AIBEST: Bulgaria’s Knowledge Industry Grows 16.8% in 2022
On 13 December, at the Hyatt Regency Hotel in Sofia, the Bulgarian Association for Innovation, Business Excellence, Services and Technology (AIBEST) presented the results of its annual report in the presence of members, partners, entrepreneurs and institutions. At the invitation of the Association, the release of the data and a discussion on its analysis was attended by the CEO of Invest Sofia, Ph.D. Maria Hristova, the Head of Investment Analysis Department – Victor Gusev, and Radostina Belcheva, Chief Expert at the Agency.
The analysis on the state of the knowledge industry in Bulgaria was prepared by SeeNews. The document compares data from 802 Bulgarian companies with activities in business services and technology. The sector’s 2022 results were presented by Iliya Krastev, Chairman of AIBEST. According to him, the tech and outsourced services industry continues to grow at a double-digit rate, but at a slower pace compared to the previous year. The industry is growing at 16.8% (vs. 22.4% in 2021) to €4.935bn. Revenues account for 5.8% of annual GDP. If the average growth of the sector over the last 5 years is maintained, revenues are expected to reach 9.2% of GDP by 2025.
AIBEST has conservative expectations for the industry’s performance in 2023 and for next year’s results due to the slowdown in the technology industry and the global economy as a whole. The geopolitical situation and multiple conflicts around the world are also having an impact, creating uncertainty for investors. According to the Association, global economic factors such as high-interest rates, recession in some major markets, etc. – are also having an impact.
Beyond external factors, the industry is also hampered by the political instability in the country, the lack of a government strategy for the development of priority sectors, tax uncertainty and last but not least – the insufficient number of specialists concerning the needs of the market. The quality of education, which is often not corresponding to the real needs of companies, is also a factor. According to Iliya Krastev, all this could lead to stagnation in the sector in the long term and to companies leaving the Bulgarian market.
Despite the challenges, companies in the industry remain the employer of choice because of good working conditions, career development and the many times higher salaries compared to the national average. In one year, the number of employees in the sector has increased by 15,000 and to date 105,000 people are employed in IT and business services and development activities.
The presentation of the annual report ended with a panel discussion, which was attended by Natalia Miteva, Deputy Minister at the Ministry of Education, Petar Ganev from the Institute for Market Economics and Dobroslav Dimitrov, Chairman of the Bulgarian Association of Software Companies (BASCOM). Among the main conclusions of the conversation were the need for cooperation between the state and business to improve the quality of Bulgarian education, local policies on training people who are currently outside the education system, as well as policies to attract labor in the country. The rapid penetration of AI-based solutions was identified as a potential threat to the sector, which could reduce jobs in the sector.
