The review was written for a customer interested in investing in Bulgaria in the field of ICT. He has an explicit interest in Call Center Services and Data mining. The review is a bit outdated (was written in 2008) but I believe that it is still valid.
Bulgaria is European country, situated on the Balkan peninsular. It is one of the former Eastern European socialist countries. Now, it is a member of the European Union and NATO. The population is about eight million. At least one million Bulgarians live and work abroad. The economy profile of the country is defined by limited natural resources and competitive human ones. Tourism, real estate and IT sector are the most promising in Bulgarian economy. The diversity of Black Sea resorts, ski resorts and culture and rural tourism, in combination with improved service, competitive prices and natural hospitality, makes Bulgaria an attractive destination.
The IT sector has also experienced remarkable development for the last ten years. As a result, at the moment Bulgaria is the only Eastern European country landing in the Top 10 of A.T. Kearney’s annual ranking of the most attractive locations for ‘offshoring’ of service activities as IT, business processes and call centres. Each country’s assessment is based on the sum of relative scores on 43 criteria, grouped in three main categories: financial attractiveness, people and skills availability and business environment.
Figure 1: AT Kearney Global services Location Index, 2007
2. Segments of the IT Sector
There are several well developed segments of the IT market in Bulgaria and at least two that are just emerging. Internet&Telecommunications, Software development, support and call centres are the developed segments. The sectors that are still underdeveloped are microelectronics, data mining, IT consulting services and freelancing.
3. Telecoms & ISP
This segment of the market is well developed in comparison with the same one in Europe and USA. A major factor for it, is the free Telco & ISP market in Bulgaria. In accordance with certain rules, each player could apply for a telecom or ISP license or both, could build a network and could interconnect it with every other player on the market. For the last five years, at least 20-50 telecom and ISP licensed companies have emerged. The competition led to “nice and reliable” service offers by the almost all major market players. From investment point of view at least half of these companies are owned by foreign investors. The major companies in that segment are:
Bulgarian Telecom Company – BTC
The former telecom is still holding the biggest market share in almost all markets it participates: BTC has the highest number of PSTN subscribers, the highest number of DSL users and the highest number of Business Voice/data customers. Despite it, BTC is experiencing violent competition and is constantly loosing subscribers especially in the business segment. The company owns the third GSM operator in Bulgaria – Vivatel and the longest fiber-optics cable network. Still, it is the “number one” national voice/data carrier.
Mtel is the first and the strongest GSM/UMTS operator in Bulgaria. Being the biggest Bulgarian mobile operator, it is owned by Austria Telecom. Mtel possesses GSM/UMTS, WiMax and also fixed telephony license. Having all types of licenses, infrastructure and equipment, in technology perspective Mtel is expected to be the leader on the mobile services market. Currently, a process of service centralization is running (Austria Telecom is merging services between the different operators under its ownership). The Mtel greatest disadvantage is the delayed offerings of Intelligent Network services pointed to the business customers e.g. (mvpn, short dialing and location based services like “home zone”). The company advantage is the leading market position and its weaknesses are in the lack of advanced business services and the unused WiMax & fixed telephony licenses.
Globul is the second mobile operator on Bulgarian market. Currently it is part of the Greek COSMOTE GROUP and has the second biggest share of the mobile services market. In technology perspective Globul has a well developed GSM&UMTS network and is offering really nice and customer friendly services. Globul has a fix telephony license and is the first operator in Bulgaria to offer fixed to mobile convergence services to its business customers. Globul advantage is the well developed service portfolio and its weakness is the lack of data service offerings to its business customers.
Vivatel (a part of BTC) is the third mobile operator and has the smallest market share. Its network infrastructure is still underdeveloped. In a mobile technology perspective, the service offered is still not at the level of its competitors. From a business point of view, Vivatel still has undeveloped potential in offering combined services with its “elder sister” BTC, as PSTN telephony service + GSM + DSL.
Orbitel is an example of a typical Internet Service Provider, proving well on the local market, attracting attention to its results and acquired by the Magyar Telecom (owned by Deutsche Telecom). Currently Orbitel is a promising ISP, providing all sorts of data and VoIP services to its business customers. That ISP has and is using well its data & fix telephony licenses.
That is another entirely Bulgarian ISP, possessing data & fixed telephony licenses. The company has well developed customer network and has been recently bought by major international player – Interoute. Currently, it provides all sorts of data & voip services to its business customers.
Spectrum Net is a company similar to TPN and Orbitel. The difference is in focusing its attention not only to the private business and Government customer segment but also in delivering Internet to lots of residential customers.
Cabletel is the biggest cable operator in Bulgaria. Currently, its best offer is the so-called “triple play” – Cable TV, Cable Internet & telephony. The second major business area Cabletel operates on, is as a transit data carrier. The company has built and currently owns in cooperation with Mtel and Globul the second biggest fiber-optics ring in Bulgaria.
There are numerous LAN internet providers in Bulgaria. That is the so-called Bulgarian internet phenomenon and it is the reason for the small DSL penetration on the Bulgarian market. The typical LAN provider owns a UTP cable network in one or two neighborhoods. Currently, there is a process of consolidation of LAN providers. Most of the already mentioned bigger companies are buying smaller LAN operators. The most active players on that market are Cabletel, Spectrum Net, Eurocom and Net is Sat.
4. Software Development
Software development segment is getting the biggest share of the IT market in Bulgaria. There are about 1000-1500 companies, successfully developing all types of software products. The factors, on which that rapid development is based, are: 1) good IT education system (a lot of universities and technical schools) and 2) lower cost of investment. The SW companies could be classified in three major groups:
4.1 Software development outsourcing services
That is the largest group. More than 90% of all software development companies are producing outsourcing sw products, mostly web pages and modules, as parts of a bigger software products. These companies usually consists of relatively small number of employees – one web development team, one java specialized and one team with C# specialists. Some names here are Musala, Bianor and many others.
Musala Soft is a software engineering service company specialized in offshore, nearshore and local delivery models. The company staff consists of former members of Bulgarian national mathematics and informatics team.
Musala Soft offers flexible arrangements and high-quality solutions, with rapid and cost-efficient development. Their reputation as a reliable service provider is proven by track record of 100% successful projects and satisfied clients among which are both start-ups and well-known names as DHL, HP, IBM, Manpower and SAP.
Bianor, founded in 1998, is a leading provider of professional software services in the area of telecommunications. It operates in the field of business process analysis, software design and development, software quality assurance, project management, system integration, and system support.
4.2 International Software development companies presented in Bulgaria
Most of the companies in that group are well known software vendors doing internal outsourcing and having development centres in Bulgaria. SAP, Vmware, CODIX, Tumbleweed and others are among them.
SAP Labs Bulgaria
SAP Labs Bulgaria came into existence in May 2000, when a team of 60 software developers, working locally on Java Enterprise Server project was incorporated into SAP AG. Now, the SAP Labs location boasts of more than 300 experienced software developers, operating in the area of innovative Java technologies. They work closely with the different development sites of SAP worldwide and keep in-line with leading-edge technology. Among the Bulgarian customers of SAP AG, are companies like Vidima – Ideal Standard, Coca Cola, Umicore-Pirdop, Mtel, BTC and Bulgartabak.
VMware is the world’s leading provider of virtualization solutions for x86-based servers and desktops. Headquartered in Paolo Alto, California, VMware has recently expanded by acquiring Sciant – one of the biggest outsourcing companies in Bulgaria and winner of 2006 Best Employer Prize. More than 200 professionals work for the company now in three offices – two of them in Sofia and one in Varna.
The subsidiary of CODIX France develops leading in many business fields software iMX, chosen as principal ICT tool by leaders from the corresponding fields in Europe and in the world – KBC, ING BANK, BNP PARIBAS, Credit Agricole, Societe Generale, France Telecom/Orange, Atradius, French state insurance and pension funds etc. Currently, about 120 employees work at the Codix development center in Sofia.
Tumbleweed Communications opened its development centre in Bulgaria in 2003 and now has more than 200 employees. The company has focused its activity in providing secure Internet communication solutions for enterprises and government customers of all sizes. Tumbleweed provides security solutions for email protection, file transfers, and identity validation that allow organizations to safely conduct business over the Internet. Among the Tumbleweed worldwide customers’ list are companies like ABN Amro, Bank of America, Securities, Catholic Healthcare West, JP Morgan Chase & Co., The Regence Group, Mtel Bulgaria, the US Food and Drug Administration, the US Department of Defense, and the US Navy and Marine Corps.
4.3 Bulgarian Companies building their own software products
There are several companies building software products for the need of the local business and government. Some of the typical outsourcing companies aim participation in the mentioned market, attempting to get financing from the European Union funds after Bulgaria has joined it. TechnoLogica, Datex, Apis and others are some of them.
TechnoLogica was found in 1990 in Sofia, Bulgaria. The company operates as a technology partner of prestigious Bulgarian organizations and companies (i.e. BNB, BTC, Bulbank, Allianz Bulgaria, ING, etc.) It provides them with the instruments of using and taking advantage of new information technologies in their developments and projects. As to keep being attractive and competitive, the company develops purposeful innovative activity – i.e. use, adapt, develop new information technologies, generate technological tools and eventually license them for its partners.
DATECS Ltd., was founded in 1990 by a group of research fellows from the Institute of Applied Cybernetics at the Bulgarian Academy of Science. The start was given in 1990 with the first Cyrillic fonts adopted in PostScript, Laser printers and MS Windows. In 1993 Datecs established a Geographic Information Systems – GIS Department. Currently the digital maps of some of the biggest cities in Bulgaria, Germany and France are made with Datecs products. Datecs programming teams supported the realization of several projects for the needs of major state institutions in Bulgaria, for Coca – Cola Greece, Amoco – USA, the Association of the Commercial Banks of Berlin and many others in Bulgaria and abroad.
In cooperation with Samsung, Datecs embarked on developing retail systems in 1994. Two, Samsung based, electronic cash registers were reconstructed in order to expand their functions and adapt them for networking. During the next couple of years more than 100 000 devices were sold in 11 countries around the World. Datecs became the best known brand of electronic cash registers with fiscal memory in Central and Eastern Europe. Currently Datecs has well established positions on Bulgarian market and abroad.
APIS BULGARIA Ltd. was established in 2003 to provide customer service and design software. At present APIS is a leader in legal information systems on Bulgarian market. The company has flexible structure with a full-time staff of more than 130 people engaged in: Developing software, Maintaining databases, Marketing and sales, Technical support and communications, Accounting, Administrative services.
Currently, some 7,000 businesses and organizations, including ministries, central agencies, local administrations and courts are APIS customers. Many lawyers, notaries and other non-corporate also work with the company products. The current APIS product “APIS 6“ includes the whole information on the Bulgarian law suite plus a new legal information module on EU legislation, which offers the customers official Bulgarian translation of the European Union legislation.
5. Support centres
The segment of the support centres is showing remarkable progress in the last couple of years. Clearly Bulgaria was chosen as one of the best destinations for outsourcing support services. The names of some of the major players here speak for themselves: HP, Coca Cola HBC, IBM and Nokia – Siemens. There are also rumors that another two IT giants (Cisco and Oracle) are investigating the country as a destination for migrating part of their current support operations.
In 2006 Tino Kanegratti, General Director of EMEA Global Delivery, announced in an interview for ComputerWorld, that Bulgaria was chosen between 14 countries for the establishment of a new HP global delivery support centre, the decision being based upon 3 key factors: stable country with growing economy and forthcoming EU membership; availability of specialists (good technical education combined with broad linguistic talent availability); excellent educational system and willingness of universities for cooperation, good infrastructure and communication channels. On the other hand, another important factor was the declared readiness of the government to support a qualification program for the centre employees on the preliminary stage of the country feasibility study. On the 21.11.2006 the Government declared allocation of funds from the central budget for 2006 to finance the qualification program of HP Global Delivery Bulgaria Centre employees amounting to BGN 2.4 mln. Currently the centre is officially opened with more than 800 people hired, and successfully providing 24/7 support to all kinds of HP customers in Europe and the Middle east.
Coca-Cola HBC is one of the largest bottlers of non-alcoholic beverages in Europe, operating in 28 countries with a total population of more than 540 million. In 1965, Bulgaria became the first East European country to produce Coca-Cola products.
In 2004 CCHBC established Shared Service Centre currently employing circa 200 people and centrally supporting all the 28 CCHBC companies. The employees of the Centre are responsible for the integration and 24/7 support of the business application IT systems, used in the company.
Siemens Enterprise Communications is one of the world’s leading vendors of Open Communications products, solutions and services. More than 15,000 employees in 80 countries develop and implement solutions designed to meet customers’ Information Technology needs and to optimize their business processes – innovatively, securely and flexibly. From end-user devices to global corporate networks, these solutions are based on open standards and integrate seamlessly into existing infrastructures. In Sofia Siemens is operating support team of over 80 young professionals in order to provide top-class solutions, services and support to its customers in Bulgaria and abroad.
IBM is another good example of successful experience with the establishing of BPOs. Based on the expertise and understanding of the competitive nature of the business area IBM operates in, the company decided to outsource part of its internal business processes to Bulgaria.
The first project for outsourcing activity the company undertook in Bulgaria was the establishment of a shared-service-centre unit of Incentives Analysis. It provides service and support for the trade activity of the company in the EMEA region. The centre has been functioning since 2004 and employs circa 30 people serving internal clients, located in IBM offices in the EMEA region.
Apparently the initiative proved to be effective and successful. The company had the opportunity to experience in effect the availability of specialists in Bulgaria, and specifically to touch upon the amount of candidates of the necessary caliber. Therefore, in 2006 IBM decided to outsource another business activity in Bulgaria by establishing a Procurement Centre destined to service internal clients, thus centralizing the procurement process, organizing the activities in such a way to follow a successful tradition of an existing centre in Budapest, Hungary. The Procurement Centre in Bulgaria operates globally, employing specialists with knowledge of English, French, German, Italian, Spanish, Portuguese, Dutch and Scandinavian Languages.
6. Call centres
There is a small difference between the call centres and the support centres. The support centre is a call centre that offers specialized support services to only one company. Call centres usually offer the following services: telemarketing, debt management, public opinion polls and also first level support. There are several small and a couple of big international call centres based in Bulgaria. Some of the bigger ones offering call center services are: BTC, IMRO and Sofica.
The Call Centre came into operation on October 25, 2004 and handles all telephonic requests for MoneyGram financial transfers from UK, Bulgaria, France, Germany, Italy, Spain, Sweden and Ukraine. According to press publications, representatives of Money Gram declared that Bulgaria was chosen out of a short-list of 25 candidate countries as the location for the Call-centre. The choice of BTC as a partner was strategic according to John Hempsey, CEO of MoneyGram International Ltd. At that time, the Bulgarian Telecom possessed the respective infrastructure: the right technology and expertise, a pool of experienced professionals and already established call-centres and partnership relations with other telecoms abroad. As predicted by many, that was only the first of many partnerships that followed, and turned Bulgaria into a preferred location for the establishment of various
At present the outsourcing operations in BTC are expanding, as last year (December 2006) the company reorganized the call centre established for the MoneyGram project into international contact centre with wide client base serving companies from various business areas, e.g. IT, hotel reservation, insurance, etc. Among the international customers of the BTC call centre are names like: Monygram, AIG, Hotelopia, First Choice Holidays, the security services provider Grisoft and also several Bulgarian ones as: Petrol AD, Web Media Group and Cisco Systems Bulgaria. Currently more than 300 employees work at the contact center of BTC.
IMRO-International Marketing Research Organization
IMRO is an international call centre services provider with offices in Belgium, Germany and Bulgaria. It started business in Bulgaria in 2003. Currently IMRO Bulgaria owns a building equipped with state of art call center technologies in Business Park Sofia with more than 800 working places. Among the customers of IMRO are companies of the following economy sectors: Automobile Industry, Cleaning Industry, Energy Providers, Food Industry, ISPs and Telecommunications.
Sofica is located in Sofia – the capital of Bulgaria. It operates call centre with technology capacity for 100 support agents using HP and Cisco VoIP platform and plans to expand its capacity up to 300 support agents by 2008. Sofica employs agents, having knowledge of all the following European languages: English, German, French, Spanish, Dutch. Sofica is working preliminary with Bulgarian, Dutch and American clients in the area of IT, consulting and health services. Orbitel, Bulgaria Air, Overgas, Alpha Research and Alltelemarketing are among the Sofica customers.
7. Data Mining
Data mining is the principle of sorting through large amounts of data and picking out relevant information. It is usually used by business intelligence organizations, and financial analysts, but it is increasingly applied in the science for extracting information from the enormous data sets, generated by modern experimental and observational methods. Currently that branch of the IT business in Bulgaria is still underdeveloped. All Data Processing is the only company providing the above mentioned services.
AII Data Processing
AII Data Processing is a high-quality, comprehensive and reliable business information provider. It produces, manages and distributes business news and information worldwide. The company provides a wide range of research and consultancy services from comprehensive researches and market analysis to company and industry profile databases.
AII Data Processing Ltd. releases over 700 news items a day, covering corporate, financial, economic and political events from 74 countries. AII DP publishes SeeNews, a regional newswire for South East Europe carrying unique content and local knowledge, concerning financial professionals and the corporate world. It operates 24/7 and employs a total staff of over 250 people working in 27 languages, including all European languages, Japanese, Arabic, Chinese, Russian, all Nordic languages, all languages of the Balkan region, all Central European languages, etc.
The Electronics sector has a long history in Bulgaria. It had started long before the end of the socialist regime. There were two factories in Sofia and two others in Pravets and Botevgrad. With the democratic changes, the sector went into a deep recession. Fortunately, some of the companies have survived it and now they produce a diversity of electronic gadgets and tools. There are also at least two major international players, presented in Bulgaria.
Johnson Controls, Inc., is a global market leader in the automotive systems and facility management and control. In the automotive market, it is a major supplier of integrated seating and interior systems and batteries. Its Design Centre in Sofia is dealing with software for driver information systems.
EPIQ Electronic Assembly
EPIQ is an electronic subcontracting company located in the town of Botevgrad (60 km away from Sofia), Bulgaria. The company was founded in 1997, as part of EPIQ with headquarter in Tessenderlo, Belgium. At the moment EPIQ has more than 2200 employees and more than 12000 m2 production аrea. EPIQ is a multi-product company with main activities in outsourcing electronic products development and production. In 1998, EPIQ put the beginning of actively getting positions on the global automotive market. Today, automotive products increase in the EPIQ share of production volume and product range. The turnover for 2005 was EUR120 mln. and 80% of it was from the automobile industry products, 15% came from products related to the consumers electronics and 5% from products related to industrial electronics. Some of the customers are VALEO USA, Delphi, VALEO Europe, Tefal and FESTO.
9. System Integrators
System Integrators has their distinguished role on each IT market and the Bulgarian one makes no difference. There are many integrators in Bulgaria that have expertise in all aspects of the IT and valid partnerships with all types of International Vendors and Software manufacturers.
This integrator was established in 2001 with the focus on delivering telecom services and IT solutions that help their clients to design, implement and support their infrastructures. According to the Top 20 of Computerworld Bulgaria TeleLink is No. 1 in systems integration for 2005/2006. In six years TeleLink has grown to more than 500 employees and 2000 partner workers. Currently Telelink is Cisco Systems Gold Certified Partner since 2005, Juniper Elite Partner since 2005, Microsoft Gold Certified Partner and has partner agreements also with Dell, Schneider Electric, Siemens, Italtel, Huawei, IBM and Motorolla. Last couple of years, Telelink has expanded abroad and now it has representatives in Romania, Serbia, Macedonia and Ukraine.
CNSYS is found in 2001 and started its business with a small team of 5-6 specialists. Currently the company is providing system integrated services through 15 regional offices and more than 170 employees. CNSYS strategy is to focus on consultations, development, implementation, and further maintenance services to customers of small and medium business, who need proven practical expertise and specific know-how. Currently CNSYS is one of the biggest partners in Bulgaria of HP, Cisco Systems, Microsoft, Fujitsu Siemens Computers, Oracle and many other well-known international vendors.
Intracom Bulgaria is a local representative of one of the biggest system integrators in the region of South-East Europe – Intracom Telecom Holdings. The company is mostly working with big telecoms and ISPs. In Bulgaria, Intracom started its business, building a network of the second GSM operator (Globul). Currently the company is implementing projects in Globul, BTC and many enterprise customers. Intracom Telecom Holdings has strategic partnerships with vendors like: Cisco Systems, Ericsson, HP, SUN and Microsoft.
Currently in Bulgaria there aren’t companies making their income entirely from consulting services. Till the moment the local market was relatively small, the projects were not so complicated and there was not enough demand for similar services. Only some of the system integrators and a very few of the SW development centres have offered consulting services. The freelancer market was also literally underdeveloped. In 2008 statusque is going to change. For the first time, Bulgaria will really benefit of the investment coming from the EU. A great deal of public procurement is expected from the Government. Projects like e-government, integration of open source products in the current government infrastructure most likely will create possibilities for business and the first players in that segment will appear.
The observation of the IT market in Bulgaria, leads to the conclusion that the country is able to compete with the best in the branch. As a former socialist state, ten years ago, the BG IT sector was completely underdeveloped. Now, it has better positions than its direct competitors and unidirectional capital flow from outside. Nevertheless, there are still relatively unexplored segments with high potential for development (microelectronics outsourcing, data mining). The reasons for the remarkable growth are the stable political and economical environment, the proper IT infrastructure (free IT services market, good level of telecom and ISP services), the well developed education system (a great number of universities), the foreign languages knowledge and the low labor cost (as for the labor cost, it is expected for the next five years, Bulgaria to be one of the most competitive countries in Europe). Least but not last the young people and government willingness to further develop the sector, makes it one of the most promising in the nearby future.