Bulgaria's IT Domestic Trade in Doldrums as Global Changes Loom - Report

Business | October 9, 2011, Sunday // 17:47

Bulgaria's domestic trade and distribution of hardware and software are at a crucial junction after sales declined for a second consecutive year, according to a consultancy report.

The combined turnover of 27 hardware and software distributers in Bulgaria reached a total of USD 362.4 M in 2010, reveals Business Ranks & Analytics Bulgaria: Distribution Business in IT Sector in Bulgaria in 2007-2012, a report of independent consultancy "CBN - Pannoff, Stoytcheff & Co."

Of the surveyed 27 companies in question, 12 are multifaceted distributors of hardware and software (including five that are among the largest corporate taxpayers in Bulgaria), and 15 are niche suppliers.

The survey focused on ten most important business indicators, including revenue, employers, debts, salary spending, gross margins, etc.

Even though the combined sales of the surveyed companies are described as "impressive" for the scope of the Bulgarian market, as in 2009, they are below the peak level of 2008.

The report points out as a surprise the fact that even though the total turnover of the IT distribution sector in Bulgaria is down by several dozen million of USD, the number of employees in the sector remains unchanged. However, the problems have translated into lower productivity for a third year in a row as well as the first ever double-digit percentage point decline of salaries in the sector in Bulgaria.

The survey has found that the amounts of hardware equipment on storage have increased, as have the amounts of debt of the distribution companies.

"The challenges before the IT distribution sector in Bulgaria are extremely challenging. In addition to the crisis, the gray market, the pressure on vendors for unsustainable sales growth, weakening marketing, and hardly any PR activity, as well as the contracts for direct supplies with the retail chains, the distributors are faced with historic changes. After a 20-year model based on desktop computers, both hardware and software services are faced with a global technological changes stemming from smartphones and tablets," the CBN report states.

At the same time, the consultancy has found a certain sustainability of the IT distribution sector in Bulgaria. Compared with the 2005 level, the sector currently has 240 jobs and USD 134.4 M more in revenue, even though the number of companies had declined by 8.

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Tags: it sector, IT, hardware, software, trade, distribution, distributor, smartphones, tablet, tablets, CBN – Pannoff, CBN Bulgaria, report, survey, ICT
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