IT as a driver for Socioeconomic Development for South Eastern Europe

NOD Shared Space February 16, 2016 11:00 - 11:15

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Zlatan Bajric
Milan Šolaja

South Eastern European Business Agency – SEEBA

Throughout the years the sourcing of IT services has been oriented towards the Asian market, more specifically towards India. Convinced that the South­Eastern European region is competitive enough, SEEBA has set its goals to promote South­East Europe (SEE) as an alternative market for IT/Media near shoring.

The IT sector in SEE is growing and has shown it self to be one of the highest potential drivers of the regional socio­economic development. This fact has led SEEBA to develop a concept called “Outsource to Europe”. SEEBA wants to encourage the cooperation between Scandinavian and South­Eastern European IT/Media companies. Arguments for choosing Europe over Asia are numerous, such as, competitive price, skilled experts, no time difference and a two hours long flight between Scandinavia and SEE.

With this careful analysis SEEBA together with one of its partners “Balkan and Black Sea ICT Cluster Network” (supported by USAID Regional Economic Growth) set its goals towards South­East Europe and started promoting the region as a new hot­spot for IT/Media outsourcing. So far SEEBA has held two “Outsource to Europe” events in Stockholm and continues to work towards the promotion of the SEE region as a competitive and yet still unexploited near shoring market.

Most of the countries that we are working with suffered heavily from unrest in the late ’90s and are still struggling to transform into sustainable economies. Unemployment rates are high, especially among youth which is recorded in the European youth unemployment list, where these countries are in the top 10. Bosnia and Herzegovina tops with 62%. Academic systems are in transformation and most of the countries have adopted the Bologna educational system. Private sector is adapting fast to the transformation while the public sector has not yet adapted to new technologies. Moreover the level of digitalization is poor.

For this reason, the understanding of what IT can do to further the development of these countries is unsufficient, which leads to practically no policies to facilitate the development of the sector and thus to simplify existing regulations. The result in return is an enormous brain drain. After the conclusion of the miserable facts there still is a positive turn. In fact currently there is an interesting development happening.

Multiple ICT HUBs are beeing setup accross SEE cities that act as centers for networking and education. The community is very vibrant, with thousands of new and existing startups. Freelancers are on the rise and two of the countries in the region are in the top 10 fastest growing freelancer communities in the world. One further positive trend is the founding of medium­sized software development companies that are teaming up with freelancers, as well as startup communities operating in the country and recently regional level.

An example is the “Balkan and Black Sea ICT Network” where multiple countries collaborate having common goals in mind. The focus is set to have unified efforts in promoting export of software to foreign markets, mainly EU, but also to foster innovation and product development. Not only is the result cooperation within IT, but it is also opening up for cross­country collaboration among old foes. Another important aspect is that there is a good balance between companies exporting software development services and ones that are offering developing their own software products. Even though, considering unemployment rates, the current situation is by far not perfect, but there is some light. Instead of wasting energy in the internal market where the public sector is more of a harming force to the development, organizations tend to turn to the global arena. Export of software services is steadily growing year by year.

Hence the IT sector is becoming very attractive for youngsters accross region with high wages and many of them are pursuing a career in this field. Living costs in the region are much lower than in most EU countries which makes them consider a possible future in their home countries.

SEEBA (​South Eastern European Business Agency)
SEEBA delivers high quality IT / Media consulting services in Scandinavia that are sourced from Southeastern Europe. SEEBA’s comprehensive portfolio of services offers tools, knowledge and expertise for emerging companies. SEEBA’s extended partner network covers more than 2,000 consultants in 10 European countries. SEEBA is based in Stockholm, Sweden.

Balkan and Black Sea ICT Cluster Network
The Balkan and Black Sea ICT Clusters Network was launched in April 2014. So far it has 16 members from Albania, Bulgaria, Bosnia and Herzegovina, Greece, Kosovo, Macedonia, Montenegro, Romania, Serbia and Turkey. The main goal of the Network is to create a framework to intensify collaboration of ICT Clusters and ICT organizations in the Balkan and Black Sea region aiming to meet common challenges affecting business opportunities in the region.

REG – Regional Economic Growth (USAID)
USAID’s Regional Economic Growth Project is a three­year project to support inclusive and sustainable economic growth in the E&E region through greater integration and harmonization of regional markets. Project activities focus on improving competitiveness and increasing financial sector stability by promoting economic integration within the region and building economic linkages to the EU and other markets. The REG Project seeks to provide a cost effective platform for demand driven high quality trainings and introduces international best practices in private sector skills and financial sector management