The ICT Sector: A Rapidly Growing Industry in Bosnia and Herzegovina

The information and communications technology sector (ICT) is one of the fastest growing sectors in Bosnia and Herzegovina (BiH). The outsourcing of Western IT firms has been the modus operandi for revenue streams for decades, but today, the sector has the potential of becoming a leading industry in terms of domestic revenues as a percentage of GDP, writes Tea Ivanovic for the Center for Transantlantic Relations.

In recent years, young software developers have begun establishing their own start-ups, upgrading the digitalization process in Bosnia and Herzegovina, and are now working side by side with large outsourced multinational companies. This has led to a tremendous growth in the ICT sector. The number of ICT companies and startups in Bosnia and Herzegovina is growing rapidly, and according to BIT Alliance estimates, (an umbrella association for the software development industry), around 1,400 companies and about 2,500 to 3,500 programmers are now working in information-technology, communications, and computer programming. The European Bank for Reconstruction and Development, (EBRD) recognized this potential and in 2014 partnered with BIT Alliance to create a 6-month “ICT boot camp.” BIT Alliance is a member-based organization that is highly export-oriented, recording 20 million dollars in exports in 2015 and employing 700 staff.

An example of such a successful company is Lanaco, the largest private system integrator and IT company in Bosnia and Hercegovina established in 1990 and based in Banja Luka. At the same time, it is one of the most successful family managed and owned IT companies in the Western Balkan region with business operations consisting of 10 departments and more than 280 employees. These young, highly educated, specialists own more than 1,000 vendor certificates and 80 percent of their revenue comes from their own products and services, making it possible for the company to invest millions of dollars in software development, education, and training for their employees. Aspiring to increase its number of quality programmers, the company has organized a Programmers’ Youth Camp Pitam Da, together with the association Gaudeamus, which aims to encourage high school students to take more interest in programming by introducing programming through peer education. Lanaco has received many vendor awards, and since April 2016, the firm is participating in the London Stock Exchange ELITE Program, a testament to the company’s strategic validity, but also an opportunity to further develop its existing management approach, and adapting to the digital transformation of the global market.

Another example is misija:web, a Sarajevo-based digital consultancy founded in 2003, which has progressed from a local into a global company delivering projects for clients from around the world. The firm employs young ambitious engineers and works with growth-oriented small and medium-sized businesses and start-ups from a diverse array of industries.

The ICT sector in the Western Balkans

The ICT sector has the potential to positively affect the unemployment problem in the country. The government has yet to recognize this untapped potential and provide incentives and state funding for the IT industry. According to BIT Alliance estimates, Bosnia and Herzegovina spends a mere 0,04 percent of its GDP on the industry, while the world average is 2.7 percent.

The ICT sector is experiencing similar growing pains in other Western Balkan nations. The exceptions are Slovenia and Croatia, who have highly developed technological parks founded in the early 1990s. Nowadays, the Technological Park in Ljubljana hosts over 300 companies with more than 1,500 employees. No less important for the development of the software industry are ICT clusters, similar to the BIT Alliance in Bosnia and Herzegovina. In Croatia, there is the Association of Software Exporters CISEx, and in Serbia the ICT Cluster in Vojvodina. In Macedonia, 2.4 percent of the country’s total workforce is employed by the ICT sector, which accounts for approximately 450 million dollars. Albania shows similar growth in this sector, with over 8,000 ICT professionals and 1,800 active companies, and 58 percent of them are local startups. Bulgaria has one of the most longstanding ICT industries in the region, with the sector attributing over 10 percent of the country’s GDP, and was ranked as one of the most competitive countries Southeast European countries by the IT Industry Competitiveness Index in 2011. Romanian startup GeCaD developed Microsoft’s RAV antivirus software, and Bucharest-based Softwin created BitDefender internet security technology more than a decade ago, reaching half a billion users worldwide last year.

The countries of the Western Balkans, still deeply troubled and hunted by their turbulent past, should support these highly-qualified professionals who can help shape a brighter future, create more jobs, and thereby help strengthen security and stability in the region. In order to have systematic solutions, a participation of state institutions with a comprehensive strategic approach for the sector is required. These folks live in the world of zeros and one, always living and thinking globally, being plugged in endless matrix web of cutting edge technologies and digital global expansion for all sectors of life. They are not burdened with daily politics, ethnic divisions, history, and various political crisis that hold often much depressing grip, slowing the regional recovery, progress, and the EU integrations. And that is truly an encouraging news.