreneurial ICT sector.
In comparison to 2007 (a year before the crisis), all IT sub-sectors have increased the number of
In comparison to 2007 (a year before the crisis), all IT sub-sectors have increased the number of
employees which confirms the developing character of IT sector.
employees which confirms the developing character of IT sector.

IT Channels --Wholesale and retail
IT Channels Wholesale and retail
IT services
IT services
Software
Software
PC Hardware
PC Hardware
Converged industry
Converged industry
Total
Total
Total [%]
Total [%]

102
102
1.018
1.018
1.160
1.160
818
818
575
575
619
619
4.292
4.292
31,1%
31,1%

570
570
2.391
2.391
1.031
1.031
314
314
0
0
635
635
4.941
4.941
35,8%
35,8%

893
893
1.811
1.811
289
289
0
0
0
0
333
333
3.326
3.326
24,1%
24,1%

Total IT
industry

Big
enterprises

Medium
enterprises


Small
enterprises

Micro
enterprises

T a b lle 1 0 W o rrk ffo rrc e iin IIT iin d u s ttrry iin S e rrb iia ,, a c c o rrd iin g tto tth e IIT S u b --s e c tto rr a n d C o m p a n y S iiz e
Tab e 10 Wo k o ce n T ndus y n Se b a acco d ng o he T Sub sec o and Company S ze

272
272
985
985
0
0
0
0
0
0
0
0
1.257
1.257
9,1%
9,1%

1.837
1.837
6.205
6.205
2.480
2.480
1.132
1.132
575
575
1.587
1.587
13.816
13.816
100,0%
100,0%


The employment in IT service sub-sector increased significantly above average in 2010 and achieved
The employment in IT service sub-sector increased significantly above average in 2010 and achieved
the number of 6,205 employees, which is 44.9% of total IT sector work force. Following is the
the number of 6,205 employees, which is 44.9% of total IT sector work force. Following is the
Software sub-sector with 17.9% share in total IT sector work force.
Software sub-sector with 17.9% share in total IT sector work force.
SME segment in IT services sub-sector also shows a significant number of employees (4.202). More
SME segment in IT services sub-sector also shows a significant number of employees (4.202). More
than half employees from SME segment work in IT service sub-sector.
than half employees from SME segment work in IT service sub-sector.
Average number of employees in SME segment is 31.7 -- almost 4 times more than the IT industry
Average number of employees in SME segment is 31.7 almost 4 times more than the IT industry
average (8.6).
average (8.6).
Slightly more than 4% employees (314) from the whole SME segment work in the PC hardware subSlightly more than 4% employees (314) from the whole SME segment work in the PC hardware subsector. Micro enterprises are dominating in PC equipment sub-sector total employment.
sector. Micro enterprises are dominating in PC equipment sub-sector total employment.
F iig u rre 1 1 S h a rre o ff IIT IIn d u s ttrry S u b --s e c tto rr ((% )) iin T o tta ll N u m b e rr o ff E m p llo y e e s iin IIC T IIn d u s ttrry
F gu e 11 Sha e o
T ndus y Sub sec o
%
n To a Numbe o Emp oyees n CT ndus y

12%

4%
8%

4%
4%

13% 13%
12%
12%
13%

IT ChannelsIT Channels
IT Channels
IT services IT services
IT services

8%
8%

Software
Software

Software

PC Hardware
PC Hardware
18%
18%

18%

PC Hardware

Other --unclassified
Other unclassified

45%
45%

Converged Other - unclassified
Convergedindustry
industry

45%

Converged industry

22

22
22

Revenue in the Serbian IT Industry
Revenue (or turnover) of the IT industry represents the revenue of the whole IT sector - all IT companies
revenues summarized. Compared to the value of IT market, IT industry revenue is typically two times
bigger, due to the selling multiplications in the distribution channel, export and the non-IT part of
companies’ business.
Serbian IT Industry accomplished revenues of more than €1.1 billion in 2010. Based on previous
researches, it is estimated that the revenues from the IT goods and services make around 80% of IT
industry revenues (nearly €900 million), while the remaining 20% come from converging and non-ICT
products.
Table 11

Revenue in Serbian IT Industry [€ million], according to the Sub-sector and Company

IT services
Software
PC Hardware
Converged industry
Total
Total [%]

14,1
52,3
34,2
62,4
14,7
34,7
212,3
19,2%

101,0
147,7
33,2
19,7
41,3
342,9
31,0%

302,5
104,9
9,1
20,3
436,8
39,5%

34,3
79,4
113,7
10,3%

Total IT
industry

Big
enterprises

Medium
enterprises


Small
enterprises

Micro
enterprises

Size

451,9
384,2
76,5
82,1
14,7
96,4
1,105,8
100,0%


In comparison with 2009, total IT industry revenue in 2010 went up by 5% - similarly to the entire IT
market growth.
The biggest revenue of 41% IT industry sector revenues were in the Wholesale and Retail sub-sector
(€451.9 million). Following is IT service sub-sector with €384.2 million (35%).
With the revenues of almost €780 million, SME gathered 70% share in total IT industry revenues. In
the SME segment, the biggest revenues also came from the Wholesale and Retail sub-sector –
more than the half of this segment revenue.
Figure 12

Structure of IT Industry Sub-Sector (%) in Revenues

IT Channels
IT Channels

9%
1% 9%
1%
7%
7%

IT services
IT services

41%
41%

7%
7%

Software
Software
PC Hardware
PC Hardware
Other - Other - unclassified
unclassified

35%
35%

Converged industry
Converged industry

23

23


Added Value in the Serbian IT Industry
Added Value in the Serbian IT Industry
IT companies have accomplished added value amounting to €367 million, which is 33% of the IT industry
IT companies have accomplished added value amounting to €367 million, which is 33% of the IT industry
revenues. This amount makes 1.2 % of Serbian GDP.
revenues. This amount makes 1.2 % of Serbian GDP.

IT Channels --Wholesale and retail
IT Channels Wholesale and retail
IT services
IT services
Software
Software
PC Hardware
PC Hardware
Converged industry
Converged industry
Total
Total
Total [%]
Total [%]

1,6
1,6
29,2
29,2
24,1
24,1
9,6
9,6
7,9
7,9
12,1
12,1
84,5
84,5
23,0%
23,0%

11,2
11,2
76,2
76,2
26,2
26,2
3,5
3,5
0,0
0,0
15,5
15,5
132,6
132,6
36,1%
36,1%

25,4
25,4
61,5
61,5
7,3
7,3
0,0
0,0
0,0
0,0
11,9
11,9
106,2
106,2
28,9%
28,9%

3,1
3,1
41,2
41,2
0,0
0,0
0,0
0,0
0,0
0,0
0,0
0,0
44,3
44,3
12,0%
12,0%

Total IT
industry

Big
enterprises

Medium
enterprises

Small
enterprises


Micro
enterprises

T a b lle 1 2 A d d e d V a llu e iin tth e S e rrb iia n IIT IIn d u s ttrry [[€ m iilllliio n ]],, 2 0 1 0 ..
Tab e 12 Added Va ue n he Se b an T ndus y € m
on
2010

41,4
41,4
208,1
208,1
57,6
57,6
13,0
13,0
7,9
7,9
39,5
39,5
367,5
367,5
100,0%
100,0%


IT services sub-sector with 57% share achieved the highest added value (€208 million), while the
IT services sub-sector with 57% share achieved the highest added value (€208 million), while the
shares of other sub-sectors were significantly lower.
shares of other sub-sectors were significantly lower.
The SME segment with a 65% share in total added value of the IT industry accomplished €240 million
The SME segment with a 65% share in total added value of the IT industry accomplished €240 million
in 2010.
in 2010.
In addition, In the SME segment the biggest part of added value came from IT service sub-sector.
In addition, In the SME segment the biggest part of added value came from IT service sub-sector.
Added value in SME segment was 8.5% higher than the IT industry average.
Added value in SME segment was 8.5% higher than the IT industry average.
The IT service segment began forming the most challenging market. System integrators and software
The IT service segment began forming the most challenging market. System integrators and software
companies who recognized the fast growing service market and became attached to it, achieved
companies who recognized the fast growing service market and became attached to it, achieved
success. Additionally, companies that collaborated with global vendors progressed rapidly thanks to
success. Additionally, companies that collaborated with global vendors progressed rapidly thanks to
their prestigious international experience and knowledge.
their prestigious international experience and knowledge.
International vendors significantly strengthened their local presence during the past few years by
International vendors significantly strengthened their local presence during the past few years by
establishing their own companies for global services. Microsoft, Cisco and Red Hat have set up their
establishing their own companies for global services. Microsoft, Cisco and Red Hat have set up their
development centers in Belgrade, one of the few in the world.
development centers in Belgrade, one of the few in the world.
International IT companies are advancing into the Serbian IT market attracted by its potential. Local
International IT companies are advancing into the Serbian IT market attracted by its potential. Local
companies will face a strong globalization effect, but at the same time, the global IT companies have to
companies will face a strong globalization effect, but at the same time, the global IT companies have to
localize – which means they will have to establish their own companies and local offices and employ
localize – which means they will have to establish their own companies and local offices and employ
local staff.
local staff.

24

24
24

Figure 13

Share of the Value Added ( %) in Revenues of ICT Industry S ub-sectors

11%
11%
11% 11%
2%
3% 2%

IT Channels

IT Channels

IT services

16% 16%

IT services

Software

3%

Software

PC Hardware PC Hardware
Other - unclassified - unclassified
Other

57%

Converged industry

57%

Converged industry


Net Assets of the Serbian IT Industry
Serbian IT industry continued to grow in 2010 despite the crisis with around €256 million of net assets
[see Terminology]. Compared to 2006, when the IT industry net assets were round €150 million, the
industry accomplished an impressive 58% growth. This trend is “spiritus movens” for the private sector,
which dominates in IT industry. The high return rates on net assets will certainly attract foreign investors
willing to take risk and use the opportunity for making a good profit. It is certain that IT services and
Software sub-sectors have a good perspective.


Total IT
industry

Big
enterprises

Medium
enterprises

Small
enterprises

IT industry Sub-Sector

Micro
enterprises

Table 13 Net Assets of Serbian IT Industry [€ million], 2010

1,0

6,4

21,1

0,2

28,7

IT services

23,4

58,9

33,3

35,1

150,8

Software

10,4

18,0

3,7

-

32,1

PC Hardware

9,7

4,0

-

-

13,7


2,8

-

-

-

2,8

Converged industry

9,0

12,6

6,3

-

27,9

Total

56,4

99,9

64,5

35,3

256,1

22,0%

Total [%]

39,0%

25,2%

13,8%

100,0%


The highest volumes of assets, over €150 million, which form 59% of the IT industry net assets, own
companies in the IT service sub-sector.
With €164 million, the SME share in IT industry net assets in 2010 was 64%.
Figure 14

Structure of IT Industry S ub-sector (%) in Net Assets

25

25

IT Channels
IT Channels
IT Channels

11%
11%
11% 11%
1%1%11% 11%
1%
5%5%
5%

IT services
IT services
IT services

Software
Software
Software

13%
13%
13%

PC Hardware
PC Hardware
PC Hardware
Other -- unclassified
Other unclassified
59%
59%
59%

Converged industry
Converged industry
Converged industry


When it comes to geographic distribution of ICT companies in Serbia, most companies are located in
When it comes to geographic distribution of ICT companies in Serbia, most companies are located in
Belgrade, Nis and Novi Sad. The vast majority of other municipalities have an insignificant concentration
Belgrade, Nis and Novi Sad. The vast majority of other municipalities have an insignificant concentration
of ICT companies.
of ICT companies.
IT Park Indjija
IT Park Indjija
Building of “IT Park” in Indjija began in July of 2011. In the first phase, 25.000 m22 of office space would
Building of “IT Park” in Indjija began in July of 2011. In the first phase, 25.000 m of office space would
provide jobs for 2.500 staff according to the plan. Completion of this investment, worth €50 million, will
provide jobs for 2.500 staff according to the plan. Completion of this investment, worth €50 million, will
probably be in the mid-2012.
probably be in the mid-2012.
There was an announcement for Project for building “IT Park” in Indjija, worth 600 million USD, in
There was an announcement for Project for building “IT Park” in Indjija, worth 600 million USD, in
September 2007, but it stopped due to the word economic crisis. The investor, Indian company
September 2007, but it stopped due to the word economic crisis. The investor, Indian company
“Embassy Group“, announced building of 250,000 m2 office space in the period of five years, up to
“Embassy Group“, announced building of 250,000 m2 office space in the period of five years, up to
2013, making that space the Europe’s largest. The Park should provide housing to IT services and
2013, making that space the Europe’s largest. The Park should provide housing to IT services and
technology providers employing up to 25,000 individuals (though not exclusively IT experts).
technology providers employing up to 25,000 individuals (though not exclusively IT experts).
Potentials of the standardization of Serbian companies
Potentials of the standardization of Serbian companies
When it comes to the standardization of Serbian companies, the general conclusions appears to be that
When it comes to the standardization of Serbian companies, the general conclusions appears to be that
the demand from foreign partners importing from Serbia drives it. However, one can conclude that, in
the demand from foreign partners importing from Serbia drives it. However, one can conclude that, in
many cases companies are not aware which set of standards they need to introduce, nor where or how
many cases companies are not aware which set of standards they need to introduce, nor where or how
they can get those standards. These issues significantly undermine the competitiveness of Serbian
they can get those standards. These issues significantly undermine the competitiveness of Serbian
industry.
industry.
Lack of specialization among Serbian IT companies has been recognized as a big issue. Serbian market is
Lack of specialization among Serbian IT companies has been recognized as a big issue. Serbian market is
not big enough, so IT companies do not have the incentive to specialize in any specific areas. In order to
not big enough, so IT companies do not have the incentive to specialize in any specific areas. In order to
survive, they need to cover a broad scope of activities. Many, if not most of micro and SME companies
survive, they need to cover a broad scope of activities. Many, if not most of micro and SME companies
tend to take the approach of being able to perform any kind of activity, even though some of them
tend to take the approach of being able to perform any kind of activity, even though some of them
might be doing that for the first time. Moreover, there is no local offer of human resources with
might be doing that for the first time. Moreover, there is no local offer of human resources with
specialization in particular areas since most of the IT professionals have a broad expertise. If companies
specialization in particular areas since most of the IT professionals have a broad expertise. If companies
need professionals with specialization in certain fields, they would rather train some of their existing
need professionals with specialization in certain fields, they would rather train some of their existing
staff than engage external professionals or companies with the specialization in the required field.
staff than engage external professionals or companies with the specialization in the required field.

26

26
26

IT and Internet Usage
Since 2006, Statistical Office of the Republic of Serbia publishes annually statistics of ICT usage in
households and businesses (RZS 2006, 2007, 2008, 2009, 2010, 2011). The report for 2011 showed that
98,9% of households own TV sets, 82,5% have mobile phones, 52,1% personal computers and 15,5%
laptop computers. Ownership of ICT equipment is mostly concentrated in the urban population with a
monthly income of more than €600 (87,1%).
The overall usage of computers in Serbia is still unsatisfactory, with 40.1% of the population having no
access to computers. The number of users has increased by a solid 3.5% in 2011. Among different
groups in the population, students are the most active in computer use (99.5%), followed by employees
(74.2%). In real figures, more than 2.5 million people in Serbia use computers every day, which is about
200,000 more than in 2010.
Internet access In Serbia has 41.2% of households, which is 2.2% more than in 2010. In Belgrade, 51.6%
of households have Internet access, in Vojvodina 42.0% and in Central Serbia 36.3%. Digital divide (gap)
in both economical and geographical spheres is apparent.
Figure 15

Digital Divide. Households with Internet Connection, by Monthly Incomes L evel

100,0%

100.0%

56,0%

56.0%

Monthly
Monthly
incomes
incomes

31,4%

31.4%
12,6%
10,8%

10.8%
under 300 €

under 300 €

17,5%

17.5%
300 - 600 €

300 - 600 €

12.6%
10,5%

38,8%

38.8%

Internet
Connection
Internet
Connection

10.5%
600 € and
All Housholds
600 € and more All Housholds
more

Source: Statistical Office of the Republic of Serbia

The Internet is mostly accessed by DSL (ADSL) connections (50,6%), followed by other Cable/LAN
connections (29,6%) and WAP/GPRS (24,1%). In 2011, Internet access through modem/dial-up
connections has decreased by 7.8%, as a direct result of recent investments in broadband infrastructure.
In Serbia, 1.9 million people use the Internet on a daily basis. Most of them use the Internet at home
(86.4%). The survey estimates that more than 680.000 people use e-Government services in Serbia,
which represents an increase of 330.000 compared to the data from 2010.
Use of ICT within companies is more widely spread than in households, with 98.1% of companies using
computers in running of business. All large and medium-sized companies (100%) own computers, while
the percentage is a bit smaller within micro- and small-sized enterprises (98.0%). Among companies that
use computers, 79.7% have Wire-based LAN, 57.3% Intranet, 46.9% Wireless LAN and 13.7% Extranet
(RZS 2010).
The majority of companies (97.2%) in Serbia have access to the Internet, using mostly DSL (xDSL, ADSL)
as the connection (75.2%). The majority of companies that have Internet connection use e-Government

27

27

ICT in Serbia at a Glance

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (13)

Ähnlich wie ICT in Serbia at a Glance

Ähnlich wie ICT in Serbia at a Glance (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

ICT in Serbia at a Glance