BASCOM: The growth of the Bulgarian software sector continues at a pace that outpaces the growth of the Bulgarian economy

The growth of the software sector in our country continues at a faster pace than the development of the Bulgarian economy. 16.5% is the growth of revenues for last year, 451 new software companies were created in our country, and the newly opened jobs in the sector are 2,675. The software industry retains its leading role in investments in development activities and leading positions in the export of services of Bulgaria. The contribution of the industry to the state budget remains significant - software companies continue to pay over 3 times more taxes and social security contributions than the national average. Artificial intelligence has been adopted by an unprecedented 100% of software companies in our country.

These are the main conclusions from the traditional annual report on the state of the software sector in our country - BASCOM Barometer - which the association has been conducting for the 16th consecutive year.

The data for 2024 were presented to the leaders of the BASCOM member companies and partner organizations, and a special guest at the event was Ekaterina Zaharieva, European Commissioner for Start-ups, Research and Innovation.

"This is the first event that practically begins the mandate of the new Bulgarian European Commissioner. We thank her for accepting our invitation! We interpret it as a strong sign on her part about the importance of the Bulgarian software industry for the development of the Bulgarian economy and for its contribution to the technological future of Europe," said BASCOM Board Chairman Krum Hadzhigeorgiev.

Bulgarian European Commissioner Ekaterina Zaharieva presented the current Commission’s focus on competitiveness, driven by innovation and innovative sectors, including software companies. She announced to the guests at the event that one of her first initiatives would be to present a new European Innovation Act. Its aim would be to improve the framework in which innovative companies operate, by facilitating the attraction of capital and talent, as well as more efficient and simplified rules for European funding. Zaharieva added that a special “European Innovation Council” has been established within Horizon Europe – the largest public research and innovation programme in the world – to support the financing of European innovative companies in their growth phase: “For the first three years of the European Innovation Council’s operation, Bulgarian innovative companies have received EUR 12 million in grant funding and EUR 22 million in equity investments. I am pleased to announce that starting next year we will increase the funding ceiling from 15 to 30 million euros, which will significantly improve the ability of these companies to stay in Europe,” said Ekaterina Zaharieva.

She shared that a special focus in her work will be the so-called single European visa for attracting highly qualified specialists: “I am sure that this is one of the good news that you will hear from me today, because I know that access to such specialists is a basic need of the sector and an obstacle to the growth of companies.”

The Bulgarian European Commissioner also emphasized the importance of talent: “Whatever we do in terms of funding – and in the next programming period it will certainly be more for innovation, start-ups and science – without training talent, retaining it in Europe, without attracting talented people from the rest of the world, we will not improve our competitiveness,” Zaharieva added.

According to data from BASCOM Barometer, over 1.23 billion leva is the growth of the software business in our country in 2023, which reaches 8.7 billion leva. For the current 2024, the forecast is for a growth of 12.4%, which is impressive against the backdrop of forecasts for weak growth and an uncertain outlook for the eurozone economy, including Bulgaria.

Investors from 34 countries are present in the software sector in Bulgaria, the largest of which are R&D outsourced centers owned by the USA, UK, Germany, France and the Netherlands.

Nearly 1/3 (28%) of the total volume of services exports in our country comes from software products and services, which forms 85% of the revenues in the sector.

The ratio of operating revenues of the software sector to GDP reaches its highest value in years of 4.7% in 2023. The forecast for 2024 is that the growth of the software sector's share in GDP will continue to increase and will reach 4.9%, which will strengthen the sector's position as a leader in the service economy in the country.

"The total number of people employed in the software sector should be 60,000 people. This is 1.9% of all workers in Bulgaria. One worker in the software business in Bulgaria generates tax and fee revenues to the budget more than 3 times the national average. Total tax revenues from the entire sector for 2024 are expected to exceed 2.7 billion leva." This was shared by Georgi Yanchev, member of the BASCOM Board of Directors.

A special focus of the event was the presentation of the cause of BASCOM and the high-tech association BRAIT for reforming education and creating at least 10 technology schools. “These schools will not replace mathematics high schools. We are not breaking what works. Profiled high schools are absolutely necessary, but we need an ecosystem of technology schools. They represent schools that are horizontally technological, since technology is in every field, but vertically economic. This vertical can be IT, energy, mechatronics or space. In reality, the professions of the future are there. In order for these schools to work, they must be of the campus type, so that we can purposefully invest in the talent of children. Just as we have music and art schools. A certain type of thinking is also talent. Talent must be distinguished from AI. The common denominator is technology, but the skills are different,” said Dobroslav Dimitrov, Chairman of the Board of the Bulgarian Employers’ Association of Innovative Technologies (BRAIT). Currently, there are 5 such schools in Bulgaria, in Sofia, Pravets, Stara Zagora, Burgas and Varna. "Besides them, we would like to have at least 10 more," Dobroslav Dimitrov is categorical and also shared that the new technological schools in Vratsa and Smolyan are in an advanced stage of development.

As Chairman of the Board of BRAIT, Dobroslav Dimitrov emphasized the importance of the association and the unanimity that has been achieved. "The great union BRAIT represents the new economy of Bulgaria. This unprecedented union that we have achieved in the last year and a half makes us very proud. Over 30 organizations are members of it and we exceed 20% of the economy. These 20% are currently not participating in the national dialogue. That is why it is important for us to join the National Council for Tripartite Cooperation - where employers, the state and unions talk, they lack a huge part of the information that we actually have. There is no way to make the right decisions with a lack of information. The three pillars on which the innovative economy is based and for which we at BRAIT will work are: access to talent - schools and access to personnel from third countries; development of the environment - tax and social security framework, regulations, creation of added value; rule of law. One of the reasons why large Bulgarian companies are not here is because they choose to register in other places with a more favorable regime. I wish we could invent the European dream. The future is brighter than we think, but we should make it happen ourselves,” Dobroslav Dimitrov concluded.