The ITO, ВРО and КРО sector in Bulgaria continues its development following the global trends
We are living in an epoch in which the low-technology and high-technology become increasingly important, complement each other and sometimes clash. On the one hand, we are witnessing a revived interest in everything that can be done by hand and is made of natural materials. We plant flowers, we cook, we bake our own bread, we buy our children wooden toys, we choose organic food products and reduce our plastic use. We love to be among nature. On the other hand, however, we are entirely dependent on high technologies. Social networks are in every area of our lives – from keeping in touch with our friends to professional connections to finding a new partner. Our homes and cars are getting "smarter." We shop online, we use cloud services, we communicate with chat-bots.
Modern businesses are in the same dependency. On the one hand, they are impossible without real-life people, who make decisions and generate creative ideas. On the other hand they experience novelties like AI, processing of big data bases, and others.
Bulgaria is an active participant in the technological transformation of the modern world. In the beginning of the 2000s, the country stepped on the market of the ITO (information technology outsourcing of applied software and information infrastructure), ВРО (business processes outsourcing) and КРО (knowledge processes outsourcing). Powered by ambitious local and established international companies that recognised Bulgaria's potential and developed it, the field gained importance and for several years now is among the best performers in the Bulgarian economy. In 2017 the ITO and ВРО sector made 3.6% of the GDP, and in 2020 it is projected to reach 4.2%. The turnover will exceed 2.5 billion euro, while the employed in it will increase from 40,000 to 65,000 people. In 2017, on the Bulgarian market ВРО had some superiority over ITO and KPO services – 53% to 47%. However, expectations are the trend to reverse towards KPO due to the increasing need of processing of big data bases, and development of patents or new products in a number of fields. This is also a world trend in the development of the market.
A survey by the Bulgarian Institute for Market Economy for the distribution of such companies in Sofia showed a large predominance of small firms with up to 9 employees – 82% in ВРО and 89% in ITO.
An average of 1.6 people work in the micro companies, meaning mainly freelancers. Programmers dominate in mid-size companies while larger companies have the capacity to specialise in consultancy services. Until recently Bulgarian companies had the best profits, but for several years now the top three positions were overtaken by established international names. International companies plan to expand their businesses in Bulgaria, while others plan to open a local operation. The Financial Times, for example, is going to open in 2019 a technological office in Bulgaria with 100 job positions for software engineers, business analysts and other specialists.
The ITO, ВРО and КРО sectors in Bulgaria work mainly for export.
Bulgaria is developing as an outsourcing destination in particularly strong competition. Indeed, international companies are currently replacing established outsourcing centres like India for the USA and Europe. In Europe, however, Bulgaria is competing with strong opponents like Romania and Poland.
What are Bulgaria's advantages?
The professionals in the field believe that explanation is as much in the labour force as in infrastructure, location and costs.
"Bulgarian IT specialists can be relied on and their culture is close to the one in the Western world," says Dobromir Tsolyov, Co-founder & Managing Partner at Strings IT Recruitment & Consulting Ltd. (Sofia, 4 Iskar St, phone: +359 883 368 980, www.pullthestrings.me). "The large majority of them speaks good English, while many speak German, French, Russian, Turkish."
"Bulgaria is one of the most favourable destinations for outsourcing in Eastern Europe owing to its cost advantage over central Europe as well as availability of abundant talent pool," says Lyubka Dimitrova, Head of EXL Bulgaria (www.exlservice.com, FB: EXL Service Bulgaria). "With a labor force of over 3 million people and 98% literacy rate, where almost everyone speaks several languages, it isn't anyone's surprise that the future for outsourcing is bright here. Bulgaria's location is a huge advantage as well, as it can be reached from almost all European cities within 1-3 hours by air. Bulgaria is also either in the same time zone or a couple of hours away from outsourcing clients in Europe, which gives the country an edge over competitors located in Asia or Latin America."
"While Sofia continues to lead the pack when it comes to outsourcing in Bulgaria, some of the tier 2 cities like Plovdiv, Burgas and Varna are catching up fast," adds Lyubka Dimitrova. "We strongly feel that Bulgaria offers the right talent and at the right cost and hence it will continue to attract outsourcing work for a long time. However, we need to prepare ourselves for the digital revolution; where bots will become a reality and will continue to cannibalize the level 1 back office work, we have to continue to hone the skills of our people to develop expertise in specific domains as well as to become more tech savvy and imbibe digitization in our daily work life."
Indeed, outsourcing industry is not what it used to be in the 2000s. In those not that distant times ВРО usually meant the opening of a callcenter, while ITO consisted of finding IT specialists to work on some project.
Today cloud services, AI, big data bases and robots are changing everything completely. ВРО is already a complex service that covers human resources, finances, facility management, and communication is often by an AI. The ITO sector is looking for people who are able to add value to projects for software development, maintenance, system administration. The growing popularity of cloud services will diminish the role of servers – and of the specialists in this field. According to estimations the implementation of AI in the different fields of outsourced services will made redundant between 15 and 30% of those employed in them.
Companies operating in Bulgaria face other challenges as well. Lack of labour force is one of them. Combined with the opportunities for development, it stimulated some of the big companies to open their own academies for training and development of talents.
Attracting foreign specialists is another option that is getting increasingly popular with the companies in the field.
To keep their talents, companies aim not only to provide adequate salaries, but also stimulating conditions: good environment, opportunities for relaxation, prequalification and skills development, work on interesting and challenging projects.
The requirements to specialists also change. Today knowing programming languages and creative thinking are not enough: the so-called soft skills such as communication and leadership are also needed and valued.
Interestingly, the Bulgarian market develops much more adequately than its competitors a particular part of its labour market: women. According to Eurostat, Bulgaria is first in this respect in the EU. In the country about 27% of IT specialists and 33% of university students in the field are women. For comparison, the average percentage of women employed in IT in the EU is 17.2%.
The companies in Bulgaria also focus their attention to places outside of the capital who have potential to develop as centres of outsourcing industry. Besides the established good examples of Varna, Burgas and Plovdiv, cities like Ruse, Veliko Tarnovo and Blagoevgrad also have perspectives.