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Cloud, Big Data, I-o-T, Social Media Will Shape the Future of the IT Industry

Computer World

By Konstantsa Kadankova

It is hard to predict the future of Bulgarian IT and outsourcing sectors. But the branch association feel the pulse of the industry, her expectations, problems and opportunities. That is why we asked the main three professional associations in the country – The Bulgarian Association of Software Companies (BASSCOM), The Bulgarian Association of Information Technologies (BAIT) and The Bulgarian Outsourcing Association (BOA), for their competent and authoritative opinions about the development of the branch.

Technological segments which will florish in 2016-2020

„I expect that Cloud, Big Data, I-o-T and social media would be the drivers of the new trends. Online services as a whole, the platforms, on which they will be developed and the operators, who will deliver them, will shape the landscape of the future. The hardware will follow them and will develop with them, so will the applications do“, Petar Ivanov, Chairman of the Managing Board of BAIT and owner of the leading Bulgarian ICT distribution company Solytron commented.

Petar Ivanov, BAIT

„The hardware and the software go hand by hand, and, as we can see by now, the hardware does not show reaching of any limit of its development, but the opposite – the technologies in this sphere develop exponentially. That is why, for being used, the hardware needs software. The software itself develops in new directions (cloud, mobile, etc.), and this drives the development of the hardware in these fields. The communications and telecommunications are in direct dependence on the previous two and that is why they should not fall in stagnation – Stamen Kotchkov, Chairman of the Managing Board of BASSCOM and Vice President at the software leader SAP Labs Bulgaria said – The other sectors I mentioned are rather supporting and their development depends on the specific needs on the other businesses, which might vary, regardless of the other trends. That is the reason why it is hard to make precictions in this direction, but we could expect at least some growth, unless another world economic crises strikes.“

According to Plamen Tsekov, Member of the Managing Board of BOA and Chief Executive Officer of the leading IT solutions and services provider ScaleFocus, the areas of the electronic services, the outsourcing and the trainings will grow. The globalizing cloud will totally transform the software, harware and system integration businesses – huge part of those will just vanish, he says. “Bulgaria was recognized as outsourcing destination of the year twice in 2015, and I assume that the interest at the autsources services will be significantly higher than at the other ICT segments”, Tsekov predicted.

Tech trends that would shape the IT business in Bulgaria by 2020

„Cloud, mobile, social, Big data, Internet of Things, semantic, and so on continue being among the most up-to-date and fast growing fields in IT industry. Robotics also shoews significant improvement and gains the interest of the companies. They, in turn, raise many questions regarding the ensuring and the support of the cyber security, which turns to one of the main problems in front of the technological users. Bulgarian software companies follow from very close the nowadays trends and can already boast considerable experience and expertise in all these sheres“, BASSCOM` s Stamen Kotchkov commented.

„The increasingly upcoming cloud services will have a serious impact – they will reshape significantly a big part from the current IT, infrastructure and system integration businesses in Bulgaria. Leading drivers of the growth will be technological solutions and specialized services at the fields of Big Data, Cognitive Analytics, Digital Marketing and Internet of Things“, BOA`s Plamen Tsekov is confident.

Petar Ivanov from BAIT referred to two leading technological trends of the future, citing the worldknown futurist Thomas Frey:

  1. By 2030 over 80% of all doctor visits will have been replaced by automated exams.

  2. By 2030, the world’s largest Internet company will be in the education business, and it will be a company we have not heard of yet.

„It is hard to say in what extend we, as a business in Bulgaria, are prepared for such scenarios. But our strive is to be adequate in each and every moment. We operate in the relity, in which part of these bold trends will happen, and others will not. Our readiness means to offer more and more connected produsts and services, new solutions and approaches for the channels, in which we operate, to start and develop new platforms for collaboration with the dealers, as well as such platforms by which they could easily work with their customers. I suppose small and medium enterprises will show up at the stage with new solutions, applications and approach. The interdisciplinary development will be the key to success“, Ivanov stated.

Challenges and drivers of success for the local ICT business by 2020

According to Petar Ivanov from BAIT, the main drivers of progress and, respectively – challenges, which would influence the development of Bulgarian IT business during the period 2016-2020, will be combinations of scalable platform with services and hardware, which guarantee the necessary level of security. Ivanov thinks that it is most probably that the security will become a great theme and a business in a new way in the nearest future. “The existing operators will search for and start new platforms for service delivery, and the business clients and the end customers will have more choice. However, this will lead to higher requirements for knowledge, necessity of trainings and the human resources market will be restructured. Besides the security, the need of IT specialists and communication of all these new opportunities, there will be a challenge for us always to have the proper products, services, platforms and specialists, which to meet the demand. IT companies should get more adaptive and innovative. The whole business environment, economic development and political situation in Bulgaria reflect the local business much more that the impact of the same factors on the companies in other European countries. Speed and adaptability will be the Most important factor for survival, together with expertise and innovation”, Ivanov claimed.

„The development of Digital Single Market in EU will be determinants factor for the development of the IT business not only in Bulgaria and not only by 2020. The delivery of platforms with services and hardware, in combination with the Digital Single Market, will give access to the Bulgarian operators of such platforms to a huge market, but it is a great challenge for the whole IT industry in Bulgaria either“, Ivanov added.

Stamen Kotchkov, BASSCOM 

According to the latest data from the yearly survey of BASSCOM – “Barometer of the software industry in Bulgaria” (Annual Report On The State of the Software Sector in Bulgaria), Bulgarian software branch marked sustainable growth of 11% in 2015, outstripping the growth rate of the gross domestic product of the country. The sector remains among the fastest growing sectors in Bulgaria with estimated earnings of 1.601 billion Bulgarian levs for the year of 2015 and share in the gross domestic product close to 2%, the survey showed. Over 65% of the software companies income came from export of high-tech products and services. These numbers largely are due to the progressiveness of the companies and of their openness to the world. Over 17 000 people work for the sector and they are mostly young and ambitious, and part of them have graduated abroad, BASSCOM`s Stamen Kotchkov explained.

„However, the natural growth of the software industry in the last few years has been hindered because of the inability of the educational system to guarantee the demanded number of qualified specialists, and not only on the fields of IT. Moves ahead have been made through the partial simplification of the procedure for issuing of the so called “EU Blue Cards “, which would allow the attraction of qualified specialists from EU non-member countries, and thus reducing the current scarcity. However, we expect additional actions at this direction, for example shortening deadlines for issuing blue cards and switch to "one-stop" service. (note: The EU Blue Card is a work- and residence permit for skilled Non-EU/EEA nationals.)

For the development not only of the IT business, but of the competitiveness of the economy as a whole, reforms are imperative in tax, social, and investment legislation, in electronic government, investments and targeting of EU funds. We believe that reforms in all of the listed areas are important not only for the sector, but for the overall economic development of Bulgaria“, Kotchkov stressed.

According to Plamen Tsekov from BOA the increasing competition in the sector, especially at the labor market, will be one of the main drivers of the progress. In terms of increasing costs and tax burdens, companies will have to manage to deliver more and distinctive value added in their services and products, he said.

„We in Bulgarian Outsourcing Association continue searching for a path for facilitation of IT and outsourcing sector from the side of state institutions. One of the long-term challenges in the quality of education either in terms of teaching technology, or in terms of content depth. At the moment the IT business has big extra expenditures on additional training and qualification, so that to be able to offer quality and competitive services“, Tsekov stated.

Bulgaria – software development and outsourcing hub

„The trend of refocusing of companies activities from „coding“ at the first years of the development of the sector to participation in all the phases of the contemporary software production – analyses, design, architecture, implementation, quality assurance, support and development, continues this year too“, Stamen Kotchkov, Chairman of the Managing Board of BASSCOM commented.

Except the purely technological innovations, which suggest high extend of integrity between different software and hardware systems, an important advantage that Bulgarian software companies acquired in the last few years is the high level of process organization and the so called “domain knowledge”, meaning the ability to organize quickly, efficiently and towards the specific needs of a given industrial sector. This means development in consulting, too, and not only purely development activity, Kotchkov pointed.

According to BASSCOM, the scope of the entrepreneurship and innovation ecosystem is growing, thanks to the seed funds, the accelerator funds and the venture capital funds, that offer very good conditions for the startup enterprises and innovative companies, and their number also rises significantly.

All these factors, together with the presence of favorable circumstances for making business in the sector determine the increasing interest at Bulgaria as an attractive destination and a regional innovation hub for potential foreign investors, Kotchkov confirmed.

Elena Marinova, BAIT

Elena Marinova, Member of the Managing Board of BAIT and President of one of the leading Bulgarian software companies - Musala Soft, showed confidence that Bulgaria has the potential to become a regional hub for software development and outsourcing services.

„Bulgaria is well positioned geographically. There are many factors that strenghten Bulgaria`s potential as a regional hub: all the local and international events on IT, entrepreneurship, management topics, that take place in the country; the startup environment, that has been formed during the last 2 years; the diversity of companies, that operate at the country – new small enterprises, local players, branches of international companies; the abundance of international clients of the local IT and outsourcing sector; the project Sofia Tech Park, which is expected to come efficiently into action in 2016; the achievements of the national mathematics and informatics teams; the strategy of the Ministry of Councils of Bulgaria for the creation of new 30 000 IT specialists, but also many other government and private educational initiatives; positive steps to ease the procedure for hiring highly qualified specialists from third countries (EU Blue Cards); the first steps for positioning Bulgaria as an attractive destination not only for IT companies, but for IT people too“, Marinova explained.

According to Marinova, there is much more to be done, because the positioning is a process and Bulgaria has competitors. Coordinated actions of business, government and the representatives of Bulgaria in Brussels are needed. „Bulgaria could be such hub, but we have to formulate, communicate and lobby our position very well from and at all levels“, Marinova assured.

Plamen Tsekov, BOA

Currently Bulgaria is in a unique position in the Balkans, its image is still very good, Plamen Tsekov, Member of the Managing Board of BOA commented. „Bulgarian companies are gaining more prominence and international awards - we can successfully be front companies and affiliates in neighboring countries that are not yet members of the EU – Macedonia, Serbia and Albania. Targeted, fast actions from the government and the society for strategic support of the IT and outsourcing sector is needed, as it happened with the tourism sector. There is an option for a serious tax, social security and demographical effect, in which the main beneficiary might be Bulgaria. Our key competitor in this mini-geopolitical game is Romania – the country has made very quick reforms in 2015 and they have bigger human resources capacity than Bulgaria. Greece is not in a good shape right now“, Tsekov concluded.

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