This is a best prospect industry sector for this country. Includes a market overview and trade data.
New opportunities exist in the ICT sector as Bulgarian companies work to increase their competitiveness in the EU, and as the Bulgarian Government complies with EU directives and legislation concerning its digital economy. Bulgaria’s ICT sector is characterized as stable and constantly growing, making it one of the most profitable sectors in Bulgaria.
Bulgaria has a long, rich tradition in the IT and electronics sectors (dating back to the Communist era) and is still known as the Silicon Valley of Southeastern Europe.
Bulgaria is home to approximately 10,000 ICT companies, 70 percent of which are only exporting, making Bulgaria a top ICT outsourcing destination. According to International Data Corporation (IDC) (the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets) the Bulgarian ICT market had a turnover with a 300 percent rise over the past 7 years and has reached 2.5 billion euros. After ten years of EU membership software business in Bulgaria is the best performing sector in the ICT industry. One of the factors that attracts so many companies to do business in Bulgaria is the low and flat corporate tax rates of 10 percent.
Bulgaria is also among the EU member states where the share of ICT in the formation of the gross added value is relatively high, ranking the country 4th in the EU. The move towards cloud services, mobility and social business positively shaped Bulgaria’s future IT landscape with an anticipated annual increase in IT expenditures of 4.2 percent in the next 5 years.
According to the National Statistical Institute, 75.7 percent of urban homes have high speed broadband, but rural areas (especially the underserved areas in North Western Bulgaria) lack such coverage. Around 71 percent of Bulgarian homes subscribe to a fixed broadband connection. Bulgaria needs to address a severe digital skills gap where only 41 percent of the population has basic digital skills. Overall, Bulgaria has retained its ranking from last year with some slight improvements to its score. Bulgarian internet users are among the most intensive users of online video calls (1st place) and social networks (6th place). Over 85 percent of people use the Internet for phone and video calls through various applications. Facebook is the most popular social network in Bulgaria. Only 20 percent of Bulgarians use Internet to interact with state administration bodies, however, as a result of the newly created ministry of e-government various improvements can be expected.
Despite the dynamic development of information technologies in Bulgaria, 28 percent of households still do not have Internet access in their homes. More than half of them, 53.6 percent cited as the main reason the lack of knowledge and skills to work with the internet. Some 48.8 percent think they do not need the internet, find it not useful, not interesting, etc., and, according to 27.9 percent of households the equipment is expensive.
Summary of key facts on broadband internet in Bulgaria:
- Fixed broadband networks reach 95 percent of Bulgaria’s households.
- 71 percent of homes subscribe to fixed broadband, limiting Bulgaria’s ability to exploit the benefits of the digital economy.
- 52.2 percent have mobile broadband connection.
- Half of fixed internet subscriptions offer high-speed connections (Bulgaria is 11th in the EU), the overall level of fixed broadband internet remains average (31th worldwide).
In 2020 the IT industry started with an inertial growth followed by shock during Q2, a mobilization in Q3 and ended the year with pre-holiday positive expectations for 2021. Those proved to be true and that upward trend continued in 2022.
Overall, the pandemic proved positive for the industry. Analysts differ in their predictions, but they share a common view that the speed of technological development is increasing. The COVID-19 pandemic resulted in an acceleration in digitalization, the peak of which we are yet to see.
A universal bottleneck continues to be human capital: 50% of global organizations state that they find it extremely difficult to source the IT talent they need. An unprecedented increase in the demand for IT services has been accompanied by significant social pressure for accountability towards the consumer, society and the environment. In order to adequately address all of these demands in the long term, we have to allocate enough of our scarce post-pandemic resources towards education. It has seen some of the most fundamental transformations, the effects of which we will see over the next 10+ years.
GDPR (General Data Protection Regulation): Companies have complied with data protection directives and regulations for more than two decades. But the General Data Protection Regulation (GDPR), an overhaul of existing European Commission data protection legislation, aims to strengthen and unify those laws for EU citizens. Primary GDPR objectives are to give back control to citizens over their personal data and simplify the regulatory environment for international business.
U.S.-based hospitality, travel, software services and e-commerce companies will certainly have to take a closer look at their online marketing practices. However, any U.S. company that has identified a market in an EU country and has localized Web content should review their Web operations. For U.S. companies, EU-directed online marketing forms and interactions will have to be adjusted to obtain explicit consumer consent. In the language of the GDPR, consent must be freely given, specific, informed, and unambiguous. Once the data is collected, U.S. companies will then have to protect it under the GDPR’s rules. For those that already follow existing data security standards (e.g., PCI DSS, ISO 27001, NIST), these new regulations should not be a burden.
The GDPR gives some leeway in weighing the risks, but a large exposure of email addresses, personal data that contains sensitive data related to medical or financial information or identifiers associated with children, would all require notification to an EU regulator or supervising authority within 72 hours. For not reporting a breach to a regulator within 72 hours, fines are in the first tier of penalties - 2 percent of global revenue - rather than the higher 4 percent that has received more press attention.
Digital Divide: Bulgaria performs slightly better than the EU average when it comes to coverage of high-speed broadband in urban areas. Networks capable of providing at least 30 Mbps are available to more than two-thirds of Bulgarians (72 percent of Bulgarian homes, above the EU average of 71 percent). However, rural areas are not well covered with only 17 percent having high-speed broadband network available.
Labor: Bulgaria has a respected, highly-qualified and inexpensive pool of IT specialists meeting the business needs of this Silicon Valley of Southeast Europe. However, the education system has not kept up with demand and the number of available IT jobs will soon exceed the number of IT graduates where the demand for IT specialists is three times greater than what the educational institutions can supply. On the positive side, the number of STEM (science, technology and mathematics) graduates has slightly increased.
According to Eurostat, 70,000 people are employed in the ICT sector in Bulgaria, which is 2.3 percent of the total number of employees in the country. This is below the EU average of 3.5 percent. A highly-qualified IT specialist in Bulgaria earns $20,000 per year which is two to three times more than the wages earned by the average Bulgarian.
Use of Internet/On-line Activities: Bulgaria ranks 17th among the EU’s 28 countries with 82 percent of Bulgarians using voice or video calls, and 74 percent participating in social networks. However, Bulgarians are reluctant to engage in on-line transactions, with only 7 percent of Bulgarians using online banking and only 31 percent shopping online.
Digital Public Services: Better online/e-government public services will enable Bulgarians to interact with public authorities. Bulgaria is the second lowest in the EU in terms of using e-government services. As previously mentioned, that is expected to change in the following years with the efforts of the new ministry of e-government.
Business Process Outsourcing: International ICT companies find Bulgaria attractive because of the 0 percent export tax, low operating costs and skilled local workforce. More and more foreign companies are opening global calls and service centers in Bulgaria as they move their operations out of India to Bulgaria, for example. The four main pillars of Bulgaria’s large outsourcing sector are:
- Geographic proximity to large European countries with no time zone issues.
- Availability of highly talented, multi-lingual individuals.
- Low labor costs.
- Favorable macro-economic and political environment.
Technology Sub-Sector Best Prospects
Cloud technologies, Big Data, Internet of Things, and social media are growing technology segments. Emerging sub-sectors include cybersecurity, e-health, e-education, e-justice, automotive electronics, intelligent transportation and smart city technologies.
Prospects for U.S. providers also include: broadband internet access technologies, consumer electronics (mainly smart phones and tablets), educational software, software for the financial services sector, analytical software, MES and Production management software, telecommunications equipment, innovation center set-up services, cybersecurity solutions, and others.
Government tender opportunities exist for EU-mandated IT solutions to include: computers, peripherals, data centers, Security Operation Centers; automation; 5G technologies/IoT; software, servers and other hardware technologies and integration services.
- IT infrastructure of the National Revenue Agency
- Major cybersecurity projects throughout all major government agencies and various businesses
- Integrated IT system of the Bulgarian courts
- Machine voting project
- National e-health system
- The national e-identification project of the Ministry of E-Government.
- Government and private companies have undertaken various information and communication initiatives.
- EU funding under the Program for Rural Development and the EU Operational Program for Good Governance will provide funding for broadband access throughout Bulgaria, and other ICT projects.
Trade Events in 2022
InfoSecurity – cybersecurity forum
October 2022 – Digital Finance Forum – digital event
Cities and Mobility Forum 2020
- Ministry of Transport and IT
- Ministry of E-Government
- Bulgarian Association of Software Companies (BASSCOM)
- Bulgarian Outsourcing Association
- Bulgarian Association of Information Technologies
- ICT Cluster
- ICT Media Events Portal in Bulgaria
- IDC Bulgaria
U.S. Commercial Service Sofia Contact Information
Name: Ms. Stanislava Dimitrova
Position: Senior Commercial Specialist