Serbian ICT sector needs shift from foreign reliance, industry experts say

BELGRADE, SERBIA — The Serbian information and communication technology (ICT) sector is experiencing significant growth. According to the Ministry of Information and Telecommunications (MIT), the country’s ICT exports exceeded 1.6 billion euros (US$1.78 billion) in the first five months of this year, up 20.5% from last year. 

Despite this expansion, a notable concern is that over 80% of Serbian ICT companies are majority or entirely foreign-owned. 

This foreign dominance raises questions about the sector’s contribution to the domestic economy, as much of the generated value benefits foreign economies more than Serbia’s own.

Shifting from outsourcing to comprehensive solutions

Industry experts emphasize the need for the Serbian IT sector to transition from traditional outsourcing models to providing complete solutions. 

Milan Šolaja, Director of the Vojvodina ICT Cluster, noted that the industry has historically focused on outsourcing and delivering software according to client specifications. 

However, Serbian companies are increasingly demonstrating the ability to deliver comprehensive solutions directly to end clients. This shift not only strengthens Serbia’s position in the global market but also enhances its reputation as a destination for developing sophisticated software solutions and services.

Despite global economic challenges, Serbia’s ICT sector continues to thrive, driven by the increasing global demand for IT services and products. 

Serbian ICT sector’s economic impact and challenges

Despite its growth, the ICT sector’s contribution to Serbia’s domestic economy remains limited. While it accounted for around 5% of the country’s GDP in 2022, the sector ranks fourth in terms of growth, behind construction, wholesale and retail trade, and mining.

Nenad Jevtović, Director of the Institute for Development and Innovation, noted that the ICT sector includes a range of activities, such as publishing, cinematography, broadcasting, telecommunications, and computer programming. 

However, the sector’s potential as a primary economic driver is hindered by its reliance on foreign ownership and outsourcing.

Strategic directions for future growth

To maximize the benefits of the ICT sector for Serbia’s economy, Šolaja advocates for a strategic shift towards providing complete solutions. This approach could help retain more economic value within Serbia and reduce the sector’s dependence on foreign ownership. 

“Not only have we lost nearly all of our strategic potential through this, but it can also be said that Serbian IT actively contributes far more to the development of foreign economies and much less to our own economy,” Šolaja warned.

As the Serbian ICT sector continues to grow, addressing these challenges will be crucial. By fostering a more mature business environment and expanding domestic capabilities, Serbia can better harness the economic potential of its thriving ICT industry, ensuring that its benefits are more evenly distributed between foreign and domestic economies.