Talking about the development and progress of a country, and not taking seriously into account the information technology that is galloping and advancing, covering the world of business, is unfounded and completely meaningless. Will we know how to surf at the upcoming wave of the IT world or will we let us be hanged and quenched? This is a decision that we will have to make, and very quickly.
Today under the IT sector we put a lot of things under the same umbrella: the production and distribution of hardware, sales of mobile phones and computers, installation and maintenance of computer software for companies and so on. However, when it comes to economic growth and the potential impact on other sectors, this is understood as the “software industry”, and in this context I will talk about IT in this brief analysis.
Perhaps it is important to frequently repeat what has already been said, IT is used to be a supplement and related services industry, but today IT is the fastest growing sectors of the economy in the world and in our country. Moreover, the digitizations of the economy and the software have begun to “swallow one by one industry.”
Business models of software services in our country are divided into two categories, where the first, custom development ordered by customers, and is the most common model in all countries of the region. The demand for this kind of service is great, but the competition is strong – Romanians, Bulgarians, Ukrainians, and others. Competitors are cost-friendly, but we are substituting its competitiveness with quality of service, through which we have already become recognizable. The second model is the development of its own IT solutions – it is more demanding, requires more resources and investment in research and development, but allows multiple sales and profit, which of course depends on the product.
Therefore, our IT sector is export-oriented, primarily due to the outsourcing model for purchasers from abroad, secondary because of the small and poor domestic market, thirdly, because the developed foreign markets are generally more desirable as they ensure better billing and overall business handling, which is far more professional and safer.
IT in figures
In Bosnia and Herzegovina the IT industry, percentage wise, has undergone expansion and according to some sources in the past five years increased by 72%. Earnings of all companies in the IT sector, according to the portal bon.ba, increased from 166 million in 2010 to 328 million in 2014, while the value of exports, and that is what we are in the context of the software industry are interested in, in 2014 reached 59 million, mainly due to the growth of outsourcing services. Various sources provide different data, but it is estimated that today in total the IT sector in B&H operates between 400-500 companies. On the other hand, no one really knows accurately how many of those are dealing only with software solutions. The whole market is worth more than 300 million, and the export itself up to 150 million.
While in Bosnia and Herzegovina we can only presume the data, in Serbia and Croatia we can find more precise data. For example, in Croatia, the total revenue of software vendors jumped to 1.82 billion (up 19.6%), while software exports grew by more than 131 million or almost 33% – from 400 in 2014 to 531 million KM in 2015. The number of employees in the IT industry in 2015 jumped by 13.2% – to 12,642 employees. In Serbia, for example, the IT market in 2015 was worth about 700 million euros, and in the past five years the cumulative export rose to one billion and 200 million euros, an increase that doubled two and a half times: in 2010, 127 million euros, 2012, 222 million, and in 2014 324 million euros, and even reached the amount of exports of maize, the traditional agricultural product. In 2015, the export in Serbia was over 400 million euros. It is estimated that 180 companies exported software solutions from Serbia and employed about five and a half thousand people.
Trends in the development of IT industry in the world
In the USA most of the wealth and entrepreneurial potential is concentrated in the Silicon Valley, San Francisco (California), in which during the information revolution of the 90s more than 29,000 companies in the field of sophisticated electronics and technology were founded. In economic terms, California is the largest state in the US, but considered as a separate state, it is the eighth largest economy in the world. On what then, is the economic miracle California and Silicon Valley based on? The software industry represents 44% of total development investment in the region (Silicon Valley Index, 2014).
The ten countries that joined the EU in 2004 (Czech Republic, Hungary, Slovenia and others.) had annual investments in the IT sector from 150 euros per capita, and today as members of the EU they have 250 euros. Serbia invests 60 euros per capita annually. In Bosnia, for example, when it comes to government incentives the IT industry did not have any budget allocations in 2014. In 2013, according to non-governmental organizations, only 304,000 KM, or just over 150,000 euros in total were allocated.
EU’s ten-year investment in the development of IT achieved an increase in competitiveness and efficiency of companies for as much as 50%, but also stressed the need for a qualified workforce. It is estimated that Germany at this time needs 100,000 IT engineers. The IT is literally the must of every industry and every other company in Germany. In the near future in the EU, 90% of jobs, such as engineering, finance, medical care, art, architecture and many others, will require a certain level of digital skills, says the data presented by the European Commission.
Challenges
Due to expansion, growth, and development, the lack of skilled personnel has become a major challenge for IT companies in our country and in the world. According to official data by the European Commission, the EU will have between 825 and 900 000 vacancies for IT professionals by 2020. It is somewhat paradoxical that while we fight high unemployment rate, the need for IT experts is increasing every day.
Formal education cannot ensure the rapid development of this sector, which is in our region especially conspicuous. Croatian higher education system annually places on the labor market around 1500 experts of computing and IT, and with that they cannot even satisfy their own needs of about 2,000 vacancies per year. According to the Dean of Faculty of Electrical Engineering Sarajevo, the Faculty annually enrolls about 450 students, and has about 70 Masters of computer science each year. For comparison, Romania, thanks to the strategic approach, was able to significantly increase the number of IT graduates: only in Timisoara around 7,000 IT professionals graduate each year, more than there are in total in Serbia (around 6,000), or 100 times more than Masters of computer science the Faculty of Electrical Engineering Sarajevo produces each year.
Timisoara – Sarajevo 100:1
IT companies cannot handle all the expenses of education or additional education of staff they need. Even when the company employs graduates, they can rarely give the full performance immediately. It requires both time and money and a lot of training for them to achieve that level. It is necessary to adopt or modify enrollment policy and strengthen the capacity of faculty, ensure scholarship policy directed towards this profession, modernize curricula, and in cooperation with IT companies develop adults education and informal education of IT staff. Even with the reform of formal education in this context, we would have to wait for a long time for the results, and we cannot we afford it.
Buy locally
State institutions and companies should be a big consumer of IT services, as they need a faster modernization and reform, and reliance on local IT companies would be an encouragement and support for the development of probably the future’s most important domestic industry. Therefore, the state can play a significant role as a buyer of modern solutions, so that, on the one hand, it can increase the quality of services provided to citizens and businesses, and on the other hand, it would be a kind of example for the business community to use advanced IT solutions in business. In addition to making the necessary regulations for IT in Bosnia and Herzegovina, the country itself should show IT companies their work on creating a secure environment for business. According to the research of the IT sector in 2013, which is supported by the European Commission in Bosnia and Herzegovina, 84.1% of the IT companies interviewed believe that the interests of IT companies in Bosnia and Herzegovina are not at all or only somewhat protected, and only 3.7% think they are being fully protected.
It is necessary to expand the promotion of IT as the profession of the future among parents and young people. This is a wanted and well-paid job, with great possibilities of choice and progress, and with a pleasant atmosphere of working in IT companies. We can even say that if there were one job in Bosnia and Herzegovina (and the region) you could call a “job of the future” it’d be a job in an IT company. That industry is probably the only industry that can keep young professionals in this country. IT industry does not employ only IT professionals. There are already IT companies in which clear majority of employees are not IT personnel, such as the industry of video games, but designers, animation specialists, writers, plotters, etc.
If we want to advance in the developing world, we must finally begin to speak about the IT sector as a strategic industry. In the Proposal of the development strategy of Bosnia and Herzegovina sector of information technology in various forms is mentioned almost 50 times (IT, ICT, Information), which, at least on paper, is optimistic. However, in the same document it is projected that the GDP of Bosnia and Herzegovina in 2014 should be higher than 38 billion, and it has not yet reached even 30 billion.
Idols or Grand Coalition
As we said, the shortage of IT personnel is a problem in most Western economies, but they are taking serious steps in the search for solutions. We have seen that the percentage of leading development investment in the Silicon Valley goes straight to the software industry. EU has launched a Grand Coalition for Digital Jobs in March 2013 – with the aim of increasing the number of IT professionals, and in general to prepare for the challenges of the digital economy. Grand coalition is a multi-sectoral and brings together key stakeholders of the IT industry (business, government, non-governmental – professional), but her vision of training, mobility, certification, professionalization and raising awareness of the IT industry and IT era would be implemented by national and local coalitions, which are opening up in many member States. Judging by Romania and its step-up in the production of IT personnel, we can determine that the results of this designation in the European Union are already seen, so to speak, in its periphery.
If we consider what is the most desirable employer in the Balkans, the show Idols will definitely be at the top of the charts. To make it clear, I do not have intent of any disrespect; moreover, it is a system that has developed a fantastic structure, a very intense marketing, a network of clients and effective workforce in the field. They conduct a broad survey of the labor market, have a very detailed selection process, objective and measurable selection criteria based on the needs of the market, they are export-oriented branch (the diaspora), and their labor is well paid. So, why Idols cannot be our solution?
The problem is that its number of jobs is limited. It is an essential fact that this workforce has relatively rare talent, and therefore cannot employ masses. In truth, any talent show is unlikely to succeed and modernize the economy, state, and society as a whole, and at the same time provide jobs for thousands of “brains” to keep them in the country, giving the world a different image of us.
A picture of a smart, modern and hardworking land is possible to achieve. But at the same time, it is not the same to export, say, software or boulder – with full respect for the wood industry, which focuses on high-quality end products. Idols or Grand Coalition, we can choose by ourselves what we will build. Our children, depending on their choice will decide how to live – as public entertainers, and it is hard to become an artist, or as a highly educated and skillful professionals that will take life into their own hands.
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