Bulgaria's IT market will grow by an annual average of 6% in 2011-2015, according to the Bulgaria Information Technology Report 2011 of Business Monitor International (BMI).
The report says that Bulgarian IT market will grow to an estimated USD 947 M in 2011, up from USD 902 M in 2010.
The compounded annual growth rate of 6% forecast by BMI for the Bulgarian IT sector is below the pre-economic crisis trend level.
The report says that Bulgarian IT spending is forecast to record low single-digit growth in 2011 as businesses and consumers are cautious due to the economic situation.
"There should still be areas of opportunity in 2011, however. Lower prices and growing Internet penetration will be among factors boosting the popularity of notebooks, while new form factors such as tablet notebooks will stimulate demand. There is growing interest in cloud computing services such as Software-as-a-Service (SaaS.) 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 will also generate IT spending. EU accession will continue to drive spending by enterprises, with most demand still coming from larger and foreign-owned companies. However, small and medium-sized enterprises (SMEs) represent an increasing opportunity," the BMI paper stresses.
It notes that Bulgaria's State Agency for Information Technology and Communications (SAITC), has set a goal for IT to account for 10% of Bulgaria's GDP by 2011, and that key policy areas include programs to computerize 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.
Another important prerequisite for the boost of IT in Bulgaria is said to be the fact that the Bulgarian government views e-government as one of the key components of its drive to modernize administrative procedures.
BMI explains that EU funding is a key driver of Bulgarian SME spending on informatization and as of 2010 the Bulgarian EUGA (EU Grants Adviser) consortium has overseen awards to SMEs of more than EUR 16 M in EU funding. Between 2007 and 2010, more than 600 Bulgarian companies and organizations consulted EUGA about how to finance their ICT projects. In addition to local funding, Bulgarian organisations have access to EUR 300 M from EU structural funds for the development of IT.
According to BMI data, HP, Acer, Toshiba, Asus, Dell and Fujitsu-Siemens are among the market leaders for Bulgarian PC sales as brand computers capture a steadily increasing share. Most of the major multinational software vendors are present in Bulgaria, either through a subsidiary or through local distributors and partners. Microsoft and SAP dominate, with Microsoft benefiting from an agreement with the State Administration Ministry to purchase software licences for use within government.
The report stresses that the increasing number of large IT projects has led global IT services vendors to increase investment in Bulgaria's IT services and business process outsourcing (BPO) infrastructure.
It reminds that in 2010, HP said that it planned to create 2 000 new jobs in Bulgaria with the construction of a new development and support center, which will provide services to HP's global customer base. Meanwhile, IBM has a BPO center in Sofia that employs more than 100 staff, and the company offers specialized solutions for Bulgarian financial institutions.
BMI forecasts that the Bulgarian computer sales market (including notebooks and accessories) will be worth USD 696 M in 2011, with single-digit annualized growth. 2010 was another difficult year for PC vendors, as growth in the first half of the year was followed by a slip into negative growth in the third quarter. Growth in 2011 is forecast to remain well below the previous levels of 2006-2008 but will trend higher again in 2012.
Bulgaria's software market is forecast by BMI at USD 92 M in 2011 and is expected to grow at a compounded annual rate of 9% over the 2011-2015 forecast period.
In 2010, 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. Bulgaria's domestic software market is still expected to grow around 32% to USD 121 M by 2015, driven in part by government and EU-subsidized IT projects as well as the untapped potential of Bulgaria's SME segment.
The Bulgaria IT services market is projected at USD 159 M in 2011 according to BMI estimates and is expected to be the fastest growing IT market segment over the forecast period. Bulgarian organizations were spending more cautiously in 2010, due to economic uncertainty, with projects being scaled back or delayed. Vendors will have to adapt to an environment when many clients are focused on value for money and 'good enough' solutions.
BMI concludes that 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 privatization and modernization in many industry sectors, new competitive pressures that prompt companies to look for efficiencies and EU support for reform.