Half a billion euros of investments in Serbian IT, News
Serbian Prime Minister Ana Brnabic, who is visiting the United States to promote Serbia as a competitive destination for investment in research and development and business centers of high-tech companies, expressed hope that a new round of investment from that country in Serbia will follow.
“I can say that some of our further directions of development are the fact that we were among the first in Europe to pass legal regulations on cryptocurrencies, that we are in the top ten in the world in blockchain technology and the gaming industry, and we are investing more and more money in biomedicine. All of these are some directions of development that have been preliminary confirmed to me here, as well as that Serbia is moving in the right direction,” the website of the Government of Serbia transmitted her statement.
And considering the events on the IT scene so far, it is not surprising that the Prime Minister in the United States has a lot of interlocutors, since some of the biggest investments in our IT are from American companies.
In early June, the news broke that the video game company Nordeus, best known for the football manager who plays on Facebook, Top Eleven, was sold for a potential 378 million dollars to the American gaming giant Take Two (Take Two Interactive Software).
The acquisition of the company closest to the status of “unicorn” in Serbia, ie startups that reach a value of one billion dollars, is comparable to the investments of Chinese Zijin in RTB Bor or even Gazprom for 51 percent of NIS.
However, what is characteristic for this acquisition, but also through the large takeovers of Serbian IT companies before, is that the founders of the company remained at its helm, and that product development and engineers remain in our country with a tendency to invest in new development centers.
Such investments represent a difference in relation to some previous investments when Serbian developers were used for outsourcing services, ie work on parts of products or some service.
Last year, revenues from the export of ICT services reached 1.44 billion euros, which, despite the pandemic, was slightly higher than the revenues from 2019. In the first four months of this year, export revenues, according to the data of the National Bank of Serbia, reached 537 million euros and recorded an increase of 11 percent compared to the same period last year.
The whole story with the development of the domestic IT sector seems to be possible from the beginning of the 2000s, when the Prime Minister of Serbia and Montenegro Zoran Djindjic negotiated with the first man of Microsoft Steve Ballmer, which resulted in the opening of a development center in Belgrade in 2006.
From the initial 30 engineers, this center reached 300 employees and became one of the most important in the world for the development of the Azure Data platform for cloud computing. With cloud computing, Microsoft enables small businesses to develop their services on their platform and servers without the need for large investments in their own machines.
This year, Microsoft announced a call for the employment of another 60 engineers in this center. One of the founders and then CEO of the company Steve Ballmer visited Belgrade in 2013, and a month later the then Prime Minister Ivica Dacic signed a contract on licensing and servicing of computer software at Microsoft headquarters in Redmond, which will be used in the daily work of the state administration.
The use of Microsoft’s services by state authorities goes even further, because in 2006, the then mayor of Belgrade, Nenad Bogdanovic, concluded a contract with this company on the improvement and connection of the Belgrade information system. Among the early investors in the IT sector of Serbia was IBM, which opened an office in Belgrade in 2007, and last year became the first commercial user of data in the Data Center in Kragujevac.
But since then, information technologies have changed a lot, and with them IT startups in Serbia, as well as investors from around the world, among which American companies are in the lead. Before the mentioned Nordeus, the biggest acquisition in this sector was the purchase of the startup Frame, founded by Nikola Božinović and whose complete development is taking place in Serbia by one of the fastest growing IT companies in the world – Nutanix, for 165 million dollars. The American company bought the Serbian one not only to take over its technology in cloud services, but also a development center was established here, which employs about 100 engineers managed by the founder of Frame.
A particularly dynamic IT sector is the gaming industry, and Novi Sad’s Trilateral has built a name as a creator of super-realistic computer-generated characters. That’s how the American gaming giant Epic Games bought them a couple of years ago. The price is unknown, but the development remains in Novi Sad.
In addition to them, some of the largest investments were made by NCR, which is currently opening a 90 million dollar campus in New Belgrade and which employs 3,000 people. Or let’s say it is not so well known that one of the world’s largest investment funds, Black Rock, employs 500 people in Serbia through the acquisition of the French IT company E Front, which did most of its business from Belgrade.
According to the data of the Development Agency of Serbia, over 500 million euros have been invested in the IT sector of Serbia, and the most common investors are engaged in research and development, software development and other IT services (Shared services / Business process outsourcing / IT consulting).
In addition to the mentioned investments, there are also Schneider Electric (France), Levi9 (Netherlands), Endawa (UK), Asecco (Poland), FIS (USA), enjoy.ing (Switzerland), Clarivate (CPA Global – USA), Gategroup Services Switzerland, Sitel (USA), Telesign Mobile (USA).
That there is still interest in investing in Serbia is also shown by the analysis of the American ITA (International Trade Administration), which helps American companies in appearances abroad, in which it is stated that IT generates 10 percent of Serbian GDP.
According to the US Startup Genome report, in 2020, Belgrade and Novi Sad are ranked 10th among growing ecosystems, and Serbia is ranked 5th in the world by blockchain developers.
Milovan Matijevic, IT analyst and owner of Mineko Computers, points out that we need to see concrete figures, but that it seems that the structure of investments in domestic IT is changing from ordinary outsourcing to product development.
“The most representative example of that is Microsoft’s development center, which is still functioning. Otherwise, investments in companies engaged in product development are characteristic of investments of American companies. Although it is difficult to say whose company it is, since many invest from their companies from offshore zones, and mostly from the Netherlands and Ireland,” notes Matijevic.
According to him, some of the largest domestic IT companies are in fact registered abroad, primarily in the United States and Ireland.
“The reason is that the business environment there is incomparably better than here. The United States is far ahead of Western Europe, and Europe is ahead of us. In principle, it is possible to make a startup here, but it is difficult to develop a serious business with an annual income of more than 10 million dollars,” our interlocutor notes, Danas reports.