ICT Sector Study North Macedonia Albania Kosovo
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ICT Sector study North Macedonia Albania Kosovo Presentation by PwC North Macedonia April 2020 Introduction I N. Macedonia II Albania III Kosovo Contact PwC North Macedonia supported by PwC Albania and PricewaterhouseCoopers (PwC) was PwC Kosovo, performed a detailed market research engaged by the Embassy of the Kingdom on the ICT sector in the MAK region (North of Netherlands to perform a study on the Macedonia, Albania and Kosovo) comprising the ICT ICT sector in North Macedonia, Albania ecosystem, status of the available workforce, ICT education, government support for the ICT sector, and Kosovo. national strategic documents and government policies and regulations. The Multi-Annual Action Plan adopted at the Western Balkan Summit in Trieste in 2017 highlights the significance of the digital agenda As part of the Project, ICT companies, for the Western Balkan. As a result, a sector government institutions, faculties were study is considered as a primary step to position considered as a primary source of potential stakeholders and to facilitate their plans information on the sector. to expand/develop in the region. ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 2 Introduction I N. Macedonia II Albania III Kosovo Contact ICT Ecosystem I North Macedonia Available workforce Review of the existing market II Albania ICT sector support Government policies and regulation III Kosovo National strategic documents ICT Infrastructure ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 3 Introduction I N. Macedonia II Albania III Kosovo Contact Business opportunities for Dutch companies North Macedonia • The ICT sector in North Macedonia is the fastest growing industry • Excellent supply of young well-educated IT experts at among the lowest labor costs in the region (average age structure in our survey shows that 63% of the employees are 25-29 years old) • The survey shows that 19% of the participants in the survey had above 1 million EUR average revenue for 2019, their most common business activity is custom software development with 38% and selling software solution with 25%. Export is of crucial importance due to the small national market. • There is continuous growth in the ICT market supported by decrease in the price of IT equipment, and a decrease in VAT for the equipment.. Albania • Young and educated population with foreign language knowledge (average age structure in our survey shows that 69% of the employees are 25-29 years old). • The survey shows that 23% of the participants had above 1 million EUR average revenue for 2019, Major export market is Italy with 24% of IT services export. • Albania has the lowest corporate income tax rate for all companies whose activity is software production and development. • The country has high entrepreneurial potential and growing soft infrastructure. The government strategies continue to strengthen Kosovo • The ICT sector is among the few sectors within the Kosovo economy that is characterized by a positive trade balance, whereby around 78% of already existing companies export their services. • The Government of Kosovo is working to position the country as a regional hub for information technology (IT)-related products and services, building on the strong IT and English-language skills within the workforce. • As per the survey, about 27% of the companies export to Switzerland and 23% to Germany. ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 4 Introduction I N. Macedonia II Albania III Kosovo Contact N. Macedonia ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 5 Introduction I N. Macedonia II Albania III Kosovo Contact Key Facts – Republic of North Macedonia NORTHEASTERN Kumanovo KEY FACTS 2019 Tetovo Skopje Name Republic of North Macedonia 2 SKOPJE EASTERN Kochani Area 25,713 km Gostivar Shtip Population 2.075 million POLOG Veles Berovo Radovish National currency Macedonian denar (MKD) NORTH MACEDONIA Kichevo VARDAR Strumica GDP in current SOUTHWESTERN EUR 10.07 bn Prilep prices SOUTHEASTERN GDP per capita EUR 4,853 Struga PELAGONIJA Inflation rate 1.5% Lake Bitola Ohrid Corporate tax 10% Lake Unemployment Prespa 17.1% rate ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 6 I ICT Ecosystem ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 7 Introduction I N. Macedonia II Albania III Kosovo Contact The ICT ecosystem in North Macedonia Academics Creative IT Tech professionals Companies Ministries ICT and public Investors agencies ecosystem ICT Chamber Entrepreneurs of Commerce Accelerators ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 8 Introduction I N. Macedonia II Albania III Kosovo Contact Doing business and improvement of government policies Labour force Digital transformation Highly skilled, competitive and cost One of the smallest gaps in in the region effective labour force regarding digital transformation in comparison to the EU Young and well educated population with foreign language knowledge 2nd in Network readiness index in the region after Slovenia (Rank 46th). Some of Macro factors the measured parameters are Political and Regulatory environment, Business and innovation Environment, Infrastructure, Affordability, Skills, Government usage Free economic zones Improvements of government policies Skopje region is the most developed • Develop to the fullest e-government and Optimal geographical location government services to citizens and businesses Ease of Doing Business ranking (17h • Speed up procedures in the administration and among 190 countries) with best indicators relating to: reduce costs th - Getting Credit ( Rank 25 ) • Further improvement of legislation related to - Paying Taxes ( Rank 37th) property rights and urban planning - Trading across borders ( Rank 32nd ) • Reduce the informal economy, including undeclared work ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 9 Introduction I N. Macedonia II Albania III Kosovo Contact Background of the survey PwC North Macedonia ran a survey among local ICT players with the aim of assessing the current situation. The survey focuses on exploring the following issues related to the ICT sector: • Policy and regulatory environment • Education level and existing skills • Digital infrastructure • Human resources • Financial performance • Barriers for development The overall sample consisted of 90 companies from North Macedonia, out of which 34 companies responded. The questionnaire was prepared in Google Forms and it was delivered through e-mail in the period March 9th - April 24th . The survey was conducted in English Language. The survey consists of open ended, multiple choice and licker-scale questions. The results on some of the key questions covered by the survey are presented in the next slides. ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 10 Introduction I N. Macedonia II Albania III Kosovo Contact Survey results (1/3) Which of the following best describes your business? List the industries you have worked for so far: Education 9% Software consulting and other 6% Energy 5% related services Transport 9% Telecommunications 6% Outsourcing IT services 31% Retail 8% Public administration 8% Selling your own software 25% solutions Game of chance 4% Healthcare 8% Custom software development 38% E-commerce & web 15% Business conuslting 10% Banking and financial services 18% What is the average age structure in the company? How many vacancies are currently available in your company? 1-5 75% 35-44 19% 6-10 6% 30-34 19% 11-20 13% 25-29 63% 21 and more 6% ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 11 Introduction I N. Macedonia II Albania III Kosovo Contact Survey results (2/3) For which technologies / programming languages do you Please provide info on average revenue in 2019 (in EUR) have deficit of human resources? CSS 9% PL/ SQL 6% Swift 9% 0 to 500,000 25% Ruby 6% 500,001 to 1milion 13% JavaScript 15% PHP 6% Above 1 milion EUR 19% Python 12% no answer 44% C# 15% C++ 9% Java 12% In which countries do you currently provide export How much export contribute to total revenue? services? Serbia 6% Netherlands 6% no answer 25% UK 11% Germany 6% 90-100 % 63% Israel 6% Croatia 6% 50-80 % 6% Switzerland 11% North America 6% Norway 6% Up to 50% 6% Sweden 11% Denmark 17% USA 17% ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 12 Introduction I N. Macedonia II Albania III Kosovo Contact Survey results (3/3) Do you face any difficulties in recruiting skilled labour to How adequate is the current local policy and regulatory your company / start-up a challenge? environment for your business? 5 0% 5 4 20% 4 13% 3 27% 3 40% 2 47% 2 40% 1 7% 1 0% 5 - Satisfactory 5 - Satisfactory 1 - Unsatisfactory 1 - Unsatisfactory Rate the quality of schools and training for people working Evaluate what factors limit your company's growth in the digital tech sector in your local area? 5 0% Non-harmonized education programs 15% 15% 4 13% Lack of skilled workforce Tax policy is discouraging 14% 3 33% Insufficent cooperation with government inst. 14% 2 47% Employee turnover rate 12% 11% 1 7% Insufficent no. of knowledge sharing events Not sufficently connected with the ecosystem 10% 5 - Satisfactory Do not have access to young talent 9% 1 - Unsatisfactory ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 13 II Available workforce ICT Sector study N. Macedonia, Albania and Kosovo 2020 April 2020 PwC 14 Introduction I N. Macedonia II Albania III Kosovo Contact Potential workforce Students enrolled in ICT % of students enrolled in ICT Name of the institution Programmes Programmes University "Ss. Cyril and Methodius" - Skopje 5,886 23.3 University "St. Kliment Ohridski" - Bitola 1,204 29.1 University "Goce Delchev" - Shtip 1,375 16.7 Public University for Information Science and Technology "St.