Bulgaria Information Technology Report 2010

Market Overview The total size of the Bulgarian IT market in 2010 is estimated by BMI at around US$1.0bn, up from US$990mn in 2009. BMI expects a market compound annual growth rate (CAGR) of 9% for 2010-2014.

Bulgarian IT spending is forecast to record low single-digit growth in 2010 following a sharp deceleration in 2009 as businesses and consumers retrenched due to the recession.

There should still be areas of opportunity in 2010, however. Lower prices and growing internet penetration will be among factors boosting the popularity of notebooks. Growing ties with EU partners and clients should increase demand among enterprises for enterprise resource planning (ERP) solutions to improve efficiency. Despite budgetary stresses, government spending on ICT will continue in areas like healthcare and e-taxation, supported by EU programmes.

Major EU-funded projects are coming on stream as Bulgaria attempts to improve its position across a range of ICT indicators. Meanwhile, foreign company investment in offshoring and call centres will also generate IT spending. EU accession will continue to drive spending by enterprises, with most demand still coming from larger and foreign-owned companies. However, small and medium-sized enterprises (SMEs) represent an increasing opportunity.

Industry Developments Bulgaria's IT governing body, the State Agency for Information Technology and Communications (SAITC), has set a goal for IT to account for 10% of Bulgaria's GDP by 2011. Key policy areas include programmes to computerise schools and connect them to the internet, raising Bulgaria into the top 40 countries in terms of e-government and investing in skills training to boost the domestic IT sector.

In addition to local funding, Bulgarian organisations have access to EUR300mn from EU structural funds for the development of IT. In July 2007, the EU announced that it would make substantial sums available to Bulgaria under its Competitiveness and Innovations Programme, which will include EUR728mn earmarked for policies in the ICT sector.

Healthcare IT system reform is part of the government's drive to achieve greater efficiency. Key goals in a plan outlined in late 2008 included online health records for all patients by 2009 and the introduction of e-health cards for evey patient by 2013. Meanwhile, another of SAITC's flagship programmes is eeducation, with the government's plan calling for schools in all 28 districts of Bulgaria scheduled to be connected to the internet during the 2008-2009 school year.

Company News HP, Acer, Toshiba, Asus, Acer, Dell and Fujitsu-Siemens are among the market leaders for Bulgarian PC sales as brand computers capture a steadily increasing share. HP was in top spot in 2008 followed by Acer and Toshiba, with the top five players accounting for about half the market. Most multinational vendors in the Bulgarian market work with big local distributors like Solytron and ASBIS Bulgaria.

Most of the major multinational software vendors are present in Bulgaria, either through a subsidiary or through local distributors and partners. Microsoft and SAP dominate, with Microsoft benefiting from an agreement with the State Administration Ministry to purchase software licenses for use within government. Under the agreement, the Bulgarian government will purchase licenses for Windows and Office software for 60,000 PCs and 2,000 servers.

The increasing number of large IT projects has led global IT services vendors to increase investment in local IT services and BPO infrastructure. IBM employs over 100 staff at its BPO centre in Sofia. Like HP, IBM has based its local growth projections on services expansion and intends to focus on some value-added services such as consultancy and financial sector solutions.

Computer Sales BMI forecasts that the Bulgarian PC market (including notebooks and accessories) will be worth US$591mn in 2010, with flat or slightly negative annualised growth. In H109, computer sales experienced a sharp deceleration compared with the same period of 2008. The first quarter of 2009 saw growth drop into the low single-digit range, at about 3%, down from a strong double-digit performance in 2008.

Growth in 2010 and 2011 is forecast to remain well below the previous levels of 2006-2008 but will trend higher again in 2012. Notebooks are projected to lead the way with a projected 2009-2013 CAGR of 13%. Lower prices, new entertainment features and a greater premium on mobility are among the factors boosting the popularity of notebooks.

Software Bulgaria's software market is forecast by BMI at US$111mn in 2010 and is expected to grow at a CAGR of 9% over the 2010-2014 forecast period. In 2009, the economic slowdown created challenging trading conditions for vendors, as large enterprises focused on the bottom line. Business trends were negative for many vendors as clients put investment plans on hold as the effects of the financial crisis were felt.

The domestic software market is still expected to grow around 40% to US$155mn by 2014, driven in part by government and EU-subsidised IT projects as well as the untapped potential of Bulgaria's SME segment. An environment of privatisation and modernisation is likely to drive growth, particularly in sectors like utilities, telecoms and banking.

• Executive Summary
• SWOTS
• Bulgaria IT Sector SWOT
• Bulgaria Telecommunications Industry SWOT
• Bulgaria Political SWOT
• Bulgaria Economic SWOT
• Bulgaria Business Environment SWOT
• Central and Eastern Europe IT Markets Overview
• IT Penetration
• Market Growth And Drivers
• Sectors And Verticals
• IT Business Environment Ratings
• Central and Eastern Europe IT Business Environment Ratings
• Bulgaria Market Overview
• Government Authority
• EU Authority
• Background
• Key Issues For Investors
• Hardware
• Software
• Services
• End-User Analysis
• Industry Developments
• Healthcare IT System
• Industry Forecast Scenario
• Country Context
• Internet
• Macroeconomic Forecast
• Economic Activity
• Competitive Landscape
• Hardware
• Software
• IT Services
• Company Profiles
• IBM Bulgaria
• Microsoft
• HP
• Dell
• Country Snapshot: Bulgaria Demographic Data
• Section 1: Population
• Section 2: Education And Healthcare
• Section 3: Labour Market And Spending Power
• BMI Methodology
• IT Ratings – Methodology
• Ratings Overview
• Weighting
• How We Generate Our Industry Forecasts
• IT Industry
• Sources
• List of Tables
  • Table: Regional IT Business Environment Ratings
  • Table: Bulgaria's IT Industry - Historical Data & Forecasts (US$mn Unless Otherwise Stated)
  • Table: Rural/Urban Breakdown, 2005-2030
  • Table: Consumer Expenditure, 2000-2012 (US$)
  • Table: Bulgarian Telecoms Sector - Internet Historical Data & Forecasts
  • Table: Bulgaria - Economic Activity
  • Table: Demographic Indicators, 2005-2030
  • Table: Rural/Urban Breakdown, 2005-2030
  • Table: Education, 2002-2005
  • Table: Vital Statistics, 2005-2030
  • Table: Employment Indicators, 2001-2006
  • Table: Consumer Expenditure, 2000-2012 (US$)
  • Table: Average Annual Wages, 2000-2012
  • Table: IT Business Environment Indicators
  • Table: Weighting Of Components