Taking the wrong turn

Recent news about “big and important” investment of Continental was followed up by information that the Serbian Government is paying €9.5 million in subventions to this company, for “establishment of Research and Development Center in Novi Sad”, which will make possible “creation of 500 permanent new jobs”.

Vojvodina ICT Cluster offers additional €9.5 million to Continental, if they fill those 500 vacancies with people who have never worked in an IT company before. That is the definition of “new jobs”, right?

Continental certainly cannot find those 500 employees in the labor market, and will have to look for them in the existing companies. Hence, it means no creation of new jobs. We are sure that the company will not keep the profit in Serbia either, and that their business model is actually outsourcing: the “R&D Center” will develop solutions that the mother company will sell on global markets not from Serbia, but from Germany or some other location – where it registers IP rights and pays profit tax. Thus, Serbian Government is using tax payers’ money to finance effective brain drain.

Let us be perfectly clear: this move by Serbian Government is nothing short of backstabbing domestic IT companies, who lead successful businesses and generate profits for themselves and our country.

We are all for free market, and our companies are not afraid of competition. They exemplify this attitude by their performances and results on international markets. But unfair competition in our own back yard, state subsidies which give advantage to individual companies, is worrying.

Serbian IT community has been trying for years now to explain where the opportunities are, to point the way forward numerous times, to argue for measures to boost IT industry in a way that would benefit all other sectors and our society at large. We have always tried to have a balanced approach and understanding for difficulties that change and slow political processes bring. Changing the course is a big task, and the key precondition for success is commitment of the decision makers.

The state has to abandon the old habit when it comes to foreign direct investments (FDI). Foreign is not always better than domestic, and especially so in case of IT industry. Serbia does not need the image of a country where companies come to employ our IT experts, but of a country that has its own IT industry, performing well on the global market. Such an image would bring even more business and success to domestic IT companies. We should remind ourselves this is the only industry in Serbia where the growth is double-digit for years now, and whose export value will soon be at the top of the Serbian export list.

The job of Government, therefore, is to invest in education and dramatically increase number of experts, solve the problem of lacking teaching staff, support entrepreneurship, promote and support IT industry on its way forward – not to create unfair competition via subsidies.

We invest a lot of enthusiasm into education of youth for IT jobs, we spread the good news about importance and successes of our software industry throughout Serbia, and point out benefits that new technologies bring along. We are at disposal to the decision makers in the Government for consultations and joint actions. Our active engagement helped introduction of the Strategy for Development of IT Industry in 2016. Performances of our companies outside Serbia are ever improving, putting our country on the map as a great source of sophisticated software products and solutions.

This latest development, however, forces us to reconsider everything we have invested so far to make our successful IT story even more so, and – what is even more important – spill over its success to other sectors, public administration, healthcare, and education.

Current Serbian Government is, admittedly, the first one in a long time that gives more attention to the IT industry. When the latest IT Strategy was adopted in 2016, we tried to keep focus on the opportunities that development of domestic IT industry created. It is the truth that now we have a government that is open for dialogue, much more so than in in the past.

Precisely that is the main reason why this move by the Government casts a long shadow on future development of Serbian IT sector, and we need to use dialogue to clear the air and set things straight. Serbia has no time for this kind of experiments.

 

 

 

 

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Vojvodina ICT Cluster

Vojvodina ICT Cluster