Bulgaria - Information and Communications Technologies Bulgaria-ICT
OverviewNew opportunities exist in the ICT sector as Bulgarian companies work to increase their competitiveness in the EU, and as the Bulgarian Government complies with EU directives and legislation concerning its digital economy. As of July 2019, Bulgaria’s ICT sector is characterized as stable and constantly growing, making it one of the most profitable sectors in Bulgaria. In 2018 there were over 2000 important IT projects in Bulgaria.
Bulgaria has a long, rich tradition in the IT and electronics sectors (dating back to the Communist era) and is still known as the Silicon Valley of Southeastern Europe.
Bulgaria is home to approximately 10,000 ICT companies, 70 percent of which are only exporting. According to International Data Corporation (IDC) (the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets) the Bulgarian ICT market reached about 3.2 billion USD in 2018, presenting a 45 percent growth since 2017. During an EU Conference EURONET in Sofia (2018) it was noted that turnover in the ICT sector in Bulgaria experienced a 300 percent rise over the past 7 years and has reached 2.5 billion euros. After ten years of EU membership software business in Bulgaria is the best performing sector in the ICT industry. One of the factors that attracts so many companies to do business in Bulgaria is the low corporate tax rates of 10 percent.
Bulgaria is also among EU member states where the share of ICT in the formation of the gross added value is relatively high, ranking the country 5th in the EU. The move towards cloud services, mobility and social business positively shaped Bulgaria’s future IT landscape with an anticipated annual increase in IT expenditures of 4.2 percent in the next 5 years, boosted by an accelerated digital transformation spawned by Bulgaria’s newly launched eGovernment State Agency.
According to the National Statistical Institute, 75.7 percent of urban homes have high speed broadband, but rural areas lack such coverage. Around 71 percent of Bulgarian homes subscribe to a fixed broadband connection. Bulgaria needs to address a severe digital skills gap where only 41 percent of the population has basic digital skills. Overall, Bulgaria has retained its ranking from last year with some slight improvements to its score. Bulgarian internet users are among the most intensive users of online video calls (1st place) and social networks (6th place). Over 85 percent of people use the Internet for phone and video calls through various applications. Facebook is the most popular social network in Bulgaria. However, Bulgarian internet users appear to refrain most from using the Internet when they need to do online banking or shop on-line and only 20 percent of Bulgarians use Internet to interact with state administration bodies.
Despite the dynamic development of information technologies in Bulgaria, 28 percent of households still do not have Internet access in their homes. More than half of them, 53.6 percent cited as the main reason the lack of knowledge and skills to work with the internet. Some 48.8 percent think they do not need the internet, find it not useful, not interesting, etc., and, according to 27.9 percent of households the equipment is expensive.
Summary of key facts on broadband internet in Bulgaria:
- Fixed broadband networks reach 95 percent of Bulgaria’s households.
- 71 percent of homes subscribe to fixed broadband, limiting Bulgaria's ability to exploit the benefits of the digital economy.
- 52.2 percent have mobile broadband connection (via mobile phone connection of at least 3G or USB key).
- Half of fixed internet subscriptions offer high-speed connections (Bulgaria is 11th in the EU), the overall level of fixed broadband internet remains average (31th worldwide).
GDPR (General Data Protection Regulation): Companies have complied with data protection directives and regulations for more than two decades. But the General Data Protection Regulation (GDPR), an overhaul of existing European Commission data protection legislation, aims to strengthen and unify those laws for EU citizens. Primary GDPR objectives are to give back control to citizens over their personal data and simplify the regulatory environment for international business.
U.S.-based hospitality, travel, software services and e-commerce companies will certainly have to take a closer look at their online marketing practices. However, any U.S. company that has identified a market in an EU country and has localized Web content should review their Web operations. For U.S. companies, EU-directed online marketing forms and interactions will have to be adjusted to obtain explicit consumer consent. In the language of the GDPR, consent must be freely given, specific, informed, and unambiguous. Once the data is collected, U.S. companies will then have to protect it under the GDPR’s rules. For those that already follow existing data security standards (e.g., PCI DSS, ISO 27001, NIST), these new regulations should not be a burden.
The GDPR gives some leeway in weighing the risks, but a large exposure of email addresses, personal data that contains sensitive data related to medical or financial information or identifiers associated with children, would all require notification to an EU regulator or supervising authority within 72 hours. For not reporting a breach to a regulator within 72 hours, fines are in the first tier of penalties - 2 percent of global revenue - rather than the higher 4 percent that has received more press attention. See: https://www.forbes.com/sites/forbestechcouncil/2017/12/04/yes-the-gdpr-will-affect-your-u-s-based-business/#4e0ef99a6ff2
Digital Divide: Bulgaria performs slightly better than the EU average when it comes to coverage of high-speed broadband in urban areas. Networks capable of providing at least 30 Mbps are available to more than two-thirds of Bulgarians (72 percent of Bulgarian homes, above the EU average of 71 percent). However, rural areas are not well covered with only 17 percent having high-speed broadband network available.
Labor: Bulgaria has a respected, highly-qualified and inexpensive pool of IT specialists meeting the business needs of this Silicon Valley of Southeast Europe. However, the education system has not kept up with demand and the number of available IT jobs will soon exceed the number of IT graduates where the demand for IT specialists is three times greater than what the educational institutions can supply. On the positive side, the number of STEM (science, technology and mathematics) graduates has slightly increased.
According to Eurostat, 70,000 people are employed in the ICT sector in Bulgaria, which is 2.3 percent of the total number of employees in the country. This is below the EU average of 3.5 percent. A highly-qualified IT specialist in Bulgaria earns $20,000 per year which is two to three times more than the wages earned by the average Bulgarian.
Use of Internet/On-line Activities: Bulgaria ranks 19th among the EU’s 28 countries with 82 percent of Bulgarians using voice or video calls, and 74 percent participating in social networks. However, Bulgarians are reluctant to engage in on-line transactions, with only 7 percent of Bulgarians using online banking and only 31 percent shopping online.
Digital Public Services: Better online/e-government public services will enable Bulgarians to interact with public authorities. Bulgaria is the second lowest in the EU in terms of using e-government services.
At the end of 2016, the Bulgarian e-Government Agency was established with a main goal to combine all government efforts in implementing the proper IT infrastructure for digital public services. By 2022, Bulgaria’s public administration is expected to be fully digitally transformed, according to the State e-Government Agency.
Some key forthcoming projects of the State e-Government Agency are the following:
- Auditing of the existing e-Government ICT infrastructure.
- Building a State Hybrid Cloud with a complimentary data center.
- An integrated Information System of the e-Government including a public Register of all Projects and Activities.
- A Basic Register of Every Day Events for the business and the citizens.
- Other key registers - a Register of the Citizens' Registration and an Addresses' Register (Centralized Information Systems).
- Spatial Information National Geo-Portal.
- Pilot e-Voting System.
- Phase 2 of Bulgaria’s broadband projects.
Business Process Outsourcing: International ICT companies find Bulgaria attractive because of the 0 percent export tax, low operating costs and skilled local workforce. More and more foreign companies are opening global calls and service centers in Bulgaria as they move their operations out of India to Bulgaria, for example.
The four main pillars of Bulgaria’s large outsourcing sector are:
- Geographic proximity to large European countries with no time zone issues.
- Availability of highly talented, multi-lingual individuals.
- Low labor costs.
- Favorable macro-economic and political environment.
Technology Sub-Sector Best Prospects
Cloud technologies, Big Data, Internet of Things, and social media are growing technology segments. Emerging sub-sectors include cyber security, e-health, e-education, automotive electronics, intelligent transportation and smart city technologies.
Prospects for U.S. providers also include: broadband internet access technologies, consumer electronics (mainly smart phones and tablets), educational software, software for the financial services sector, analytical software, MES and Production management software, telecommunications equipment, innovation center set-up services, cyber security solutions, and others.
- Government tender opportunities exist for EU-mandated IT solutions to include: computers, peripherals, data centers, software, servers and other hardware technologies and integration services.
- E-Government Agency projects as described above.
- The national e-identification project of the Ministry of Interior.
- Government and private companies have undertaken various information and communication initiatives.
- EU funding under the Program for Rural Development and the EU Operational Program for Good Governance will provide funding for broadband access throughout Bulgaria, and other ICT projects.
Trade Events in 2019Late May – Early June 2019 Sofia Event Center, Paradise Mall, Sofia, Bulgaria https://www.digitalk.bg/ DIGITALK
DigitalK is among the leading European events attended by European venture capital funds and tech journalists. A 10,000 euro cash prize will be awarded.
May 13-15, 2019 National Palace of Culture, Sofia, Bulgaria
Webit.Festival Europe is Europe's largest and most influential tech and digital policy gathering of EU policy makers, global innovation leaders ranging from Fortune 500 top executives.
Ministry of Transport and IT- http://www.mtitc.government.bg
Ministry of Environment and Water - http://www.moew.government.bg/?&lang=en
2016 European Digital Progress Report - https://ec.europa.eu/digital-single-market/en/digital-scoreboard
Computerworld Bulgaria ICT Top 100 Ranking - http://computerworld.bg/inenglish/top100
Bulgarian Association of Software Companies (BASSCOM) - http://www.basscom.org/ Bulgarian Outsourcing Association - http://www.outsourcinginbg.com/
Bulgarian Association of Information Technologies - http://www.bait.bg/
ICT Cluster Bulgaria -
ICT Media Events Portal in Bulgaria -
IDC Bulgaria - http://www.idc.com
Notes: Publicly available statistical data in Bulgaria is scarce and unreliable. For in-depth market research and more precise date, please contact Ms. Neli Vacheva, Country Manager, IDC Bulgaria, Neli Vacheva at NVatcheva@idc.com; http: www.idc.com
U.S. Commercial Service Sofia Contact Information
Name: Ms. Stanislava Dimitrova
Position: Senior Commercial Specialist