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COMPUTERWORLD | Articles | Market Analysis
15 Apr
2013
 
 

Bulgaria's ICT market reached 2.05 bln euro in 2011

The local telecom market dropped by 12% and the IT market went up a little but mostly because HP Global Delivery Center entered Computerworld Bulgaria's Top 100 for the first time

A total of 4.01 bln BGN, or some 2.05 bln euro were the 2011 revenues of all the ICT companies that are active on the Bulgarian market and submitted their financial data for the annual Computerworld ICT Top 100 rank list.

Last year the crisis continued to influence most market segments, thus the overall telecom revenue slumped by more than 12%. However, we must have in mind that the telco market is still experiencing a continuous consolidation, as well as that two of the largest players – Bulsatcom and Blizoo – did not file any data for Top 100 2012 (which is effectively about 2011), nor we could find their financial results online by the time we have completed our work on the current issue.

The IT market

had a slight growth of 3.3% versus 2010, according to the direct comparison between Top 100 2012 and Top 100 2011. This positive result is strongly influenced by the presence in the list of HP Global Delivery Center, which works for abroad. The center generated 63% more revenue in 2011 against 2010, and this sum represents nearly one sixth of all IT revenues combined. There are also other participants that significantly contributed to the overall annual growth, and a lot of them are large exporters too, like Datecs (up 34%) or Fadata (up 33.5%). There are also companies which are strongly focused on the local market but still posted strong improvements in revenues. Such are Apcom with its increase of 61% to nearly 11 mln BGN, Mnemonica, which had a 61% growth too to 3.3 mln BGN, or CAD R&D Center Progress whose revenue soared 32% to almost 38 mln BGN.

As a whole, about two thirds of the businesses in Top 100 2012 managed to generate better revenues than in 2010. This, however, demonstrates a negative trend in Computerworld Bulgaria's Top 100 – a lot of companies whose financial performance worsens tend to decline submitting data about the bad year. These firms only want to take part in the rank list if they have what to show off with. Thus we feel like we should point out the praiseworthy persistence of long-year participants, like Kontrax, Solytron, Paraflow Communications, Information Services, TechnoPro, Alcomtech, ABC Net, and several more, which have always submitted their data so far – both in periods of growth and decline. In this context it is noteworthy that one of the leading IT companies in Bulgaria – Most Computers – did not file its annual report, nor the consolidated, neither the individual. Another large player which is absent is Siemens IT Solutions and Services, whose parent company was bought in the middle of 2011 by Atos Origin. Atos only shares financial data about the whole group and thus did not reveal the 2011 state of its Bulgarian business, which by the way has been performing well.

Telecom revenues

went down to 2.76 bln BGN, which is 13% less than in Top 100 2011. As already mentioned, the list does not include the data of two large telecoms – Bulsatcom and Blizoo, which were on positions 4 and 5 for 2010, respectively, as well as of Spectrum Net, which was 6th for 2010 but was acquired by Mobiltel last year.

It is a fact, however, that a number of unfavorable market and regulation factors influenced both the revenues and the profits of the leading players on the market, two of which are already for sale. The owners of BTC (Vivacom) are looking for a strategic investor to at least partially compensate the 1 bln BGN spent on the telecom years ago. Simultaneously Greek OTE Group, part of which is held by Deutsche Telekom, has announced it is looking for a buyer of its Bulgarian telecom Globul, which by the way is doing well on the background of the economical crisis and the lack of positions outside the mobile market.

Only two operators in the telco rank list in Top 100 2012 achieved revenue growths last year. These are NET1 and Bulgaria Net. However, there are some mainly IT companies that managed to increase their incomes form telecommunications – Sirma Group Holding (+62%) and Prima Soft (+59%).

It is noteworthy that the large telecoms again did not provide a breakdown of their revenues, which would have revealed how much they made from activities of the sort of data transmission, voice services and TV. Such information is even omitted in their annual reports. Only the report of Vivacom provides dedicated data about its mobile and fixed businesses, as well as some other breakdowns. Even this, however, does not give information on the market segments the way they are defined by the national Communications Regulation Commission.

The slight growth of the total IT revenue

in the ranking should not fool people about the real situation in the sector. The presence of new large players, including HP Global Delivery Center (HP GDC) and Printec Bulgaria, which is specialized in the sphere of ATM and POS terminal solutions, gave the 2011 list some boost. Thus, with the results of these two companies, the overall IT revenue for 2011 came to be 1.261 bln BGN, and if we exclude the telco incomes of the ICT enterprises, the total revenue becomes 1.244 bln BGN. This represents an increase of 3.3% versus 2010 but a decline of 1.2% if compared to 2009.

Apart from two firms, for which 2011 was their first year of operation, (CenterMine Ltd. and 2Plus Computers), in Top 100 2012 there is a number of new participants, including Printec Bulgaria (12th), VALI Computers (14th) and NDB (29th), which specializes in software distribution.

Of all IT companies, those with the largest 2011 revenue growth are ITA Trade and ITA Engineering, where the jump is 301% and 147%, respectively. However, we should keep in mind that both enterprises decided to skip our last-year rank list, which might mean they had experienced a weak 2010.

Among our traditional participants, Stanga managed to achieve a staggering 135% revenue increase, New Horizons went up 65.3%, Apcom's and Mnemonica's revenues both swelled by 61%, and SpaceCAD and Global Consulting respectively achieved growths of 55.7% and 45.9% (see the ranking on page 82).

As for absolute growth, HP GDC is the leader. It managed to increase its revenue by more than 83 mln BGN, all of which came from foreign markets. Other companies whose revenues soared significantly in 2011, are Datecs (up 29 mln BGN compared to 2010), Polycomp (up 13.7 mln BGN), Telelink (up 12.3 mln BGN), CAD R&D Center Progress (up 9.2 mln BGN) and Stanga (up 9 mln BGN).

IT companies' average efficiency in Top 100 2012 is 97.7 thousand euro per employee. The leading five here are Apcom, Polycomp, CAD R&D Center Progress, Asbis Bulgaria, and Solytron, which are in the distribution business. In top 10 there are four more distributors – NDB, TechnoPro, Lancom Bulgaria, and Escom Bulgaria, as well as Mnemonica, whose main activity is system integration.

As for telecommunication enterprises, they generate much more revenue per employee compared to IT firms. The leading telco in terms of efficiency per worker in 2011 was Novatel with its 230,000 euro per person. Bulgaria's largest mobile operator M-Tel comes second with 208,000 euro per employee, and the other two national telcos – Globul and Vivacom – achieved 179,000 euro and 140,000 euro, respectively.

The total profit in the IT sector was 77 mln BGN in 2011. In Top 100 2012, HP GDC has the largest net profit – over 17.3 mln BGN. Datecs, which ranked second, achieved 13.4 mln BGN, Borica-Bankservice had a 8.7 mln BGN net profit, Printec Bulgaria finished the year with 5.9 mln BGN, NDB reported 3.7 mln BGN, and Stanga made 3.5 mln BGN. The others in top 10 are Stone Computers, DZU, Global Consulting, and Polycomp.

Profit margin is another important index. In this context, CenterMine has the best margin in Top 100 2012 – 63.3%, followed by IPT (51.4%) and NDB (44.7%). Top 10 is completed by Quality House, Global Consulting, BonevSoft, Borica-Bankservice, AS Systems, Mistral Software, and Printec Bulgaria.

The average gross monthly wage in the ICT sector was 1,517 BGN in 2011.

IT subsegments

  • IT distribution

Distribution of IT products was again the subsegment which generated the largest part of the total IT revenue in 2011 – 25%. However, in 2010 distribution had a nearly 38% share.

24 IT distributors took part in Top 100 2012, and they generated nearly 318.5 mln BGN, which marks a decline of 31% versus the 463.6 mln BGN in Top 100 2011. Only 15 companies, however, filed their data for both 2010 and 2011. The total 2011 revenue of these is some 15.3 mln BGN, and their 2010 revenue was nearly 315 mln, which means a 1.6% drop.

The average gross monthly wage in the distribution sector was 1,486 BGN.

  • System integration

The works on several major projects in Bulgaria and abroad made it so system integration could contribute 24.2% to the market, but this was not enough to be equal to or surpass 2010's 30%.

The overall 2011 system integration revenue of the 48 companies that took part in both Top 100 2011 and Top 100 2012 is 304.9 mln BGN, which marks a 23% annual decline. Telelink, Stemo, Lirex BG, and Stone Computers are the leaders in this aspect of our ranking for the 3rd consecutive year now.

  • Hardware sales

Selling own and imported hardware (e. g. office equipment, UPS, PBX, etc.), however, offered a chance for the business to do this and in 2011 this type of activity generated 15.2% of the market versus 15% in 2010.

54 hardware distributors filed their data for Top 100 2012. In 2011, they generated 192.4 mln BGN from hardware sales, which is 3.8% more than the 184.4 mln BGN in 2010. The first place is again held by Datecs with its 81.71 mln BGN and a 60.2% sales jump. VALI Computers comes second with 17.67 mln BGN, and Plesio is third with 14.66 mln BGN and a minimal drop by 1.9%. Top 10 is completed by DZU, Printec, Digital World, ZTA, Kontrax, Media Systems, and Persy.

A total of 16 hardware producers are present in Top 100 2012, and they generated 111.75 mln BGN in 2011 versus 104.67 mln BGN in 2010. Datecs holds the top spot here too. The company, which is mostly known for making tills but has a much broader product portfolio, demonstrated a growth of 60.8%. DZU, second, achieved a 13 mln BGN revenue from hardware production in 2011, and ZTA Bansko occupied the third place. Optical discs manufacturer Media Systems took the fourth position but the company suffered a serious production revenue drop of 70%. Top five is completed by Persy.

  • Ready software sales, software development

Ready software sales contributed 4.12% to the market (3.5% in 2010), and software development had a share of 5.46% compared to 6.15% a year earlier.

In 2011, software development revenues went down by 8.5% to nearly 69 mln BGN from 73.5 mln BGN in 2010.

The overall software revenue in Top 100 2012 is 162.6 mln BGN, which is 4.2% more than Top 100 2011. This accounts for 12.9% from the total IT revenue in the latest ranking (1.261 bln BGN).

  • E-services

This year we also introduce a new category – E-services, which encompasses the revenues from web-based activities, the e-signature business and card payments. This column contains 2.6% of the overall IT market.

The sum of all e-services revenues in Top 100 2012 is 32.5 mln BGN.

  • Other services

In Top 100 2012 there is also a column called “Other IT services”, where everything that is different from the aforementioned activities is included, e. g. maintaining IT systems or IT outsourcing. This column contains 20.6% of the total IT market revenue for 2011. In Top 100 2011 the corresponding figure was only 3.5% and the difference is mainly due to the outsourcing services offered by HP CDG, which are present in this column for 2011 but not for 2010.

In 2011, the overall revenue from other IT services went up by 12.5% year-on-year to over 260 mln BGN.

  • Trainings and courses

Another type of activity we decided to create a separate column for in Top 100 2012 is ICT trainings and courses. A total of 20 firms filed data about this kind of business, and in 2011 they generated 5.27 mln BGN from it. This accounts for less than 1% from the overall IT revenue in Top 100 2012.

  • ICT consultations

The ICT consultations aspect of the latest ranking is also new for Top 100. This business has an even smaller share in the overall revenue compared to the previous type of activity – only 0.1%. The number of companies that did ICT consultations in 2011 was 16, and they generated some 1.63 mln BGN from this.

  • ICT export

Bulgarian ICT export had a growth of over 152% (again, due to the introduction of HP GDC to the ranking) if we compare all the export revenues in Top 100 2012 to Top 100 2011. Even without the boost by HP GDC, the ranking shows an increase too – to 92.7 mln euro in 2011 from 80.3 mln euro in 2010.

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