EBRD: Bulgaria the "Balkan Tiger" Is Emerging as Global Player in Software Development

Letters to the Editor | May 12, 2009, Tuesday // 10:37

Nicholas Jeffery,
Senior Advisor Strategy and Investment Planning European Bank for Reconstruction and Development - Telecoms Media and Technology

Leading up to the financial crash, the European Bank for Reconstruction and Development (EBRD) was updating its new Telecoms Media and Technology strategy for the 30 countries it serves across SEE and CEE from the border of the Czech Republic to Mongolia. The business unit was re-inventing itself to focus a good proportion of its investments on the media and services sector.

It is always a difficult challenge to balance the Bank's mandate of reconstruction and development with investing in companies with proven profitability. Investing in media and content providers, who are often in the first stage of development, is especially challenging as these investments are usually more appropriate for Venture Capital and Private Equity boutiques who traditionally provide a more hands on approach.

The EBRD investment team has seen a significant shift away from telecoms and the large fixed line privatisations of the last decade, although a few laggards remain, towards a more traffic generating/service provision and applications environment for its investment opportunities.

"It is fair to say that the Eastern European markets have a second mover advantage, not having to justify continued investment into first generation legacy systems such as WAP but instead concentrating on application development for 3G platforms such as Google Android. This gives the region the ability to leapfrog over first generation technology having the experience of the more ICT developed countries. It is the "Moore's law" principle in action - every year technology gets smaller, cheaper and faster," said Nicholas, EBRD's telecoms media and technology Senior Strategy Advisor who has spend nearly 30 years as an entrepreneur in the industry.

In the wake of the fall of communism, there has been a substantial brain drain from Eastern Europe to Silicon Valley for bright young graduates as opportunities for them in their home markets were limited. However, the EBRD sees this trend slowly reversing as the salary differentials narrow and quality of life and individuals' home roots come into play as important parts of one's career choice.

As you look around the world, geographies have defined themselves in the technology market as being known for something: California is the application development centre of the world, India (Mumbai) is the call centre magnet (which we are seeing a reversal of trends) and Bulgaria is becoming one of the premiere software development centres of the world.

HP, CSC and most of the mobile operators of the world know exactly what Bulgaria has to offer and as one of the newest entrants into the EU with a planned accession into the European Community by 2010, the Bulgarians appear to be bucking a trend as investments are still being made even during the last six months.

This against a regional backdrop from the Economist Intelligence Unit benchmarking study published on the 18th of February 2009, where they show that from November 2008 to February 2009, the number of companies in Central and Eastern Europe who plan to cut their investment in the region has risen from 16% to 21%.

Bulgaria is also attracting the more esoteric and creative application developers such as ViaOne, a US based corporation recently funded by the EBRD who have created mobile roaming cost saving, mobile wallet and money transfer applications as part of a wider suite of applications such as Voice over Internet Protocol targeted at the small to medium enterprise business markets.

Another example of Intellectual Property moving into Bulgaria is Lightapp, a UK high tech company who has developed a method of delivering business and home computing applications on a per use model via a set top box to a digital TV, at a fraction of the cost of a PC and traditional software licence fee.

Software development companies that have been created in Bulgaria and are now taking on the world are business like Fadata, serving the International insurance markets with their risk analysis software, and Teracomm who has developed a suit of eight product lines from mobile TV and mobile marketing applications to 3G video calling and streaming for the world mobile operators.

Teracomm, whose clients range from Vodafone and T-Mobile to Universal Music and Adidas, are developing killer applications and competing and winning in Western Europe, the USA, Asia Pacific and nearer to home in Hungary and other CIS and CEE countries.

And then came the financial crisis, hitting with effects that are much more severe and deeper than originally anticipated.

But they say that every grey cloud has a silver lining. This crisis is a chance to re-think the EBRD's transition priorities as it invest in 2009 and moves towards defining its strategies for the next five years. The EBRD needs to embrace the challenges ahead through taking a fresh approach to how it works and achieves its goals.

Because the EBRD is needed more than ever, the bank must ensure that it remains equipped to address the challenges as they unfold. EBRD's targets for 2009 are necessary and at the same time ambitious with a target of Euro 7 billion of investment. The bank is under no illusion that finding and financing good projects will be easy as the bank strives for higher business volumes. EBRD will need to look at new projects in light of the crisis, to be more creative, flexible and act decisively and with speed.

"EBRD's flexibility in tackling the financial crisis effects means that despite the financial turmoil, Bulgaria can continue to build upon its growing reputation as a centre of software development globally. During these difficult times, it is excellent to see a country like Bulgaria clearly setting out how it can support inward bound technology companies and investment to maximise the ICT talent that is abundant in the country. Watch out for the Bulgaria the "Balkan Tiger," said Nicholas.

About EBRD: EBRD is the single biggest investor in the region including Central and Eastern Europe and Central Asia, investing in 30 countries. Founded in 1991 in the wake of the fall of communism, EBRD is owned by 61 countries and two intergovernmental institutions and focuses on supporting private sector investment in its countries of operation. EBRD's Telecom, Media and Technology investment team is based in London, with representation at the country level, and has over 15 dedicated bankers. The team invests in and provides financing to a variety of companies from basic communication infrastructure provision to software and content.


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Tags: IT, telecommunications, EBRD, software, software development, Balkan Tiger
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