Has the IT bubble burst, and are we witnessing a domino effect of layoffs on a global scale, or is it just a phase in the crisis in the tech sector? According to the participants in the Zoom In show, the answer is that it’s a phase that will gradually pass during this year, but not without consequences, as reported by Bloomberg Adria.
Vladan Balaban, co-founder and president of the M&I System group, states that his company, which has its own product and provides services in the regional and American markets, has not laid off employees and has no plans to do so. Nebojša Bjelotomić, director of the ‘Digital Serbia Initiative,’ adds that there were certainly IT companies affected by the crisis, but he believes that the Serbian IT ecosystem is ‘too small to be heavily affected.
However, it’s not quite that small. The IT sector has become the most significant export branch in Serbia, boasting the largest surplus and the fastest growth rate of 20% annually. In 2012, the export of the ICT sector was 375 million euros, and 10 years later, in 2022, it reached 2.7 billion euros. By 2023, it had grown to 3.5 billion euros.
From 2016 to last year, the number of employees in this sector doubled from 56,000 to about 110,000.
Serbia is recognized as one of the top 20 European IT ecosystems in terms of available talent. Advantages listed for starting or relocating a startup to Belgrade or Novi Sad include tax incentives, government subsidies, and international connectivity.
“What is the new reality everyone in the economy is facing is that money is no longer as easily accessible or cheap as it used to be, and almost every industry is affected by it and needs to regroup. The expectation now is to be positive and have consistent customers who stay with you for a longer time; that’s the new mantra, and therefore, we need to approach things differently and reassess our market and priorities. Now, outsourcing companies that have contributed to these figures are looking for salespeople, which is very good and shows the industry’s maturity. Suddenly, they have to go to customers and sell their services, making them more robust,” says Bjelotomić.
Balaban believes that the time when good education, a good mindset, and character were crucial for the development of the IT sector in Serbia has passed.
“I think that era is passing, and major players for our market are slowly transforming and creating new content of services, knowledge, and everything else. We can no longer be just competitive cheap labor and an outsourcing model, especially with the crisis happening in the West, which will have its spill-over effect here. During the pandemic, everyone hired way more people than they need, and now there’s a reshuffling and laying off of individuals who lack the skills needed for AI, and those jobs are coming to us. Short-term, this is good for us, but in the long run, we have to change skills and broaden our knowledge,” states Balaban.
Will AI replace programmers by 2040?
Artificial Intelligence (AI) is having an increasingly significant impact on all sectors, especially the IT sector.
“We have not yet seen exactly what AI will change and bring, but the boom in automation is undeniable. All employers concerned about the profitability of their companies in AI see a source of greater productivity, and therefore, this trend must be followed. The way we currently perceive AI and its results is something we are yet to witness. A small group of people is constantly talking about it, but a broader mass of people is yet to join. The smartphone penetrated the entire world in 5 to 7 years; AI might do so a bit faster, but it’s certainly not something that will happen tomorrow,” says Bjelotomić.”
“Some analyses in America show that it will only be by 2040 that AI will be able to replace programmers, but even then, programmers will still have work. Robots will handle some repetitive tasks, but people who know algebra and calculus, who will be involved in Big Data, Data Science, Data-Driven Decision Making, and managerial processes, cannot be replaced by artificial intelligence,” states Balaban.
Bjelotomić says that the problematic aspect in our context is the definition of a good idea because people usually come up with a product first and then figure out who to sell it to.
“Here, founders are usually engineers who fall in love with a technology or a solution, while successful startups first identify a specific set of problems and how much people are willing to pay for it. Sometimes, growth and quickly acquiring a large number of users were sought from startups; now, profitability is also required, and that is harder to achieve,” notes Bjelotomić.
Katapult is an acceleration program designed for innovative enterprises focused on early-stage growth.
It consists of a three-month intensive training program with financial support to accelerate the startup’s development and create conditions for rapid growth.
“The first Katapult cohort raised 15 million euros for 19 companies last March. In the next month, we will see how much money the second cohort will raise, and that will be a good indicator of where our market is and what it’s doing. As for unicorns, I don’t think we are close to that because we don’t have access to a market where we can find such a large number of users to be valued at a billion. The essence of our work currently is not to become a unicorn but to create a good, healthy base where we can have companies that will employ a large number of people and learn how to market their product. Although we don’t have two big champions like Croatia – Rimac and Infobip, we have a much higher-quality base,” says Bjelotomić.
“The market we are in is quite limited and doesn’t allow for the kind of growth we could have in America, but we have potential. Here, the majority of startups are still engineers, and it’s one thing if we are creating some software robot that does something and showcasing it to people, but it’s much different if we have solved their problem. Serbia is de facto a leader in the region, even though we are all similar in quality. Where I see a significant opportunity here is that we know how to do the same thing as Americans for much less money. However, the downside is that we are not yet an integral part of the global market,” notes Balaban.
