Despite signs of recovery in the global IT sector, layoffs remain prevalent both internationally and within Serbia, although at a reduced pace. Over the past two years, more than 400,000 IT workers were laid off worldwide, and Serbia was not immune to this trend. According to a recent survey by the Serbian IT Association (SITA), 61% of IT companies in the country have had to reduce their workforce, with 27% of firms cutting up to 5% of their employees, and 34% laying off more than 5%.
Struggles with wage competitiveness and employee retention
A key issue contributing to workforce reduction is the challenge of retaining talent, primarily due to low wages and inflation. SITA’s survey found that 31% of companies struggle with insufficiently competitive salaries and benefits, while 27% cite inflation as a major concern. Additionally, the growing competition for skilled workers in the labor market adds pressure.
To address retention challenges, 34% of companies in Serbia have increased salaries by 5% to 10% this year. However, 19% of companies report that their employees are considering leaving Serbia, with popular destinations being Germany, the U.S., and Switzerland. In response, many companies are implementing measures such as salary hikes, additional benefits, and hybrid work models to retain their staff.
Global layoff trends and impact on startups
Globally, the IT sector continues to face layoffs, albeit at a slowing rate. In 2023, more than 260,000 IT workers were laid off, and in 2024, the number exceeds 140,000. Many startups, in particular, are feeling the strain due to cautious investment practices, while larger, global IT companies have been adjusting more rapidly. The situation remains fluid, and plans for 2025 will reveal how companies will respond to ongoing economic challenges.
Incentives and tax breaks: A critical issue for IT growth
The SITA also highlighted the need for regulatory reforms and tax incentives to ensure the continued growth of the IT sector in Serbia. Companies have expressed frustration over the complexity of applying for tax breaks and 30% of surveyed companies believe that tax incentives are crucial for their future development.
Government representatives have shown willingness to cooperate, and talks are underway to streamline the process. Without these incentives, the IT industry in Serbia could face a decline, warns SITA’s Marko Vučetić.
Outlook for 2025: AI and technological adaptation
Looking ahead to 2025, experts agree that artificial intelligence (AI) will be a key area of focus. Companies like Hooloovoo, which faced layoffs earlier in the year, are now stabilizing and investing in AI-based solutions. Global investments in AI are on the rise, and experts believe that these technologies will be a driving force in the recovery of the sector.
The demand for skilled workers in areas such as AI, cloud technologies, and cybersecurity is expected to increase as companies adapt to new technologies. Research indicates that by 2027, 80% of software engineers will need to upgrade their skills to remain competitive due to the widespread impact of AI on the industry.
Current employment landscape in Serbia
The IT job market in Serbia has seen a 25% decrease in open positions compared to last year, primarily due to declining demand for traditional IT services. However, there is still strong demand for senior professionals with specialized skills, including DevOps engineers, cloud experts, and cybersecurity specialists. Junior developers or those with narrowly focused skills are facing more difficulty in finding opportunities.
Despite the challenges, there remains optimism that the sector will stabilize and grow, particularly with a focus on emerging technologies and the continued need for skilled professionals in the IT sector.
