ITO and BPO as Key Enabler for Growth

During the past 5 years, the Bulgarian software industry has increased its revenue with 133.6%. The forecast for 2019 is that it will add another 18.4%. The Bulgarian Outsourcing Association expects the cumulative turnover of all the 500 companies to double by 2021. As of today, they make 4.8% of the GDP and by 2021 the number will be 7.9%.

The foreign investments in the Bulgarian ICT sector have increased with 300% for the last 3 years, according to fDi Markets. In 2018 alone, the ICT sector has received 16 new projects amounting to 240M USD. Half of these investments are coming from the USA, Switzerland and France. 

Not only has the sector grown rapidly and steadily, but also it has reinvented itself and has become one of the most attractive workforces. For quite some time now, it’s no longer associated with the call centers that marked its birth in the country. According to Ivaylo Savov, Board Member of the Bulgarian Outsourcing Association, currently they make up for only 16% of all the services in the ICT sector.

The industry is basically divided in two – business processes outsourcing (BPO) and IT outsourcing (ITO). Still the first generates the bigger part of the turnover, but it’s closely followed by the ITO companies with their share of 47%. Additionally, the forecast is that the ITO sector will be growing faster due to the added value it exemplifies. No less important is the fact that the borders between the two segments are getting fuzzier because of the clients’ demand for more complex services.

Within the Bulgarian ITO sector, 56.6% of the turnover comes from software development services and 39.6% -- from software products. Yes, the stereotype that developers at outsourcing services companies only have to follow the specification from a list still prevails. But it’s only natural, because of the great exuberance of clients and their projects from all over the world, that they are also able to work with the newest technologies linked to all the buzz words like VR, Big data, AI, machine learning, etc. 

And yes, operations typically contain on-demand services, but also include flexible software platforms, cloud-based solutions, social networking, integrated online communities, risk analysis, digital learning, product training and integrated services. The new trends in the sourcing sector include transformational and innovative services tailored to the clients’ requirements, such as mobility, analytics, cloud services, social media, digital marketing and cybersecurity. The key to success is to move from sourcing to tech innovation. Sourcing companies are no longer just a provider of services, but also engage actively in the clients business development.

Our region, South-east Europe, is third in the world behind Ukraine and India and ahead of all Central-European countries as a preferred outsourcing destination. It’s predominantly chosen by German, Swiss and Austrian companies, which outsource mainly their IT service and software development activities. Romania is the most popular destination, closely followed by Bulgaria and North Macedonia.

Our region’s key advantages are: language skills and education, cultural similarity to European and North American clients, government support and small-time zone differences. We also offer well-developed telecom infrastructure; Internet connection speed being among the fastest worldwide; a talent pool of well-educated and highly skilled developers. And last but not least, hugely important is the fact that sourcing industry in the leading countries – Bulgaria and Romania, has evolved from providing relatively basic services, such as call centers, to offering more advanced and complex services in the BPO and ITO fields.