The information technology and digital services sector confirmed its position as Serbia’s strongest performing foreign-owned segment in 2025, not only in terms of growth rates but also in profitability quality, external income generation, and resilience to domestic macroeconomic constraints. Unlike capital-intensive industries or consumption-dependent services, IT and digital services operate largely decoupled from Serbia’s internal demand cycle, making the sector structurally distinct within the economy.
Foreign-owned IT companies operating development centres and delivery hubs in Belgrade, Novi Sad and Niš recorded average revenue growth in the range of 15–20 percent year-on-year in 2025. This expansion was broad-based rather than concentrated in a handful of firms, reflecting sustained demand from EU and North American clients for outsourced software development, systems integration, data engineering, cybersecurity, and digital product development. Growth was driven less by headcount expansion than by higher billing rates, deeper project scopes, and a gradual move up the value chain toward more complex and mission-critical services.
Profitability metrics remained exceptional by regional and cross-sector standards. EBITDA margins regularly exceeded 25–30 percent, with some mature delivery centres reporting margins closer to 35 percent on stable contract portfolios. These margins reflect three structural advantages. First, the sector’s output is predominantly high-value intellectual labour rather than physical goods, keeping capital expenditure low relative to revenue. Second, revenues are overwhelmingly billed in euros or US dollars, while a substantial portion of costs remains local, preserving margin buffers even as domestic wages rise. Third, project pipelines are typically diversified across multiple geographies and clients, reducing earnings volatility.
Key foreign-owned employers and operators anchor this ecosystem. Microsoft Development Center Serbia remains one of the most sophisticated development hubs in the country, focusing on core product engineering rather than peripheral support functions. Its Serbian operations contribute to global software platforms, embedding Serbia directly into upstream innovation chains rather than downstream outsourcing alone. This positioning supports higher billing rates and long-term contract stability.
Schneider Electric DMS represents a different but equally important model. Originating from Serbian engineering expertise and later integrated into a global industrial group, the DMS unit operates at the intersection of energy systems, grid software, and industrial digitalisation. In 2025, its performance benefited from accelerating investment in power systems, grid modernisation, and energy transition software across Europe, generating stable export revenues and reinforcing Serbia’s role in industrial digital engineering rather than generic IT services.
Endava and EPAM Systems exemplify the large-scale delivery-hub model. Both companies expanded Serbian operations in 2025 through selective hiring, internal upskilling, and portfolio diversification. Their Serbian entities service clients in financial services, retail technology, healthcare, and industrial platforms, with project sizes and complexity increasing over time. Revenue growth for these firms remained firmly in the mid-teens, while utilisation rates stayed high, supporting margin preservation despite rising wage costs.
The export structure of the sector is one of its most macro-relevant features. More than 90 percent of IT and digital services revenues generated by foreign-owned firms in Serbia are export-driven, with minimal reliance on domestic clients. This makes IT services one of Serbia’s largest sources of net foreign exchange inflows outside tourism. In balance-of-payments terms, the sector acts as a structural counterweight to the persistent goods trade deficit, generating stable, recurring inflows that are not seasonal and not commodity-price dependent.
In 2025, total IT services exports from Serbia are estimated to have exceeded €3.5–4.0 billion, with foreign-owned companies accounting for the dominant share. This figure places IT alongside tourism as a cornerstone of Serbia’s external income model, but with markedly different risk characteristics. Unlike tourism, IT exports are not exposed to climate, geopolitical travel disruption, or seasonal volatility. Unlike manufacturing, they are not heavily dependent on imported inputs or energy costs. This makes the sector particularly attractive from a macro-stability perspective.
Cost pressures did increase in 2025, but they did not materially undermine performance. Average gross wages in senior engineering and specialised digital roles rose by 10–12 percent, reflecting tight labour markets and competition among employers. However, billing rate adjustments and productivity gains absorbed much of this increase. Foreign-owned firms increasingly invested in internal training, automation of testing and deployment, and AI-assisted development workflows to protect margins and reduce dependency on linear headcount growth.
Capital intensity remained low. Annual capital expenditure for most IT service centres was limited to 2–4 percent of revenues, primarily covering office space, IT infrastructure, cybersecurity, and compliance systems. This low reinvestment requirement explains why free cash flow generation is high and why dividend repatriation from the sector is structurally significant. At the same time, many firms retained part of their earnings locally to fund incremental expansion and retention incentives rather than large fixed investments.
From a strategic standpoint, 2025 further clarified the sector’s trajectory. Serbia is no longer competing primarily on low labour costs, but on delivery quality, technical depth, and reliability within European time zones. The most successful foreign-owned firms in Serbia increasingly position local teams as integrated components of global product development rather than outsourced capacity. This shift supports higher margins, longer contract durations, and greater resilience to cyclical downturns in global IT spending.
The sector’s main constraint is no longer demand, but labour availability and skill depth. Demographic trends, emigration, and competition from remote work opportunities limit the pace at which capacity can expand. This has led foreign-owned firms to prioritise productivity, seniority mix, and project selectivity over aggressive headcount growth. As a result, revenue growth in 2025 was driven more by value per employee than by employee numbers, a positive signal for long-term sustainability.
In the context of Serbia’s broader economy, foreign-owned IT and digital services companies represent a rare combination: high growth, high margins, export orientation, and low external vulnerability. Their financial performance in 2025 did not merely outperform other sectors; it illustrated what structurally competitive, globally integrated value creation looks like in the Serbian context.
