With their strategic location in Southeast Europe (SEE), fast-developing economies and growing tech communities, the Balkan countries are turning into strategic business destinations for expanding IT operations. In this article, we take a look at four of them - Bulgaria, Greece, Romania and Serbia to determine which one stands out of the crowd and is worth looking at for future investments and business development.

Bulgaria

Area: 110,993.6 km²
Population: 6,951,482
Capital city: Sofia
Language: Bulgarian
Time Zone: EET (UTC+2)
Currency: BGN (Bulgarian lev is pegged to the EURO, 1 EUR= 1.9558 BGN)

Bulgaria is a country with a solid reputation as a destination for BPO services and near- and off-shoring IT operations. The country ranks highly in renowned reports such as A.T. Kearney Global Services Location Index 2019 (rank 17), Global Competitiveness Index (rank 49), and 2020 Doing Business Report (61).

Some of the main advantages of Bulgaria as an attractive IT destination are the availability of a highly-skilled and multi-lingual talent pool, a competitive level of labour and operational costs, favourable macroeconomic environment, as well as good internet and telecommunications infrastructure.

• Size of IT talent pool and cost of talent

As of March 2021, according to the National Social Security Institute, the IT sector in Bulgaria consists of approximately 75,000 full-time employees (excluding freelancing professionals). Furthermore, 6,500 new graduates are entering the market each year and gradually growing the IT talent pool in the country.

The workforce is mainly concentrated in the major cities such as Sofia, Plovdiv and Varna, with the capital city being the main tech hub. As a result of the pandemic of Covid-19 and the transition to remote work, however, an increasing talent dispersion is observed. Other cities such as Burgas, Veliko Tarnovo and Shumen are gaining popularity among tech professionals and companies.

The average monthly salary in the sector for 2019 was 1,636 EUR. The exact amounts varied depending on the seniority and technology skillsets required.

• Start-up ecosystem

Over the past 10-15 years, Bulgaria’s start-up scene has been flourishing. More than 2,000 start-ups have been created only between 2013 and 2018. And currently, there are more than 15,000 people employed by start-up and scale-up companies in Sofia.

Furthermore, in 2015 Forbs ranked the capital city of Sofia in the top 10 cities to launch a start-up worldwide.

In the 2020 StartupBlink Ecosystem Report, Bulgaria climbed three positions and ranked 32nd with ambitions to be among the top 30 in 2021. According to the report, “Bulgaria is indeed maintaining its position as a country with a strong start-up ecosystem in the Balkan region”.

To further support the start-up ecosystem in the country, the Bulgarian government has recently introduced the so-called StartUp Visa. This is a mechanism that ensures а more effective procedure for non-EU citizens to invest and establish new businesses in the country. With the introduced changes in the legislation, the government aims to attract more foreign investments in the country and to further boost the start-up ecosystem.

• IT infrastructure

Another advantage of Bulgaria is its fast internet connection speed and wide internet coverage. With its average consumer mobile download speed of 80.86 Mbps as of January 2021, the country ranks 5th in Europe and 13th in the world in the Ookla’s Global Index.

The growing number of data centers in the country is another indicator for the good and constantly improving IT infrastructure. There are currently 21 data centres in Bulgaria.

• EU membership and law synchronization

Bulgaria is an EU member since January 1st, 2007. The country’s legislation is synchronized and regulated by EU laws. This significantly eases the process of legal compliance, especially for businesses from other member states.

• Accessibility

Bulgaria has 4 international airports in Sofia, Burgas, Varna and Plovdiv. The airport in the capital city Sofia (SOF) is the busiest one, hosting major international airlines and making the country easily accessible from main economic centres in Europe and worldwide.

Greece

Area: 131,957 km²
Population: 10,724,599
Capital: Athens
Language: Greek
Time Zone: EET (UTC+2)
Currency: EUR

Greece is one of the Balkan countries with good potential in terms of IT business opportunities. The country ranks 59^th in the Global Competitiveness Index and 79^th in the 2020 Doing Business Report. The main advantages of the country are its strategic location and good connections to Central Europe, Asia and the Middle East, the synchronized EU legislation and promising potential of growth of the ICT sector.

• Size of IT talent pool and cost of talent

According to the 2020-2021 Digital transformation in Greece report, 1.8% of the total workforce in the country is employed in the ICT sector which equals to approximately 70,000 people. And although it is steadily growing in the recent years, this percentage is still far below the EU average of 3.9%.

The average monthly salary in the sector is 2,440 EUR which is considerably high with the talent pool size in mind and compared to the other three countries in the region.

• Start-up ecosystem

Greece’s start-up ecosystem is in its early stage of development. It was just getting back on track after the Greek Government Debts crisis between 2009 and 2017, but the Covid-19 pandemic slowed its growth once again.

The Startup Blink Report ranks Greece’s start-up ecosystem between Serbia and Romania at the 44^th position. According to the National Elevate platform, there are currently 190 registered start-ups in the country.

The government has several initiatives (Equifund - an initiative created by the Hellenic Republic in cooperation with the European Investment Fund to provide SMEs with funding for growth, Elevate Greece – a national platform for information on the Greece start up ecosystem, and others) that aim to support the development of the start-up ecosystem in the country, but a greater effort is required in order to create a favourable entrepreneurial environment.

• IT infrastructure

In terms of internet speed Greece performs better than Serbia and Romania. The country ranks at 29th position with 56.39 Mbps average mobile download speed.

Positive signals for the further development of the IT infrastructure in the country are the recent announcement by Microsoft about the opening of a new data centre in the area of Attica, as well as expressed interest in the country by Amazon.

• EU membership & law synchronization

Greece is an EU member since 1981. As in Bulgaria and Romania, its legislation is synchronized and regulated by the EU laws.

• Accessibility

There are 15 international airports in Greece, most of which are located near popular tourist destinations. The primary international airport is the Eleftherios Venizelos Airport (ATH) in the capital of Athens. It handles approximately 25 million passengers each year and serves as a hub for many international airlines. Other major airports are Heraklion Airport (HER), Thessaloniki Airport (SKG) and Rhodes Airport (RHO).

Romania

Area: 238,397 km²
Population: 19,317,984
Capital: Bucharest
Language: Romanian
Time Zone: EET (UTC+2)
Currency: RON (Romanian leu)

Just like Bulgaria, Romania has a good reputation as a destination for doing business. The country’s main advantages are its EU membership and bigger talent pool, that unfortunate comes at a higher price. Romania ranks 28^th in the A.T. Kerney Index 2019, 51^st in the Global Competitiveness Index and 55^th in the 2020 Doing Business Report.

• Size of IT talent pool and cost of talent

Being the largest country by territory and population in the region, Romania expectedly has а sufficient talent pool of IT professionals. According to the Romanian National Institute of Statistics, in 2019 there were 115,343 people employed in the IT sector.

The average net monthly salary in the sector is approximately 1,850 EUR, and according to “The Rise of Digital Challenges” report by McKinsey, the workforce costs would continue to rise. Furthermore, “there are limited labour reserves left to plug into the economy”. So, if aiming to stay competitive, the country should develop a more viable strategy to grow and develop its IT talent pool.

• Start-up ecosystem

Romania’s start-up ecosystem could be defined as being in the early stage of development. According to data from the “The Rise of Digital Challenges” report, in 2018 there were 28 start-ups per million citizens in Romania. This is a significantly small number of start-ups in comparison to the average of 58 in the CEE region. The country ranks 45^th in the 2020 StartupBlink Ecosystem Report, showing a good potential for development and growth.

• IT infrastructure

Romania has a slightly better performance in comparison to Serbia in terms of consumer mobile download speed. It ranks at 38th position in the Ookla’s Global Index with 47.69 Mbps.

In terms of number of data centres, Romania outperforms Bulgaria with 23 units.

• EU membership & law synchronization

Romania is an EU member since January 1st, 2007. This means that just like Greece and its southern neighbour – Bulgaria, the country’s legislation is synchronized and regulated by the EU laws.

• Accessibility

There are 12 active international airports in Romania. The Bucharest Henri Coandă Airport (OTP) is the busiest one with approximately 15 million passengers annually. It hosts many international airlines such as Blue Air, Ryanair and Wizz Air. Among the other major airports are Cluj-Napoca (CLJ), Timișoara Airport (TSR) and Iași Airport (IAS).

Serbia

Area: 77,474 km²
Population: 6,926,705
Capital city: Belgrade
Language: Serbian
Time Zone: CET (UTC+1)
Currency: RSD (Serbian dinar)

Serbia is a Balkan country with good potential for investments and doing business. Despite not being an EU member yet, the country has made some economic progress and reforms in its judicial and public administration systems.

The country ranks at 72nd place in the Global Competitiveness Index and 44th in the 2020 Doing Business Report.

• Size of IT talent pool and cost of talent

Serbia is amongst the countries with the lowest number of IT professionals per 1,000 people in the region. According to the Statistical Office of the Republic of Serbia, in 2020 there were 35,000 full-time employees in the IT sector. With 1,300 IT graduates entering the market annually, the country still has room for improvements in terms of growing its IT talent pool.

On the other hand, the cost of talent is considerably lower in comparison to the other 3 countries in the region. According to the data from the country’s statistical office, the average monthly salary in the sector in 2019 has been approximately 1,100 EUR.

• Start-up ecosystem

Currently, the Serbian start-up ecosystem is in its early stage of development. According to the StartUp Scanner Report in 2019, there were between 200-400 start-up companies in Belgrade and Novi Sad. The majority of start-ups are operating in the fields of Enterprise solutions, AI & Big Data, Gaming, Smart Cities and Blockchain & Crypto.

The Serbian start-up ecosystem value is still considerably small. It is estimated at about $502 million, while the global start-up ecosystem average value is $10.5 billion, according to The Global Startup Ecosystem Report 2020. Serbia ranks 42^nd in the 2020 StartupBlink Ecosystem Report, falling down by 6 positions in comparison to 2019.

• IT infrastructure

In terms of IT infrastructure, Serbia preforms well. With an average consumer mobile download speed of 46.52 Mbps, the country ranks at 39th position in Ookla’s Global Index.

• EU membership and law synchronization

Serbia’s current membership status is “candidate state”. The European Council granted Serbia the status of a candidate country in March 2012, and the accession negotiations officially started in 2014.

Since then, eleven Accession Conference meetings were held, and 18 out of total 35 negotiation chapters have been opened. Serbia is on the right track to join the European Union, but there is still a lot of work to be done.

• Accessibility

Serbia has two active international airports – Belgrade and Nish airports. The Belgrade Nikola Tesla Airport (BEG) is the busiest one with more than 6 million passengers annually. The airport offers an year-round connection to more than 50 cities around the world.

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In conclusion, each Balkan country has its advantages and disadvantages as a nearshore IT destination. Romania, Bulgaria and Greece are EU members, while Serbia is still expected to join the union. All four countries are easily accessible through a number of airports. Romania has significantly bigger, but a bit expensive talent pool with limited growth potential. On the other hand, Serbia could offer an affordable workforce but not being an EU member yet, may cause some difficulties for businesses. Greece seems to be a few steps behind its neighbours with a not very well-developed start-up ecosystem and expensive IT talent, while Bulgaria appears to have a good balance of skilled talent pool at a reasonable cost.

Should you be curious to learn more about the IT sector in Bulgaria, make sure to download our IT industry report or just contact us.