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Driving Serbia’s IT growth: The role of state support and industry evolution

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State subsidies and investments in the IT sector, coupled with the employment of skilled professionals, have positioned Serbia favorably on the global map and attracted foreign tech companies to invest in its market. Over the years, Serbia has emerged as an appealing destination for tech firms due to several factors. Firstly, its universities produce high-quality graduates who are well-prepared to contribute to the industry. Secondly, until recently, Serbia offered a cost-effective labor force compared to other European countries, making it an attractive option for foreign companies seeking to minimize expenses.

However, the landscape has evolved significantly. The domestic IT sector has experienced substantial growth in terms of wages, exports, and services, underscoring its increasing importance to the Serbian economy. Despite facing challenges in recent years, such as the global economic downturn, the IT sector in Serbia has remained resilient. While outsourcing companies felt the impact more profoundly, firms with proprietary products weathered the storm relatively well. Layoffs were minimal, and the sector maintained stability, thanks in part to government subsidies and incentives that attracted research centers and fostered growth.

Looking ahead, continued state support is crucial for sustaining the momentum of the IT sector. The success achieved thus far can be attributed to the consolidation of subsidies, which must be maintained or even increased to ensure continued growth. With rising wages, Serbia is becoming less of a budget-friendly option and is aligning more closely with European standards. While this signifies progress, there is a risk of losing competitiveness if salaries surpass those in neighboring EU countries like Romania, Poland, and Bulgaria. To avoid this scenario, Serbia must strike a balance between attracting investment and maintaining cost-effectiveness, ensuring that it remains an attractive destination for both domestic and foreign IT companies.

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