The Serbian IT market shot up 30% year on year in U.S. dollars in 2007, fuelled by a growing economy, structural reforms, privatization, tax cuts, and inflow of foreign direct investment (FDI). According to a recent IDC report, total spending on hardware, software, and IT services in Serbia reached almost $751 million in 2007. However, measured in local currency, the market saw modest year-on-year growth of 12%, due to weakening of the dollar.

“IDC expects IT spending in Serbia to grow dynamically in the midterm, albeit from a low base, driven by an expanding economy, structural reforms, FDI inflow, privatization, the pace of the country’s EU approach, and a few foreseen IT investment initiatives,” says Atila Madai, Research Analyst, IDC Adriatics. “The average growth rate, however, will depend on vendors’ abilities to cope with political constraints facing the country.”

Posting $102 in IT spending per capita in 2007, Serbia’s per capita spending was 11.5% of the EU27 average ($886) – behind Slovenia ($455) and Croatia ($276), close to Bulgaria ($120), and slightly ahead of neighboring Romania ($96). Nevertheless, Serbia captured 22.5% of the combined IT spending of the eight Adriatics regional countries, and was just above the $99 average IT spending per capita for the region overall in 2007.

IT equipment constituted 72.8% of the total value of Serbia’s IT market in 2007. IT services placed second, with approximately 15.4%, and software captured the remaining 11.8%.

IDC expects IT spending in Serbia to increase at an average annual rate of 15.3% over the next five years to surpass $1.50 billion in 2012, with software expected to grow the fastest.

“Proceeding with the privatization process, increasing FDI, and improving economic developments, nearly all end user segments will be buying computers and equipment,” said Madai. “The majority of companies are still undergoing development processes and are trying to establish basic informatics structures – this means potential for long-term development in the local IT market.”

The study Serbia IT Market 2008-2012 Forecast and 2007 Vendor Shares (IDC #ESQ1Q) presents the IT market in Serbia and forecasts total IT expenditures by technology through 2012. The study contains market size, vendor market shares, and growth projections for hardware and packaged software shipments, as well as for the provision of IT services.