Bulgaria IT Services Market 2011 - 2015 Forecast and 2010 Vendor Shares Draft

MARKET AN ALYSIS Bulgaria IT Services Market 20112015 Forecast and 2010 Vendor Shares
Neli Vacheva
IDC OPINION
Fax. +359 2 973 3833
The Bulgarian IT services market contracted in U.S. dollar terms in 2010 to reach a value of $133.66 million. The decline was the result of a slow recovery from the economic crisis, overall economic uncertainty, the debts business had, those that the government had towards businesses, and a drop in foreign direct investments. There was a double-digit decline in the IT services market in Bulgaria for a second consecutive year. The share of IT services in the total IT market fell to 2007 levels. The IT services market would have seen an even more dramatic decline if the government was not forced to spend on systems to fulfill obligations related to its membership in the EU. The support and installation foundation market was the largest on the Bulgarian IT services market again, despite the need for further reduction of operational costs in the private and public sectors directly hitting the installation and support services market. The low number of new projects led to declines in the network consulting and integration services and the information system consulting services markets. Systems integration services had less of a decline due to projects in the government segment. The slight recovery in some areas of the Bulgarian economy in the second half of 2010, mainly driven by exports, failed to provide a positive spark for the IT services market. It is expected that demand for IT services will recover slowly in the second half of 2011, following the recovery of the economy and a renewal of government spending for new IT projects. However, the deteriorating economic situation may scupper demand from the private and public sectors, delaying the recovery in the IT services market. Vendors have to prepare for a period of slow demand as user priorities change. Users will continue to be cautious about IT spending and their attention will gradually move from cost-cutting to projects with greater business value. Vendors should prepare to offer high levels of reliability and commitments to users concerns.
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Filing Information: December 2011, IDC #ES05T, Volume: 1 Central and Eastern European IT Services Expanded Country Set: Market Analysis
TABLE OF CONTENTS
P In This Study 7
Methodology ............................................................................................................................................. 7 Executive Summary .................................................................................................................................. 7 S i t u a t i o n O ve r v i e w 7
Overview of the IT Services Market .......................................................................................................... 7 Continuing Economic Malaise ........................................................................................................... 8 Trends in Services Procurement ....................................................................................................... 9 Acceptance of Outsourcing/Cloud Computing ................................................................................... 9 Vertical Market Perspective ............................................................................................................... 10 Competitive Landscape ..................................................................................................................... 10 Mergers and Acquisitions .................................................................................................................. 10 Leading IT Services Vendors .................................................................................................................... 11 IT Environment ......................................................................................................................................... 13 Drivers ............................................................................................................................................... 13 Inhibitors ............................................................................................................................................ 14 Overview of the IT Services Market by Foundation Market ...................................................................... 14 Support and Training Services Macromarket..................................................................................... 16 Hardware Support and Installation Services............................................................................... 16 Software Support and Installation Services ................................................................................ 18 IT Training and Education .......................................................................................................... 19 IDC Analysis of Support and Training Macromarket ................................................................... 20 Project Services Macromarket ........................................................................................................... 21 Network Consulting and Integration ........................................................................................... 21 Systems Integration .................................................................................................................... 23 Information System Consulting................................................................................................... 24 Application Consulting and Customization ................................................................................. 25 Custom Application Development .............................................................................................. 27 IDC Analysis Project Services Macromarket .............................................................................. 28 Outsourcing Macromarket ................................................................................................................. 29 Application Management Outsourcing ........................................................................................ 29 Information System Outsourcing ................................................................................................ 31 Network and Desktop Outsourcing Services .............................................................................. 32 Hosted Application Management ................................................................................................ 33 Hosting Infrastructure Services .................................................................................................. 34 IDC Analysis of the Outsourcing Services Macromarket ............................................................ 36 Overview of the Information Technology Services Market by Vendor Category ....................................... 36 The Services Landscape ................................................................................................................... 36 Overview of IT Services Spending by Vertical Market .............................................................................. 37 Government sector ............................................................................................................................ 38 Financial Sector ................................................................................................................................. 39 Telecommunications .......................................................................................................................... 40 Combined Manufacturing .................................................................................................................. 40 Future Outlook 42
Forecast and Assumptions ....................................................................................................................... 42 Forecast by IDC Engagement Type.......................................................................................................... 48 Hardware Support and Installation Services ...................................................................................... 48 Software Support and Installation Services ....................................................................................... 48 IT Training and Education ................................................................................................................. 48
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TABLE OF CONTENTS Continued

P Network Consulting and Integration................................................................................................... 49 Systems Integration ........................................................................................................................... 49 Information System Consulting .......................................................................................................... 50 Application Consulting and Customization ........................................................................................ 50 Custom Application Development...................................................................................................... 50 Information Systems Outsourcing...................................................................................................... 51 Network and Desktop Outsourcing Services ..................................................................................... 51 Application Management ................................................................................................................... 52 Hosted Application Management ....................................................................................................... 52 Hosting Infrastructure Service Providors ........................................................................................... 52 Market Context ......................................................................................................................................... 53 Alternative Scenario.................................................................................................................................. 54 Main Assumptions ............................................................................................................................. 54 Future Outlook by Vertical Market ............................................................................................................ 55 Government ....................................................................................................................................... 56 Telecom ............................................................................................................................................. 57 Finance .............................................................................................................................................. 57 Vendor Profiles ......................................................................................................................................... 57 Siemens IT Solutions and Services ................................................................................................... 58 Services Overview ...................................................................................................................... 58 Clients and Contracts ................................................................................................................. 60 SWOT Analysis .......................................................................................................................... 61 Information Services .......................................................................................................................... 61 Services Overview ...................................................................................................................... 61 Clients and Contracts ................................................................................................................. 63 SWOT Analysis .......................................................................................................................... 64 HP ..................................................................................................................................................... 64 Services Overview ...................................................................................................................... 64 Clients and Contracts ................................................................................................................. 66 SWOT Analysis .......................................................................................................................... 67 Kontrax .............................................................................................................................................. 67 Services Overview ...................................................................................................................... 67 Clients and Contracts ................................................................................................................. 69 SWOT Analysis .......................................................................................................................... 70 Printec ............................................................................................................................................... 70 Services Overview ...................................................................................................................... 70 Clients and Contracts ................................................................................................................. 72 SWOT Analysis .......................................................................................................................... 1 Essential Guidance Learn More 1 2
Related Research ..................................................................................................................................... 2 Definitions ................................................................................................................................................. 3 Foundation Markets ........................................................................................................................... 3 Hardware Support and Installation ............................................................................................. 3 Managed Support Services ........................................................................................................ 4 Software Support and Installation............................................................................................... 4 IT Education and Training .......................................................................................................... 4 IT Consulting .............................................................................................................................. 4 Systems Integration .................................................................................................................... 5 Network Consulting and Integration ........................................................................................... 5
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TABLE OF CONTENTS Continued

P Application Consulting and Customization ................................................................................. 6 Custom Application Development .............................................................................................. 6 Exceptions and Exclusions ......................................................................................................... 7 Outsourcing (as an Engagement Type) ...................................................................................... 7 IS Outsourcing ................................................................................................................................... 7 Exceptions and Exclusions ......................................................................................................... 8 Network and Desktop Outsourcing Services ..................................................................................... 8 Exceptions and Exclusions ......................................................................................................... 9 Application Management ............................................................................................................ 9 Hosted Application Management ....................................................................................................... 9 Exceptions and Exclusions ......................................................................................................... 11 Hosting Infrastructure Services.......................................................................................................... 11 Exceptions and Exclusions ......................................................................................................... 12
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LIST OF TABLES
P 1 2 3 4 5 6 7 8 9 Overview of the Leading IT Services Companies in Bulgaria by IT Services Revenue, 2010 ..... 12 Overview of the Top 10 IT Services Companies by IT Services Revenue Provisioned in Bulgaria, 2010 ............................................................................................................................. 13 Overview of IT Services Spending by IDC Foundation Market in Bulgaria, 2010 ......................... 15 Total Supply-Side Revenue on the Hardware Support and Installation Foundation Market in Bulgaria, 2010 ............................................................................................................................. 17 Total Supply-Side Revenue on the Software Support and Installation Foundation Market in Bulgaria, 2010 .............................................................................................................................. 19 Total Supply-Side Revenue on the IT Training and Education Foundation Market in Bulgaria, 2010 ............................................................................................................................. 20 Total Supply-Side Revenue on the Network Consulting and Integration Foundation Market in Bulgaria, 2010 .......................................................................................................................... 22 Total Supply-Side Revenue on the Systems Integration Market in Bulgaria, 2010 ..................... 24 Total Supply-Side Revenue on the Information System Consulting Market in Bulgaria, 2010 ..................................................................................................................................................... 25
10 Total Supply-Side Revenue on the Application Consulting and Customization Foundation Market in Bulgaria, 2010 ............................................................................................................. 26 11 Total Supply-Side Revenue on the Custom Application Development Foundation Market in Bulgaria, 2010 ............................................................................................................................. 28 12 Total Supply-Side Revenue on the Application Management Outsourcing Foundation Market in Bulgaria, 2010 ............................................................................................................. 30 13 Total Supply-Side Revenue on the Information System Outsourcing Foundation Market in Bulgaria, 2010 ............................................................................................................................. 31 14 Total Supply-Side Revenue on the Network and Desktop Outsourcing Foundation Market in Bulgaria, 2010 ............................................................................................................................. 33 15 Total Supply-Side Revenue on the Hosted Application Management Foundation Market in Bulgaria, 2010 ............................................................................................................................. 34 16 Total Supply-Side Revenue on the Hosting Infrastructure Services Foundation Market in Bulgaria, 2010 ............................................................................................................................. 35 17 Overview of IT Services Spending by Vertical Market in Bulgaria, 2010 ..................................... 41 18 Top 3 Assumptions for the IT Services Market, 20112015 ......................................................... 42 19 Key Forecast Assumptions for the IT Services Market, in 2010, 20112015 ............................... 43 20 Forecast and Analysis of IT Services Spending (US$M) by IDC Foundation Market in Bulgaria, 20102015 ................................................................................................................... 46 21 Comparison of Forecast for IT Services Spending (US$M) in Bulgaria, 20102014 versus 20112015 ................................................................................................................................... 54 22 Overview of Siemens IT Solutions and Services' Contracts, 2010 ............................................... 60 23 SWOT Analysis of Siemens IT Services and Solutions, 20102015 ............................................ 61 24 Overview of Information Services' Contracts, 2010 ...................................................................... 63 25 SWOT Analysis of Information Services, 20102015................................................................... 64 26 Overview of HP's Contracts, 2010................................................................................................ 66 27 SWOT Analysis of HP, 20102015 .............................................................................................. 67 28 Overview of Kontrax's Contracts, 2010 ........................................................................................ 69 29 SWOT Analysis of Kontrax, 20102015 ....................................................................................... 70
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LIST OF TABLES Continued

P 30 Overview of Printec's Contracts, 2010 ......................................................................................... 73 31 SWOT Analysis of Printec, 20102015 ........................................................................................ 1 32 Distinctions Between Systems Integration, Custom Application Development, and Software Deploy .......................................................................................................................................... 6 33 Distinctions Between Hosted Application Management and Traditional Application Management ................................................................................................................................ 10
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LIST OF FIGURES
P 1 2 3 4 5 6 7 8 9 Spending (US$M) on IT Services by IT Services Engagement Type in Bulgaria, 2009 and 2010 ............................................................................................................................................. 9 Spending (US$M) on IT Services by IT Services Engagement Type in Bulgaria, 2010 and 2011 ............................................................................................................................................. 9 Spending (US$M) on IT Services by IT Services Engagement Type in Bulgaria, 2010 ............... 16 Overview of the Leading Providers of the Support and Training Services Macromarket in Bulgaria by IT Services Revenue (US$M), 2010 .......................................................................... 17 Hardware Support and Installation Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 18 Software Support and Installation Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 19 IT Training and Education Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ............................................................................................................... 20 Overview of the Leading Providers of the Project Services Macromarket in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 22 Network Consulting and Integration Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 23
10 Systems Integration Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ............................................................................................................................... 24 11 Information System Consulting Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 25 12 Application Consulting and Customization Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010............................................................................................. 27 13 Custom Application Development Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 28 14 Overview of the Leading Providers of the Outsourcing Services Macromarket in Bulgaria by IT Services Revenue (US$M), 2010............................................................................................. 30 15 Application Management Outsourcing Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 31 16 Information System Outsourcing Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 32 17 Network and Desktop Outsourcing Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 33 18 Hosted Application Management Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 34 19 Hosting Infrastructure Services Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010 ................................................................................................. 36 20 IT Services Revenue Share by Vendor Category in Bulgaria, 2010 ............................................. 38 21 Overview of IT Services Spending by Vertical Market in Bulgaria, 2010 ...................................... 39 22 Forecast of IT Services Spending (US$M) by IDC Engagement Type in Bulgaria, 2010 2015 ............................................................................................................................................. 48 23 Forecast of IT Services Spending (US$M) by IDC Engagement Type in Bulgaria, 2010 2015 ............................................................................................................................................. 50 24 Forecast of Relative Shares by IDC Engagement Type in Bulgaria, 20102015 ......................... 53 25 Forecast of Relative Shares by IDC Engagement Type in Bulgaria, 20102015 ......................... 55 26 Comparison of Forecast for IT Services Spending (US$M) in Bulgaria, 20092014 versus 20102015 ................................................................................................................................... 56
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LIST OF FIGURES Continued

P 27 Forecast of IT Services Spending (US$M) by IDC Engagement Type in Bulgaria, 2010 2015 - Alternative Scenario .......................................................................................................... 57 28 Spending (US$M) on IT Services by Vertical Market in Bulgaria, 2010 ....................................... 58 29 Siemens IT Solutions and Services: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria,, 2010 ................................................................................................................ 60 30 Siemens IT Solutions and Services: Overview of IT Services Revenue by Vertical Market in Bulgaria, 2010 .............................................................................................................................. 61 31 Information services: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria,, 2010 ............................................................................................................................. 64 32 Information services: Overview of IT Services Revenue by Vertical Market in Bulgaria, 2010 ..... 64 33 HP: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria, 2010 ................... 67 34 HP: Overview of IT Services Revenue by Vertical Market in Bulgaria2010 .................................. 67 35 Kontrax: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria, 2010 ............ 70 36 Kontrax: Overview of IT Services Revenue by Vertical Market in Bulgaria, 2010 ........................ 70 37 Printec Bulgaria: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria, 2010 ............................................................................................................................................. 73 38 Printec Bulgaria: Overview of IT Services Revenue by Vertical Market in Bulgaria, 2010 ........... 73
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IN THIS STUDY
Methodology
See the Learn More section at the end of this study for information on the methodology.
Executive Summary
In 2010, the IT services market in Bulgaria totaled $133.66 million, representing a year-on-year decline of 15.5% in U.S. dollar terms. The hardware support and installation category accounted for the largest share of IT services revenue at 27.6%, followed by systems integration with 26.3% and combined outsourcing with 11.2% of the IT services market in the county in 2010. Siemens IT Solutions and Services was the leading IT services provider in Bulgaria in 2010 with IT services revenue of $12.30 million and 8.9% market share. Information Services placed second with $12.08 million and 8.7% market share. HP ranked third with $9.19 million and 6.6% share. Kontrax and Printec Bulgaria rounded out the top five IT services providers in the country in 2010 with 6.6% and 6.4% of the market, respectively. Combined government was the largest vertical market in Bulgaria in 2010 with $41.33 million in services-related spending and 30.9% market share. It should be noted immediately that this result is due to spending on three huge projects launched in precrisis years. The combined finance vertical placed second with 22.2% share from IT services investment of $29.63 million. Telecommunications ranked as the third-largest vertical market in 2010 with IT services investment of $21.23 million and 15.9% market share. Combined manufacturing was the fourth-largest market in the country, accounting for $10.15 million in IT services revenue and 7.6% market share. IDC expects spending on IT services in Bulgaria to increase 0.6% year on year in 2011 and to expand at a CAGR of 38.8% across the five-year forecast period to total $688.54 million in 2015.
SITUATION OVERVIEW
Overview of the IT Services Market
In 2010, the IT services market in Bulgaria totaled $133.66 million, representing a year-on-year decline of 15.5% in U.S. dollar terms. Measured in local currency, the domestic IT services market was down 11.9% in 2009.
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FIGURE 1
Spending (US$M) on IT Services by IT Services Engagement Type in Bulgaria, 2009 and 2010
Source: IDC, 2011
FIGURE 2
Spending (US$M) on IT Services by IT Services Engagement Type in Bulgaria, 2010 and 2011
Source: IDC, 2011
Key trends in the 2010 IT services market in Bulgaria include the following:
Continuing Economic Malaise

In 2010, internal demand in Bulgaria remained low and is forecast to stay low in 2011. The slight restoration of economy growth in 2010 was mainly due to an increase in
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demand for Bulgarian exports in Europe. The inflow of foreign direct investment (FDI), which was critical for the growth of the Bulgarian economy in the pre-crisis years, was 59% lower in comparison with 2009, reflecting a tough recovery in verticals like finance (mainly in insurance and leasing services) and real estate, construction, and trade. If the European economy recovers well, is can be expected that FDI will grow thanks to favorable tax conditions (a 10% corporate tax) and a stable banking sector. The uncertain economic situation in 2010 made organizations cautious and even more cost cuts were implemented. Many reduced their IT budgets, which seriously hurt demand for IT services, as IT support and maintenance services were usually the first to be cut. Projects were limited in scope and were aimed at immediate return on investment (ROI). Service providers significantly lowered their margins and it is not likely that they will be able to return to the pre-crisis levels in the near future. With the decline in the domestic market, Bulgarian IT service providers looked for opportunities abroad. This helped Bulgarian IT companies weather the crisis and avoid layoffs. Many IT service providers became certified in ISO 27000, ITIL, and other benchmarks, which became critical for compliance with requirements imposed in many public tender procedures.
Trends in Services Procurement

In an attempt to compensate for the decline in revenues from hardware, software, and traditional services, systems integrators expanded their portfolios and repositioned themselves through specialization in key areas. Some integrators turned toward software consulting and implementation, while others specialized in IT security, or developed managed, hosted, and cloud services. With greater pressure from global technology and software vendors exploring direct sales models, we may expect to see more changes in integrators' strategies, further repositioning, and collaborations. Models for provisioning of services on demand matured. A number of hosting and independent datacenter providers introduced virtual servers, virtual storage, and other infrastructure as services. Some systems integrators successfully launched hosted application services, infrastructure as a service (IaaS), and managed services. Microsoft and its partners were very active in introducing software as a service (SaaS) options. SAP took some steps in that direction as well. It should be noted that despite the market being currently driven by the large enterprise segment, small and medium-sized businesses (SMBs) present significant growth potential, as they do not have the financial power to build and support their own IT infrastructure.
Acceptance of Outsourcing/Cloud Computing

Outsourcing and the cloud expanded slightly in terms of share, driven by the need for flexible scaling and timely provisioning of services. The bulk of businesses ran their core systems internally and turned to external suppliers to secure disaster recovery or resources for peak workloads. This outsourcing is motivated by the very low ROI of investments into system redundancy. On rare occasions, some large international companies outsourced their IT functions in order to improve the quality of service. The growing maturity of the market will further change users' perception. Fear of breaches in security continues to be the main concern among CIOs and an inhibitor to outsourcing. The cloud business model is still questioned in many respects, but the number of the CIOs that are willing to consider mixed in-house and outsourced IT service delivery models is growing.
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Sticking to the definition of the cloud services market as defined by IDC, it is not likely that many local service suppliers will introduce a pure public cloud model that features self-servicing. However, new hosting and managed services marketed as cloud services are likely to appear, which will continue to create confusion among IT users about what should be classified as cloud services.
Vertical Market Perspective

All vertical markets in Bulgaria recorded a decline of IT services spending in 2010. The government sector, traditionally significant for IT services, launched only a few large-scale projects. Moreover, about one-fourth of the spending in the central government vertical was due to one project that started in 2009. A very limited number of IT services providers benefited from the government sector, while the majority suffered from budget restrictions on the part of the government. In 2010, the telecom sector continued to look for a reduction to its operational costs by outsourcing IT operations and reducing IT staff. In the financial vertical, the extensive cost-saving measures imposed in 2009 were undone in 2010, but projects seem to be smaller in scope and are mostly implemented by internal IT staff. Deposits attracted by high interest rates make the Bulgarian banking sector stable, but the restrictions on the IT spending came from the central headquarters abroad. The overall performance of the manufacturing sector started to recover in the second half of 2010, but IT budgets were not influenced.
Competitive Landscape
In 2010, businesses did not see significant changes to the competitive landscape. The crisis froze the beginnings of consolidation in the Bulgarian IT business. Instead of expanding by acquisitions and mergers, service providers formed consortiums on a project-by-project basis. In an attempt to boost sales, major technology vendors tried to strength their partner networks by acquiring new partners. This approach had a positive effect, though not a very healthy one over the longer term, as the proliferation of the partners harmed the loyalty of traditional partners that looked for contracts with new vendors. The local offices of global technology vendors like SAP, Oracle, and Microsoft implemented global partner programs. While in general these programs were aimed at increasing the skills of partners and the quality of service, they also imposed tougher requirements on the local service providers and some refrained from investing in certificate renewal. The crisis hindered the activities of regional IT service providers, mainly Greek IT integrators, on the Bulgarian market.
Mergers and Acquisitions

The government did not privatize state-owned systems integrator Information Serivces as it previously intended. The vendor won only one of four calls for tenders for IT services that it had previously provided. However, in 2011 the Ministry of Finance abrogated the tenders and invited Information Services to resume its previous activities. It appears likely that Information Services will hold on to its position as the major supplier of IT services to the government. A group of Bulgarian banks that owned Borica and Bankservise, companies that provide electronic payment infrastructure and other banking systems, merged the two companies into a single entity. The merger will not substantially change the competitive landscape as the newly established Borica-Bankservice JSC will take
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over the functions of its predecessor and aims to provide increased efficiency and competitiveness.
Leading IT Services Vendors

In Table 1 below ranks the top IT services providers on the Bulgarian market by 2010 services revenue. IDC provides total IT services-related revenue when reporting figures for individual vendors. In other words, IDC does not subtract revenue delivered via third-party channels or through subsidiaries when reporting an individual vendor's revenue. This creates a discrepancy between the sum of revenue arrived at by adding an individual vendor's total IT services revenue (supply side) and the actual spending by end users (demand side). See the Revenue Recognition section for further details.
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TABLE 1
Overview of the Leading IT Services Companies in Bulgaria by IT Services Revenue, 2010
2010 Ranking 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Vendor Siemens IT Solutions and Services Information services HP Kontrax Printec Bulgaria IBM CNSys Bankservice Stemo Lirex Stone Computers Paraflow Musala Soft S&T Cisco Microsoft CAD Progress Bulmag Global Consulting Intracom Bulgaria Telelink ITCE KPMG Oracle Bull VBS EMC PWC New Horizons IBS Bulgaria Others Total Value (US$M) 12.30 12.08 9.19 9.19 8.81 7.10 6.72 5.91 5.72 5.20 4.86 4.14 2.46 2.37 2.32 2.02 1.94 1.44 1.39 1.19 1.16 0.89 0.88 0.74 0.74 0.74 0.70 0.68 0.66 0.59 24.34 138.48 Share (%) 8.9 8.7 6.6 6.6 6.4 5.1 4.9 4.3 4.1 3.8 3.5 3.0 1.8 1.7 1.7 1.5 1.4 1.0 1.0 0.9 0.8 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.2 17.8 100.0 2009 Ranking 10 4 5 2 n/a 3 6 14 8 7 16 9 11 15 n/a 17 12 18 19 13 1 20 n/a 21 n/a n/a n/a n/a n/a n/a
Notes: The total reflects total IT services revenue from the supply side, including offshore revenue and subcontracted revenue. Actual spending by end users from the demand side was $133.66 million. * Revenue estimated by IDC CEMA.
Source: IDC, 2011
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TABLE 2
Overview of the Top 10 IT Services Companies by IT Services Revenue Provisioned in Bulgaria, 2010
2010 Ranking 1 2 3 4 5 6 7 8 9 10 Vendor (US$M) Siemens IT Solutions and Services Information services HP Kontrax Printec Bulgaria IBM CNSys Bankservice Stemo Lirex Others Total Value (US$M) 12.30 12.08 9.19 9.19 8.81 7.10 6.72 5.91 5.72 5.20 56.26 138.48 Share (%) 8.9 8.7 6.6 6.6 6.4 5.1 4.9 4.3 4.1 3.8 40.6 100.0
Notes: The total reflects total IT services revenue from the supply side, excluding offshore revenue. * Revenue estimated by IDC CEMA.
Source: IDC, 2011
IT Environment
The IT market in Bulgaria contracted 1.7% year on year in 2010 to stand at $981.47 million. The hardware segment expanded 1.3%, while IT services and packaged software declined 15.5% and 1.1%, respectively, year on year. Hardware accounted for 70.6% of IT spending in the country, IT services for 13.6%, and software for the remaining 15.8%. The latest IDC data indicates the Bulgarian IT market will decline 4.6% year on year in 2011 to a value of $935.97 million. The Bulgarian market is forecast to expand at a compound annual growth rate (CAGR) of 6.6% over the five-year forecast period to reach $1.35 billion in 2015, with the strongest growth in the IT services segment.
Drivers
Economy Revival: The Bulgarian economy rebounded moderately in the second half of 2010, supported by a rise in demand in the eurozone and a slight recovery in domestic demand following the declines in 2009 and H1 2010. Business confidence remained low, influenced by factors like high fuel prices, the crisis in Greece, and inconsistent government policies. Government IT Spending: Government ICT policies in critical areas such as egovernment, ehealth, and ejustice have been severely underfinanced in the last two years. The priorities in the area of egovernance have been put in place and it is expected that government spending will resume at high rates in the second half of 2011.
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Progress in EU Funds Absorption: Accelerating the absorption of EU funds and preventing fraud is a priority for the government. This drives ICT spending for the development of systems for monitoring EU finances. FDI Inflow: With the global economic recession over, several foreign companies announced plans to make new investments or expand existing investments in Bulgaria. The government is trying to attract FDI with low taxes, low production costs, and a relatively cheap workforce. Bulgaria as an Outsourcing Destination. The growing importance of Bulgaria as business process outsourcing destination for global technology vendors like AVG, HP, IBM, SAP, Johnson Controls, as well as for service vendors, boosts the construction of new ICT infrastructure, call centers, helpdesk installations, and datacenters. The jobs created help lessen the impact of the country's brain drain.
Inhibitors
Economic Uncertainty: The Bulgarian economy was badly affected by the crisis in 2010 compared with other CEE countries, which either posted growth or saw only insignificant declines in GDP in 2010. Although the Bulgarian economy seems to have emerged from decline, the recovery is still slow and not robust throughout the economy. Public Procurement Still not Effective: Except for EU-funded tenders, the government canceled most of its IT projects. Besides the limited number of new tender announcements in 2010, the continuous changes in procurement legislation also had a negative effect on government IT spending. While intended to ensure a competitive environment in the procurement process, these changes still create room for abuse and corruption. For this reason, some high-quality suppliers and service providers do not submit tenders for government business because they see it as a waste of time. Inter-Company Liabilities: The tough economic climate caused solvency problems for many organizations. In addition, the government delayed many of its liabilities to companies in the private sector, which led to a contraction of financial resources in many organizations and delays in IT investments. Lack of Vertical Spending Diversity: The government, telecom, and finance industries are the leading IT spenders in Bulgaria, while other vertical markets lag far behind in terms of IT spending. The retail and utility sectors are also underpenetrated, but have limited potential compared with the government sector.
Overview of the IT Services Market by Foundation Market

This section of the study examines the IT services industry by IDC's 13 core segments, called foundation markets. These are mutually exclusive and all inclusive. Although the activities in these categories can potentially overlap, such as systems integration taking place as part of an IS outsourcing contract or software support bundled into a network and desktop management contract, IDC has reconciled overlaps by sizing each category by the primary way in which the service is procured. This technique ensures that the categories are mutually exclusive.
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FIGURE 3
Spending (US$M) on IT Services by IT Services Engagement Type in Bulgaria, 2010
Source: IDC, 2011
TABLE 3
Overview of IT Services Spending by IDC Foundation Market in Bulgaria, 2010
Value (US$M) Hardware Support and Installation Software Support and Installation Support and Installation Total IT Training and Education Total Network Consulting and Integration Systems Integration Systems Integration Total Information System Consulting Total Application Consulting and Customization Custom Application Development Custom Application Development Total Application Management Outsourcing Information System Outsourcing Network and Desktop Outsourcing Services Hosted Application Management Hosting Infrastructure Services Outsourcing Total Total
Source: IDC, 2011
Share (%) 27.6 8.4 36.0 4.1 5.6 26.3 31.9 3.6 7.5 5.7 13.2 1.7 2.5 2.3 3.0 1.7 11.2 100.0
Year-on-Year Growth (Value) -21.6% -37.6% -26.0% -2.6% -40.1% 1.8% -9.4% -35.6% -7.6% -12.7% -9.9% 1.8% -5.6% 45.3% 3.2% 45.4% 12.5% -15.5%
36.87 11.26 48.13 5.44 7.50 35.13 42.63 4.81 9.99 7.63 17.62 2.31 3.31 3.13 3.95 2.34 15.03 133.66
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Support and Training Services Macromarket

In 2010, spending in the support and training services macromarket in Bulgaria totaled $53.56 million, making it the second-largest macromarket in the country with 40.1% share.
FIGURE 4
Overview of the Leading Providers of the Support and Training Services Macromarket in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Hardware Support and Installation Services
Spending on the hardware support and installation services market in Bulgaria stood at $36.87 million in 2010, representing a year-on-year decrease of 21.6% and 27.6% share of the total IT services market.
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FIGURE 5
Hardware Support and Installation Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: Printec Bulgaria placed first in the hardware support and installation services market in Bulgaria in 2010 with revenue of $8.01 million and 20.7% share. The service revenue of Printec includes support services for ATM networks. HP ranked second in the hardware support and installation services market in Bulgaria in 2010 with revenue of $5.05 million and 13.1% share. Siemens IT Solutions and Services came third in the hardware support and installation services market in Bulgaria in 2010 with revenue of $2.89 million and 7.5% share.
TABLE 4
Total Supply-Side Revenue on the Hardware Support and Installation Foundation Market in Bulgaria, 2010
Value (US$M) Printec Bulgaria HP Siemens IT Solutions and Services Information services Stemo IBM CNSys Lirex Kontrax Bankservice Others Total 8.01 5.05 2.89 2.51 2.40 2.13 2.08 1.33 1.17 0.94 10.18 38.70 Share (%) 20.7 13.1 7.5 6.5 6.2 5.5 5.4 3.4 3.0 2.4 26.3 100.0
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TABLE 4
Total Supply-Side Revenue on the Hardware Support and Installation Foundation Market in Bulgaria, 2010
Value (US$M) Notes: The table reflects IT services revenue from the supply side minus offshore revenue. Actual spending by end users from the demand side was $36.87 million.
Source: IDC, 2011
Share (%)
Software Support and Installation Services
In 2010, expenditures on software support and installation services in Bulgaria decreased 37.6% year on year to $11.26 million, representing 8.4% of the IT services market in the country.
FIGURE 6
Software Support and Installation Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: CAD Progress placed first in the software support and installation services market in Bulgaria in 2010 with revenue of $1.46 million and 12.6% share. Bankservice ranked second in the software support and installation services market in Bulgaria in 2010 with revenue of $0.71 million and 6.2% share. Kontrax came third in the software support and installation services market in Bulgaria in 2010 with revenue of $0.67 million and 5.8% share.
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TABLE 5
Total Supply-Side Revenue on the Software Support and Installation Found ation Market in Bulgaria, 2010
Value (US$M) CAD Progress Bankservice Kontrax Microsoft IBM Stemo Printec Bulgaria VBS HP Global Consulting Others Total 1.46 0.71 0.67 0.61 0.53 0.51 0.51 0.47 0.46 0.44 5.15 11.53 Share (%) 12.6 6.2 5.8 5.3 4.6 4.5 4.4 4.1 4.0 3.9 44.7 100.0
Notes: The table reflects IT services revenue from the supply side minus offshore revenue. Actual spending by end users from the demand side was $11.26 million.
Source: IDC, 2011
IT Training and Education
Organizations in Bulgaria spent $5.44 million on IT training and education services in 2010, reflecting a year-on-year decrease of 2.6% and representing 4.1% of the IT services market.
FIGURE 7
IT Training and Education Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
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Key vendor developments in this category include the following: New Horizons placed top in the IT training and education services market in Bulgaria in 2010, with revenue of $0.66 million and 11.7% share. HP ranked second in the IT training and education services market in Bulgaria in 2010, with revenue of $0.55 million and 9.8% share. ITCE came third in the IT training and education services market in Bulgaria in 2010, with revenue of $0.46 million and 8.1% share.
TABLE 6
Total Supply-Side Revenue on the IT Training and Education Foundation Market in Bulgaria, 2010
Value (US$M) New Horizons HP ITCE Siemens IT Solutions and Services Information services Bulmag Microsoft Lirex Oracle IBM Others Total 0.66 0.55 0.46 0.46 0.40 0.26 0.24 0.23 0.22 0.18 1.98 5.64 Share (%) 11.7 9.8 8.1 8.1 7.1 4.6 4.3 4.1 4.0 3.1 35.1 100.0
Source: IDC, 2011
IDC Analysis of Support and Training Macromarket
In 2010, customers postponed hardware replacements and software upgrades, which seriously affected the support and training macro market and IT budget cuts imposed severe pressure on support and maintenance contracts. Many large customers either delayed contract renewals or reduced volumes by 2030% while keeping the same scope of services. Vendors and service providers saw a serious decline in revenues and tried to compensate by adding new services and repositioning themselves. Software support and installation services were affected by the limited number of new projects, cancelation of upgrades, and a lack of expired license renewals. Corporate IT departments were pressed to provide installation and support services internally. Implementations of IT asset management and license management software solutions increased as IT departments were forced to keep track of IT assets in order to increase the transparency of spending while reducing expenditures. IT training and education services declined at low rate, boosted by several EU-funded programs for development of human resources. End user organizations, as well as IT companies, benefited from the programs and invested in the qualification of their staff
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and professional certificates. The decline in demand for basic end-user trainings was partly compensated by the increased demand for specialized professional trainings. Demand for these services will increase in the next phase of EU funding as compliance requirements increase as well. The support and training macro market, together with integration services, were influenced most by the large project for the implementation of the biometric passport system. A contract for the installation and support of Microsoft OS and Office products in the state administration launched in 2007 prevented this macro market from declining even further.
Project Services Macromarket

The project services macromarket amounted to $65.06 million in Bulgaria, making it the largest macromarket in the country, with 48.7% share.
FIGURE 8
Overview of the Leading Providers of the Project Services Macromarket in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Network Consulting and Integration
The market for network consulting and integration services in Bulgaria totaled $7.50 million in 2010, reflecting a year-on-year decrease of 40.1% and accounting for 5.6% of the IT services market.
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FIGURE 9
Network Consulting and Integration Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: CNSys placed first in the network consulting and integration services market in Bulgaria in 2010, with revenue of $1.54 million and 18.4% share. Paraflow ranked second in the network consulting and integration services market in Bulgaria in 2010, with revenue of $1.33 million and 15.8% share. Cisco came third in the network consulting and integration services market in Bulgaria in 2010, with revenue of $1.28 million and 15.2% share.
TABLE 7
Total Supply-Side Revenue on the Network Consulting and Integration Foundation Market in Bulgaria, 2010
Value (US$M) CNSys Paraflow Cisco Lirex Stemo IBM Information Services Intracom Bulgaria Microsoft GMN Others Total 1.54 1.33 1.28 0.73 0.53 0.50 0.24 0.24 0.16 0.15 1.72 8.42 Share (%) 18.4 15.8 15.2 8.7 6.3 5.9 2.9 2.8 1.9 1.8 20.4 100.0
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TABLE 7
Total Supply-Side Revenue on the Network Consulting and Integration Foundation Market in Bulgaria, 2010
Value (US$M)
Source: IDC, 2011
Share (%)
Systems Integration
In 2010, the market for systems integration in Bulgaria increased 1.8% from 2009 to $35.13 million, representing 26.3% of the total IT services market in the country.
FIGURE 10
Systems Integration Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: Siemens IT Solutions and Services placed first in the systems integration services market in Bulgaria in 2010, with revenue of $7.16 million and 19.9% share. Kontrax ranked second in the systems integration services market in Bulgaria in 2010, with revenue of $7.12 million and 19.8% share. Stone Computers came third in the systems integration services market in Bulgaria in 2010, with revenue of $4.71 million and 13.1% share.
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TABLE 8
Total Supply-Side Revenue on the Systems Integration Market in Bulgaria, 2010
Value (US$M) Siemens IT Solutions and Services Kontrax Stone Computers CNSys HP Information Services S&T Paraflow IBM Stemo Others Total 7.16 7.12 4.71 2.03 2.02 1.97 1.54 1.18 0.99 0.97 6.35 36.05 Share (%) 19.9 19.8 13.1 5.6 5.6 5.5 4.3 3.3 2.8 2.7 17.6 100.0
Source: IDC, 2011
Information System Consulting
The information system consulting foundation market was valued at $4.81 million in Bulgaria in 2010, representing a year-on-year decrease of 35.6% and constituting 3.6% of the total IT services market.
FIGURE 11
Information System Consulting Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following:
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IBM placed first in the information system consulting services market in Bulgaria in 2010, with revenue of $0.78 million and 16.0% share. Information Services ranked second in the information system consulting services market in Bulgaria in 2010, with revenue of $0.48 million and 9.9% share. KPMG came third in the information system consulting services market in Bulgaria in 2010, with revenue of $0.42 million and 8.7% share.
TABLE 9
Total Supply-Side Revenue on the Information Sy stem Consulting Market in Bulgaria, 2010
Value (US$M) IBM Information Services KPMG ITCE Microsoft Musala Soft Lirex Stemo Oracle CNSys Others Total 0.78 0.48 0.42 0.38 0.32 0.32 0.31 0.20 0.19 0.18 1.29 4.88 Share (%) 16.0 9.9 8.7 7.7 6.6 6.6 6.4 4.1 3.8 3.7 26.5 100.0
Source: IDC, 2011
Application Consulting and Customization
Spending on application consulting and customization services in Bulgaria decreased 7.6% year on year in 2010 to $9.99 million, accounting for 7.5% share of the IT services market.
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FIGURE 12
Application Consulting and Customization Foundatio n Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: HP placed first in the application consulting and customization services market in Bulgaria in 2010, with revenue of $1.10 million and 10.6% share. Siemens IT Solutions and Services ranked second in the application consulting and customization services market in Bulgaria in 2010, with revenue of $0.92 million and 8.9% share. Bankservice came third in the application consulting and customization services market in Bulgaria in 2010, with revenue of $0.65 million and 6.2% share.
TABLE 10
Total Supply-Side Revenue on the Application Consulting and Customization Foundation Market in Bulgaria, 2010
Value (US$M) HP Siemens IT Solutions and Services Bankservice IBM Bull PWC Microsoft Stemo Information Services Paraflow Others Total Notes: 1.10 0.92 0.65 0.57 0.47 0.44 0.40 0.40 0.36 0.33 4.76 10.41 Share (%) 10.6 8.9 6.2 5.5 4.5 4.2 3.9 3.8 3.5 3.2 45.7 100.0
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TABLE 10
Total Supply-Side Revenue on the Application Consulting and Customization Foundation Market in Bulgaria, 2010
Value (US$M) The table reflects IT services revenue from the supply side minus offshore revenue. Actual spending by end users from the demand side was $9.99 million.
Source: IDC, 2011
Share (%)
Custom Application Development
In 2010, expenditure on custom application development services in Bulgaria decreased 12.7% year on year to $7.63 million, representing 5.7% share of the total IT services market.
FIGURE 13
Custom Application Development Foundation Market Vendor Shares in Bulgaria by IT Services Revenu e (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: Musala Soft placed first in the custom application development services market in Bulgaria in 2010, with revenue of $2.03 million and 26.3% share. Information Services ranked second in the custom application development services market in Bulgaria in 2010, with revenue of $1.43 million and 18.5% share. Stemo came third in the custom application development services market in Bulgaria in 2010, with revenue of $0.57 million and 7.4% share.
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TABLE 11
Total Supply-Side Revenue on the Custom Application Development Foundation Market in Bulgaria, 2010
Value (US$M) Musala Soft Information Services Stemo Global Consulting Interconsult Bulgaria Bankservice IBM Lirex Bull Printec Bulgaria Others Total 2.03 1.43 0.57 0.43 0.32 0.24 0.21 0.21 0.19 0.12 1.96 7.71 Share (%) 26.3 18.5 7.4 5.6 4.1 3.1 2.8 2.7 2.5 1.6 25.4 100.0
Source: IDC, 2011
IDC Analysis Project Services Macromarket
The project services macromarket was harmed by restrictions to IT investments in all verticals. The majority of the projects were small, with short implementation cycles, low risk, and fast ROI. The project services macromarket was driven by technology convergence and increased broadband speeds in the telecom sector; adoption of various IT security features in the finance sector; and high availability and disaster recovery initiatives in almost all verticals. Virtualization became normal in the large and very large business segment, but penetrated the SMB segment at lower rate than expected. The small scale of SMBs makes investments into virtualization rather ineffective and many companies in this segment prefer free versions of virtualization installations. Many software integration and software implementation projects were put on hold. Internal IT teams usually performed process reengineering and functional expansion of information systems, which is particularly true of large businesses with extensive ICT teams and resources. Aggressive price promotions, new licensing schemes, and reductions of services fees by software vendors and integrators managed to attract enterprise application software (EAS) and customer relationship management (CRM) clients from the SMB segment, but projects were restricted to the implementation of core functional modules. Funding through EU operational programs had a limited positive effect to the project services market. These projects drove spending in software installation and support, consulting, and software deployment services, but as whole their budgets were limited. Network consulting and integration services declined more than 40% year on year for a second consecutive year despite the private and public sectors continuing to develop network infrastructures. The government's priority is to integrate the two state-owned broadband networks, thus creating a highly reliable environment for the exchange of information between government entities. The project should be accomplished by the end of 2011.
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Outsourcing Macromarket
The outsourcing macromarket in Bulgaria achieved a value of $15.03 million in 2010, making it the third largest macromarket with 11.2% share.
FIGURE 14
Overview of the Leading Providers of the Outsourcing Services Macromarket in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Application Management Outsourcing
The market for application management services in Bulgaria totaled $2.31 million in 2010, reflecting a year-on-year increase of 1.8% and constituting 1.7% of the total IT services market.
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FIGURE 15
Application Management Outsourcing Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: Bankservice placed first in the application management services market in Bulgaria in 2010, with revenue of $0.91 million and 38.7% share. Information services ranked second in the application management services market in Bulgaria in 2010, with revenue of $0.77 million and 32.9% share. IBM came third in the application management services market in Bulgaria in 2010, with revenue of $0.28 million and 12.1% share.
TABLE 12
Total Supply-Side Revenue on the Application Management Outsourcing Foundation Market in Bulgaria, 2010
Value (US$M) Bankservice Information Services IBM S&T Cisco Lirex Others Total 0.91 0.77 0.28 0.09 0.09 0.05 0.14 2.35 Share (%) 38.7 32.9 12.1 4.0 4.0 2.2 6.0 100.0
Source: IDC, 2011
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Information System Outsourcing
In 2010, the information system outsourcing market in Bulgaria stood at $3.31 million, representing a year-on-year decrease of 5.6% and 2.5% of the IT services market.
FIGURE 16
Information System Outsourcing Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: Information services placed first in the information system outsourcing services market in Bulgaria in 2010, with revenue of $0.81 million and 24.5% share. IBM ranked second in the information system outsourcing services market in Bulgaria in 2010, with revenue of $0.28 million and 8.6% share. Lirex came third in the information system outsourcing services market in Bulgaria in 2010, with revenue of $0.26 million and 7.9% share.
TABLE 13
Total Supply-Side Revenue on the Information System Outsourcing Foundation Market in Bulgaria, 2010
Value (US$M) Information Services IBM Lirex Bankservice Paraflow Accenture Microsoft Xerox 0.81 0.28 0.26 0.18 0.17 0.12 0.12 0.10 Share (%) 24.5 8.6 7.9 5.4 5.0 3.7 3.7 3.0
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TABLE 13
Total Supply-Side Revenue on the Information System Outsourcing Foundation Market in Bulgaria, 2010
Value (US$M) IBS Bulagria Deloitte Others Total 0.01 0.00 1.26 3.31 Share (%) 0.4 0.0 38.0 100.0
Source: IDC, 2011
Network and Desktop Outsourcing Services
Organizations in Bulgaria invested $3.13 million into network and desktop outsourcing services in 2010, constituting a year-on-year increase of 45.3% and 2.3% of the IT services market.
FIGURE 17
Network and Desktop Outsourcing Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: Bankservice placed first in the network and desktop outsourcing services market in Bulgaria in 2010, with revenue of $1.03 million and 32.3% share. Information Services ranked second in the network and desktop outsourcing services market in Bulgaria in 2010, with revenue of $0.65 million and 20.4% share.
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Lirex came third in the network and desktop outsourcing services market in Bulgaria in 2010, with revenue of $0.31 million and 9.7% share.
TABLE 14
Total Supply-Side Revenue on the Network and Desktop Outsourcing Foundation Market in Bulgaria, 2010
Value (US$M) Bankservice Information Services Lirex Paraflow Kontrax IBM Cisco Telelink CNSys Others Total 1.03 0.65 0.31 0.25 0.18 0.14 0.14 0.10 0.08 0.30 3.20 Share (%) 32.3 20.4 9.7 7.8 5.7 4.4 4.3 3.3 2.5 9.5 100.0
Source: IDC, 2011
Hosted Application Management
In 2010, spending on hosted application management increased 3.2% year on year in Bulgaria to $3.95, representing 3.0% of the total IT services market.
FIGURE 18
Hosted Application Management Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
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Key vendor developments in this category include the following: Information Services placed first in the hosted application management services market in Bulgaria in 2010, with revenue of $1.96 million and 49.5% share. Bankservice ranked second in the hosted application management services market in Bulgaria in 2010, with revenue of $0.86 million and 21.7% share. Lirex came third in the hosted application management services market in Bulgaria in 2010, with revenue of $0.52 million and 13.2% share.
TABLE 15
Total Supply-Side Revenue on the Hosted Application Management Foundation Market in Bulgaria, 2010
Value (US$M) Information Services Bankservice Lirex IBM IBS Bulagria Others Total 1.96 0.86 0.52 0.36 0.03 0.24 3.95 Share (%) 49.5 21.7 13.2 9.0 0.7 6.0 100.0
Source: IDC, 2011
Hosting Infrastructure Services
Spending on hosting infrastructure services increased 45.4% year on year in Bulgaria to $2.34 million, constituting 1.8% of the total IT services market.
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FIGURE 19
Hosting Infrastructure Services Foundation Market Vendor Shares in Bulgaria by IT Services Revenue (US$M), 2010
Source: IDC, 2011
Key vendor developments in this category include the following: Siemens IT Solutions and Services placed first in the hosting infrastructure services market in Bulgaria in 2010, with revenue of $0.50 million and 21.6% share. Lirex ranked second in the hosting infrastructure services market in Bulgaria in 2010, with revenue of $0.42 million and 17.8% share. Bankservice came third in the hosting infrastructure services market in Bulgaria in 2010, with revenue of $0.30 million and 12.6% share.
TABLE 16
Total Supply-Side Revenue on the Hosting Infrastructure Services Foundation Market in Bulgaria, 2010
Value (US$M) Siemens IT Solutions and Services Lirex Bankservice Information Services IBM Others Total 0.50 0.42 0.30 0.25 0.14 0.73 2.34 Share (%) 21.6 17.8 12.6 10.9 6.1 31.0 100.0
Source: IDC, 2011
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IDC Analysis of the Outsourcing Services Macromarket
The outsourcing services macromarket was the only macromarket that registered positive growth in 2010. User resistance to outsourcing is declining gradually in Bulgaria as a result of pressure to lower operational costs and provide a better quality of service. Outsourcing clients become organizations that have low ICT capacity in terms of IT staff and skills, regardless of the size of the business and vertical. Generally, mid-sized enterprises' IT needs exceed their capacity to invest. SMBs in Bulgaria represent more than 70% of businesses, but despite this figure, the largest share of outsourcing spending came from the large and very large business segments. Core IT systems outsourcing projects were few and mainly took place after a crisis within an organization or as a result of centralized contracts. Companies mostly sought reliability and constant availability options. Among the enterprises that outsourced the management of their core systems in 2010 were Sofiiska Voda (utility), Lev Ins (insurance), Speedy (logistics), and Panda (retail). High datacenter operating costs is another reason for outsourcing IT systems to third-parties in Bulgaria. The transfer of risks from within the organization to an external supplier, including the risks of security breaches was also an important consideration. Other problems addressed by outsourcing were the need for a reduction in IT equipment inline with a reduction of in the businesses' volumes. A significant push to the growth of the local outsourcing market came from regional or global outsourcing contracts. One of the largest deals was the IT infrastructure management outsourcing contract for E.ON by HP in 2010, which is expected to be followed by outscoring of applications and business processes. Alcatel-Lucent also won a contract to develop Vivacom's fixed and mobile network.
Overview of the Information Technology Services Market by Vendor Category

The Services Landscape
In addition to foundation markets, IDC defines the Bulgarian services market by the categories that reflect the heritage and primary activities of the vendors. While many vendors operate successfully within many, if not all categories, providing some form of delineation by vendor type enables a better understanding of the dynamics and trends within the country's fast-evolving IT services industry. Figure 20 below illustrates the competitive landscape of the IT services industry in Bulgaria by vendor category. The following types of firm were contacted and surveyed for this study: systems integrators (e.g., Siemens Business Solutions, Kontrax, CNSys), technology vendors (e.g., HP, IBM, and Sun Microsystems), consulting firms (e.g., PWC and KPMG), independent software vendors (e.g., Microsoft, SAP, and Oracle), indirect channel partners (e.g., IBS, Primasoft), outsourcers and data centers providers (e.g., Lirex, Daticum, Teleink), offshore outsourcers (Cognizant, Wipro, and Tata Consultancy Services), and telecommunications service providers (Mobiltel, Vivacom, Globul, Blizoo) .
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FIGURE 20
IT Services Revenue Share by Vendor Category in Bulgaria, 2010
Source: IDC, 2011
Overview of IT Services Spending by Vertical Market

Combined government was the largest vertical market in Bulgaria in 2010 with $41.78 million in services-related spending and 31.3% market share. The combined finance vertical placed second with 22.2% share from IT services investments of $29.62 million. Telecommunications ranked as the third-largest vertical market in 2010 with IT services investment of $20.78 million and 15.5% market share. Combined manufacturing was the fourth-largest market in the country, accounting for $10.18 million in IT services revenue and 7.6% market share.
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FIGURE 21
Overview of IT Services Spending by Vertical Market in Bulgaria, 2010
Source: IDC, 2011
Government Sector
In 2010, the combined government sector in Bulgaria accounted for $41.16 million in IT services spending, thus constituting 32.1% of the total IT services market in the country. The leading provider of IT services to this industry last year was Information Services with revenue of $10.56 million, followed by Siemens IT Solutions and Services with revenue of $9.22 million. Rounding out the top five players in this sector in 2010 were Kontrax, CNSys, and CAD Progress. IT spending in the government sector was reduced to a bare minimum for two consecutive years and most of the spending was associated with the launch of systems, arising from the country's membership in the EU and entering the Shengen area. These include the decentralized automated information system project for Bulgarian identity documents; several projects in connection with the accession of Bulgaria to the Shengen area; the development of a system for management of traffic on the Danube River (BULRIS); and a project for the creation of a GIS metadata model. These projects raised IT services spending for installation and support and integration services, leading to the government becoming the largest consumer of IT services in 2010. The demand for software and customization services and consulting services was limited due to the low number of new projects. The long-awaited egovernment portal has been launched, but the services accessible through it had been developed in previous years. The next stages will involve more software-related and consulting services to introduce new eservices and improve interoperability of the egovernment portal. Other priorities are in the area of cyber security and development of frameworks for municipal IT systems. In 2010, the government announced its intention to privatize state-owned company Information Services and ran tender proceedings for the support of a central information system previously provided by Information Services. Despite the fact that consortiums of private companies won three of the four tenders, the outsourced IT services were never transferred from Information Services to the winners. In 2011, the Ministry of Finance abrogated the tenders and invited Information Services to
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resume its previous activities. It appears likely that Information Services will hold on to its position as the major supplier of IT services to the government.
Financial Sector
In 2010, the combined finance sector in Bulgaria accounted for $29.67 million in IT services spending, constituting 23.1% of the total IT services market in the country. The leading provider of IT services to this industry last year was Printec Bulgaria with revenue of $8.80 million, followed by Broica-Bankservice with revenue of $5.50 million. Rounding out the top five players in this sector in 2010 were Stone Computers, HP, and Kontrax. Printec's revenue includes services supporting ATMs. The banking sector in Bulgaria remained profitable, despite the decreasing volume of the credits. However, IT investments continued to be limited. Leasing and insurance companies saw a serious decline in the volume of their business, leading to a steep drop in investments. The crisis also caused some smaller financial services companies to close their doors. Projects in the financial sector varied greatly. Many of these projects targeted increased information security and IT system availability. Consolidation and virtualization initiatives and projects to improve storage manageability drove spending in network consulting and integration services. The banking sector is traditionally among the largest consumers of hardware and software support and installation services that are outsourced to national system. Companies in the finance vertical run internal the core systems, but compliance issues force the outsourcing of disaster recovery sites to third-party datacenters. Banking companies maintain extensive qualified IT staffs and do not use consulting services to a great extent as they must adopt the practices and IT solutions run by their international headquarters. Raiffeizen Bank commissioned IBM for an extensive consulting project in 2010 that included redesigning business processes and implement an IT infrastructure library (ITIL). Companies in the finance vertical also addressed issues such as mobile payments, online banking, client portals, accession to the Single Euro Payments Area (SEPA) standard, and fraud prevention. Business analytics (BA) upgrades and development and CRM projects were also commissioned. One of the largest ongoing projects is the internal development of a CRM system at Unicredit Bulbank. Some insurance companies also introduced client eportals and different eservices. IT investments in the insurance sector were led by fraud-reduction measures and by preparation for adoption of e-insurance in 2011. The information systems of the Traffic Police and the Guarantee Fund started to exchange information, allowing easier fraud detection. The Guarantee Fund was established to enable injured persons to get compensation under Motor Third Party Liability Insurance /MTPL/ and accident insurance for public transport passengers. The serious indebtedness of businesses and little access to credit boosted the development of factoring services. The establishment of series of factoring companies raised the demand for implementation services for specific software and communication solutions. Changes in the legal environment boosted the development of e-insurance systems, but the implementations will come in 2011.
Telecommunications
The telecommunications market in Bulgaria is highly competitive and it is in the process of consolidation and technological renewal. Mobile operators strengthened their 3G networks trying to take advantage of growing demand for mobile data and
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compensate the declining revenues from voice services. Fixed operators increased network coverage and invested in higher bandwidths. Many built optic backbones and some provided fiber to the home. Both fixed and mobile operators invested into digital TV, digital video, telepresence, content services, and other over the top services. The telecommunication vertical was the largest IT spender for many years and a consumer of almost all types of IT services. However, telecoms faced declining revenues from their core services and focused on reducing operational costs in 2010. These measures, as well as the completion of several large projects and the cancellation of others led to a significant reduction in the volume of contracts for IT services. The fall in IT spending was also due to acquisitions and consolidation, as telcos halted investments while waiting for regulatory approval. The top three telecommunication providers revised their IT budgets, restructured IT operations, and outsourced some IT activities to external suppliers. Incumbent BTC outsourced the expansion and operational management of its fixed and mobile network to Alcatel-Lucent. About 3,000 employees were reallocated from the telco to the service provider. As far as the outsourced processes are not considered IT services by IDC, the deal had only a partial impact on the volume of the IT services market. Vivacom outsourced to HP the consolidation of its various networks and the management of all services including data, messaging, and voice in real time, as well as prepaid billing. Mobiltel also announced the outsourcing of expansion and support of its mobile network to the system integrator and 60 Mobitel employees moved to Telelink. Telcos were forced to invest into integration, management platforms, and improved billing solutions. Mobiltel also invested heavily into CRM, implementing Amdocs CES 7.5. The project caused significant problems with billing and significantly exceeded the initial implementation deadline.
Combined Manufacturing
The manufacturing sector in Bulgaria was seriously hit by the decline in exports to Europe and the slump in internal demand. In the autumn of 2010, the revitalization of demand in Europe drove growth in some manufacturing subsectors, but IT spending remained at very low levels. The sector is not homogeneous in regard to the need of IT services, as it is comprised of a small number of large and very large businesses and high number of SMBs; both categories greatly differ in regard to the maturity of IT systems and IT service needs. Large companies invested significantly into their IT infrastructure and business software in the pre-crisis years and in 2010 concentrated on better utilization of existing resources. Alongside with consolidation and server virtualization, large businesses strengthened the resilience of IT systems and put in place industry-specific software systems, which helps support compliance with industry standards. The penetration of EAS systems in large and very large manufacturing companies is high. Many of the installations are expanding functions with advanced capabilities like production planning and management, budgeting, supply chain management, and analytics. However, investments into EAS software and deployment services saw a sharp decline in 2010. New projects were few and far between and expansions were mainly performed by internal IT teams. Several business intelligence (BI) projects were launched. Manufacturing SMBs in Bulgaria have low ICT capacity and use different external suppliers to support their IT functions, with some outsourcing IT processes and using managed services, infrastructure as a service (IaaS) and software as a service (SaaS), thus lowering IT costs. Attracted by aggressive price promotions from EAS vendors and their partners and funding opportunities under EU development programs, a number of manufacture
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SMBs launched EAS projects. Despite this, demand for services was limited, as many installations remained limited in scope.
TABLE 17
Overview of IT Services Spending by Vertical Market in Bulgaria,
Value (US$M) Agriculture, Construction, and Mining Discrete Manufacturing Process Manufacturing Transportation Telecommunications Broadcasting and Media Utilities Retail Wholesale Banking Insurance Financial Services Business Services Local Government Central Government Healthcare Education Home Other Total Combined Finance Combined Manufacturing Combined Government
Source: IDC, 2011
2010
Share (%) 1.4 3.2 4.4 1.1 15.5 0.5 4.7 4.4 1.1 19.3 1.6 1.3 4.4 3.5 27.8 2.2 2.0 0.2 1.4 100.0 22.2 7.6 31.3
1.89 4.24 5.95 1.51 20.78 0.69 6.23 5.91 1.46 25.75 2.18 1.69 5.91 4.65 37.13 2.91 2.64 0.33 1.84 133.66 29.62 10.18 41.78
FUTURE OUTLOOK
Forecast and Assumptions
Table 18 below outlines the general set of assumptions that affect the IT services market in Bulgaria and provides guidance to future trends and developments within the IT services industry.
TABLE 18
Top 3 Assumptions for the IT Services Market, 2011 2015
Market Force IDC Assumption Significance Changes to This Assumption That Could Affect Current Forecast Comment
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TABLE 18
Top 3 Assumptions for the IT Services Market, 2011 2015
Market Force IDC Assumption Significance Changes to This Assumption That Could Affect Current Forecast Slow economic reforms and an inconsistent budget policy may further delay the economic recovery. Experts are warning against a "W"shaped recession. The government sector may not be effective in setting priorities and policies. That will continue to postpone investments into eservices and IT infrastructure. Comment
GDP Growth
GDP is expected to grow 2.8% in 2011, far ahead of the average annual growth of 3.7% forecasted for the period 20122015
The recovery of the IT market is directly dependent on the overall economic recovery.
As a result of inconsistent fiscal strategy, it is very difficult to forecast a recovery in FDI and domestic demand.
Government Spending on IT
The government has committed itself to substantial IT investments over the medium to long term.
Government spending on IT services has always represented a large share of the market and its restoration will significantly drive the market.
IT investments have already seen several delays in public procurements and unsuccessful attempts addressing critical areas like low public procurement, the creation of a competitive environment, and the introduction of strategies that are financially sound. Even a partial improvement in the absorption of EU funds could directly and indirectly speed up national ICT development and ICT spending.
EU Funds
The absorption of EU funds will accelerate.
Bulgarias has absorbed only 2.6% of the allocated $8.4 billion in EU funds for 20072013.
The elections for local government and president in Q4 of 2012 may cause a further slowdown in administration and changes to priorities.
Source: IDC, 2011
Table 19 below outlines the general assumptions that affect the IT services market in Bulgaria and provides guidance on future trends and developments within the IT services industry.
TABLE 19
Key Forecast Assumptions for the IT Services Market, in 2010, 20112015
Market Force IDC Assumption Impact Accelerator/ Inhibitor/ Neutral Certainty of Assumption
Macroeconomics
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TABLE 19
GDP Growth
GDP is expected to grow 2.8% in 2011, far ahead of the average annual growth of 3.7% forecasted for the period 20122015 The absorption of EU funds will accelerate.
High. The low economic growth results in less demand for products and services, including IT and project delays. High. Higher absorption of EU funding will increase demand for ICT as implementations of new technologies, standards, and best practices are directly financed by the operational programs. High. Low FDI inflow harms the economy's potential for growths and indirectly affects the ICT market. Moderate. Elections will cause a slowdown in local government spending in the short term and delays in regional projects. However, the government, criticized for its inefficiency and slow reforms, will try to improve its reputation by not delaying further ICT projects financed by the EU.
EU Funding
Foreign Direct Investment
FDI will remain low in 2011 and gradual recovery to the end of forecast period. The local government elections for in October 2011 will affect the performance of the local administration
Political Situation
Market Characteristics Globalization of IT Functions Multinational companies are centralizing IT functions Moderate. Bulgaria may benefit from infrastructurerelated international consolidation projects, as the country offers low electricity prices, space in datacenters, rents, and a skilled workforce. IT functions mat also be outsourced globally, thus reducing the demand for IT services. High. Suppliers will be pressed to provide services at relatively low margins for some more time. They will need to reconsider their portfolios and will invest in efficient service delivery. New delivery models and services will appear. Some suppliers will bankrupt. Low. The crisis will delay the regional expansion of some Greek businesses and will continue to affect the IT spending of Greek banks in Bulgaria. The growth potential
Internal IT Budgets
Internal IT budgets will continue to be closely monitored.
Neighboring States Economies
The crisis in Greece will continue to negatively affect the Bulgarian economy, mainly by lowering demand for Bulgarian exports. On the other hand, investments could
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TABLE 19
come from Greece, as businesses may move to Bulgaria. Government Spending on IT Bulgaria is lagging behind other SEE countries in the area of egovernance and the government will try to show progress before parliamentary elections in 2012.
of Greek IT suppliers that operate regionally will be harmed as well. Moderate. Large projects will be launched, but it is not clear if the government will create the conditions for their timely implementation, sustainability, and quality control.
Business Environment
The cloud, as well as other outsourcing service models, will be more widely adopted.
Moderate. Pressed by the need for quality IT services, SMBs will adopt outsourcing. New IT players will enter the market, including telcos, and new business models will emerge. Traditional integrators and vendor partners will suffer from price pressures. Low. Labor costs will stay stable as the market is not struggling from a lack of IT specialists, but it will remain difficult to hire project managers. Moderate. Software support and installation and application customization services will be the most affected by access to EU funds. A positive impact on spending might be expected in Q4 2012 and beyond.
Labor Market
The demand for qualified IT staff with managerial skills will remain high.
EU Financing for the Implementation of Business Software
The launch of a government program for financing of business software implementations via EU funds will postpone investments in business software in 2011, as many companies apply for financing and wait for approval before launching project implementation activities.
Technology/ Service Developments Support Services Support services will suffer from a decline in hardware and software sales, but will return to moderate growth in 2012 and that growth will continue over the forecast period. High. The pressure on vendors to provide more services for the price will continue and It will be difficult for vendors to keep their margins, which have already been cut. They will look to optimize their operations by seeking new partners, implementation of technologies, and change in delivery models. Low. This segment is likely to see a slight decline in 2011 due to low numbers of new IT implementations. It will grow in
Training Services
IT training services were hit hard by priority reevaluations stemming from the crisis, but this was mitigated by EU
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TABLE 19
funding for HR programs, which will continue in the future.
the coming years. Furthermore, businesses are lowering spending pm trainings in expectation of the next round of grants form the EU-financed HR development program. High. Integration services will experience slight growth over the short term, but will perform well in the medium to long term. The increasing complexity of IT solutions, together with need for better integration between systems will increase demand for services from highly-skilled external suppliers. High. Most likely, the market will see a decline in 2011 and will revive in 2012. In the short to medium term, the demand for customization services will remain strong in Bulgaria as users adopt new solutions to achieve business goals. Low. The demand for outsourcing services will increase at high rate, as these services are underpenetrated in Bulgaria and have significant potential. Moderate. As the role of IT for the support of business processes is continuously growing, the demand for consulting services will increase once the economy recovers. Moderate. Many companies in the manufacturing sector, in particular SMBs, lack IT competences and will continue to consume integration, software customization and development, consulting, and other services. High. Telecoms will slow investments into their networks and IT infrastructures in long term and will spend more on integration, consulting, and software customization. It is expected that telcos will
Integration Services
Growth in the integration services market should resume as both the public sector and private enterprises continue to invest in infrastructure. However, growth will be at a significantly lower rate than in the years prior to the crisis.
Customization Services
Businesses will continue to seek better alignment of IT with business needs.
Outsourcing Services
Outsourcing is no longer viewed solely as cost cutting, but as an opportunity for the delivery of better services to clients. The demand for IS consulting services is driven by complex projects in the government sector and large enterprise segment.
Consulting Services
Vertical Markets Manufacturing Manufacturing will be boosted by increased demand from the EU and will resume investments into IT and business applications.
Telecoms
Telecoms will remain intense users of IT services as the sector is under pressure, both from regulations and from the competition. Declining revenues from voice service behoove the companies to
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TABLE 19
seek additional sources by developing new services. Public Sector The public sector will resume investments into egovernment and ehealth. The projects will be carefully monitored for being in line with the initial targets and requirements. The financial sector in Bulgaria will continue to be stable and profitable, despite the crisis in Greece and the fact that many of the banks in Bulgaria are Greek-owned.
increase their significance as a provider of IT and business services. High. Government spending on IT will be at lower rate than before the crisis
Finance
Moderate. The banking sector will continue to invest in IT systems for improved security, risk management and better client relations. New regulations, like BASEL III, will drive further IT spending in the medium term.
Legend: very low, low, moderate, high, very high

Source: IDC, 2010
Spending on IT services will continue to grow in Bulgaria over the forecast period, boosted by egovernment and other public sector initiatives, competition in the finance and telecommunications sectors, and expected long-term transformations in sectors like transportation, manufacturing, and utilities. It is expected that the Bulgarian IT services market will expand slightly in 2011. The growth in the near term will be driven by the need for better utilization of existing systems and improved alignment of IT with business needs. The rise in the demand for exports in manufacturing, the growing maturity of IT in the financial sector, transformations in telecoms, and the restoration of demand in government sector will fuel the market for IT services, but significant inter-company liabilities, rising unemployment and a slow-down in growth of the eurozone will continue to hamper the launch of new projects. The economic situation is expected to improve in 2012 and spending on IT services will grow in almost all segments. Some fluctuations in growth rates in services categories during the forecast period (i.e. application consulting and customization, custom software development, IT training and education) are related to the expected allocation of EU funds. When credit is scares, the importance of EU funds grows and may lead to tangible slowdowns in anticipation of project approval. IDC expects spending on IT services in Bulgaria to increase 0.6% year on year in 2011 and to expand at a CAGR of 6.9% over the five-year forecast period to total $187.01 million in 2015.
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TABLE 20
Forecast and Analysis of IT Services Spending (US$M) by IDC Foundation Market in Bulgaria, 2010 2015
2010 2011 2012 2013 2014 2015 CAGR 2010 2015 4.2% 9.3% 5.5% 6.6% 8.4% 5.8% 6.3% 7.1% 8.7% 7.3% 8.1% 9.1% 13.0% 8.7% 11.8% 14.4% 11.5% 6.9%
Hardware Support and Installation Software Support and Installation Support and Installation Total IT Training and Education Total Network Consulting and Integration Systems Integration Systems Integration Total Information System Consulting Total Application Consulting and Customization Custom Application Development Custom Application Development Total Application Management Outsourcing Information System Outsourcing Network and Desktop Outsourcing Services Hosted Application Management Hosting Infrastructure Services Outsourcing Total Total
Source: IDC, 2011
36.87 11.26 48.13 5.44 7.50 35.13 42.63 4.81 9.99 7.63 17.62 2.31 3.31 3.13 3.95 2.34 15.03 133.66
36.50 10.92 47.42 5.60 7.76 35.62 43.39 4.96 9.59 7.17 16.76 2.44 3.67 3.27 4.23 2.74 16.36 134.48
38.36 11.74 50.10 5.99 8.24 37.44 45.68 5.35 11.90 8.03 19.93 2.64 4.09 3.46 4.65 3.04 17.90 144.96
40.51 13.09 53.60 6.65 9.01 39.99 49.00 5.68 13.21 9.21 22.42 2.88 4.62 3.74 5.23 3.45 19.91 157.26
42.86 15.25 58.11 7.02 10.02 42.90 52.92 6.14 14.03 10.07 24.10 3.19 5.29 4.19 5.98 3.96 22.62 170.91
45.39 17.57 62.96 7.49 11.23 46.64 57.87 6.77 15.18 10.87 26.06 3.56 6.10 4.74 6.89 4.58 25.87 187.01
FIGURE 22
Forecast of IT Services Spending (US$M) by IDC Engagement Type in Bulgaria, 20102015
Source: IDC, 2011
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Forecast by IDC Engagement Type

Hardware Support and Installation Services
The hardware support and installation services market in Bulgaria stood at $34.52 million in 2010, representing a year-on-year decline of 26.6% and 26.9% share of the total IT services market. Spending on hardware support and installation will decrease 1.0% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 4.2% to total $45.39 million in 2015, representing 2.,3% of the country's IT services market, as compared with $36.87 million and 27.6% share in 2010. In 2011, support and installation service contracts will probably remain on 2010 levels. The category will follow the hardware market, but at a slower pace than predicted earlier as pressure on margins will remain. The managed services market has growth potential, as it is underdeveloped in Bulgaria, but its share will remain relatively small in the forecast period.
Software Support and Installation Services

Spending on software support and installation will decrease 3.0% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 9.3% to total $17.57 million in 2015, representing 9.4% of the country's IT services market, as compared with $11.26 million and 8.4% share in 2010. The software support and installation services category has already seen a serious decline in 2010 and will be harmed by further delays of software upgrades and new projects in 2011. The pressure on budgets force corporate IT teams to keep software support services as internal as possible. The expected launch of projects by the government in the autumn of 2011 will have a slight influence to the market. Acceleration in growth is expected in 2012 or 2013, depending on when projects under the EU's Competitiveness operational program will be approved.
IT Training and Education

Spending on IT training and education will increase 3.0% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 6.6% to total $7.49 million in 2015, representing 4.0% share of the country's IT services market, as compared with $5.44 million and 4.1% share in 2010. The rising complexity of the IT environment raises the need for the training and education of staff. In 2011, the possibility of receiving funds from the operational program Human resource development will positively influence the category. Steady growth may be seen after 2012, after spending for training of end users is restored. Over the longer term, demand for highly professional training and certifications will accelerate in order to meet compliance and technology requirements.
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FIGURE 23
Forecast of IT Services Spending (US$M) by IDC Engagement Type in Bulgaria, 20102015
Source: IDC, 2011

Spending on network consulting and integration will increase 3.5% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 8.4% to total $11.23 million in 2015, representing 6.0% of the country's IT services market, as compared with $7.50 million and 5.6% share in 2010. The continuing expansion and renovation of telecom networks; the introduction of high bandwidth services like digital video and digital TV; government initiatives; emerging third-party datacenters; the development of the country as outsourcing destination; and the relatively low penetration of broadband Internet are factors that will drive growth over the entire forecast period. Virtualization and cloud adoption will support the growth of network consulting and integration as well.
Systems Integration
Spending on systems integration will increase 1.4% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 5.8% to total $46.64 million in 2015, representing 24.9% share of the country's IT services market, as compared with $35.13 million and 26.3% share in 2010. Due to immaturity of the Bulgarian market, there are many hardware infrastructure projects and the demand for system integration services will remain high in the forecast period. Consolidation and later virtualization are expected to accelerate in the large and very large business segment. The SMB segment lags behind and still purchase low-volume standalone servers. Both segments will continue to add storage
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capacities and implement various data management features like tiering, thin provisioning, and de-duplication. The convergence of technologies, the need for better utilization of IT investments, and the need of interoperability between the systems will contribute to the stable performance of the integration services category. It seems that the adoption of mobility will not be significant driver for integration services in the corporate segment during the forecasted period. Demand will rather come from telcos that target the consumer segment.
Information System Consulting

Spending on information system consulting will increase 3.0% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 7.1% to total $6.77 million in 2015, representing 3.6% share of the country's IT services market, as compared with $4.81 million and 3.6% share in 2010. The demand for consulting services is expected to rise gradually in all verticals, but the sharp growth in 20122014 is expected to come from large projects commissioned by traditional consumers of consulting services like the government, telecoms, and the transportation sector. Demand for IT consulting services from the utility sector is hardly predictable and will depend on further privatization and liberalization. Also the transition to private and public cloud is expected to increase demand for IT consulting. Consulting services will probably be strongly influenced by the end of the EU accession programs in 2013, when new mechanisms for fundabsobtion and changes in funded areas will be implemented.

Spending on application consulting and customization will decrease 4.0% year on year in 2011 due to the slowdown of the IT market due to overall economic situation and the postponement of projects while awaiting decisions about grants from the Competitiveness operational program in 2012. Through 2015, this foundation market will expand at a CAGR of 8.7% to total $15.18 million in 2015, representing 8.1% share of the country's IT services market, as compared with $9.99 million and 7.5% share in 2010. The application consulting and implementation market has significant potential for growth due to low penetration of complex business management systems like EAS, CRM, and enterprise relationship management (ERM) in the SMB segment in Bulgaria; needs for functional expansion of the existing EAS installations in large corporate segment; and low penetration of CRM and analytic systems in large businesses. The need for better integration of all corporate systems is another important issue that will continue to boost the segment.

Spending on custom application development will decrease 6.0% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 7.3% to total $10.87 million in 2015, representing 5.8% share of the country's IT services market, as compared with $7.63 million and 5.7% share in 2010. Custom application development services are very dependent on the availability of new projects. That is why a slight recovery in demand may be expected in mid-2012. Custom application development services see lower demand from the private sector as clients seek shorter implementation times and less risk by implementing predefined packaged solutions. In the near term, custom application development
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services will be fueled by integration, reporting, and interoperability needs in the corporate segment.
FIGURE 24
Forecast of Relative Shares (%) by IDC Engagement Type in Bulgaria, 20102015
Source: IDC, 2011
Information Systems Outsourcing

The information system outsourcing foundation market will increase 11.0% year on year in 2011. Over the 20102015 forecast period, this foundation market will expand at a CAGR of 13.0%. Annual spending will total $6.10 million in 2015 to account for a 3.3% share of the total IT services market in the country, as compared with $3.31 million and 2.5% share in 2010. The demand for outsourcing services will continue to rise, but the share of the segment on the IT services market will remain low, as the majority of the companies in Bulgaria are not ready to outsource their business processes entirely. The attitude toward outsourcing is changing. Companies will increasingly seek availability services, as the ROI in IT infrastructure is very high. Outsourcing is already seen as an opportunity for risk reduction and better quality of service. Promotions of cloud computing by vendors contribute to changes in the attitudes of companies. The outlook for outsourcing may be even more optimistic if state agencies outsource their IT operations, but there are no signs that this is on the horizon.

The network and desktop outsourcing services foundation market will increase 4.5% year on year in 2011. Over the 20112015 forecast period, this foundation market will expand at a CAGR of 8.7%. Annual spending will total $4.74 million in 2015 to make
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up 2.5% share of the total IT services market in the country, as compared with $3.13 million and 2.3% share in 2010. The desktop outsourcing services market will follow the recovery of the hardware market. It became clear by Q3 2011, that such a recovery may not be expected until 2012. Network outsourcing on the other hand has serious cost saving potential and is considered by companies whose ITC needs exceed the volume of what they are able to investment. IDC forecasts this market will continue to witness positive momentum in Bulgaria during the forecast period.
Application Management
Spending on application management will increase 6.0% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 9.1% to total $3.56 million in 2015, representing 1.9% share of the country's IT services market, as compared with $2.31 million and 1.7% share in 2010. The application management services market follows the increasing penetration of business software solutions and the growing role of service providers, vendors, and integrators in the monitoring and management of a clients systems. The transfer of application management to external vendors from the companies themselves will accelerate, but this share will remain very small during the forecast period.

The hosted application management (HAM) foundation market will increase 7.0% year on year in 2011. Through 2015, this foundation market will expand at a CAGR of 11.8%, which is faster than the overall IT services market, but its market share will remain modest. Annual spending will total $6.89 million in 2015 to constitute 3.7% share of the country's total IT services market, as compared with $3.95 million and 3.0% share in 2010. The largest portion of revenue in the category in 2010 came from the banking sector, where banks operate a common specific system from integrator Borica-Bankservice, and by the government sector, where application hosting is outsourced to Information Systems. Only a few large private businesses use the HAM model for core systems (i.e. insurance company LevIns), and despite the increased readiness of the suppliers to deliver high quality services, outsourcing critical applications still needs to prove its worth to many large businesses. On the other hand, many SMBs are not ready to pay fees for high-quality service, even being aware of the benefits. It is likely that they will prefer switching directly to cloud services, due to potentially more affordable pricing.
Hosting Infrastructure Service Providers

The hosting infrastructure services (HIS) foundation market will increase 17.4% year on year in 2011. Over the 20102015 forecast period, this foundation market will expand at a CAGR of 14.4%. Annual spending will total $4.58 million in 2015 to make up 2.4% share of the total IT services market in the country, as compared with $2.34 million and 1.7% share in 2010. The market will be driven by needs for increased IT system reliability, faster restoration of operations after crashes, and lower time to market for innovative services. It is expected that new providers will enter the market. Pure HIS players will collaborate with ISVs, content suppliers and other business service suppliers to increase the client base.
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FIGURE 25
Forecast of Relative Shares (%) by IDC Engagement Type in Bulgaria, 20102015
Source: IDC, 2011
Market Context
IDC's current 20112015 forecast of the Bulgaria IT services market differs from the 20102014 forecast published in last year's study of this market. The forecast has been decreased due to the following factors: Economic Recession: In 2010, the Bulgarian economy did not achieve the predicted economic growth of 0.5%, and 2011's expected 2.8% growth will also not happen. The future of important national projects in energy, waste treatment, and construction is not clear. As a result, IDC has reduced its forecast for IT services revenue in 2011. IT service spending is more resilient to short-term changes in the economy and will return to growth once the economy recovers. Access to Financing: Corporate debt, as well as government debt, continues to be high and businesses struggle with cash-flow issues and limited access to credit. Demand from abroad is not enough to boost internal demand. Unpredictable Schedules for Government Projects: The initial plan called for the launch of egovernment projects in September 2011. However, only some tenders may be launched in late 2011, but they will only have a limited effect on the market. According to projects already announced, IT service spending will jump in the 20122014 period.
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FIGURE 27
Comparison of Forecast for IT Services Spending (US$M) in Bulgaria, 20102014 versus 20112015
Source: IDC, 2011
TABLE 21
Comparison of Forecast for IT Services Spending (US$M) in Bulgaria, 20102014 versus 20112015
2007 Forecast 20102014 Forecast 20112015
Source: IDC, 2011
2008 186.1 n/a
2009 158.08 n/a
2010 165.80 133.66
2011 185.06 134.48
2012 216.60 144.96
2013 257.10 157.26
2014 299.66 170.91
2015 n/a 187.01
133.63 n/a
Alternative Scenario
Main Assumptions
IDC presents an alternative market scenario should the following possibilities become a reality: The overall slowdown in the European economy and the crisis in Greece may have further consequences for the Bulgarian economy due to a decline in demand for exports, low FDI inflows, and declining revenue because of strikes, protests, and delayed payments. IDC research shows that 2011 would mostlikely be another bad year for the IT business. As has happened several times in the past, the results of government tenders may be challenged in the courts and projects can be delayed unpredictably. Legislation in the area of public procurements has been changed several times already, but still does not address the problem effectively. The forecast above is based on the assumption that several large projects for egovernment systems will be launched in Q4 2011 or early 2012 and the money allocated to them from different EU programs will be absorbed..
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Despite the measures taken by the government to overcome problems absorbing EU funds, it is possible that Bulgaria will face new funding stoppages and investigations into past cases. Because of concerns about double funding, the EU halted the introduction of electronic services in ministries and municipalities of the OPAC (Operational Program Administrative Capacity) program whle before the publishing of this report.
FIGURE 27
Forecast of IT Services Spending (US$M) by IDC Engagement Type in Bulgaria, 20102015 - Alternative Scenario
Source: IDC, 2011
Future Outlook by Vertical Market

The following figure's x-axis shows IT services spending (US$M) in each vertical market in 2010. The y-axis illustrates potential IT services spending growth for each vertical market.
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FIGURE 28
Spending (US$M) on IT Services by Vertical Market in Bulgaria, 2010
Source: IDC, 2011
Government
The government sector will continue to be one of the major consumers of almost all types of IT services, but the economic situation and the difficulties of the government to institute reforms will continue to inhibit implementations of IT strategies. It is expected spending will recover in 2012. A strong increase in demand for consulting, software development and deployment, integration, and support services might be expected in 20122014 with the launch of egovernment and ehealth projects. It is difficult to predict when the projects will start, as they have already been delayed due to appeals in the court and other reasons. The focus in egovernment will be on the deployment of new eservices; further development of the egovernment portal's service oriented architecture (SOA); the establishment of a centralized system for monitoring and managing information security and interoperability; and the implementation of an electronic identity registry. The planned development of a reference architecture model for the central government and municipal administrations is crucial for further
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development, as the variety of systems in operation hampers interaction between them. The National Information Network in eHealth will be deployed in 20122014. The system must guarantee the interchange of data among all participants in the ehealth system and better monitoring of processes and costs in the health system. The implementation of intelligent transportation systems in major cities will also be launched in the forecast period.
Telecommunications
Due to strong competition in the sector and declining tariffs, operators need to look for other revenue sources. They will continue adding new services on top of core voice and data services, such as digital TV, digital video, and other content services. They are also very likely to become service providers. Telcos are well positioned to exploit the cloud business model and may introduce cloud IT services offerings either by themselves or in partnership with other vendors. During the forecast period, telecoms will increase their share of hosted, managed, and cloud services market by providing virtual servers, storage-ondemand, datacenter management, managed business continuity services, etc. The transformation of operators into IT service providers will continue to fuel demand for consulting, system and network integration, software implementation and support from the telcos themselves. Telecoms will also continue investments in the capacity of their networks, better manageability, quality of service, and advanced billing.
Finance
The financial sector will continue to see restrictions on IT spending in the next couple of years, but growing demands from business and regulators will force the players to invest into IT. The higher maturity of IT in banking in comparison with other verticals means that financial institutions will shift spending toward software implementations and IT services, increasing demand for consulting, software development, and deployment and network consulting services. They will continue to look for better utilization and manageability of resources, implementations of ITIL, or other best practices, higher IT security, and better quality of service for the business. Further cost-cutting initiatives might be expected as well. The expected consolidations in banking, the growing maturity of leasing services, and changes in insurance businesses, such as the introduction of e-insurance, will drive spending in IT services until the end of the forecasting period.
Vendor Profiles
In this section, IDC profiles the top IT services providers and ranks them by total supply-side IT services revenue. For each company, IDC provides a brief description of its competitive positioning, services offerings, contact/client base, and growth strategies. The following vendors were selected: Siemens IT Solutions and Services, Information Services, HP, Kontrax, and Printec Bulgaria.
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Siemens IT Solutions and Services

Siemens IT Solutions and Services became the top vendor in the Bulgarian IT services market in 2010, generating $12.30 million in IT services-related revenue and 45.7% IT services market share. The company was recently purchased by Atos. Siemens IT Solutions and Services is a provider of integrated IT solutions and services from one source, covering systems integration, consulting, and management of IT infrastructure. The vendor's main partnerships are with SAP AG, SAP Bulgaria, Oracle, Fujitsu, Microsoft, and EMC. Siemens IT Solutions and Services provides consulting and advisory services; design, implementation, and support of the mySAP Business Suite and mySAP ERP (SAP R/3) standard business applications; specialized IT solutions such as RFID; and biometric and mobile solutions, among others.
Services Overview
FIGURE 29
Siemens IT Solutions and Services: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria, 2010
Source: IDC, 2011
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FIGURE 30
Siemens IT Solutions and Services: Overview of IT Services Revenue by Vertical Market in Bulgaria, 2010
Source: IDC, 2011
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Clients and Contracts
TABLE 22
Overview of Siemens IT Solutions and Services' Contracts, 2010
Client's Name Ministry of Finance Ministry of Interior Project Description IT infrastructure, maintenance, and development activities. Implementation of a system for passports with biometric data worth more than $9.2 million Delivery and installation of equipment for a border control system. Industry Government Government Macro Market Project Project Foundation Market System Integration Systems Integration Contract's Length na 6 years
Ministry of Interior
Government
Project
Installation and Support Application Consulting and Customization
1 year
CCB Management Services
SAP consultancy services
Business Services
Project
1 year
Source: IDC, 2011
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SWOT Analysis
TABLE 23
SWOT Analysis of Siemens IT Services and Solutions, 2010 2015
Strengths Well-rounded portfolio allows vendor to address numerous sectors and service lines across the Bulgarian IT services market Solid installation and support offerings allow vendor to maintain strong foothold during difficult times in other service lines Performs well in the public sector, the largest in Bulgaria Experience in outsourcing of IT business processes Certified in ISO/IEC 20000-1, ISO 27001:2005 and ISO 9001:2008 Extensive expertise in SAP implementations Opportunities Look for growth in other key verticals as the economy recovers while keeping an eye on public sector Benefit form outsourcing of IT operations by large international clients Utilize acquisition by Atos to target key verticals like combined finance, transport, retail, healthcare, and manufacturing
Source: IDC, 2011
Weaknesses Does not have clear positioning in clients minds because the new portfolio of services is not known to Bulgarian clients Perceived as ignoring the SMB segment due to the complexity and scale of services offerings The transformation of operations will take some time
Threats
Increasing competition in the public sector, as well as

continuing inefficiencies in the sector in allocating funds could hamper revenue in this market.
Information Services
In 2010, state-owned Information Services ranked second on the Bulgarian IT services market with revenue of $12.08 million. The majority shareholder in Information Services PLC is the Ministry of Finance. Information Services (IS) has always been the largest supplier of IT services to the government. The company covers the entire spectrum of IT services: software development, construction and administration of networks, hardware support, consultancy, and training. IS has a well-developed network of 26 branches in all of Bulgaria's regional cities.
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FIGURE 31
Information Services: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria,, 2010
Source: IDC, 2011
FIGURE 32
Information Services: Overview of IT Services Re venue by Vertical Market in Bulgaria, 2010
Source: IDC, 2011
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TABLE 24
Overview of Information Services' Contracts, 2010
Client's Name Ministry of Finance Project Description Development of information systems for monitoring and management of structural instruments in Bulgaria (ISUN) Industry Government Macro Market Project Foundation Market Application consulting and integration Application consulting and integration Systems Integration/Support Support Services Contract's Length 1 year
E.ON, EVN, CEZ
Support of regional offices, adjustment of reporting systems
Utility
Support/Training
1 year
Ministry of Finance
Support and development of the IT infrastructure for the ministry
Government
Support/Training
1 year
National Revenue Agency

Source: IDC, 2011
Provisioning and support of esignatures for the employees of the National Revenue Agency.
Government
Project
1 year
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SWOT Analysis
TABLE 25
SWOT Analysis of Information Services, 20102015
Strengths Well-developed network throughout the country, which is valuable when implementing large-scale projects Government-owned and able to capitalize on the large number of government IT projects Stable revenues due to maintenance contracts Conscious effort to target high-value projects Operator of esignatures ISO 27001:2005 certified Weaknesses Limited presence in verticals other than government Doesnt use its potential on the SMB market Looses revenues from business services as result of reforms in state administration Large and ineffective structure Dependent on political decisions
Opportunities Capitalize on growing government investments into IT infrastructure Utilize the nationwide network for projects outside the public sector Build on leading position in the outsourcing market Capitalize on introduction of new eservices requiring esignatures Capitalize on anticipated inflow of EU funds for technology projects within the public sector
Source: IDC, 2011
Threats Potential delays or slowdowns of government projects Uncertain position of the government in regard to the future of the company, possible privatization, or transfer of government contracts to other suppliers Loss of share to more quick and flexible private companies
HP
In 20010, HP was the third-largest IT services provider based on revenue of $9.9 million and 6.6% share. HP employs almost 100 people in Bulgaria. HP in Bulgaria offers the following IT services: security and privacy services; PC and server services; business continuity and resiliency services; integrated communications services; storage and data services; middleware services; maintenance and support; managed print services; and application consulting and deployment.
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FIGURE 33
HP: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria, 2010
Source: IDC, 2011
FIGURE 34
HP: Overview of IT Services Revenue by Vertical Market in Bulgaria2010
Source: IDC, 2011
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TABLE 26
Overview of HP's Contracts, 2010
Client's Name E.ON Vivacom Project Description Management and support of the IT infrastructure Set-up and run of Next Generation Intelligent Network system Delivery of managed print services Utility Telecom Industry Macro Market Outsourcing Outsourcing Foundation Market Systems Integration Network Management Contract's Length 3 years 3 years
E.ON
Source: IDC, 2011
Utility
Outsourcing
Outsourcing
4 years
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SWOT Analysis
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SWOT Analysis of HP, 20102015
Strengths Recognized as global technology leader with broad hardware, software, and services portfolios Market leader in PCs within Bulgaria with strong support revenues and compelling brand recognition Long-term relationships with clients and business partners Global outsourcing experience and references Access to a pool of highly-skilled IT professionals Strong position in the government vertical Opportunities Migrate growing hardware installed base to other related services Capitalize on growing interest in outsourcing services Capitalize on growing focus on systems and services management to pave the way for the provision of value-added services Capitalize on cloud adoption
Source: IDC, 2011
Weaknesses May not always be flexible due to internal administrative procedures and risk compliance measures Complex organizational structure Perceived as a high-priced vendor Threatens relations with partners with its direct sales model
Threats Intense market competition from more flexible companies Large accounts becoming saturated Danger of direct competition with channel partners in services Global economic instability likely to increase price sensitivity within the market
Kontrax
In 2010, Kontrax ranked as the fourth-largest vendor in the Bulgarian IT services market with revenue of $9.90 million, corresponding to 6.6% share and total revenue of $12.94 million. The company employs 119 people. Kontrax specializes in servicing large government and corporate entities, although it also has increased its focus on the SMB segment. Kontrax Group includes companies that specialize in custom application development, Internet services, cable infrastructure systems, call center systems, and the manufacturing of office furniture. The company distributes hardcopy peripherals from Kyocera Mita and Canon; PCs and servers by NEC, Acer, and Fujitsu Siemens; and communications equipment from Lucent and AVAYA and is partner of Microsoft and Cisco.
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FIGURE 35
Kontrax: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria, 2010
Source: IDC, 2011
FIGURE 36
Kontrax: Overview of IT Services Revenue by Vertical Market in Bulgaria, 2010
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TABLE 28
Overview of Kontrax's Contracts, 2010
Client's Name Project Description Industry Macro Market Foundation Market Systems Integration Application Consulting and Customization Other Outsourcing Systems Integration Contract's Length 1 year
Ministry of Interior
Software and maintain a database of security features related to travel documents as part accession to the Schengen system Development and implementation of a centralized system for service delivery via an integrated service counter.
Government
Project
Bulgarian Post
Transport
Project
1 year
DSK Bank
Managed print services maintenance of printer and MFP equipment.
Banking
Outsourcing
1 year
Ministry of Finance
Delivery and support of a protected records system
Government
Project
1 year
Source: IDC, 2011
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SWOT Analysis
TABLE 29
SWOT Analysis of Kontrax, 20102015
Strengths Established company with 18 years of experience on the Bulgarian IT market Good reputation in key verticals Expanded portfolio of offerings Well-developed office structure in the country and abroad Partnerships with key vendors Offerings for SMB segment Vertical expertise in healthcare Opportunities Forge proven partnerships with key brand manufacturers Tap into the continued investment in both the private and public sectors aimed at developing the country's infrastructure Benefit from expected projects in ehealth due to vertical specialization
Source: IDC, 2011
Weaknesses Dependency on government contracts Marked impact of the economic downturn on the enterprise segment, Kontrax's chief target market Focuses only on key verticals
Threats Direct sales by technology vendors Competition with international vendors for IT personnel Further projects delays in the public sector Margin pressures expected to continue Economic uncertainty and volatility
Printec
Printec Bulgaria became the fifth-largest IT services provider in Bulgaria in 2010 with IT services revenue of $8.81 million and total revenue of $14.93 million. Printec Bulgaria's main activities are oriented towards delivery, servicing, developing software applications, and installation of equipment for non-cash payments in the field of finance, banking, and retail. The company is part of the international corporation Printec Group.
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FIGURE 37
Printec Bulgaria: Overview of IT Services Revenue by IDC Engagement Type in Bulgaria, 2010
Source: IDC, 2011
FIGURE 38
Printec Bulgaria: Overview of IT Services Revenue by Vertical Market in Bulgaria, 2010
Source: IDC, 2011
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TABLE 30
Overview of Printec's Contracts, 2010
Client's Name Bulgarian National Bank Project Description Support of e -transaction infrastructure Industry Finance Macro Market Support and Training Support and Training Foundation Market Installation and Support Installation and Support Contract's Length 1 year
23 banks in Bulgaria
Support of epayments, including maintenance of ATMs and point-of-sale (POS) terminals.
Finance
1 year
Source: IDC, 2011
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SWOT Analysis
TABLE 31
SWOT Analysis of Printec, 20102015
Strengths Part of international group of companies with solid portfolio and extensive client base Focus on electronic transaction processing systems Solid client base in the banking sector, Extensive portfolio of security solutions; Can rely on regional agreements from Greece to provide support of banks Weaknesses Brand name not recognized by some large companies on the market Lacking vertical diversity
Countrywide support team Opportunities Captitalise on the increasing use of epayment systems, ATMs, and POS terminals Take advantage of up sales in the financial sector Profit from regulations in the financial sector and need for better IT security Captitalise on participation in government projects
Source: IDC, 2011
Threats Contracting margins in support services Increasing competition from other local integrators and technology vendors in regard to project-based services
ESSENTIAL GUIDANCE
IT service providers should prepare for the transformation of the global and local service delivery landscape. HP, IBM, Microsoft sell products and services directly instead via their partner networks. The local partners are in a situation to compete against the vendors, while basing offerings on prices, provided by their competitors with vendors. Locals have other advantages, but risk being push out by vendors. The introduction of new cloud services; the emergence of telecoms as IT service providers; and the entrance of global service providers. Suppliers need to decide about their own role and value in the delivery chain in respect to target segments and type of services and take steps to strengthen that position. Neglecting this trend may have very negative effect for local players. Investing into professional, industry, and vendor-=specific certificates should be carefully planned. These certificates are de facto standard prerequisites for public or private tender procedures. The acquisition and the support of these certificates is quite expensive and vendors must chose which ones best fit their strategy for development. Suppliers should maintain the development of IT skills of key employees and the managerial skills of project and finance managers. As the complexity of products and projects increases, the need for managerial skills gains importance. Keeping in mind the expected simultaneous launch of EAS, ERM, and CRM projects with overlapping implementation cycles in 2012, suppliers of business software customization and software development services must take measures to increase
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their implementation capacity. Different measures can be considered, such as partnerships, creation of pre-defined functionalities, standardization of procedures and processes, advanced delivery models, contracting and training of pool of freelancers, etc.
LE ARN MORE
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Definitions
Foundation Markets
Studying the IT services industry through an activities-based approach offers insight into what a vendor does. This approach, however, does not necessarily represent how IT services are actually purchased. Thus IDC introduced the concept of foundation markets, or the contract view, which shows what a customer buys. Foundation markets remain mutually exclusive and all-inclusive service categories. For example, if a customer signs a systems-integration contract, IDC recognizes the entire spending on the contract as systems-integration spending, without regard to the underlying services actually delivered. However, if the customer manages the systems-integration project in house and procures services such as IT consulting, custom application development, and training separately, IDC recognizes the spending for each of these activities separately within their respective categories. The following 13 foundation markets in the IT-services industry primarily target information systems and technology-enabled processes:
Hardware Support and Installation
This market captures hardware installation and support services. Hardware comprises the following segments: client devices (desktops and notebooks), user interface, "toward the edge of network," servers, storage, peripherals, and networking equipment such as enterprise networking equipment, datacenter networks, and telecommunications infrastructure. For greater detail on the hardware categories, please see IDC's Worldwide Hardware and Network Infrastructure Taxonomy, 2007 (IDC #206156, June 2007). Installation services consist of configuration and installation (testing and debugging, IT-site preparation, and IT installation). Configuration can be conducted either on the customer's premises or on the vendor's premises. Examples of configuration on the vendor's premises are HP's Factory Express offering and Sun Microsystems' Factory Integration offering. Decommissioning services include end-of-life services for IT hardware. The two main services included in decommissioning services are data wiping and device removal from networks. Support services comprise telephone support, remote diagnostics, electronic support, onsite support, predictive/preventive maintenance, repairs, and inventory/asset management services. Hardware support services can be provided by either the hardware vendor or a third party and are either attached to the hardware or included in a site agreement.
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Managed Support Services
Managed support services refer to high-end or mission-critical support services. Under the terms of a managed support services offering, the provider is responsible for proactively alerting the customer about events or situations that occur in the customer's environment or on discrete technology assets. Under the terms of a managed support agreement, the provider's legal liability is limited to providing an alert to the customer. After the alert has been sent, the provider may have additional responsibilities under the terms of a traditional support agreement. For example, the provider may be bound by response or resolution times as described in a support agreement. IDC excludes the base warranty purchased with the product from hardwaredeployment and support spending. If a vendor or third-party assumes responsibility for a customer's entire IT help-desk operations, this service is excluded because it is considered business process outsourcing.
Software Support and Installation
Software support and installation services are activities, expertise, and systems aimed at providing a customer with the proper installation and configuration of commercially available packaged software. It also includes appropriate ongoing support and access to resources. Installation services consist of the basic installation of packaged software or upgrades, including standard set-up and configuration. Configuration is limited to the options and features available in the software package. Typical activities associated with software support services are as follows: telephone support, remote diagnostics and repair, electronic support, support-related software maintenance, onsite software support, and predictive and preventive maintenance. Support and installation engagements exclude support for custom-developed software and support provided via another contract mechanism (e.g., outsourcing); furthermore, it excludes traditional maintenance. Traditional software maintenance is generally priced as a percentage of either the net or list license cost and includes software updates, upgrades, and patches.
IT Education and Training
Training enhances general knowledge and expands capabilities for using IT. Training involves learning new behaviors, skills, or actions that can be used to begin performing job-specific tasks or to improve performance. IT education and training services cover all technologies using all delivery media, with a particular focus on packaged-software and data-communications training. This may include training for IS/technical skills, desktop skills, and professional IT certification. This category excludes business-skills training, learning services, or learning infrastructure engagement, as per IDC Corporate Learning Taxonomy.
IT Consulting
IT consulting is a professional services activity around information technology. It is the delivery of advice to customers aimed at managing their IT organization and at
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improving their IT performance, infrastructure, and related processes. IT consulting includes two main areas: IT strategy consulting assists an IT executive with designing an IT vision and goals for the entire organization, then aligning resources accordingly. This includes IT strategic planning (including human resources, facilities, and financial planning), IT road map design, governance, systems, enterprise application, and infrastructure strategy. IT operations consulting assists an IT executive with optimizing the company's IT infrastructure and architecture, and its use of specific technologies. This includes infrastructure management; IT road map implementation; hardware, software and services procurement; vendor relationship management; IT infrastructure performance; and performance engineering. IT consulting engagements exclude spending on planning activities bundled with implementation and operational services. Consulting delivered through these 'other services' categories is captured as a part of the total spending in each category.
Systems Integration
SI services include the planning, design, implementation, and project management of a solution that addresses a customer's specific technical or business needs. SI involves systems and custom application development, as well as the implementation and integration of enterprise packaged software. SI projects typically involve different platforms and technologies. The solution may include hardware, software, and services. An SI project is formalized by a contract constructed around solution specifications and often demands certain levels of performance against technical or business goals. The end result of an SI project is the delivery of a system that meets a stated objective and fulfills solution specifications. In Central and Eastern Europe, the Middle East, and Africa (CEMA), contracts of under $50,000 are not typically considered systems-integration projects because most are delivered by small local resellers and value-added resellers, which do not guarantee systems performance or computability across existing platforms. SI projects can include any of the following activities: planning, design, implementation, training, and support.
NCIS services are defined as those activities associated with planning for, designing, and building local-area networks and wide-area networks, commonly known as LANs and WANs, including multi-service, converged wireless, and wireline networks, which enable voice, video, and data applications (such as VoIP and unified messaging) to be propagated across a single common infrastructure. Specifically, the NCIS market includes services provided to the providers of telecommunications networks for the planning and building of public integrated voice, data, and wireless infrastructures. This category excludes services provided for the planning, building, or operation of traditional circuit-switched enterprise voice networks and their supporting devices (e.g., traditional PBXs).
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Services in this category include modifying existing applications and the customization of packaged applications for specific business requirements. Contracts relating to software assessment are also included within this category. This category excludes, however, contracts covering software development, the installation of systems software, and the customization of IT operating environments, as well as maintenance contracts covering the ongoing support of applications by maintaining software code and providing bug fixes and enhancements on a continual basis.
Custom application development (CAD) services focus on delivering standalone, custom codesets to meet a client's business needs. CAD services can span the entire application development life cycle, including requirements gathering and design, solution build, testing and QA, and solution acceptance. CAD services include coding for custom-developed applications as well as enhancements and modifications to custom legacy applications. CAD services also include third-party development and support (e.g., follow-on patches or enhancements) of custom applications that are either designed or migrated to cloud-based platforms such as Windows Azure or Force.com. Due to the complexity and evolving maturity of PaaS platforms, and the ongoing need to integrate with internal back-end systems, discrete CAD or SI services are being delivered to enterprises to support their PaaS initiatives, which can include coding, construction, and integration support as well as process modeling and system architectural design. IDC notes that CAD contracts can include requirements for patches that are not considered part of a daily maintenance plan. Customization of an existing custom application is also included within CAD (customization is defined as implementing new features not available in the custom software application). CAD services are delivered as part of a project with a defined beginning and end. Although application development activities can be included in larger systems integration projects, IDC classifies services as CAD if the final deliverable to a client is a custom-designed application. Following table 32 highlights the distinctions between systems integration, application consulting on commercially off-the shelf applications, and custom application development, and software deploy markets.
TABLE 32
Distinctions Between Systems Integration, Custom Application Development, and Software Deploy
Custom Application Development Custom
Systems Integration/ACC What types of applications are affected? What are the key activities during the engagement? Either custom or commercial off-the-shelf (COTS) Development (if custom) and/or integration of application with other software or infrastructure components Yes
Software Deploy COTS
Development or maintenance of a custom application
Deployment (including configuration) of a COTS application
Does the project involve any integration work with other software or infrastructure?
No
No
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Distinctions Between Systems Integration, Custom Application Development, and Software Deploy
Is the engagement limited to defined capabilities of an existing COTS application? What is the size of the engagement?
Source: IDC, 2011
No
No
Yes
Typically $50,000+
Any
Any
Exceptions and Exclusions
Maintenance contracts that include 24 x 7 ongoing support and maintenance for custom applications by maintaining the code and providing bug fixes and enhancements on a continual basis are captured within other markets (e.g., application management). This definition also excludes support for standard packaged applications, which is captured either in the software deploy and support definition or in the IT education and training definition. Application development that is performed as part of a broader SI, commercial off-the shelf application consulting, or IS outsourcing engagement is also not included in the custom application development segment.
Outsourcing (as an Engagement Type)
Outsourcing is the contracting by an organization of a third party for the management and enhancement of ongoing operations for all or part of its IT infrastructure, IT functions, business processes, or business solutions. Outsourcing involves a fixedterm contractual arrangement that may involve the transfer of assets or people. IDC separates the outsourcing market into two distinct categories: 1) custom outsourcing, comprising information-systems outsourcing, application outsourcing, and desktop and network management; 2) the hosted one-to-many model, which consists of hosted application management and hosting infrastructure services.
IS Outsourcing
IS outsourcing services involve a long-term, contractual arrangement in which a service provider takes ownership of and responsibility for managing all or part of a client's IS infrastructure and operations based on a service-level agreement. Services are provided in a one-to-one model. At the core of an IS outsourcing contract is taking over management of day-to-day operations at a datacenter and its systems infrastructure (either mainframe based or through a "server farm") and usually also includes two or more of the following services: Desktop management Local and wide area network (LAN and WAN) operations management Help desk support Application management
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Hosted application management Disaster recovery services Hosting services IS outsourcing contracts can also include related consulting and systems integration activities. Along with activities performed by the outsourcer's employees, an IS outsourcing contract can include (though does not always include) ongoing capital spending for new equipment and may involve the transfer of assets and people from the client to the service provider.
To maintain consistent IDC definitions, if only the network and desktop environments are outsourced, IDC captures the spending in the network management services and desktop management services category (collectively known as network and desktop outsourcing). Likewise, if only the application environment is outsourced, IDC captures the spending in the applications outsourcing category. IS outsourcing captures only those contracts for which a large portion of the IS environment is outsourced, usually over a 5- to 10-year period. Spending on discrete hosting services or other hosted, one-to-many service models is captured elsewhere in IDC's spending methodology. The IS outsourcing category captures spending on customized, one-to-one IS outsourcing engagements.

Network and desktop outsourcing services (NDOS) involve the set of activities associated with outsourcing the support and management of one or more elements of the client/server and network communications infrastructure of an organization. NDOS may be further segmented into network management services and desktop management services. The term desktop is used interchangeably with office client/server environment (i.e., desktops, servers for print/file/messaging, storage, and peripherals), therefore, NDOS = network management services + desktop management services: Network management services. Network management services are the activities, skills, facilities, and network infrastructure captured within a contract associated with outsourcing the operations of a specific segment or entire network communication system of a company. The scope of work includes the installation and management of network tools that automatically monitor active nodes, traffic, revision management, and security. The service supplier also assists with fault isolation and resolution and enables the business to optimize the efficiency of the network and avoid any downtime. As part of the network management contract, the service supplier installs and configures the network management system and manages user moves, adds, or changes on the network, network software, and hardware upgrades. Desktop management services. A desktop management contract might include needs assessment, asset management, systems management, procurement and deployment, onsite hardware maintenance, and onsite software support services for office client/server environments. As with the IS outsourcing category, IDC views desktop management services from a contract perspective. Desktop
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management captures only those contracts for which several desktop services are outsourced to the same supplier.
The network operations provided as part of a larger IS outsourcing contract are not captured in the network management services category. Likewise, if the engagement includes not only desktop environments but also business applications (e.g. ERP, SCM, CRM, etc.) and the systems supporting them, then it would be captured as an IS outsourcing engagement rather than as an NDOS engagement. Additionally, the network equipment support and maintenance contracts that are not associated with network operations outsourcing contracts are not captured in this category. The hardware support and installation service category captures the majority of network product support.
Application Management
Application management is a service designed to provide for the day-to-day operation, support, and maintenance of enterprise applications. AM services contain a number of discrete components, including end-user support, proactive and reactive application maintenance/enhancements, and remote or onsite application monitoring, whether on the customer's or the vendor's premises. For IDC to consider a contract as AM, the contract must contain a minimum of SLA-driven operational responsibility for application performance and uptime, plus some application maintenance activities. AM engagements typically, but not always, involve the transfer of employees from the customer to the service provider. AM services are often embedded in far larger contracts, encompassing such services as datacenter or infrastructure outsourcing, desktop and hosting services, and business-process outsourcing (BPO). In such cases, IDC does not count the data as a part of the discrete AM forecast.

Hosted AM comprises services where a customer's packaged applications are hosted and managed out of a vendor-managed datacenter and includes packaged applications hosted either in a customer-dedicated or in a shared infrastructure environment. There are major differences between hosted AM, which is a standardized service, and traditional AM, which is a customized outsourcing engagement. With hosted AM: Customer applications are primarily hosted out of the vendor's datacenter. Support resources and certain elements of the low-level infrastructure (network, transport, and so on) are shared across customers (a one-to-many model). The vendor uses automated provisioning, management, monitoring, and maintenance technologies to create economies of scale in managing across multiple customer environments, thus reducing costs when compared with traditional outsourcing models. Providers bring expertise in standardization of packaged application implementations and may assist customers in reducing customization by leveraging prebuilt template solutions.
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In most cases, the vendor sets a flat price per user (depending on a host of variables, including promised uptime and support response times), and contracts are typically for a shorter time period. Packaged applications are primarily sold traditionally, with a one-time license and recurring maintenance/support fees. The software license contract is usually separate from the hosting contract. Most hosted AM contracts allow for customization of the packaged application, usually for an additional charge to support the custom application over time in addition to any professional service fees. While installation, testing, and maintenance (including patches and fixes) are built into a hosted AM service, optional services can include configuration, custom integration, upgrades, and modernization enhancements. Remote monitoring as well as uptime and performance monitoring via application SLAs are often sold as part of the service. Some hosted AM providers provide more robust pre- and postproduction support services at the application layer that address ERP suite configuration services, patches and performance tuning services, technical upgrades, security administration, SAP ABAP reporting support (RICEF), custom integration and monthend and year-end closing support, among a long list of application-related services. Other hosted AM providers, as seen in certain geographies, will offer infrastructure, OS, and database layer management support and limit the application support to application monitoring and instance availability and uptime SLAs. These providers will not offer specialized application postproduction support (e.g., monitoring data loads, scripting support, BI performance tuning, post-implementation enhancements, and governance workflow and change management support). The main value proposition of the hosted model versus traditional AM is that because the vendor has complete ownership and control over the hardware environment, customers are freed from the costs and time associated with managing the systems upon which their applications are running. The vendor owns and manages the infrastructure in addition to managing the dedicated customer application instances. The differences between traditional AM services and hosted AM services are highlighted in following Table 33.
TABLE 33
Distinctions Between Hosted Application Management and Traditional Application Management
Hosted AM Where are the applications located? Who is responsible for hardware procurement, financing, and configuration? Who is responsible for hardware management and uptime? Is the infrastructure shared? Are the applications shared? Vendor datacenter Vendor Vendor Yes; one to many No; one to one Traditional AM Customer site Customer Customer No; one to one No; one to one
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TABLE 33
Distinctions Between Hosted Application Management and Traditional Application Management
Hosted AM Is staff transferred?
Source: IDC, 2011
Traditional AM Sometimes
Never
IDC's Worldwide Software-as-a-Service Taxonomy, 2008 (IDC #211780, April 2008) classifies hosted AM as one category within the broader SaaS umbrella. It is important to distinguish between hosted AM, which is designed for the management of traditionally licensed packaged applications, and SaaS. SaaS, as referenced here, is a model of Web-delivered, shared-instance software delivery, offered with a subscription instead of a traditional license. SaaS multitenant is typically run with a single shared application instance and a range of configuration options, but no true customization to the database schema and multitenant data model, whereas hosted AM offers customers private application instances (single-tenancy applications) with greater customization capabilities. IDC will be updating its SaaS taxonomy to separate out hosted AM from the SaaS umbrella term in a forthcoming document. In the existing IDC SaaS taxonomy, the term software on demand (SoD) is also used to reference the SaaS multitenant model. The hosted AM market excludes retail ecommerce portals and informational Web sites.
Hosting Infrastructure Services

Hosting infrastructure services include the management of servers, networking, and other infrastructure solutions in a third-party service provider datacenter. Hosting infrastructure services encompass activities related to the provisioning, management, and maintenance of the infrastructure that supports businesses' Web sites and Webenabled applications. The specific capabilities delivered under this umbrella are typically delivered as part of larger hosting infrastructure deployments and include support for associated application infrastructure platforms (e.g., ecommerce packages, databases, and application servers), comprehensive Internet infrastructure management, and systems-level (as opposed to server-level) administration in support of large-scale Web sites and Web applications. Software-centric activities (i.e., middleware/operating system/database) are often performed by service providers as part of infrastructure-oriented hosting infrastructure services engagement. Generally, the starting point is infrastructure management, and management of infrastructure-related software is often part of the engagement. Hosting infrastructure services also include any hosting services delivered on virtualized infrastructure (commonly referred to as "private cloud"), in addition to services supported on traditional dedicated physical infrastructure. Hosting infrastructure services provided on utility or virtualized infrastructure are not necessarily "cloud services," given that the delivery and consumption models may or may not conform to all of the cloud services attributes specified in Worldwide and Regional Public IT Cloud Services 20102014 Forecast (IDC #223549, June 2010).
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Hosting infrastructure services may be further segmented as follows: Legacy shared web hosting/virtual private server (VPS). These are legacy Web hosting categories that often get confused with "cloud" but do not meet the criteria established in the cloud model. Legacy web hosting and VPS are SMBoriented, low-priced, relatively simple offerings generally leveraged for basic Web sites and/or reseller hosting and/or application development and testing. With these services, customers' Web sites and applications are hosted on a single physical server on which each customer has a fixed resource allocation (disk space in the case of shared hosting; virtual machine environments in the case of VPS). Cloud, by contrast, enables customer Web sites and applications to be abstracted from predetermined physical servers and supports dynamic capacity scaling. Cloud hosting infrastructure services. This term describes a particular model of hosting service delivery as specified in IDC's public cloud services definition in Worldwide and Regional Public IT Cloud Services 20102014 Forecast (IDC #223549, June 2010). Cloud hosting infrastructure services combine use of multitenant (shared) resources, radically simplified (i.e., standard) packaging, self-service provisioning, highly elastic and granular scaling, flexible pricing (often pay-per-use/pay-as-you go), and broad leverage of Internet standard technologies to make offerings dramatically easier, cheaper, and better to consume. Dedicated hosting. These are dedicated servers but are unmanaged from the service provider's perspective; essentially, this involves server hardware leasing where the customer has full control over the hardware and root access. Complex managed hosting. This includes n-tier environments up to the application layer where the environment is managed by the hosting provider (or comanaged with the customer) as an integrated Web application environment. However, the service provider does not provide application management hence the distinction from hosted application management. Colocation. This is commercial/retail colocation where the service provider offers colocation services and related remote network and systems management. Colocation services are defined as a customer's use of a third party's physical floor/cage/rack space, network capacity, and HVAC/power infrastructure (i.e., the listed equipment is owned by a third-party datacenter and is located at the third party's facility) to support operation of the customer's servers/storage/network equipment and other types of infrastructure. Also included in the definition are value-added services offered as add-ons to managed and colocation hosting services, such as managed storage and security.
Exceptions an d Exclusions
Colocation services provided by non-dedicated datacenters (e.g., office rental companies providing access to the Internet as part of the charge for office space) are not included. Hosting infrastructure services provide infrastructure-driven management functionality that is not specific to a particular type of application. The definition excludes connectivity fees associated with remote access to the datacenter, professional services billed on a time-and-materials basis, and the resale of hardware or software.
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It also excludes enterprise application management, business process outsourcing, and application/business productivity functionality delivered via the software-as-aservice or software-on-demand model. As such, hosting infrastructure services do not include hosted management of enterprise application software but do encompass management of middleware and other types of enabling, infrastructure-oriented software. For example, if the starting point of a client engagement is a request to "manage my SAP application instances," then IDC would define it as hosted application management. IDC's Worldwide and Regional Public IT Cloud Services 20102014 Forecast (IDC #223549, June 2010) includes hosting infrastructure services that feature multitenant platforms, pay-per-use pricing, self-service capabilities, and all the other attributes commonly associated with cloud services. However, IDC's public cloud forecast is a separate effort from the foundation markets defined in this taxonomy, and as such, the precise level of overlap has yet to be determined.
Synopsis
"Vendors have to prepare for continuing pressure on margins, as well as the gradual transformation of user priorities from cost cutting to better alignment of IT with business goals. Strong justification for IT investments will be required. Vendors should prepare to offer impeccable reliability, flexibility, and a commitment to users' concerns." Neli Vacheva, Country Manager, IDC Bulgaria
Copyright Notice
This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2011 IDC. Reproduction is forbidden unless authorized. All rights reserved.
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Bulgaria IT Services Market 2011 - 2015 Forecast and 2010 Vendor Shares Draft

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MARKET AN ALYSIS Bulgaria IT Services Market 20112015 Forecast and 2010 Vendor Shares

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TABLE OF CONTENTS Continued

TABLE OF CONTENTS Continued

LIST OF TABLES Continued

LIST OF FIGURES Continued

Source: IDC, 2011

Source: IDC, 2011

Continuing Economic Malaise

Trends in Services Procurement

Acceptance of Outsourcing/Cloud Computing

Vertical Market Perspective

Mergers and Acquisitions

Leading IT Services Vendors

Overview of the IT Services Market by Foundation Market

Source: IDC, 2011

Support and Training Services Macromarket

Source: IDC, 2011

Hardware Support and Installation Services

Source: IDC, 2011

Software Support and Installation Services

Source: IDC, 2011

IT Training and Education

Source: IDC, 2011

IDC Analysis of Support and Training Macromarket

Project Services Macromarket

Source: IDC, 2011

Network Consulting and Integration

Source: IDC, 2011

Source: IDC, 2011

Information System Consulting

Source: IDC, 2011

Key vendor developments in this category include the following:

Application Consulting and Customization

Source: IDC, 2011

Custom Application Development

Source: IDC, 2011

IDC Analysis Project Services Macromarket

Source: IDC, 2011

Application Management Outsourcing

Source: IDC, 2011

Information System Outsourcing

Source: IDC, 2011

Network and Desktop Outsourcing Services

Source: IDC, 2011

Hosted Application Management

Source: IDC, 2011

Hosting Infrastructure Services

Source: IDC, 2011

IDC Analysis of the Outsourcing Services Macromarket

Overview of the Information Technology Services Market by Vendor Category

Source: IDC, 2011

Overview of IT Services Spending by Vertical Market

Source: IDC, 2011

The absorption of EU funds will accelerate.

Source: IDC, 2011

Foreign Direct Investment

Internal IT budgets will continue to be closely monitored.

Neighboring States Economies

EU Financing for the Implementation of Business Software

funding for HR programs, which will continue in the future.

Businesses will continue to seek better alignment of IT with business needs.