Serbia Smart Solution

IT SECTOR Serbia - A Smart Solution 3 Serbia in Motion 4 One of CEE’s Premiere Investment Locations 5 Who is Leads the Way?

Serbia’s ICT Industry 7 Putting the ICT into Perspective 8 Early Days 9 Nowdays 10 Sector’s Close up 11 Closer Look / Software Development Sub-sector 12 Outsourcing Opportunities 13 Gaming Industry

Why Serbia? 15 Educated Talent Pool 18 Favorable Business Environment 19 Ready for Business 23 Cradles of Businesses

Success Stories 27 Development Center Serbia (MDCS) 28 Nordeus 28 Schneider Electric DMS NS 29 RT-RK

Relevant Institutions 31 SIEPA 31 Vojvodina ICT Cluster 32 NICat 32 Regional ICT Cluster – Kragujevac 32 ICT Net Cluster Serbia - A Smart Solution

Serbia’s external position is more balanced than before the 2008–09 crises. This is reflected by a lower current account deficit, a more competitive exchange rate and a comfortable level of international Serbia in Motion Over the past several years, the Serbian reserves. The banking system is economy has experienced growth liquid and well-capitalized, a result due to strong foreign investments of cautious economic policies pursued and continuous improvement of its before and during the crisis. business environment. Major steps to improve the business climate and The new Labour Law has been adopted reduce the state’s footprint in the in June 2014, granting more flexibility economy have been implemented with to employers and providing job options the aim of providing momentum for previously not available. Amendments investments, economic diversification, to the Pension and Disability Insurance and sustainable private sector growth Law were adopted in July. In August, in order to create jobs. amendments to the Bankruptcy Law were adopted, regulating in more The European Council granted Serbia the detail the role of the bankruptcy status of a candidate country in March administrator and creditor’s rights. 2012 and decided to open accession negotiations in June 2013, the same year Serbia intends to secure a three-year when the Stabilization and Association loan agreement with the International Agreement between Serbia and the Monetary Fund this year-end to help EU entered into force (in September). reach debt and deficit goals. Accession negotiations were formally launched in January 2014. Serbia has continued to build a satisfactory track record in implementing its obligations under the SAA as noted in the EC’s latest report from October 2014.

2 3 IBM Global Business Services* measured that Serbia ranked as a global number one investment destination in 2013 by the number of jobs relative to the size of the population. *IBM Global Business Services, Global Location Trends, 2014 annual report

One of CEE’s Premiere Investment Locations

Who is Leading the Way?

Many world-renowned companies have recognized Serbia’s potential and decided to set up operations in Serbia. For some of them, Serbia serves as a Poland manufacturing hub that enables duty- -180 free exports to a market of almost 1 Czech Rep. billion people. Others are attracted by and dynamic country that enables -191 Slovakia the country’s adept level of English them to have an opportunity much -104 language proficiency, highly skilled and greater than they initially perceived. Hungary easily trained workforce and generous -289 Bulgaria tax and incentives environment. EU countries dominate the investment -139 Regardless of the reason for their scene although US and Russian initial interest, businesses that companies have been showing a Serbia decide to start operations or conduct strong interest, as well. US companies +120 Romania -301 trade in Serbia encounter a reliable were active in the manufacturing sector for over a decade but recently showed strong interest in the service The improvement of Serbia’s overall sector with KKR fund acquiring a business climate was certainly not FDI RANKING BY Nº OF PROJECTS regional cable and internet provider left unnoticed and unappreciated by named SBB/Telemach and with NCR Italy 16.3% the investors. opening a global centre in . Germany 13.6% According to EY*, Serbia was one Austria 12.8% Sector-wise, Serbia’s investment of Europe’s favourite investment Based on the comparison between the nimber of FDI projects secured over landscape is still dominated by locations in CEE in 2012. The success 2004-2008 and 2009-2013 periods, Serbia is the only country in CEE that Slovenia 10.4% traditional sectors. Apart from has raised its FDI attractiverness. continued in 2013 - number of new France 5.6% what we could mark as expected FDI jobs was up by 18%, placing Serbia on USA 5.0% results such as the financial sector the 5th position in Europe, while 63 FDI Projects by Countries (vast majority of banks operating new projects made Serbia the second Greece 5.0% in Serbia are now foreign-owned), Czech Rep. Romania Hungary Serbia Slovakia Bulgaria Poland most attractive location in CEE, second Israel 3.9% telecommunications, retail and real only to Poland. 2004-2008 512 612 597 164 305 287 802 estate, Serbia has recorded large Switzerland 2.7% 2009-2013 321 311 308 284 201 148 622 investments in the automotive sector, *EY European Attractiveness Survey 2014 Source: EY European Attractiveness Survey 2014 Source: SIEPA database of investment projects both in value and project numbers.

4 5 Putting the ICT into Perspective

However, don’t let the investment track-record statistics fool you. Just Serbia’s ICT Industry because it’s not on the top-ten list of key investment sectors doesn’t mean there’s nothing much going on there, because there is. By its very • Microsoft’s fifth development center globaly opened back in 2005; nature this industry is neither labour • Serbian-owned Comtrade is one of the largest IT companies in CEE with nor capital intensive enough to offset over 1,000 engineers on 16 locations globally; manufacturing and financial activities. • Asseco, one of the IT leaders in CEE acquired a Serbian banking software But underneath that, the sector is development company employing almost 500 engineers; extremely vibrant, pulsating with • Local company DMS made the best software solution for energy activity, not always visible to the distribution and entered a JV with Telvent, now Schneider Electric. naked eye. Both local and international Together they employ over 1,000 engineers; players are riding the wave of talented • HTec – Deloitte’s 3rd fastest growing technology company in Central and skilful people, either coming up with Eastern Europe from 2009-2013; new solutions or developing and • Nordeus is a leading and award-winning European game developer. upgrading existing ones. Officially the best European gaming start-up of 2011.

These are only some of the landmarks of the ICT scape in Serbia. But, let’s take it to the roots.

6 7 The first digital computer in Central Europe was manufactured in Serbia back in 1960. Nowdays

Computer software is one of Serbia’s main export products. Serbia is globally acclaimed for being the biggest Early Days exporter of raspberries, but the value of exported software and services is almost twice as big as the export of raspberries. In 2013, Serbian IT industry ranked 40th globally when it comes to value of exported software, while the overall industry was ranked 79th. This made it the most successful and export-oriented industry in Serbia. The first digital computer in Central Europe was manufactured in Serbia back in 1960. At the time, Serbia was also one of the six Sector’s export is on the constant rise especially when it comes to export of computer and information services i.e. countries in the world with the capability and know-how needed software development. In 2008 the value of exported services was €96 million and by 2013 it reached as much as to do that. The name of the computer was CER-10. Although with a €265 million, which is a blazing 165% increase. Serbian IT market was worth around €410 million in 2013, which is lower capacity than today’s bottom-end cell-phones and a size of still far less than before the global financial crisis outbreak in 2008, when it was worth €550 million. The potential a smaller room, it was very high-end at the time and was used for for reaching and exceeding that result is evident. Also, the mentioned substantial export results were achieved business and military purposes, but also by the Soviet Academy of with the state investing around €60 per capita in IT development which is far less than the European average Science and many technical universities around the globe. (€800). ICT is considered a priority sector for the Government and it will increase the support for this sector over the years, especially given the sector’s strong results in attracting investors and employment. In early nineteen-eighties in Former Yugoslavia computers were a rare luxury. A ZX Spectrum or Commodore 64 could easily cost In order to really further step up this result, the state also has to increase investment into research a month’s salary. In 1983, Serbian enthusiast Mr. Voja Antonic and development and science which nowadays stand at 0.3% of GDP (the EU average is around 2%). came up with an idea and invented a do-it-yourself comput- Serbia is currently investing only €60 per capita into the development of the ICT industry, far less ing machine based around the same microprocessor Z80 as its than for example Croatia (€200). The EU average is €800. renowned siblings Spectrum and Commodore. Galaksija (Galaxy), that was the name of the computer, was born and a computer Many key global players such as Microsoft, SKF Group, Adobe, Oracle, Google, Hewlett Packard, revolution with it. The detailed diagrams for the machine were SAP, IBM, Siemens, Intel, Cisco, NCR Corporation, Erickson and others, have already tapped freely available and published in the popular Yugoslavian sci- into this potential, either by establishing their development centres in Serbia or outsourcing ence magazine. More than 8,000 enthusiasts made their own services to local IT companies. Galaksija computers within only a few months following the launch. With the third edition of the magazine this number was Vibrancy of the sector is also obvious when analyzing the distribution of lease activities in raised up to 40,000 copies and made Galaksija computers. Belgrade by sector in the first two quarters of 2014. IT companies are still the most dominant with a share of 53%, followed by professional and financial services. Key trends and outlook for CEE IT market DEMAND BY SECTOR OF BUSINESS CER-10 16% Professional services According to PMR, a British- H1 2014 American company providing market information to international 53% businesses interested in Central and IT Companies Eastern Europe, the IT market in Central 12% Banking and and Eastern Europe (CEE) will increase by insurance 4.5% annually in 2014-2018.

In 2013, the value of the IT market in CEE 9%Advertising, Media totalled at €14.6bn, which meant a growth of 1% Construction 4% Manufacturing 2.5% compared to 2012. Despite this limited growth rates which have been attributed to the 2% Public 3% Pharmaceuticals COMMODORE 64 CEE countries in recent years, the faster increase Source: CBS International, part of the CBRE Affiliate Network of the IT market is expected in the coming years.

8 9 Sector’s Close up Closer Look Software Development Sub-sector

Biggest Employers / No. of employees According to Serbian Business Registration Software and IT service sub-sectors There were 1,255 companies registered for software Agency (SBRA) there were 1,786 active have become the most challenging development (computer programming). This sub-sector companies registered for performing Schneider Electric DMS NS, Novi Sad / 686 markets. System integrators and earned €45,896,983 in 2013 which is around 75% of the total ICT related activities with the Serbian Asseco SEE, Belgrade / 470 software companies which recognised annual income of the entire sector. It is also the biggest Business Registration Agency in 2013. the fast growing service market and employer in the sector (8,828) and the sub-sector with the The scope of their activities included GTECH, Belgrade / 183 went for it, achieved success. Additionally, largest annual growth rate over the respective period software development, consulting Comtrade ITSS, Belgrade / 160 companies that have partnered global IT (2011-2013) – around 23%. In 2013, software development services in the field of ICT, computer vendors progressed rapidly thanks to the companies generated a collective profit of €3,645,400. equipment management, data the reported number of employees Almost two thirds of all companies adoption of international experience and Oddly, but this is also the sub-sector with the largest processing, hosting services, web does not correspond to the actual registered in the sector are based knowledge. The international IT vendors number of zero-employee companies, 261. portal-related services, and other number of people working for those in Belgrade (1,088), Novi Sad falls far have strengthened their local presence services related to ICT. The whole companies and that there’s a lot behind with 207, and the same applies to significantly in the past few years sector employed 11,003 people in 2013 going on in the freelancing part of Nis with 72 companies. This discrepancy by establishing their own companies and turned over around €62 million the developer’s pool or informal in favour of the capital doesn’t seem for global services. Microsoft, Intel, netting €5,083,318 in profit. commissioning. Freelancing is an that big with reference to the number Cisco and Red Hat – each have one of increasingly popular concept among of employed people – Belgrade based their few global developing centres in The average number of employees is young educated people in Serbia, companies employed as many as 7,280 Belgrade. close to 6, which is no wonder since the especially in creative industries, people, Novi Sad (1,894), and Nis (542). vast majority of these companies were software development etc. According classified as micro companies, meaning to elance.com Serbia is among the All together, 250 new companies have Net profit they turn over up to €700,000, employ top 5 countries in Europe based joined the sector in 2013, which is slightly up to 10 people on average, and have on freelancers’ earnings, while the more than in 2012 (240), and 2011 (229). 2011 4,104,388 the value of assets less then €350,000. number of freelancers rises by 70% New companies gave employment to 2012 3,931,687 However, an interesting thing about annually. When it comes to income, 485 new employees in 2013. Belgrade is Source: SBRA micro-sized companies is that only 1,381 546 companies have earned more than also the most vibrant environment when 2013 3,645,400 do have registered employees, whilst €10,000. Together, they employ 9,190 it comes to growing new ICT companies only 226 companies from the list have employees (close to 17, one average). with 157 new companies, giving APPLICATION SOFTWARE STRUCTURE 10+ employees. Since the companies employment to 318 IT professionals. formally not employing a single Most of these new companies were employee have together earned more engaged in software development (91). 28.2% than €0.5 million in 2013, it seems that Collaborative app. (DM, CMS, CRM, BI, Web) Annual turnover 52.9% Sector’s key indicators (2011-2013) Number of companies Business aplications by size in 2013 (Software Development (ERP, SCM, Accounting) 2011 2012 2013 sub-sector) Number of active companies 1,496 1,638 1,786 Micro 1.670 12.0% Annual turnover (EUR) 40,905,947 51,074,901 61,985,867 Small 102 2011 30,828,271 Other business app. Number of employees 8,312 10,369 11,003 6.9% Engineering applications (e-Bus, Mobility, Medium 13 2012 37,102,133 Office...) Source: SBRA Large 1 2013 45,896,983 Source: Mineco 2012 Source: SBRA Source: SBRA 10 11 Outsourcing Opportunities Gaming Industry

The outsourcing sector of the software development industry has long Time zone / geographic position Bearing in mind that hundreds of millions of people worldwide spend hours favoured Asian countries for low costs of service, thus helping the software Serbia is in the Central European Time playing games; it comes as no surprise that the gaming industry has become development outsourcing to India gain momentum over the years. However, Zone, one hour ahead of Greenwich exceedingly popular nowadays. Serbian gaming companies have already achieved tables are turning and Eastern European countries are asserting their Mean Time (GMT+1). This location is Nordeus, publisher of the most global success with their creativity, enthusiasm and talented professionals. Some presence in the IT outsourcing market, especially Serbia which is recognized especially advantageous for near- popular football manager in the world of the best examples are the Belgrade- based Nordeus and Cofa Games and Eipix as high level and one of the most promising IT outsourcing destinations. shoring outsourcing contracts. Serbia -Top Eleven, which has reached 100 Entertainment from Novi Sad. is well connected with the rest of million registered users, has grown Europe and almost any destination into an international company with company G2 and its subsidiary GTECH can be reached within 3 hours. So, more than 160 employees, with offices Belgrade have been joined with Spielo Why outsourcing to Serbia? control workloads through outsourced in Belgrade, San Francisco, Skopje, International, forming a new brand, projects are guaranteed. London and Dublin. The company Spielo G2, which was ultimately united Serbian companies have proved to be able to provide cost- received many awards as one of the Cofa Games was selected by the EU under the single name and brand – effective, yet at the same time quality and functional IT Safe and secure IT outsourcing hottest European hi-tech companies Innovation Fund among the 12 Most GTECH. Today, GTECH is a leading gaming outsourcing. There are many reasons companies choose services (Techtour) and the best gaming start- Innovative Enterprises in Serbia and technology and services company, Serbia for IT outsourcing: In line with the growing trend of its up (Europe’s Awards) in 2011. made it to the Top 3 Start-ups in the providing innovative technology, economy, Serbia has recently (January Game & Entertainment Category of creative content, and superior service 2014) commenced the membership Eipix Entertainment represents Midnight Pitch Fest. delivery. GTECH is teamed up with one of Highly skilled talents at negotiations with the EU and already another very successful gaming the world’s largest commercial lottery competitive costs undertaken structural and legal company in Serbia. Founded in 2005 in Last, but not least of good examples is operators - Lottomatica Italy and Competitive advantages of outsourcing, reforms towards full compliance with Novi Sad, this Serbian company has 140 GTECH Belgrade, the Serbian software together they form a fully integrated such as lower costs, IT expertise, the EU standards and regulations. This employees today. In 2011, they teamed development house now employing lottery operator and gaming technology economy of scale and increased labour has been recognized also by many up with the famous American publisher 200+ people operating in all areas of solutions provider. Lottomatica Group flexibility, may become core strengths leading global ICT companies, such Big Fish Games. The most successful development (Oracle, Microsoft, Java ...). S.p.a is now GTECH S.p.a with more through outsourcing arrangements as Cisco Systems, Adobe, Motorola, Eipix’s project - Hidden Expedition The roots of GTECH’s Belgrade branch than €1.6 billion in revenues and 6,300 with IT companies in Serbia. Serbian Ericsson, Oracle, Google, Hewlett Smithsonian Hope Diamond was done lie in 1998 and a Belgrade branch of employees in over 50 countries. educational system is based on strong Packard, SAP, IBM, Siemens, Intel, in cooperation with the Smithsonian Finsoft LTD, which was acquired by mathematical and logic background Telenor, Microsoft and SKF Group, Institution, which is one of the national GTECH and became its Belgrade Branch and will increasingly be able to provide which have already tapped into the symbols of America. Eipix is currently in 2007, employing 97 people. In 2012, the quality software engineering education advantages of developing software producing one to two games per and produce excellent IT experts due to and doing business in this country. month, which is probably one of the the awareness of high-level demand for fastest paces in gaming in the world. this type of professionals. Growing IT industry Government support geared towards Another successful Serbian company Cultural alignment with no IT sector in Serbia is the best evidence is Cofa Games from Belgrade. It was language barrier of awareness about the Serbian started when a small group of video People of Serbia have a strong potential in world`s IT industry. game fans from Belgrade stepped into an understanding of Western culture and ambitious project called the Awakening values, both on a personal and business of Heroes in July 2013, which became level, which, combined with fluency a true hit in the region even months in English, enables constructive and before its official promotion. Awakening gratifying communication, both of Heroes was the first domestic MOBA written and oral. game - Multiplayer Online Battle Arena.

12 13 Educated Talent Pool

In 2013, the Serbian IT industry employed around 11 thousand workers. However, Vojvodina ICT Cluster estimates that this number is a smaller part of a much bigger ICT work corpus of nearly 50,000 ICT specialists. The estimation is that, beside the IT industry, nearly 35,000 ICT specialists work in the telecommunication sector, in end-user companies (companies which are IT users) and entrepreneur ICT sector. In comparison to 2007 (the Why Serbia? year before the crisis), all IT subsectors have increased the number of employees, which confirms a developing character of the sector.

Quality Education

Universities and colleges in Serbia Mathematical Sciences in Novi Private universities are still attracting produce around 47,500 graduates Sad were the first to adopt such a lower number of students (9%), annually. One third of them practices. Nowadays (2012/2013), with mostly because tuition fees are still are produced by business and around 800 graduated IT experts an advantage of the state-owned administration universities, while annually, these faculties represent faculties where more than 80% of ICT another third comes from technical the backbone of the Serbian high IT studies are covered from the budget. universities. Leading institutions education (Tertiary-type A) in the IT in this field such as the School of area, as well as the base for research Electrical Engineering or the School and development in this area. In NUMBER OF NEW ICT ENROLEES of Mechanical Engineering in Belgrade addition to that, almost the same ACCORDING TO CITIES or the Technical University in Novi Sad number of IT talents is produced by are recognized internationally for their their departments, with skills related expertise. University of Belgrade has to information technology. 2500 confirmed its ranking from 301-400 2013 places at the 2014 Academic Ranking ICT education is taught at 35 Higher 2000 2012 of World Universities (ARWU), also Education institutions, 16 of which known as the Shanghai List of top state-owned, 6 private faculties and 13 500 universities globally. Although state-owned vocational colleges. These 1500 the list is considered informal, it is a institutions are located in 18 cities prestigious ranking comprising only across Serbia, which allows enrolment two percent of all universities globally. of a wide base of ICT students for 1000 Tertiary-type A and type B studying Introduction of ICT educational programs and six sub-programs. 500 courses to technical universities’ curriculum dates back to 1980’s. Faculties of Electrical Engineering, 0 Mathematics and Organisational Sciences in Belgrade, Electronic Nis Other Cacak

Faculty in Nis, Faculty of Technical Novi Sad Belgrade Science and Faculty for Natural and Source: Mineco 2012

14 15 OPEN JOB POSTS (2014) In addition to this, there is a number of certified private training institutions usually set-up around big ICT companies. 4% 2% Software quality assurance engineer The Serbian ICT sector and the ever-increasing number of international IT technicians companies on the market absorb a vast majority of ICT graduates, minimizing 4% the effect of “brain drain” which was once a big problem. However, the growing Network administrators demand for ICT professionals, both locally and throughout Europe, puts a lot 4% of pressure on the Serbian educational institutions to produce more students. 68% Database Administrators Programers 5% Number of ICT Enrolees and Enrolment capacity – Estimations and Trends English language proficiency SAP specialists is particularly strong. In 2012, 6% In 2012, ICT enrolees accounted for The Microsoft development centre has estimated that Serbia is losing Sistem administrators 7% Graphic & Web Designers more than 10% of the total number of from 50-100 thousand Euros from each IT engineer who leaves the Serbia was ranked fourth out newly enrolled students which shows country in order to be employed abroad (that’s the amount the state of 76 reviewed countries in Source: poslovi.infostud.com and www.poslovi.rs a huge interest of young people in is investing in their education). The company aims at facilitating Business English proficiency by studies related to informatics. creation of 16 IT developers per thousand people in Serbia by 2025, as PROGRAMMING SKILLS 2013 2014 opposed to 1.6 nowadays to meet the needs of the industry. the Business English Index (BEI). The total number of new ICT enrolees Serbia also scored 6.38 while the 0 40 80 120 160 200 in the 2011/2012 school year was average BEI score among 108,000 C/C++ 5,523, out of which 3,042 began their Serbia to have more than 3,500 ICT education with tertiary type new ICT experts on an annual basis. test-takers around the world is C# A studying program (OAS) and the Another 800 IT graduates from 4.15 (on 1-10 scale). The average Java remaining 2,481 with tertiary type economical sciences and around 500 rank for professional and financial B (OSS). Some of the tertiary type A from math schools should be added to Objective C graduates will continue their studies, the equation, as well as almost 1,500 services is 5.19 and 4.68, respectively. so it seems reasonable to expect for mechanical engineering graduates. PHP

Source: poslovi.infostud.com and www.poslovi.rs Language Skills LANGUAGE PROFICIENCY BUSINESS ENGLISH PROFICIENCY (BEI) Labor Market – Demand Foreign languages are taught from elementary school and throughout students’ Intermediate + Advanced 6 Any level entire education. Usually Serbian schoolchildren begin with English at the age 80 of 9 or 10, while a second language (French, German, Italian or Russian) is Software developers were in highest demand among introduced at the fifth grade. Private language schools are also very popular ICT professionals in the first half of 2014. Namely, and attended by students who want to hone their language proficiency or learn 60 4 more than 2/3 of all open ICT-related job posts* another language (usually Spanish, German or Italian). advertised were in need of software developers, followed by designers, system administrators, SAP 40 2 specialists, IT technicians, network administrators, and database administrators. 20 When it comes to actual programming skills the list Based on 35K+ job seekers sample 0 is topped by Java, C# and PHP, with rising demand 0 for Java programming compared to Q1 2013.

India Serbia Poland Hungary Romania

Germany *Advertised at Czech Rep. Italian French English German Russian Spanish Netherlands poslovi.infostud.com and www.poslovi.rs

Source: Infostud Source: Global English Corporation 16 17 Ready for Business Once in Belgrade, the Nikola Tesla Costs of Labor Net salary (EUR) Airport is only 18 km away from downtown and, by taking the highway, The competition for talents tightens it is no more than 20 minutes to and they don’t come cheap. Yet, the Senior level reach the heart of the city. The road Munich 930km price a company needs to pay for Easy Travel to Serbia network connects the airport with Milano 1,009km hiring or commissioning IT profes- Middle level (5+ years of major international roads E-75 and sionals in Serbia is still competitive experience) Owing to its position on the geographic E-70 which link the capital to Zagreb, Rome 1,289km compared to prices in CEE and espe- Junior level (2-5 years of borderline between the East and West, Nis, Novi Sad, Subotica, and other Prague 907km cially in Western European countries. experience) Serbia is often referred to as a gateway cities in Serbia and the region. Depending on the platform and tech- (0-2 years of 1,200+ of Europe and a perfect place for a Warsaw 1,067km nology used, and especially the level experience company to locate its operations if it Air traffic to Nis is less frequent, Kiev 1,302km of experience, the net cost scheme 800-1,200 wants to closely and most efficiently but it provides a good international for software developers may resem- serve its EU, SEE or Middle Eastern connection to the city. Bucharest 641km ble the following: 400-800 Source: SIEPA customers. Bordering the EU, Serbia still offers the possibility of enjoying all benefits of working outside the EU

while being able to provide services th th and transport goods in projected and 7 Pan European Corridor 10 Pan European Corridor Favorable Business Environment flexible time frames. London Minsk Moscow The most efficient way to reach Serbia is by air, using one of the 2,042km 1,532km 2,235km of regulations (which are in line New employment entitles companies two available international airports with EU best practice) due to wrong to a tax return of up to 75% of paid in Serbia - Belgrade Airport and Stuttgart Vienna interpretation on the side of civil Personal Income Tax and contributions. Nis Airport. The ease of travelling 1,451km 612km Bratislava Legislation Framework servants who implement them will be Alternatively, companies can apply from Belgrade to almost every 578km solved along way with specific by-laws. for the financial support scheme destination in the world, either Doing business in the ICT field in Serbia administrated by SIEPA and tailored directly or with a layover is provided Salzburg is increasingly becoming easier and Low Operating Costs to the needs of SS & BPO in order to by almost all major international Graz Budapest 989km more accessible to (foreign) investors. receive financial grants of up to 50% airlines. The daily flight schedule 699km 384km Legislation and regulation on the state Corporate Profit Tax rate is set at very of the invested amount or sum of to major transportation hubs such level has been impressively improved low 15%, Salary Tax to 10% and the VAT new employees’ gross salaries over as Frankfurt, Rome, and Moscow Konstanza in recent years. In general, Serbia’s is levied at the rate of 20%. In addition a two-year period. The condition for includes more than four flights. 702km tax regime is highly conductive to to these low tax rates, the package of eligible companies is to invest over Ljubljana Zagreb business. Corporate profit tax is still incentives makes business ventures in €0.3 million and create more than 20 Sofia one of the lowest in Europe, while Serbia even more profitable. new jobs (more at www.siepa.gov.rs). 510km 442km 756km VAT, salary tax and social insurance Istanbul contributions are among the most Amsterdam 1,722km 1,356km competitive in Central and Eastern Hamburg 1,547km Skopje Europe. Export of software is treated as 889km Financial grants of up to Thessaloniki both product and service, and there are Berlin 1,255km no legal obstacles in realization of any 50% of the invested amount or Frankfurt 1,282km 1,020km contracts in this area. Any problems sum of new employees’ gross Igoumenitsa that may arise in implementation Zurich 1,175km salaries over a two-year period 1,051km

18 There were over 3,570 accounts in Serbia Regionally wise, Belgrade leads the way with 70%, both on owning the in 2013, which, in relation computer and having the access to to the population, the Internet. ICT Infrastructure puts Serbia among Europe’s Internet was accessed mostly on Fixed (landline) telephony service Prices of Internet access top Facebook users. desktop computers (80.5%), followed is offered by a number of licensed by cell phones (61%), and laptop operators. Telekom Srbija is the 2013 computers with 57%. ADSL is the most biggest and still the most important common technology used (54.6%), active operator of the fixed Amount of monthly subscription fee for cable internet followed by 35.3%, telecommunications network, both Access bitrate Access Technology permanent Internet access Telecommunication and ICT Infrastructure while the outdated dial-up technology in financial and technical terms. (VAT included) in RSD was used by only less than a percent However, the market has been fully Relevant indicators show that the telecommunication sector in 2013 remained of households. Broadband Internet liberalized with the introduction 5120/1024Kbps ADSL 1,549 stable enabling further market development. The development of broadband connection was available to 55.1% of of number portability in April 2014, 15360/1563Kbps Cable 1,594 access market and Internet usage is particularly significant and, measured households, 11.7% up from 2013. Almost enabling entities to take benefit from 3072/2048Kbps wireless (2.4GHz 1,279 by the ICT Development Index (IDI), Serbia was among the top 50 countries entire youth population (16-24 years) an open competition. 3 GB with full access rate in 2013, based on the ITU data. uses the Internet, with 95.6% of them included in the price Mobile network 690 having accounts on social networks Mobile telephony service is offered Source: RATEL The International Telecommunication Union (ITU) publishes the indicators such as Facebook and Twitter. by three mobile operators: Mobilna of ICT development with the aim of measuring and monitoring the telefonija Srbije (MTS), still in majority development of information society and determining the digital divide When it comes to businesses, research state ownership, Telenor, fully owned among UN Member States. The Index combines 11 indicators divided showed that the entire pool of them use by Telenor A/S, Denmark since 2006, into three sub-groups: ICT Readiness (infrastructure and access), ICT computers and Internet, 98% of which and Vip mobile, owned by Mobilkom The Internet market in the Republic of Internet connections and total use (primarily by individuals, but also households and undertakings) with broadband Internet connection, CEE Beteiligungsverwaltung GmbH, of Serbia has been experiencing revenues from the Internet service and the intensity of use, as well as ICT Capability (skills necessary and 74% having corporate websites. Austria since 2006. expansion for years. This refers in provision. In December 2013, there for the effective use of ICTs). particular to the number and structure were 221 Internet service providers (ISPs) registered in Serbia. The value of IDI Index for the Republic of Serbia in 2013 amounted to 6.03, which is a significant growth compared to 4.23 in 2008. Considering the ITU data for the previous years and clearly rising trend (4.80 in 2009, 5.10 in 2010, 5.47 in 2011, and 5.62, in 2012), it seems that the place among the first 50 countries on the list is quite secure. BROADBAND PENETRATION RATE (%) The latest data of the National Bureau of Statistics show that, for 2014, a computer was owned by 63.2% of households 0 2 4 6 8 10 12 14 16 18 20 in Serbia, (up by 3.3% compared to 2013), while 62.8% has 2013 internet connection which is a 7% increase YOY. 2012 2011 2010 2009

Source: RATEL 20 21 Office Space WHAT YOU ARE GETTING FOR AN AVERAGE RENT OF €15/MONTH In Q2 2014, the vacancy rate dropped below 10% (as compared to the total stock), with two fastest growing industries, ICT industry with 53% and SS & BPO with 16%, taking up most of the stock. Bratislava Belgrade A couple of new developments are underway for 2015 and will Bucharest Cradles of Businesses better the supply/demand ratio. Class A office buildings recorded asking rents ranging between €14-16/sq.m/month, while average Prague, Budapest asking rents of Class B stock vary between €11-12/sq.m/month. Warsaw Prime yields range between 9-9.5%. engage in business, finance and other services, as well as various advanced Business and Science & Technology Parks in Serbia manufacturing activities. PRIME RENTS €/m2/MONTH 1m2 As a result of joint initiatives of Sumadija & Western Serbia region Most of the incubators (primarily 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014/Q2 universities, state institutions and followed with six BIs and the City those where ICT companies dominate 25 the donor community, a total of 23 of Belgrade with three already the tenant’s pool) provide office incubators were established in Serbia established BIs and one initiative for space, common office services, ICT 20 (as of February 2014; not all survived), BIs establishment. infrastructure, and some of them 15 with initiatives to establish additional even IT training centres. In terms 10 five business incubators (BIs). As a Companies residing in BIs in Novi Sad, of services, the array of services 5 result of substantial support of BI , Belgrade and Kragujevac also includes legal advice, coaching, Programme, the majority of BIs were are mostly engaged in ICT and accounting, education, business 0 founded and initiated in Vojvodina with software development activities while consulting etc. Source: Jones Lang LaSalle, April 2013 Source: Jones Lang LaSalle eight BIs, Eastern & Southern Serbia the incubators in other cities host regions hosted also eight BIs together, companies which predominantely

Costs of Living and Quality of Life City Ranking Incubator Year of Number of Number of Current Current Current oc- Mercer’s 2014 Cost of Living Rankings, published 10 July 2014, compare the cost establishment companies jobs created number of number of cupancy rate of living for expatriates in 211 cities worldwide. Cities are ranked based on data Munich 55 incubated tennants employees (%) from our annual Cost of Living Survey, the most comprehensive of its kind. The Zagreb 120 Subotica 2006 32 60 14 52 70 survey helps multinational companies and governments determine compensation allowances for employees on international assignments. The survey measures the Budapest 132 Novi Sad 2010 12 43 10 35 60 comparative cost of more than 200 goods and services in each location, including Warsaw 142 housing, transportation, food, clothing, household goods, and entertainment. Zrenjanin 2005 24 82 13 32 75 Sofia 172 Belgrade 2006 35 200 20 50 100 According to the study, Belgrade, as the most expensive city in Serbia to live in Bucharest 159 was ranked 184th, 8 places up from 2013’s ranking. The quality of life is exactly what Kragujevac 2008 31 100 11 50 70 one could expect from a capital of two million people, with international schools, Belgrade 184 Uzice 2008 32 80 12 60 100 quality medical services, and infrastructure to host a large expat community. Krusevac 2008 51 n/a 21 39 90 Prokuplje 2007 11 45 11 41 90 In 2007, the Financial Times’ fDi magazine picked Belgrade as the City of the Future and is described by the portal Lonely Planet, as Vranje 2006 24 123 24 198 80 the No. 1 nightlife destination in the world. Source: Strategic Development Plan for Business Incubators and Science and Technology Parks in Western Balkan Region (WBCInno)

22 23 BITF The Business and Technology Incubator of Technical Faculties Belgrade (BITF) has Share of export in tenant’s revenues been established as a partnership between the four technical faculties of the exceeds 75%, while some of the start- University of Belgrade (Civil Engineering, Mechanical, Electrical and Technological/ ups have achieved a huge growth Metallurgical), the Municipality of Palilula and the Democratic Transition Initiative. and became very successful players. The establishment has also received support from the Organization for Security After only a few years of operation and Cooperation in Europe (OSCE). Bitgear and HTech companies were listed on Deloitte’s list of fastest The incubator operates on 600sqm of renovated office space. Key achievements include: growing technology companies in • 550 students have passed the trainings on entrepreneurship, CEE. In 2013, Bitgear was the runner- • 250 young people engaged in the incubator and enterprises-tenants up, while HTec ended up on third • 42 small enterprises tenants of the incubator place on the list for 2014. • 30 new technologies/services developed in innovation projects • 9 patents applications www.bitf.rs • 3 clusters/networks established • 1 service centre developed (set of legal, accounting and financial services, business plan).

IT PARK, INDJIJA SCIENCE & TECHNOLOGY PARK ZvEZDARA

Science & Technology Park Zvezdara Key Establishments The Park was developed as an EU-funded Greenfield project with a prime goal to encourage development of knowledge- IT Park, Indjija based small and medium-sized The Embassy Techzone’s IT Park is enterprises by providing the modern the maiden venture in Europe of the venue for integrating economic and Embassy Group, a leading Indian real intellectual resources and promoting www.piu.rs STP Zvezdara is also positioned close estate development firm. The park is www.embassytechzones.rs Besides significant cost advantages, high-tech entrepreneurship based on to technical universities and fully located in the municipality of Indjija, the benefits of this IT Park are indigenous knowledge. It is a modern accessible by good public transport near Belgrade, Serbia – one of the top manifold – master planning, strict complex consisting of five modular the convenience of a parking lot, system. The price of lease is favourable, investment destinations in this part covenants pertaining to building buildings, common entrance lobby security and professional property it is determined in public auctions, of the world. design, construction material and and connective structures with a total management services. with starting price determined by the The IT Park in Indjija has been green space requirements. It will surface area of 14,000 square meters, municipal authorities. This multi-phase development has conceptualized as a business support enable lower density offices, state including 8,000 square meters of Class The Park is conveniently located in been built for LEED® Green Building and technology transfer initiative of the art infrastructure with A office space. The complex is designed the central area of Belgrade, in the Zvezdara is suitable for companies at Gold Certification. This development that will encourage and support the uninterruptible telecommunication and built to comply with the highest vicinity of the international highway all stages of their development - from includes single and multi-tenant start-up and incubation of innovation- lines, on-site data hosting and international standards of design and E75 and Belgrade airport. Tenants have early-phase start-ups to those that state-of-the-art offices across 25,000 led, high-growth, knowledge- business continuity with disaster quality, and it includes innovative open- opportunity to enjoy calm surroundings have already set their footprint on m² spanning four office buildings. It is based businesses. It will provide an recovery management solutions. plan interior style with centralized of green landscape while being the market. envisaged that in the next five years environment where large, global Shared transportation services with HVAC and IT support systems. It is close to a metropolitan centre with this park could be expanded to offer businesses can set up specialized excellent interstate/highway access also built using innovative energy- amenities including education, housing, 250,000 m² of office space. centres of knowledge creation. will be provided on site. efficient building techniques and offers entertainment, shopping and health care.

24 25 www.microsoft.com/serbia/mdcs SQL Server Team Microsoft Development Center Serbia SQL Server Team was founded in 2007 (MDCS) focusing on development of spatial type extensibility support in SQL Server The centre was established in 2005 as Handwriting Recognition Team - first deployed as part of SQL Server the fifth of its kind on the global level. This team is focused on the development 2008. SQL team specializes in complex The centre specializes in software of handwriting recognizing technology data analytics, and is now in charge of engineering and applied mathematics for tablet pc. This early effort all SQL Server features related to spatial and currently employs 130 highly culminated in 7 language handwriting and XML data types, improvements qualified engineers. recognizers and Math recognizer in the area of data warehousing, and Success Stories shipped in Windows 7. Reco team also other related projects. It is the only MDCS has been created with a mission enabled shape recognition technology SQL Server engine team outside to take an active part in conception of in PowerPoint 2010. of USA and it has made a noted novel Microsoft technologies by hiring contribution to the SQL Server 2012. unique local talent from Serbia and the Image Analysis Platform Team region and to contribute components Image Analysis Platform Team started Office Team to some of Microsoft’s premiere and with document layout analysis project Office MDCS Team was originally tasked most innovative products. The centre in for MS Live Book Search and later to improve existing MS Mathematics Belgrade is becoming widely recognized on moved towards development of suite with the MS Office Education across Microsoft as a centre of excellence common Microsoft image analysis Group. The team has completely for the following domains: computational platform. The most recent projects redesigned the product and delivered algebra engines, pattern recognition, focused on improving online search technology improvement in two object classification, computational experience for mobile devices. flavours: Math add-in for the Office geometry and core database systems. Word and OneNote and MS Mathematics The common theme uniting all of the standalone product as a standalone efforts within the development centre is product. In addition, Office team joined applied mathematics. Office 2013 efforts and worked on a PDF Reflow feature: a brand new Word The centre’s team consists of software 2013 feature that converts PDF to DOCX. engineers with solid industry Some key areas of expertise of MDCS experience and fresh college graduates Office team include machine learning with a common trait - hunger for and layout analysis, services, and math. achieving and making a substantial impact. The team also boasts with the highest concentration of champions in international mathematics and programming competitions such as Olympics, ACM, and Imagine Cup.

There are four teams within MDCS that maintain collaboration with engineers from various Microsoft development centres around the world (Redmond, Israel, India, Ireland and China), and Microsoft researchers from Redmond, Cambridge and Asia.

26 27 DSP applications, tools, and industrial RT-RK MARVELL focused on Android and GoogleTV application and customer Nordeus applications; VESTEL dedicated team www.rt-rk.com named MicronasNIT, the team for TV and STB software development The Serbian start-up Nordeus has be- www.nordeus.com enteredthe era of expansion in DSP, and testing tools development; come one of Europe’s most successful FPGA and Digital TV technology. In support; SMARDTV dedicated team for gaming companies ever, led by first- 2009, a new company RT-RK was CAM and STB software development; time entrepreneur Branko Milutinovic Top Eleven is a cross-platform game, RT-RK is a R&D company and national established, delivering development and the newest member of the NSDC who has decided to jump ship and without Facebook exclusivity and the research institute that delivers services to different non-consumer family TTTech team for automotive launch his own start-up after spend- first game ever that allowed one to development services and own products customers such as Tegic, Nuance, software development. ing almost two years at Microsoft. play it on a laptop, close it, and then Serbia: very good talent, less expen- in the arena of real time embedded Magic4, Openwave (mobile phone continue playing it on a Smartphone. sive, less competition from other com- systems, with strong focus on industry), lighting for Philips and Nowadays, the company’s business Nordeus was born in 2009 in Bel- The company invested a lot in tech- panies and thus that talent will be consumer electronics, communications cooperation with ALTRAN in embedded is structured in two big categories: grade and it has become one of the nology, mobile and learning how it all more passionate and involved in the and multimedia. system design. In April 2009, RT-RK professional services (outsourcing, biggest mobile gaming companies in worked at a time when very few gam- company, etc”. acquired MicronasNIT, bringing the near shore development centres), Europe thanks to the hit game, the ing studios had done it. In 1991, a small group of professors two teams under one umbrella, thus and own products. RT-RK delivers most popular football manager in the Nordeus has received many awards, working at the University of Novi Sad, becoming the largest SEE company for professional services in the field of world -Top Eleven which has reached Asked about whether it would have such as ranking Among 25 Hottest Faculty of Technical Sciences, Chair embedded system design. computer engineering, focusing on: 100 million registered users and 5 mil- been easier for Nordeus if it were in European Hi-Tech Companies (Tech- for Computer Engineering, launched embedded software, TV software, DSP lion DAU. The company now employs London or Berlin instead of Serbia, Mr. tour, November 2011), The Best Gaming first projects in the area of telephony In the following years the company software, Industrial and Automotive more than 160 people; it has offices in Milutinovic said: “I think it would have Start-up (Europas Awards, November and digital signalling protocols. Their started working on their Android for software, FPGA, product design, and Belgrade, San Francisco, Skopje, Lon- been equally tough and there are pros 2011), The Best Facebook Application interest for business has further evolved TV mission and became recognized small scale production. The company don and Dublin. Nordeus has a very and cons. Serbia and Eastern Europe- (Web Fest, November 2011), and Peo- to automation processes in Serbian oil worldwide as an Android competence offers three lines of products: strong corporate culture that makes an countries have started to receive ple’s Choice Award- The Best Start-up and gas industry, in projects for gas centre. • Automated solutions for testing of it a cool company to work for to the tax incentives when it comes to fun- (London Web Summit, March 2012). pipeline management. After establishing complex consumer electronic devices extent where only one person has left draising, which is good for companies a company named FTN-IRAM-RT The company has created near shore such as Integrated Digital TVs (iDTV) the company in four years of the com- established there. But I do see a lot of Source: Posted in Branko Milutinovic, LeWeb, and creating a JV with the German development centres (NSDC) for and Set-Top boxes (STB), known as pany’s existence. pros when it comes to building from updated December 16th, 2014. semiconductor company Micronas different companies: Cirrus Logic for BBT (Black Box Testing). • Interactive system for wireless control of lighting ambience OBLO includes retrofit intelligent Schneider Electric DMS NS www.schneider-electric-dms.com switches, dimmers and outlets for power consumption monitoring. Schneider Electric DMS NS Ltd. for is a strategic partner with Microsoft, • The latest products introduced on power engineering, Novi Sad is a high- and this partnership includes access the STB market, powered by iWedia tech engineering software company to the latest Microsoft technologies, software. engaged in research, development Microsoft courses and Microsoft and software engineering in electrical certificates. Headquartered in Novi Sad, with an systems – distribution management office in Belgrade Serbia, with over 400 system (DMS). This company is also The scope of technologies and employees, 350 of whom are engineers, part of the scientific research park platforms used include database, .NET RT-RK is one of the biggest development of the University of Novi Sad. There programming, artificial intelligence, houses in Southeast Europe. are nearly 600 employees and it data mining, cloud computing, operates projects practically on every distributed systems, real time continent. Schneider Electric DMS NS systems, Web, etc.

28 29 SIEPA www.siepa.gov.rs

SIEPA was established more than and industry-specific advisory services. among the top five IPAs of developing a decade ago and entrusted with Our network of contacts provides links and countries in transition topping the mission of supporting foreign to all levels of government as well as the list of our international companies seeking to set up or expand private service providers. acknowledgements. The list of our their presence in Serbia and Serbian clients includes FIAT, Benetton, companies doing business abroad. SIEPA has technically and financially Panasonic, Bosch and many other Today, staff of nearly 50 multilingual supported thousands of Serbian global and regional industry leaders. Relevant Institutions employees handles projects from and companies in increasing their to all over the world. competitiveness at global markets. We invite you to contact our expert SIEPA’s work is widely recognized, staff which is ready to assist you in We provide professional services to with World Bank’s MIGA ranking SIEPA developing your business in Serbia. companies interested in setting up Working with us is simple, easy, and business operations in Serbia, focusing still costs nothing. on all relevant issues in their decision making process. Our staff is ready to offer information on the general investment environment as well as targeted legal

of the global recession. Serbian IT opportunities for the members, vojvodina ICT Cluster companies in general made a noticeable compiling and delivering sets of breakthrough on the global markets, services to members and third parties, www.vojvodinaictcluster.org putting Serbia on the map as a very policy advocacy for improvement of interesting alternative location for business environment in Serbia, and Vojvodina ICT Cluster is a business development of sophisticated software. popularization of ICT both in terms of association founded through a Vojvodina ICT Cluster gives institutional generating more ICT professionals and bottom-up initiative of ICT companies support to this trend, mobilizing enabling more penetration of these and several supporting institutions. players from the triple helix business– technologies throughout other sectors It is a fast-growing organization that education–government. Strong support of Serbian economy. provides a single point of contact with from the University of Novi Sad adds to ICT companies in Serbia, with the total the strength of the cluster. The cluster has its own Academy, workforce of 2,000+ experienced IT organizing courses, presentations and professionals working in their member The strategic objective of the cluster lectures according to the needs of the companies. is to increase visibility of the Serbian members, as well as a separate Project ICT industry, but also to promote Novi Office that is developing its projects Over 90% of the members’ businesses Sad and put it on the regional and portfolio and revenues every year. are export-oriented, exporting software European map as the hotbed for ICT in products and services to EU, North this part of the world. Activities toward America and the Middle East. Member this objective include: building an ever- companies also exhibited strong stronger network of international growth in recent years, regardless contacts, creating new business

30 31 NICat www.ni-cat.org a favourable location for business operations in the field of advanced technologies. Bottom up (the need recognized by successful SMEs) and top down (SECEP Current cluster members include extensive research on cluster potentials 23 successful companies doing of Serbia) initiatives met in June 2011 in business in the electrical, electro- the former city of Electronics. mechanical and ICT industry, two scientific research institutions The key goals of the cluster are the (Faculty of Electronic Engineering and increase of member’s turnover both on Faculty of Mechanical Engineering – the national and international markets, University of Nis) and three economic strengthening of their capacities for development support institutions innovations and development of new (Regional Development Agency RRA technological products and services, South, Regional Chamber of Commerce and promotion of the City of Nis as and Business Incubator Nis).

Goran Radosavljević

Adviser for Export and Investment Promotion Regional ICT Cluster – Kragujevac www.ict-cs.org (ICT and Shared Services) The youngest cluster of its kind in Serbia, established in April 2014. It currently represents a pool of 18 T: +381 11 3398 772 companies operating in the area of the City of Kragujevac. The key strategic goals of the cluster include development of ICT technologies in the Region, increase of the competitiveness of the membership, [email protected] increase of exports of software, creating a favourable business environment for investing in the region’s ICT industry and adjusting the educational system to the needs of the industry.

ICT Net Cluster with access to relevant and up- member companies. Also, the to-date information from the ICT Cluster is focused on obtaining www.ict-net.org industry, thus enabling them to easier access to public and EU boost their competitiveness and funds for its members, giving them grow. As an open organization, possibility of internationalization ICT Network is an association of it offers its members equality of of their business operations companies, individuals, academic opportunities and a transparent and actively supporting their and research institutions framework for efficient fulfilment innovative and enterprising devoted to the development of of their interests. initiatives and projects. the ICT sector in Serbia. It was established in 2010 by the merger One of Cluster’s main objectives of two former cluster initiatives, is to encourage its members to Serbian Software Cluster and suggest their own initiatives or Embedded.rs. projects which can be realized either through Cluster’s extensive As a unique information hub, ICT network of strategic partnerships JANUARY 2015 Network provides its members or in cooperation with other

32 Serbia Investment and Export Promotion Agency 3, Vlajkoviceva St. 5th floor, 11000 Belgrade, Serbia T: +381 11 3398 550; F: +381 11 3398 814 e-mail: [email protected] www.siepa.gov.rs; www.doingbusinessinserbia.com