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Serbia Information Technology Report 2011
Business Monitor International, Jan 2011, Pages: 49
The Serbia Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Serbia's information technology industry.
Market Overview:
The total size of the Serbia IT market in 2011 is estimated by BMI at around US$698mn, up from US$678mn in 2010. BMI expects a market CAGR of 10% for 2011-2015. Serbia’s IT market is forecast to return to low single-digit growth in 2011 following a further contraction in 2010, as businesses and consumers retrenched due to the recession.
The context for this growth opportunity is Serbia’s currently low level of IT development. The current level of per capita IT spending, estimated at around US$69 in 2010, is far lower than in countries such as Hungary and Greece, and 20% of that in fellow former Yugoslavia republic Slovenia.Trading conditions will remain challenging for IT vendors, however, with fiscal pressures and modest private consumption and investment growth projected.
The government’s stated agenda of privatisations would, if implemented, be an important driver of spending in sectors such as banking, telecoms and utilities. Vendors will also target Serbia’s 318,745 small enterprises, many of which are still looking to deploy basic IT infrastructure.
Industry Developments:
The Serbian government has an agenda of strengthening Serbia’s IT development through attracting new investment into the sector, skills initiatives and speeding up the application of IT. The government has also associated itself with an agenda of faster reform and privatisation. This has the potential to drive IT spending in key sectors such as banking.
The Serbian government also targets a continued improvement in e-government, although progress has been slow due partly to low computer penetration in the population. The guiding framework is the Strategy for Public Administration Reform and the Action Plan for Public Information Development adopted in 2006.
Under the plan, the Serbian government pledged funds for the establishment of an integrated electronic network covering state organisations. Meanwhile, funds from EU institutions will be used to support infomatisation in a number of sectors including small and medium-sized enterprises (SMEs) and education.
Competitive Landscape:
The largest computer seller in Serbia is local IT leader ComTrade, with the top multinational brands being HP, Lenovo, Dell, Toshiba and Fujitsu Siemens. The Serbian computer market remains highly price-sensitive, with many consumers preferring to buy ’white boxes’ assembled from Far Eastern components. Multinational vendors have strengthened their position in the Serbian brand PC market in the past few years, however.
Microsoft dominates the operating system software segment with around 90% of the market. However, the company projected flat turnover growth of US$45mn in its 2010 fiscal year due to the economic crisis. The company hopes to receive a continuing boost from migrations to its new operating system, Windows 7.
The IT services opportunity is a draw for vendor investment in the country with S&T Group, IBM, HP and Combis among the market leaders. The developing market is also of interest to major regional players such as SBS and ComTrade.
Computer Sales:
BMI forecasts that Serbia’s PC market (including notebooks and accessories) will be worth US$384mn in 2011, with a return to modest single-digit growth compared with 2010. A 2011-2015 Serbian computer market CAGR of 8% is forecast, with computer hardware sales including notebooks and accessories reaching US$677mn by 2015.
With only around 40% of households having a computer according to government figures, the market looks set to be dominated by hardware sales for some time to come. In 2010 growth was expected to finish in negative growth territory again for the year, as the weak economy continued to affect demand after the market contracted sharply in 2009.
Software:
The Serbian addressable software market is projected by BMI at US$79mn in 2011 and is expected to grow at a CAGR of 12% over the 2011-2015 forecast period. Serbia lags far behind most regional neighbours in software deployment, but there is a growing awareness among enterprises of the potential benefits of utilising IT.
SMEs will be an important target for vendors due to their generally low level of informatisation, which adds up to a big potential market for basic enterprise resource planning (ERP) and enterprise resource management (ERM) applications. Larger companies will continue to offer important opportunities, however, as the Serbian government has pledged to accelerate privatisation of key state enterprises. Further market growth will depend on the government’s efforts in combating piracy, which is still around 76% (although down from 90% a few years ago).
Services:
The Serbian IT services market was expected to be worth around US$139mn in 2011 according to BMI estimates, accounting for around 19% of all IT spending in Serbia. IT services CAGR for the sector for the 2011-2015 period is forecast at around 11%, with the market opportunity reaching US$214mn by 2015.
Government ICT initiatives and EU funding should continue to provide opportunities, as the banking and government sectors, in particular, invest in IT that will enable them to compete in a changing environment. Outsourcing is a fast growing area as Serbian companies face increasing pressures of regional and global efficiencies, while growing interest in cloud computing services will drive investment in data centres.
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