Bulgaria Information Technology Report 2012
The total size of the Bulgarian IT market in 2012 is estimated by BMI at around US$1.1bn, up from US$1.0bn in 2011. BMI expects a market CAGR of 5% for 2012-2016, below the pre-economic crisis trend level. Bulgarian IT spending is forecast to record low single-digit growth in 2012 as businesses and consumers remain cautious due to the economic situation.
Despite various reported delays in 2011, major EU-funded projects are coming on stream as Bulgaria attempts to improve its position across a range of ICT indicators. Meanwhile, foreign company investment in offshoring and call centres has continued, despite the downturn. EU accession will continue to drive spending by enterprises, with most demand still coming from larger and foreign-owned companies while small and medium-sized enterprises (SMEs) represent an increasing opportunity.
Lower prices and growing internet penetration will be among factors boosting the popularity of consumer notebooks, while new form factors such as tablets will provide new opportunities. There is growing interest in cloud computing services such as Software-as-a-Service (SaaS) and growing demand for colocation and hosted services will drive growth in Bulgaria's nascent data centre market.
Industry Developments
The Bulgarian government views e-government as one of the key components of its drive to modernise administrative procedures. The government has a target of reducing the administrative burden in national legislation that does not transpose EU legislation by 20% by 2012. This is in line with the EU's action programme for reducing administrative burdens. The Bulgarian government said that e-government was a key part of its strategy in achieving this target.
EU funding is a key driver of Bulgarian SME spending on informatisation and as of 2010 the Bulgarian EUGA (EU Grants Adviser) consortium had overseen awards to SMEs of more than EUR16mn in EU funding. Between 2007 and 2010, more than 600 Bulgarian companies and organisations consulted EUGA about how to finance their ICT projects. In addition to local funding, Bulgarian organisations have access to EUR300mn from EU structural funds for the development of IT.
Meanwhile Bulgaria's IT governing body, the State Agency for Information Technology and Communications (SAITC), set a goal for IT to account for 10% of Bulgaria's GDP by 2011. Key policy areas include programmes to computerise schools and connect them to the internet, raising Bulgaria into the top 40 countries in terms of e-government and investing in skills training to boost the domestic IT sector.
Company News
In 2011, HP strengthened its position with new distribution contracts with consumer electronics retail chains Technopolis and Technomarket, as the company moved towards a more direct distribution model. Top three 2010 vendors HP, Acer, and Asus have around 50% of the Bulgarian market, but HP's rivals could receive a boost as a result of the vendor's announced plans to sell all or part of its PC division.
In 2011, growing demand for hosted services fuelled investment in data centre capacity. Sofia-based carrier-neutral data centre 3DC launched services back in 2009 with an initial investment of US$3.6mn, and as of 2011 had reached around 30% of capacity. Meanwhile, local telecoms company Neterra, faced with full capacity utilisation at its existing 2 data centres in Sofia, launched a new carrier-neutral facility in the city in November 2011.
Despite the economic slowdown, IT services vendors continued to increase investment in local IT services and business process outsourcing (BPO) infrastructure. In 2011, HP said that it planned to create more jobs in Bulgaria at its Global Delivery CEntre in Sofia. In a new development, the facility now provides various services to Bulgarian companies as well as serving international clients. HP already employs around 3,000 in Bulgaria and the centre offers services in 20 business segments.
Computer Sales
BMI forecasts that the Bulgarian computer market (including notebooks and accessories) will be worth US$770mn in 2012, with single-digit annualised growth. 2011 was another difficult year for PC vendors, with revenues growth projected to be modest despite low double-digit growth in volume shipments. Growth in 2012 is forecast to remain well below the previous levels of 2006-2008 but the consumer segment will provide most potential. Notebooks are projected to lead the way with lower prices, new entertainment features and a greater premium on mobility among the factors boosting their notebooks. However, it is forecast that aggressive notebook pricing by retailers will continue.
Software
Bulgaria's software market is forecast by BMI at US$106mn in 2012 and is expected to grow at a CAGR of 5% over the 2012-2016 forecast period. In 2011, the economic slowdown continued to create challenging trading conditions for vendors, as large enterprises focused on the bottom line. Business trends were negative for many vendors as clients put investment plans on hold as the effects of the financial crisis were felt.
The domestic software market is still expected to grow to US$131mn by 2016, driven in part by government and EU-subsidised IT projects as well as the untapped potential of Bulgaria's SME segment. An environment of privatisation and modernisation is likely to drive growth, particularly in sectors such as utilities, telecoms and banking.
Services
The Bulgaria IT services market is projected at US$181mn in 2012 according to BMI estimates and is expected to be the fastest growing IT market segment over the forecast period. Bulgarian organisations continued to spend cautiously in 2011, due to economic uncertainty, with projects being scaled back or delayed. Big projects were fewer in 2011 than before the economic crisis, and vendors must adapt to an environment when many clients are focused on value for money and 'good enough' solutions.
IT services account for less than 20% of all IT spending in Bulgaria's hardware-dominated market presently and the market is relatively undeveloped. However, there are a number of potential drivers including privatisation and modernisation in many industry sectors, new competitive pressures that prompt companies to look for
Despite various reported delays in 2011, major EU-funded projects are coming on stream as Bulgaria attempts to improve its position across a range of ICT indicators. Meanwhile, foreign company investment in offshoring and call centres has continued, despite the downturn. EU accession will continue to drive spending by enterprises, with most demand still coming from larger and foreign-owned companies while small and medium-sized enterprises (SMEs) represent an increasing opportunity.
Lower prices and growing internet penetration will be among factors boosting the popularity of consumer notebooks, while new form factors such as tablets will provide new opportunities. There is growing interest in cloud computing services such as Software-as-a-Service (SaaS) and growing demand for colocation and hosted services will drive growth in Bulgaria's nascent data centre market.
Industry Developments
The Bulgarian government views e-government as one of the key components of its drive to modernise administrative procedures. The government has a target of reducing the administrative burden in national legislation that does not transpose EU legislation by 20% by 2012. This is in line with the EU's action programme for reducing administrative burdens. The Bulgarian government said that e-government was a key part of its strategy in achieving this target.
EU funding is a key driver of Bulgarian SME spending on informatisation and as of 2010 the Bulgarian EUGA (EU Grants Adviser) consortium had overseen awards to SMEs of more than EUR16mn in EU funding. Between 2007 and 2010, more than 600 Bulgarian companies and organisations consulted EUGA about how to finance their ICT projects. In addition to local funding, Bulgarian organisations have access to EUR300mn from EU structural funds for the development of IT.
Meanwhile Bulgaria's IT governing body, the State Agency for Information Technology and Communications (SAITC), set a goal for IT to account for 10% of Bulgaria's GDP by 2011. Key policy areas include programmes to computerise schools and connect them to the internet, raising Bulgaria into the top 40 countries in terms of e-government and investing in skills training to boost the domestic IT sector.
Company News
In 2011, HP strengthened its position with new distribution contracts with consumer electronics retail chains Technopolis and Technomarket, as the company moved towards a more direct distribution model. Top three 2010 vendors HP, Acer, and Asus have around 50% of the Bulgarian market, but HP's rivals could receive a boost as a result of the vendor's announced plans to sell all or part of its PC division.
In 2011, growing demand for hosted services fuelled investment in data centre capacity. Sofia-based carrier-neutral data centre 3DC launched services back in 2009 with an initial investment of US$3.6mn, and as of 2011 had reached around 30% of capacity. Meanwhile, local telecoms company Neterra, faced with full capacity utilisation at its existing 2 data centres in Sofia, launched a new carrier-neutral facility in the city in November 2011.
Despite the economic slowdown, IT services vendors continued to increase investment in local IT services and business process outsourcing (BPO) infrastructure. In 2011, HP said that it planned to create more jobs in Bulgaria at its Global Delivery CEntre in Sofia. In a new development, the facility now provides various services to Bulgarian companies as well as serving international clients. HP already employs around 3,000 in Bulgaria and the centre offers services in 20 business segments.
Computer Sales
BMI forecasts that the Bulgarian computer market (including notebooks and accessories) will be worth US$770mn in 2012, with single-digit annualised growth. 2011 was another difficult year for PC vendors, with revenues growth projected to be modest despite low double-digit growth in volume shipments. Growth in 2012 is forecast to remain well below the previous levels of 2006-2008 but the consumer segment will provide most potential. Notebooks are projected to lead the way with lower prices, new entertainment features and a greater premium on mobility among the factors boosting their notebooks. However, it is forecast that aggressive notebook pricing by retailers will continue.
Software
Bulgaria's software market is forecast by BMI at US$106mn in 2012 and is expected to grow at a CAGR of 5% over the 2012-2016 forecast period. In 2011, the economic slowdown continued to create challenging trading conditions for vendors, as large enterprises focused on the bottom line. Business trends were negative for many vendors as clients put investment plans on hold as the effects of the financial crisis were felt.
The domestic software market is still expected to grow to US$131mn by 2016, driven in part by government and EU-subsidised IT projects as well as the untapped potential of Bulgaria's SME segment. An environment of privatisation and modernisation is likely to drive growth, particularly in sectors such as utilities, telecoms and banking.
Services
The Bulgaria IT services market is projected at US$181mn in 2012 according to BMI estimates and is expected to be the fastest growing IT market segment over the forecast period. Bulgarian organisations continued to spend cautiously in 2011, due to economic uncertainty, with projects being scaled back or delayed. Big projects were fewer in 2011 than before the economic crisis, and vendors must adapt to an environment when many clients are focused on value for money and 'good enough' solutions.
IT services account for less than 20% of all IT spending in Bulgaria's hardware-dominated market presently and the market is relatively undeveloped. However, there are a number of potential drivers including privatisation and modernisation in many industry sectors, new competitive pressures that prompt companies to look for
Contents
Executive SummarySWOT Analysis
Bulgaria IT Sector SWOT
Bulgaria Telecoms Industry SWOT
Bulgaria Political SWOT
Bulgaria Economic SWOT
Bulgaria Business Environment SWOT
IT Business Environment Ratings
Table: Regional IT Business Environment Ratings
Europe IT Markets Overview
Market Overview
Government Authority
Key Issues For Investors
Hardware
Software
Services
End-User Analysis
Industry Developments
Industry Forecast Scenario
Table: Bulgaria's IT Industry - Historical Data & Forecasts (US$mn Unless Otherwise Stated),2008-2016
Internet
Table: Telecoms Sector -- Internet -- Historical Data & Forecasts,2009-2016
Macroeconomic Forecast
Table: Bulgaria – Economic Activity
Competitive Landscape
Hardware
Software
IT Services
Company Profiles
IBM Bulgaria
Microsoft
HP
Dell
Country Snapshot: Bulgaria Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
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