The IT services market in Serbia experienced another year of steady growth in 2008. According to a recent IDC study, the Serbian IT services market totaled $149.03 million in 2008, representing 28.7% year-on-year growth in U.S. dollars. Measured in local currency, the market expanded 21.0% year on year. After a decline in 2009 and stagnation in 2010, the Serbian IT services market is expected to recover as the country's economy rebounds.

"Presidential elections held in January and February 2008 had a negative effect on foreign direct investment (FDI) and on IT services spending in the first half of the year," says Atila Madai, IDC's country manager for Serbia. "However, the second half of the year was characterized by more positive overall development in the country, which encouraged further FDI inflow and resulted in increased demand for IT services."

In 2008, telecommunications was the largest vertical market in Serbia, with $45.85 million in services-related spending for a 30.8% market share. The combined finance vertical (banking, insurance, and other financial services) placed second, with 20.9% share, based on services expenditure of $31.20 million. Manufacturing entities undertook IT services investment of $19.52 million in 2008, thus ranking the combined manufacturing vertical third, with 13.1% share. The fourth-largest vertical was the public sector, which accounted for 10.2% ($15.18 million) of total IT services spending in the country in 2008.

On the supply side, Saga was the leading IT services provider in Serbia last year, followed by Telefonija, Siemens SIS, Spinnaker New Technologies, and S&T. The combined market share of the top five vendors accounted for almost half of the total IT services market in 2008.

The hardware support and installation category accounted for the largest share (24.3%) of IT services revenue in 2008, followed by systems integration (23.5%) and software support and installation (19.5%). The combined custom application development category comprised 15.7% of the 2008 IT services market in Serbia.

IDC predicts spending on IT services in Serbia will cease to grow in 2009, remain flat in 2010, and recover during the following three years. This upturn will be in line with the expected recovery and growth of the economy from 2011 onward. Over the five-year forecast period, the market will grow at an average annual rate of 8.4%, to reach approximately $224 million in 2013.

“After two years of healthy progress, the Serbian IT services market will experience a period of stagnation, through 2009–2010, induced by the financial crisis,” says Madai. “Vendors should be proactive in recommending specific actions to their clients that will help them overcome the downturn; pushing the role of IT from that of serving business to one for transforming business.”

IDC’s Serbia IT Services Market 2009-2013 Forecast and 2008 Vendor Shares (IDC # ES42R9) presents the Serbian IT services industry in 2008 and forecasts expenditures on IT services through 2013. The study provides market size information, vendor market shares, and revenues by IT services categories and vertical markets, and includes profiles of the top five IT services providers, including their IT services portfolios, their presence in individual vertical markets, and their largest contracts in 2008.

If you are interested in purchasing the report, please contact Ana Papez (apapez@idc.com, +385 1 30 40 050).