Bulgarian Software Industry Remains Strong in 2020

Despite the COVID crisis, the IT sector is growing by 10%. There is a demand for more than 23,000 jobs.

The Bulgarian Association of Software Companies (BASSCOM) announced the results of its annual report* Barometer 2020, which presents the state of the software sector in Bulgaria. The survey is prepared for BASCOM with the assistance of CBN Pannoff, Stoycheff & Co. and includes the responses of over 4,400 companies. It also provides a forecast for the period 2020-2024, based on the data from the annual Barometer 2020.

The research states that the IT industry can add to the state budget BGN 1.5 billion in the form of direct and indirect taxes that can enter from the software industry till 2024. Currently, one employee in the sector generates for the more than BGN 22,400 in the form of taxes and insurance for the budget - three times more than the national average. This additional revenue of nearly BGN 625 million will be generated by the newly created over 23,000 jobs in the next five years (2020-2024), compared to BGN 750 million, achieved in 2019.

These data show the vast potential of the software industry, as one of the most potent drivers of the Bulgarian economy. This sector can bring it out of the crisis, being able to generate high added value and to provide predictable revenues in the budget. It is no coincidence that we are firmly focused on education. In this regard, there is a need for strong government policy, to help us build new specialists in the sector, along with a commitment to many initiatives undertaken to develop our business in this direction, “said Dobroslav Dimitrov, Chairman of the Board of BASSCOM.

The opportunities for the development of young people in the software industry in Bulgaria are still the most desired. Jobs in 2020 have increased by more than 3,500, but employment growth in the sector is slowing, with 2019 being the lowest in ten years. The excellent news is that about 35% of those employees are women and their numbers keep growing, which ranks Bulgaria first in the EU in this indicator with more than twice the EU average.

There is also a new trend - many of the new employees in the software companies are Bulgarians who have returned from abroad, and in some companies, they reach 10% of the total number. The average salary in 2020 accounts an expected growth of approximately 4%, as the sector continues to pay wages that are more than three times higher than the average in other sectors of the economy.

Despite the COVID-19 pandemic, the software sector recorded revenue growth of 10%, in contrast to a 5.5% decline in the country’s GDP. Compared to the previous year, revenue growth is lower / 18.4% in 2019 compared to 2018 /, but it is still significant, considering the severe economic consequences of the global pandemic. The anticipations are for sustainable double-digit growth for each of the following years until 2024 (14-19%), which makes the Bulgarian software sector one of the fastest-growing in the country.

The operating revenues of the software sector as a percentage of GDP are 3.3% in 2019; in 2020 are expected to reach 3.8%. According to BASSCOM forecasts, in 2024 this share is expected almost to double compared to the current level and gain 6%.

Software companies work mainly for foreign markets, and the trend is steady. The export value of 2020 is expected to increase by another 12% and reach BGN 3.5 billion, compared to 2019, when the growth of export revenues was 20% on an annual basis, reaching 3.1 billion. BGN.

BASSCOM has been collecting and analyzing all this data for 12 years. Statistics corroborate the importance of the sector as it is a positive model for sustainable development in the Bulgarian economy. Business leaders put on the agenda the need to keep the current business regulations in the country. The predictability of the tax policy is a crucial factor in the investment decisions of large corporations in the IT sector, and the current tax policy gives a fragile advantage to Bulgaria over other competing destinations. Last but not least, there is a need to increase the state admission for STEM students in higher education, to stimulate programs and academies for training of specialists and to use European funds for training and qualification in high value-added industries.

*Source: Press release of BASSCOM, available of Bulgarian. The survey is expected to be published in Jan 2021.