Bulgarian ICT sector in 2023: Main tendencies

There were 10,664 full-time employees in the telecommunications sector in 2023, compared to 11,795 in 2022. As a result, the average efficiency (revenue per employee) for 2023 is slightly higher than the previous year, around BGN 336,000, compared to less than BGN 300,000 for 2022. The average gross remuneration in the sector is growing, apparently compensating for inflation - almost BGN 3,000 for 2023 against BGN 2,700 for 2022.

ICT solutions market

The total revenue of all participants in the ranking from sales of ICT products and services for 2021???, including from IT process outsourcing, is almost BGN 5.95 billion. Among the IT companies, the largest revenues are generated by the two main distributors - POLYCOMP and ALSO Bulgaria, followed by ITO provider DXC Bulgaria, PaySafe Bulgaria and SAP Labs Bulgaria.

In the top 20 for 2023 are also the payment terminal manufacturer DATECS, Telelink Business Services Group with a consolidated report, IBM Bulgaria, Shelly Group (operating until recently under the name Allterco Robotics) and the outsourced IT services provider Hewlett-Packard Global Delivery Center Bulgaria.

Again, there are 18 companies in the ranking (including telecoms) with individual annual turnovers exceeding BGN 100 million, and 37 of the companies each have revenues for 2023 exceeding BGN 50 million (44 in the 2022 ranking).

Leaders in individual IT activities

Software technology development is again the top revenue contributor. The sector's total turnover is BGN 1.44 billion, with a further BGN 60 million coming from software license sales.

Systems integration generated a revenue of BGN 1.32 billion, or 22% more than in 2022, giving it a 22.2% share of the IT market. The leader here is A1 Bulgaria, which has significantly increased its presence in the segment following the acquisition of Stemo. It is followed by Telelink Business Services Group and Eviden (both have reported consolidated figures), Siemens (CNSYS) and new entrant Kontron Bulgaria.

The distribution of ICT products, including a host of new solutions in the field of cybersecurity and artificial intelligence, generated 13% of total IT turnover, reaching BGN 776 million. The revenue of the IT outsourcing (ITO) business rose to BGN 978 million, from BGN 665 million in last year's survey, marking growth of over 47%.

The share of the hardware sector, which reported revenue of almost BGN 1.3 billion from sales of computers, office equipment, smartphones and communication equipment, is around 14%. Revenue from IT consulting services fell by around 25% to around BGN 66.5 million. IT training revenues decreased by 40%. In the specific business, revenues generated in 2023 are up by 34% to around BGN 380 million.

The average gross monthly remuneration (including social security contributions but excluding additional incentives) in the IT industry in 2023 drops for the first time, albeit only by 3.5%, to around BGN 5,000 from an average of over BGN 5,185 in 2022.

As many as 69 of all the top 100 companies in the ranking announced their business forecasts for 2024, projecting a total revenue of BGN 3.75 billion for the full year 2024.This forecast is more than 16% higher than what they achieved in 2023. Only 7 of these 69 companies expect weaker results, with most of the decline being within the range of 1% to 12%. Notably, another 7 IT firms forecast revenue growth in the 20% to 35% range, while the four leaders in this ranking expect much higher growth rates. For EGT Digital, the projected growth is over 166%, after its 2023 revenue jumped 223%. Financial start-up Payhawk is expecting another good year, with 83% growth, after its revenues increased by about 20% in 2023.

Insurance solutions company TINQIN also expects revenue growth of over 62% in 2024, while listed IoT products maker Shelly Group projects its revenues will increase by over 40%. Yet another listed company, Telelink Business Services Group, is planning major growth of its business, forecasting almost 33% higher revenues.

The reasons for optimism are mostly related to expanding in new markets. EGT Digital, for example, is entering more international markets, which it sees as an opportunity to ensure the company's success, but also to promote the qualities and skills of Bulgarian software specialists. The company already has partnerships in EU countries, North and Latin America, and Africa, where other key players are showing interest in its products. TINQIN's main clients are some of the largest insurance companies operating on the European market, for which the Bulgarian company develops software design, business analysis, prototyping, product testing and maintenance. In addition to offices in Sofia and Varna, the company has a representative office in Paris, through which it offers mainly consulting services.

Shelly Group reported revenues from device sales of more than BGN 40 million for the first quarter of 2024, an increase of 45% compared to the same period in 2023. In the first quarter of 2024, the company also reported premium subscription revenues, which accounted for an increase in service revenues. For the full 2024 financial year, Shelly Group's board of directors expects revenue from device sales and related services to reach 105 million euro and earnings before interest and taxes (EBIT) likely to top 26 million euro, the company said in its quarterly report.

TBS Group expects to grow its business in Bulgaria, including in the public sector, and to achieve strong growth in Croatia following the acquisition of 7IT. In addition, the group continues its positioning initiatives in Germany, the US and the UK through local marketing and sales teams and operational resources from Bulgaria.