Sophisticated Software Solutions
Sophisticated Software Solutions
Business Model Description
Develop, sell and maintain software products and services to improve business operations, such as custom software development, cloud computing services, data analytics and business intelligence, and cybersecurity services. Customers receive delivery, implementation, training and support. Software services developed in Serbia are mainly exported. Sophisticated software solutions can target a wide range of industries, including healthcare, finance, manufacturing, retail, education, transportation and logistics.
Expected Impact
Increase efficiency and productivity, improve decision making, create job opportunities, and provide access to information and knowledge.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Serbia: Belgrade Region
- Serbia: Vojvodina Autonomous Province
Sector Classification
Technology and Communications
Development need
Serbia generates 10% of its GDP from the ICT sector, which is among the top four export sectors, along with steel, cars, and agriculture. However, there's a need to adjust the regulatory framework and improve digital skills (1).
Policy priority
High-level policy documents, such as the Strategy of Scientific and Technological Development from 2021 to 2025, "Power of Knowledge," and the Electronic Communications Development Strategy from 2020 to 2024 prioritize improving the quality of life of the citizens of the Republic of Serbia through science and technological development (2, 4).
Gender inequalities and marginalization issues
There are only 20% of women in the technology sector, although there is great potential for employment in this area (5). Only 69% of rural households are connected to fixed broadband, compared with 85% in urban areas. This gap significantly hampers access to economic opportunities for a large share of the population (4).
Investment opportunities introduction
Serbia’s technology industry had more than 2,000 firms in 2017, a significant increase from 700 in 2006. The industry revenue nearly doubled during that period. Serbia’s technology industry has the potential to address the country’s economic stagnation and lift people out of poverty (5).
Key bottlenecks introduction
Although Serbia’s tech sector is expected to continue to grow by more than 20% a year, expansion is hampered by a lack of skilled people - primarily with foreign firms hiring as quickly as the educational system can produce them. Universities are graduating new engineers, but it is estimated that the country needs at least 15,000 more to meet rising demand (1).
Technology
Development need
The current technological structure of the industry in Serbia could be more favorable - the most significant part of production takes place in the least technologically demanding industrial branches. Without specialization, productivity growth, and climbing the technological ladder, there will be no much-needed economic growth and, thus, no higher wages (6)
Policy priority
The development of the technology subsector is prioritized by high-level policy documents, such as the Action Plan for the period from 2021 to 2022, for the implementation of the smart specialization strategy in the Republic of Serbia for the period from 2020 to 2025 and the Smart Specialization Strategy in the Republic of Serbia for the period from 2020 to 2027 (7).
Gender inequalities and marginalization issues
According to a report by the World Bank, Roma communities in Serbia often face discrimination and lack of access to land and other resources, making it difficult for them to benefit from new technologies (8). Additionally, an uneven generational presence in the digital society contributes to age discrimination and a lower quality of life (10).
Investment opportunities introduction
In 2021,135 million USD were invested in domestic startups. In addition, the Serbian technology sector exceeded 1.7 billion USD in export revenue in 2021. The Digital Serbia initiative recognized the potential, so it founded Business Angel Groups, which provide expert advice and investments of up to 219,000 USD and supports domestic startups (11).
Key bottlenecks introduction
The government buys modern technology, but there needs to be adequate training of employees and education sufficiently dedicated to the technological literacy of students, who are faced with computer work only when employed. Also, the elderly and the poor are neglected (12).
Software and IT Services
Pipeline Opportunity
Sophisticated Software Solutions
Develop, sell and maintain software products and services to improve business operations, such as custom software development, cloud computing services, data analytics and business intelligence, and cybersecurity services. Customers receive delivery, implementation, training and support. Software services developed in Serbia are mainly exported. Sophisticated software solutions can target a wide range of industries, including healthcare, finance, manufacturing, retail, education, transportation and logistics.
Business Case
Market Size and Environment
< USD 50 million
10% - 15%
The Serbian IT sector has been experiencing significant growth for several years, so that the domestic IT services market has reached a value of USD 325 million and is growing at an annual rate of 10%, while the export of IT services in 2021 amounted to USD 1.9 billion , which is an annual growth of 30% (38).
Indicative Return
> 25%
Returns on investment for sophisticated software solutions vary widely based on the specific software and manner of deployment. Serbia's software industry has historically shown higher returns than other industries, with an average return on investment of around 25% (43).
Investment Timeframe
Short Term (0–5 years)
Typically, the investment timeframe can range from several months to several years, depending on the specific software and deployment model. The investment timeframe may be longer for complex software solutions that require significant custom development and integration with existing systems (43).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Impact Case
Sustainable Development Need
Although Serbia’s tech sector is expected to continue to grow by more than 20 percent a year, expansion is hampered by a lack of skilled people; largely with foreign firms hiring as quickly as the educational system can produce them. The country needs at least 15,000 more to meet rising demand (1).
Serbia needs to reverse the “brain drain” that has cost the country tens of thousands of highly educated young workers annually in recent years; spur innovation; adjust its regulatory framework; and improve digital skills and the outdated primary education system (1).
Women and men in Serbia use ICT equally at work, but the level of use is significantly below the EU average (9). In the EU, the percentage of individuals using computers, laptops, smartphones, tablets or the other portable device at work is 38.23%. In Serbia, the same indicator was 22.02% in 2020 (42).
Gender & Marginalisation
Serbia experiences a lack of special measures aimed at overcoming gender inequalities in science, especially gender-balanced terms (27).
Among ICT specialists in Serbia, 21.6% are women, while at the EU-27 level, this percentage is lower, at 17.2%. Serbia registers the highest average annual increase in female ICT specialists in Europe, standing at 13% for 2011-2019 (9).
The business environment has to support or take into account work-life balance, gender biases and sexism that may have unintended consequences that prevent women from advancing in their careers, widen the pay gap that already exists between men and women in the ICT sector, and lead women to leave the sector.
Expected Development Outcome
Implementing sophisticated software solutions can help businesses stay competitive in a rapidly changing digital environment by providing them with new capabilities and access to new markets, which enhances Serbia's economy in an international standing (43).
Sophisticated software solutions can provide businesses with better tools to interact with customers and understand their needs, improving customer service and satisfaction. It also creates new and attractive jobs and opportunities for skilled professionals in the technology sector (43).
Gender & Marginalisation
Sophisticated software solutions can be developed with the needs and perspectives of women and marginalized groups in mind, leading to increased representation and participation of these groups in the technology sector (43).
Sophisticated software solutions can help increase economic empowerment for women and marginalized groups by providing them with new tools and opportunities to start and grow businesses and access new markets (43).
Primary SDGs addressed
9.b.1 Proportion of medium and high-tech industry value added in total value added
N/A
N/A
5.b.1 Proportion of individuals who own a mobile telephone, by sex
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Public sector
Outcome Risks
The immaturity of the sophisticated software solutions market in the Republic of Serbia can create data privacy and security risks (43).
Sophisticated software solutions can automate repetitive tasks, leading to job displacement for employees who perform those tasks (43).
Businesses and users may become reliant on sophisticated software solutions, which can create risks if they fail or are unavailable (43).
Women with mid-level qualifications in the service sector (retail, accounting, insurance, etc.) are a category under high risk from automation (43).
Sophisticated software solutions may widen the digital divide if access to technology and technology education is not provided to marginalized groups (43).
Impact Risks
Sophisticated software solutions may need more transparency, making it easier for users to understand how they work and how their data is used (43).
Businesses or users may not adopt sophisticated software solutions if they are not designed to meet their needs or are challenging to use (43).
Impact Classification
What
Implementation of sophisticated software solutions brings increased efficiency and productivity, improved customer service, increased competitiveness, and digital transformation.
Risk
Businesses and users may not adopt these solutions if they are not designed to meet their needs or are difficult to use.
Impact Thesis
Increase efficiency and productivity, improve decision making, create job opportunities, and provide access to information and knowledge.
Enabling Environment
Policy Environment
Action plans for implementation of the Smart Specialization Strategy of Serbia 2022, which aim to improve digital skills and increase the competitiveness of the Serbian industry and advance business models' digitalization (26).
Industrial Policy Strategy 2021-2030 focuses to overcoming the digital divide for the elderly and marginalized groups (26).
Financial Environment
Financial incentives: The Center for Digital Transformation of the Serbian Chamber of Commerce, in cooperation with the Ministry of Economy, organized the Digital Transformation Support Program for MSMEs 2022 and invited companies to apply and obtain the right to subsidies from 6,400 to 12,800 USD (35).
Fiscal incentives: Businesses that invest in sophisticated software solutions may be eligible for tax incentives, such as reduced corporate income tax rates, accelerated depreciation of assets, and other tax benefits (36).
Other incentives: Incubators and accelerators provide resources and support to businesses and startups that develop sophisticated software solutions, such as mentorship, networking, and access to funding (37).
Regulatory Environment
The Law on Electronic Commerce: This law regulates electronic commerce activities in Serbia, including the provision of online services and the protection of personal data (30).
The Law on Personal Data Protection regulates the collection, processing, and storage of personal data, including data collected through sophisticated software solutions (31).
The Law on Electronic Communications regulates electronic communications, including the provision of internet services and the protection of personal data in the context of electronic communications (32).
The Law on Cybercrime regulates criminal offenses related to computer systems and data, including hacking, unauthorized access, and data breaches (33).
The Law on Free Access to Information of Public Importance regulates the right of citizens to access information held by public authorities, including the use of electronic means for access to information (34).
Marketplace Participants
Private Sector
Data center in Kragujevac, ZF Friedrichshafen, Brose Group, Serbia ContiTech, Vorwerk & Sohn Group, Luxoft, Comtrade System Integration, Schneider Electric, Microsoft, High Tech Engineering Center, Asseco See, SAP West Balkans, Oracle Srbija & Crna Gora, and Endeva.
Government
AI Council, Ministry of Economy, Ministry of Education, Science and Technological Development, Ministry of Trade, Tourism and Telecommunications, Serbia Investment and Export Promotion Agency (SIEPA).
Multilaterals
World Bank, United Nations Development Programme, (UNDP) European Union (EU), International Finance Corporation (IFC), Organisation for Economic Co-operation and Development (OECD)
Non-Profit
IT Clusters (Subotički IT klaster, IKT klaster Centralne Srbije, Vojvođanski IKT klaster), Science Technology Parks (Naučno tehnološki park Beograd,N Naučno tehnološki park Čačak), Universities and R&D institutions (Centar za istraživanje razvoja nauke i tehnologije Pupin).
Target Locations
Serbia: Belgrade Region
Serbia: Vojvodina Autonomous Province
References
- (1) International Trade Administration, Information and Communications Technology Market, 2022. https://www.trade.gov/country-commercial-guides/serbia-information-and-communications-technology-market
- (2) Official Gazette of RS, Strategy for the development of electronic communications in RS from 2010 to 2020, 2009. https://www.ratel.rs/uploads/documents/pdf_documents/documents/Regulativa/Strategije/Strategija_razvoja_elektronskih_komunikacija_2010-2020.pdf
- (3) International Trade Administration, Information and Communications Technology Market, 2022. https://www.trade.gov/country-commercial-guides/serbia-information-and-communications-technology-market
- (4) FAO, EBRD and WBIF support Serbia to expand broadband to rural areas, 2021. https://www.fao.org/in-action/territorios-inteligentes/noticias/detalle/en/c/1373515/
- (5) The Borgen Project, What Serbia's technology industry can do for its economic situation, 2021. https://borgenproject.org/serbias-technology-industry/
- (6) Talas.rs. Low wages in Serbia and the development of technologies - lessons from developed countries, (2021). https://talas.rs/2021/01/18/niske-plate-u-srbiji-i-razvoj-tehnologija-lekcije-iz-razvijenih-drzava/
- (7) MESTD of RS. Smart specialization strategy in the Republic of Serbia for the period 2020-2027, (2020). https://prosveta.gov.rs/wp-content/uploads/2020/03/strategija_pametne_specijalizacije.pdf
- (8) The World Bank, Breaking the blackout cycle of Roma Exclusion in the Western Balkans, 2019. https://documents1.worldbank.org/curated/en/758911554459613139/pdf/Executive-Summary.pdf
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- (21) Telegraf. HYCU is a company that deals with data protection of the world's largest companies, and its software solutions are created in Serbia, 2018. https://www.telegraf.rs/hi-tech/zanimljivosti-hi-tech/2997778-hycu-je-kompanija-koja-se-bavi-zastitiom-podataka-najvecih-svetskih-firmi-a-njena-softverska-resenja-nastaju-u-srbiji
- (22) Pc Press. Endava is opening over 80 jobs in Serbia, 2020. https://pcpress.rs/endava-otvara-preko-80-radnih-mesta-u-srbiji/
- (23) Telegraf. Comtrade opened the doors of its company in Belgrade, 2017. https://www.telegraf.rs/hi-tech/zanimljivosti-hi-tech/2882468-comtrade-otvorio-vrata-svoje-kompanije-u-beogradu-briga-o-zaposlenima-im-je-najbitnija-a-tek-da-vidite-sta-su-sve-postigli-do-sada-foto
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- (37) The call for participation in the third edition of the BioSens accelerator has been announced, 2022. https://biznis.rs/vesti/srbija/raspisan-poziv-za-ucesce-u-trecem-izdanju-biosens-akceleratora/
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