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Nov 29, 2022 16:09 EEST
November 29 (SeeNews) - The operating revenue of sourcing companies in Bulgaria is expected to exceed 8.9 billion euro ($9.2 billion) by 2025, more than double the revenue of 4.2 billion euro recorded in 2021, the Bulgarian Association for Innovation, Business Excellence, Services and Technology (AIBEST) said on Tuesday.
The country's technology and sourcing sector booked a 22.4% annual jump in revenue last year, compared to an increase of 12.7% during the coronavirus pandemic in 2020, AIBEST said in an annual industry report prepared by SeeNews and based on data from 774 companies.
The strong performance meant that the revenue generated by companies in the sector was equal to 5.9% of the country’s 2021 gross domestic product (GDP) at current prices. This gave the sector a 2.1% share of the total turnover generated by private companies in Bulgaria last year, the report found.
The sharp improvement in the sector's profitability was also a sign of the strong post-pandemic recovery in 2021, with overall net profit surging 47.2% on the year to 468.4 million euro.
Business process sourcing and information technology sourcing and, as of this year, research and development were the three major areas of activity of the companies tracked by the report. The number of IT sourcing vendors on the market was the highest for a second year straight, with 405 companies representing the segment in 2021 compared to 349 business process sourcing companies. Research and development, represented by 20 companies, was added to reflect the boost it has provided to the sourcing sector in the country.
In terms of revenue per type of activity, business process sourcing contributed the most, or a slice of 48% of the aggregate turnover.
The sector's fiscal contribution also rose significantly last year, with the companies contributing 55.8 million euro in taxes, or 40.6% more than in 2020.
Salaries in the sector grew 22% year-on-year to 2.1 billion euro in 2021, for a total headcount of 89,165 full-time employees. Salaries thus accounted for 11.4% of total salary costs in Bulgarian economy, up from 10.7% a year earlier.
By 2025, the total workforce in the sector is projected to surpass 120,000.
As much as 81% of the companies surveyed are based in the capital Sofia, with Plovdiv being preferred by IT sourcing firms, while Varna emerged third with mostly business process sourcing-based activity. Burgas, followed by Veliko Tarnovo, Stara Zagora, Ruse and Blagoevgrad, were singled out as emerging hotspots with high development potential.
The UK was the country behind the highest number of companies in Bulgaria’s sourcing sector, with 8% of all companies having a British majority owner. The US, Germany and the Netherlands together accounted for a third of the foreign investors in the local knowledge-based sector.
"With the sector continuing to develop well until the last quarter of 2022, there are signs that next year we will again be able to report a strong year for the high-tech business in the country," AIBEST chairman Ilia Krastev said.
The projections for the next three years are based on the sector's five-year compound annual growth rate (CAGR) of 19.9% in the 2017-2021 period. At this rate of medium-term growth, sourcing companies are expected to book an aggregate turnover corresponding to 9% of the gross domestic product forecast for 2025.
($ = 0.963788 euro)
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