This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/23/2018

Overview

New 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. Bulgaria’s ICT sector for 2016-2017 is characterized as stable and growing.
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 USD $1B in 2016, presenting a growth of 1.7 percent due to the good performance of IT services and software -- while the hardware segment was stagnating. During an EU Conference “EURONET in Sofia (2018) it was noted that turnover in the information and communication technologies sector in Bulgaria experienced a 300-percent rise over the past 7 years and has reached 2.5 billion Euros.
However, digitization is poorly present or completely absent in a number of sectors of the national economy due to Bulgaria’s temporary unstable political situation (from October 2016 to May 2017), a transition period between EU funding periods, and low level FDI which negatively influenced IT spending by the government and the private sector. However, the move towards cloud services, mobility and social business positively shape 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 promoted by Bulgaria’s newly launched eGovernment State Agency. 
According to the National Statistical Institute, 67.3 percent of urban homes have high speed broadband but rural areas lack similar coverage; 66.9 percent of Bulgarian homes subscribe to a fixed broadband connection which in addition to a fixed cable connection also includes an Internet connection through the network of mobile phone operators. Bulgaria needs to address a severe digital skills gap where only 31 percent of the population has basic digital skills. Bulgarian internet users are among the most intensive users of on-line 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.
According to the 2017 report of the Industrial Welfare Commission (IWC), the penetration of the mobile data in the population was 66.9 percent. Some 85.3 percent of Bulgarians browse the internet via their smartphone; 36.1 percent browse through a laptop or tablet; and, 63 percent of Bulgarian households have a desktop computer, a laptop or a tablet. In 2017, 58.8 percent of the population between the ages of 16 and 74 used a computer every day or at least once a week at work, at home or elsewhere. In 2017 there are 3.69 million users of mobile data in Bulgaria and by 2022 users are projected to reach 4.18 million.

Source: Statista, 2018
Despite the dynamic development of information technologies in Bulgaria, 32.2 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

  • 66.9 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), although the overall level of fixed broadband internet remains low (27th in the EU)

 
Source: NSI
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 (72 percent of Bulgarian homes, above the EU average (71 percent). However, rural areas are not well covered with only 17 percent having high-speed broadband network available.
Digital Skills: Bulgaria needs to address its severe digital skills gap.  
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 USD $20,000 per year which is more than double the wage 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.

 
BPOs/Outsourcing: International ICT companies find Bulgaria attractive because of the 0% export tax, low operating costs and a skilled local workforce. More and more foreign companies are opening global call 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; and

  • 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 cybersecurity, 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, cybersecurity solutions, and others.
 

 

Opportunities

  • 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 2018-2019 

Late 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.
 
Mid-Late June 2019 · Arena Armeec, Sofia, Bulgaria ·
https://www.webit.bg/2018/index.php WEBIT.FESTIVAL Europe
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.
 

Web Resources

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 - http://www.ictcluster.bg/en/
ICT Media Events Portal in Bulgaria - http://en.ictmedia.bg  
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
Email:           stanislava.dimitrova@trade.gov
Phone:          +359-2-939-5740

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Bulgaria Information and Communication Technology Trade Development and Promotion