Bulgarian Software Business Reached 1.6 Billion Levs in 2015
Bulgarian software industry has seen a steady double-digit growth through 2015, outpacing several times the growth of the gross domestic product for the year. The sector remains one of the fastest growing in Bulgaria with projected revenues of 1.601 billion levs for 2015.
Those were one of the most significant conclusions from the latest issue of the yearly survey of the Bulgarian Software Companies Association (BASSCOM) traditionally called “Barometer for the software industry”.
The report again uses the results of consultation with member companies and an analysis of the software industry in Bulgaria, prepared by an independent consulting company CBN - Pannoff, Stoytcheff & Co. on behalf of BASSCOM.
Revenues and share of GDP
The forecasts for 2015 is revenues in the sector to increase by 11%, reaching 1.601 billion levs. A year ago, in 2014 this indicator hit 1.449 billion levs, or 13% growth compared to 2013. Over 65 percent of the revenue of the software companies came from high-tech products and services export.
Growth in work places and compensations
One of the highest qualified and well paid specialists in Bulgaria work in the software sector, as the average compensation in the industry is four times higher than the average for the country. 7,8% growth of the number of the employees in the branch is expected in 2015 compared to 2014.
In 2015 it is estimated that the average gross compensation (wages + bonuses) on a monthly bases would reach 3 358 levs which is 8% growth on annual bases. In 2014 г. the compensation was 3 108 лв., which was 7% higher than the number in the previous year.
According to the official data, the purchasing power of a programmer in Bulgaria is aligned with that of British programmer.
In 2015 г. it is expected that the work places in the industry will exceed 17 000, and the number is growing annually by 6-10%. The share of the IT specialists in 2015 was 88% of all employees in the branch, and one third of them were women. Over 90% of the jobs were occupied by young people under the age of 35.
Because of the scarcity of IT professionals in the software companies, the sector almost constantly has new open positions and vacancies, and often the companies need over ten weeks to fill some of them - software architects, software developers and project managers.
238 million levs paid taxes from the branch in 2014
In 2014 г. the taxes paid by the software industry to the state treasury of Bulgaria amounted 238 million levs, which is 25 million levs more than it was the previous year. From the total amount 89 million levs were value-added tax, 21 million levs – profit tax, 71 million levs – social security, and 58 million levs came from income tax. According to the data from the survey “Barometer for the software industry”, in growth of paid taxes to the budget the branch points 8 times difference to the growth of the budget - or 12.0 percent more taxes compared with 1.5% growth in the revenues of the budget.
Due to the specifics of the industry and the lack of gray sector tax collection is extremely high.
Prognoses for 2015
9% of all the members of BASSCOM who participated the survey expect a rise in their revenue with about 50% in the year of 2016, and 20% foresee a 10 percent growth. 50% of the companies don`t expect any change, and only 12% anticipate that their income will go down.
The figures show that the IT sector is among the most sustainable in the country and marked an annual double-digit growth in all indicators discussed. 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.
Problems and expected measures for support of the sector
Except the two-digit growth, marked by the software companies in the last few years, there is a visibly increasing interest at Bulgaria as an attractive destination and regional innovation hub for potential foreign investors, thanks to favorable conditions for doing business in the sector.
"The software sector reached 1.86% of GDP of Bulgaria for 2015 and is one of the fastest growing sectors in the country with an expected 12.8% growth in revenues from exports."
In the last few years, the natural growth of the sector was hindered because of the inability of the educational system to ensure the necessary number of qualified professionals, and not just in IT. There is almost not modern business activity which is not connected in one way or another with the introduction and use of high technology. The fact is that one job in the software industry is a factor for the opening of several jobs in other sectors, thereby also affects the reduction of unemployment and the rising of the living standards of employees.
BASSCOM marked as a positive move 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.
"The industry provides a quarter of a billion levs tax revenues in the state budget and operating profit in the industry is approximately equal to the gain in sectors such as motor vehicles and Health."
In the long term horizon, BASSCOM works with a number of competent institutions to undertake deep structural reforms in the education system in line with business requirements. The software association insist on the imposition and development of the IT sector as a priority for national policy and in 2015 proposed and started the implementation of five concrete measures.
"20% of companies predict revenue growth of 10% for 2015"
One of them is related to the provision of vocational training "junior programmer" for interested students (grades 9-12) from all schools in the larger cities. BASSCOM believes that this step would have the greatest effect in the medium term to address the problems of the industry and the economy as a whole. Therefore BASSCOM, together with National Agency for Vocational Education and Training (NAVET) started the preparation of the state educational requirements for the profession "Programmer". Subsequently, based on the standard, a curriculum for qualification "junior programmer" will be prepared. With the support of the Ministry of education and Science (MES) BASSCOM anticipates at full development of 20 training centers in the country by 2020, up to 6,000 students to graduate annually.
Except for extremely urgent changes in education, BASCOM continues to push for policy reforms in tax, social, investment and fiscal legislation, the introduction of electronic government, investments and targeting of EU funds.
BASSCOM stated that reforms in these areas are important not only for the sector, but also for the overall economic development of Bulgaria.