Serbia’s information and communication technology (ICT) sector has been on a record-breaking trajectory for years, but there is significant potential for further advancement, particularly in shifting from exporting “cheap” labor to increasing the export of ICT products. According to data from the Ministry of Information and Telecommunications (MIT), the export of ICT products and services in the first five months of this year reached over €1.6 billion. This represents a 20.5% increase compared to the same period last year when exports totaled just over €1.3 billion.
The sector’s impressive growth, with the expectation of surpassing last year’s record, is evident when analyzing quarterly data. In the first three months of this year alone, ICT service exports amounted to €917 million, marking a 17% increase from the same quarter last year. To put this into perspective, the exports for the first quarter of 2024 alone exceeded the total exports of 2017.
Since 2012, when exports in this sector were €375 million, there has been nearly a tenfold increase. The MIT anticipates that this year’s export figure will exceed €4 billion, reinforcing the sector’s position as Serbia’s fastest-growing economic branch.
Despite the global economic crisis impacting the sector last year, it continues to expand. The average net salary in this field has risen by 13.3% from June 2023 to May 2024, reaching 234,407 dinars. Additionally, the number of employees in the sector grew from 108,129 to 111,352 between July 2023 and June 2024.
Nenad Jevtović, Director of the Institute for Development and Innovation, highlights that the ICT sector encompasses more than just programming. According to the Republic Institute of Statistics (RZS), it includes various sub-sectors such as publishing, cinematography, broadcasting, telecommunications, and computer programming. Jevtović underscores that this sector significantly contributes to Serbia’s economy, accounting for about 5% of the GDP in 2022, with a notable portion coming from computer programming. However, he emphasizes the need for domestic companies to shift from merely selling services to developing and exporting their own products.
Jevtović is optimistic about increased domestic investment in the sector, hoping for more companies to emerge that create and export ICT products, supported by local capital. He notes that such companies are typically more resilient to economic downturns compared to those attracted by “cheap” labor.
However, Jevtović points out that the ICT sector, while growing, is not the primary driver of Serbia’s economic growth. Construction, wholesale and retail trade, and mining currently lead, with ICT in fourth place. The rapid growth of construction, in particular, suggests that it will remain the dominant sector for the foreseeable future.
Milan Šolaja, Director of the Vojvodina ICT Cluster, notes that Serbia’s IT industry primarily exports services, including software development for international clients. The global demand for IT services has been rising steadily, creating opportunities for Serbian companies to capitalize on their skilled workforce. Serbian IT firms have successfully positioned themselves as quality service providers and have increasingly taken on complete projects rather than just providing components.
Šolaja points out that the domestic IT industry has evolved from basic outsourcing to delivering complete solutions directly to end clients, a significant advancement that has bolstered Serbia’s reputation as a hub for sophisticated software development. However, he argues that the sector’s contribution to Serbia’s economy is less than it could be due to a high level of international ownership among domestic IT firms, which limits the sector’s impact on the local economy.
In summary, while Serbia’s ICT sector demonstrates impressive growth and potential, transitioning from a focus on service exports to developing and exporting proprietary products will be crucial for maximizing its contribution to the national economy.
