Usaid Economic Development, Governance and Enterprise Growth Project (Edge) Usaid Project - Partnership For Better Business Regulation

USAID ECONOMIC DEVELOPMENT, GOVERNANCE AND ENTERPRISE
GROWTH PROJECT (EDGE)
USAID PROJECT - PARTNERSHIP FOR BETTER BUSINESS REGULATION

Workforce Assessment Report – ICT Industry
Objective:
• To provide a comprehensive picture of the constraints and challenges of the
companies in the ICT industry, in the region of Western Balkans, in relation to
skills and availability of labor they need to operate effectively and to grow and to
offer recommendations for improvements.
Methodology:
• Online survey of 134 ICT companies
• Direct interviews with ICT companies
• Direct interviews with business associations
• Data from:
• State Statistical Offices of Individual Countries;
• Data from other available reports and studies (including WTO, World Bank etc.).
CONTENTS
• ICT industry in the countries of Western Balkans Region
• Education system
• Online survey of ICT companies
• Interviews
• Experiences and challenges before the ICT companies
• Role of the associations
• Conclusions
• Recommendations
ICT INDUSTRY IN THE WESTERN BALKANS
ICT Industry in the Western Balkans Region
• Steady growth in the last five years
• Important employer
• Increase in exports of ICT services
• An industry with an important contribution to the GDP
GDP added value - ICT (%) GDP added value - Computer
6,00 programming, consultancy and related
activities; information service activities
5,00 (%)
2,00 8.0%
4,00 1,80
1,60
8.4%
3,00 1,40
14.2%
1,20
8.4%
2,00 1,00
annual
0,80 growth
1,00 0,60
0,40
0,00 0,20
Albania Bosnia and Kosovo Montenegro North Serbia
0,00
Herzegovina Macedonia
Albania Bosnia and North Serbia
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Sources: Individual countries’ statistical offices (online statistical databases)

Commercial services exports by sector and partner - BOP6 - SI -
Telecommunications, computer, and information services * ($US million)
Source: WTO, data.wto.org, accessed on November 30, 2020

*Countries included: Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, Serbia
BOP6 - SI - Telecommunications, computer, and information services - exports
(US$ per 100 people)
25.000
Serbia
20.000
15.000
Montenegro
10.000
North Macedonia
Bosnia and Herzegovina

5.000
Kosovo Albania
0
2014 2015 2016 2017 2018 2019
Albania Bosnia and Herzegovina Kosovo Montenegro North Macedonia Serbia
Source: World Bank, https://tcdata360.worldbank.org, accessed on December 07, 2020

BOP6 - SI - Telecommunications, computer, and information services - exports
(US$ per 100 people)
40.000
35.000 Slovenia
30.000
25.000
Serbia
20.000
15.000
Montenegro
10.000
North Macedonia
Bosnia and Herzegovina
5.000
Albania
Kosovo
0
2014 2015 2016 2017 2018 2019
Albania Bosnia and Herzegovina Kosovo Montenegro North Macedonia Serbia Slovenia
Source: World Bank, https://tcdata360.worldbank.org, accessed on December 07, 2020

*Fixed broadband subscriptions (per 100 people)
35
30
25
20
15
10
0
Albania Bosnia and Montenegro North Serbia Slovenia
2012 2013 2014 2015 2016 2017 2018 2019
Source: WTO, data.wto.org, accessed on November 30, 2020

*Countries included: Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, Serbia (and Slovenia)
EDUCATION SYSTEMS IN WESTERN BALKANS
Education System in Western Balkans
• Formal and informal education
• The formal education system consists of
• Primary Education
• Secondary Education
• Vocational & Post-secondary Non-Tertiary
• Tertiary Education
• Bologna programs are applied at the universities in the region.
Education System in Western Balkans
• About *27% of the graduates (26000 graduates) from tertiary
education in the Western Balkans Region come from:
• Science, Technology, Engineering and Mathematics programs (23%)
• Natural Sciences, Mathematics and Statistics programs (4%)
• Annual number of graduated students from tertiary education in the
ICT is about 9% of the total number of graduated students or about
8500 ICT graduates.
*Source: World Bank, https://databank.worldbank.org, accessed on December 1, 2020

LABOR MARKET ICT
ICT in the Western Balkans Region - Labor Market
• In 2018 ICT sector employed about 150,000 people
• approx. 2.9% of all registered employees in the region
• The number of employees is even larger if we take into consideration ICT experts
employed in other companies (larger production companies, banks, government)
• Table: Number of employees in ICT

Bosnia and North
*Albania *Kosovo Montenegro Serbia Total
Total Number of Employees 1.137.939 572.958 345.100 190.132 759.054 2.131.079 5.136.262
ICT employees 32.000 21.518 9.663 5.274 15.303 63.935 147.693
Computer programming, consultancy and
related activities 10.241 5.947 3.175 1.061 6.754 27.656 54.834
ICT as % of total number of employees 2,8% 3,8% 2,8% 2,8% 2,0% 3,0% 2,9%
related activities as % of total number of
employees 0,9% 1,0% 0,9% 0,6% 0,9% 1,3% 1,1%
related activities as % of ICT employees 32,0% 27,6% 32,9% 20,1% 44,1% 43,3% 37,1%
* Estimated
ICT in the Western Balkans Region - Labor Market
• ICT - average net wages by country (in Euro)
Average Net
2017 2018 2019 Wages in 2019
(or 2018)
Albania / 622 / 424
Bosnia and Herzegovina 628 659 718 485
Kosovo / 717 / 558
Montenegro 697 703 / 510
North Macedonia 683 874 803 436
Serbia / 702 825 466
• ICT - average net wages by subsector (in Euro)

Computer programming,
Telecommunications
consultancy and related
2018 2019 2018 2019
North Macedonia 724 671 1.059 1.029
Serbia 658 735 925 1.081

Data for 2018
BOSNIA AND HERZEGOVINA: SERBIA:
ICT % of GDP: 4.12 ICT % of GDP: 4.8
IT % of GDP: 1.62 IT % of GDP: 1.9
ICT % of all employees : 3.76% (21,518) ICT % of all employees: 3.1% (63,935)
# of ICT companies: 1468 # of ICT companies: 4935
ICT services exports: 159 million $US ICT services exports: 1592 million $US
MONTENEGRO: KOSOVO:
IT % of GDP: n/a IT % of GDP: n/a
ICT % of all employees : 2.77% (5,274) ICT % of all employees: n/a (9,600 est.)
# of ICT companies: n/a # of ICT companies: 982
ICT services exports: 63 million $US ICT services exports: n/a
ALBANIA: NORTH MACEDONIA:

IT % of GDP: 0.67 IT % of GDP: 1.26
ICT % of all employees : 2.8% (32,000 est.) ICT % of all employees : 2.02% (15,303)
# of ICT companies: 2483 # of ICT companies: 1856
ICT services exports: 108 million $US ICT services exports: 235 million $US
Sources: Individual countries’ statistical offices (online statistical databases);

World Trade Organization (https://data.wto.org)
ONLINE SURVEY OF ICT COMPANIES
Survey of ICT companies
Characteristics of respondents
• 134 companies surveyed (1.04% of all ICT enterprises in the WB region, or 2.06% of enterprises
in the computer programming and consultancy segment)
Surveyed companies by country and size

(in %) Size of surveyed
100% companies:
• 30% micro (40)
80%
• 51% small (69)
60%
• 16% medium (22)
40% • 3% large(4)
20%
0%
Albania Bosnia and Kosovo Montenegro North Serbia Total
(8) Herzegovina (32) (15) Macedonia (32) (134)
(14) (33)
Up to 10 employees (micro) from 11 to 50 employees (small)
from 51 to 250 employees (average) more than 250 employees (large)
Main Business Activity

• Majority of surveyed companies (66%) are involved in providing ICT consulting services
Main Business Activity

• Most of the companies that
stated to have combination of
70% 66%
other activities (95% or 34
60% companies) also include ICT
consulting services
50%
• The combination of main
40% activities is more represented in
30% 27%
the micro and small companies
20%
10%
3% 2% 1%
0%
Training provider Provider of ICT Hardware Retail sale of Combination of the
consulting services distribution equipment and above
(wholesale) accessories
Employees turnover
• 5591 employees at the surveyed companies
• 4% of all employees in the ICT in the region, or
• 10% of all employees in computer programming, consultancy and related services
• 65% / 35% male to female ratio at the surveyed companies
• tertiary education trends indicate changes in this ratio towards making the difference smaller
• *In the period 2014 to Fulltime employees by gender
2019 the ratio
as % of all fulltime employees
male/female of graduated
students in ICT has 100%
changed from 60%/40% 80%

to 53%/47%. 60%
40%
20%
0%
* Data for graduated students in ICT in North
Macedonia (source: State Statistical Office, Annual Herzegovina Macedonia
Publications on Number of Graduated Students)
004. Full time male employees 005. Full time female employees
Employees turnover
• Use of seasonal workers was noted in 16% of the companies (21
companies)
Percentage of surveyed companies Average number of days per seasonal worker
that use seasonal labor (N=21) 140
60% 120
50% 100
40% 80
30% 60
20% 40
10% 20
0% 0
Albania Bosnia and Kosovo Montenegro North Serbia Albania Bosnia and Kosovo Montenegro North Serbia Total
Herzegovina Macedonia Herzegovina Macedonia
Sales analysis
• 100 companies, or 74% of surveyed companies, stated that they export their services,
• The analyzed levels of export sales indicate that the companies are either mostly focused on the
domestic market or their focus is placed on the export markets
Level of export sales of the exporting companies Level of export sales of the
(in %) (N=100) exporting companies (in %) (N=100)
50%
90% 44%
80% 45% 40%
70% 40%
60% 35%
50% 30%
40% 25%
30% 20%
20% 15%
8% 8%
10% 10%
0% 5%
Albania Bosnia and Kosovo Montenegro North Serbia Total 0%
Herzegovina Macedonia <= 30% 30% - 60% 61% - 80% >=81%
<= 30% 31% - 60% 61% - 80% >=81% Level of sales on export markets as % of total sales
Sales analysis
Expectations for Sales in 2020 Expected average decrease /
• Amidst the coronavirus 40% 37% increase of sales in 2020
challenge, the 35% 33% 40%
35%
expectations for 2020 30%
30% 35%
for the companies vary 25%
30% 26%
25%
20%
20%
15%
15%
10% 10%
5% 5%
0% 0%
Sales will Sales will stay at Sales will Expected average sales Expected average
decrease same level increase decrease in 2020 increase in sales in 2020
Expectations for Sales in 2020

80%
60%
40%
20%
0%
Sales will decrease Sales will stay at same level Sales will increase
Certifications in the ICT industry
• In regard to certifications, more than half of the surveyed companies (74

companies or 55% of all surveyed companies) have stated that they are certified
for standards relevant for the ICT industry.
• 34 companies (26%) have already been certified, or are in process for certification
for the quality management system ISO 9001
Fluctuation of employees in the ICT industry

• 68% of the survey companies (91 companies) did not have changes in the number
of employees
Changes in the number of employees
in the last 12 months
100%
88% 87% 88%
82%
80%
64% 68%
59%
60%
41%
40% 36% 32%
18%
20% 13% 13% 13%
0%
Yes No
Fluctuation of employees in the ICT industry

• 43 companies (32%) had changes in number of employees in the last 12 months
• The level of change in number of employees was less than 10% from the total number of
employees for 49% of the companies that had changes
• Finding new employees was partly or very difficult for 77% of these companies
Changes in the number of employees (N=43) Was finding new employees easy?
60% (N=43)
49% 45% 42%
50%
40%
35%
40% 35%
30%
30% 26% 25%
23% 19%
20%
20%
15%
10%
10% 5%
2% 5%
0% 0%
1 - 10 (%) 11 - 25 (%) 26 - 50 (%) no answer Yes Partly yes No n/a
Trainings in the ICT industry

• Trainings are important for the ICT sector. Close to 80% of the surveyed companies stated that
their employees had attended courses or trainings in the last 12 months.
• The companies mostly use the training services organized by private consulting firms (31% of all
answers), as well as training organized by other projects (31%).
• VET centers and Business associations are used by 14% of the surveyed companies.
Training Providers
70% Other projects 31%
60%
50%
Government institutions 2%
40%
Private consulting companies 31%
30%
20% Business
14%
10% associations/Chambers
0% Higher education institutions
Albania Bosnia and Kosovo Montenegro North Macedonia Serbia Total 8%
(universities)
Herzegovina
Vocational education training
14%
Vocational education training centers Higher education institutions (universities) centers
Business associations/Chambers Private consulting companies
Government institutions Other projects 0% 20% 40%

• Companies are, in general, satisfied with the quality of trainings organized by VET centers and
universities.
Satisfaction with training

70% 65%
61%
60%
50%
40%
28%
30% 21%
20% 11% 14%
10%
0%
Great Good Not Great Good Not
satisfactory satisfactory
Higher education institutions Vocational education training
(universities) centers

• Over 90% of the companies (124) stated that their employees need further professional
improvements in skills within the organization’s functions and soft skills
Skills within organization's functions Soft Skills - Training Requirements
- Training Requirements (312 answers) (402 answers)
Skills for quality standards 13% Other skills 4%
Finance / Financial Management Teaching skills 3%

8%
Skills
Informatics literacy and ICT skills 14%
Sales and sales management
19%
skills Creativity and innovation skills 14%
Knowledge and use of foreign
Management skills 22% 9%
languages
Teamwork and team building 16%
Marketing skills 18%
Problem solving skills 18%
Production-related skills
20% Communication and presentation
(technology) 23%
skills
0% 10% 20% 30% 0% 10% 20% 30%
Availability of labor force in the next three years

• The companies believe there will be no competent and well-trained workforce in the next three
years
Contacts and cooperation with labor providers and internship opportunities
• Contacts with labor providers and internship opportunities
Formal contacts with potential providers

of required workforce
No, we have no contact and
23%
cooperation
Other 12%
Lifetime Learning Centers 2%
Vocational education and

12%
training centers
Employment agencies 11%
With faculties / universities 33%
With secondary vocational

6%
schools
0% 10% 20% 30% 40%

Availability of training providers

• There are training providers available locally that meet the requirements of the ICT companies
partly (58%);
• It is very difficult to find qualified local training providers (25%).
Internship opportunities
• Most of the companies (88% or 118 companies) offer internships
• The companies that do not offer internship are micro and small companies
Number of companies with interns at the time of the survey Number of companies with interns
70% at the time of the survey
60% 50% 46%
50%
42%
40%
40%
30% 30%
20%
10%
20%
12%
0%
10%
0%
Yes No No answer Yes No No answer
Government policies and strategies

• Most of the surveyed companies are partly familiar with current government policies and
strategies
• Policies and strategies partly meet the expectation or are inappropriate
• Current policies and strategies are poorly designed and implemented
Familiarity with current government policies Characteristics of current programs and policies Opinion of the companies
and strategies for labor development and employment about current programs and policies
No answer 1% No answer 2% No answer 4%
They are inappropriate and Both policies and action

No, I'm not familiar with
25% don't meet my company 34% plans are well designed and 4%
this question
expectations implemented
I am partly familiar with They partially meet the Policies are well designed,
current programs and 54% expectations of my 59% but operational/action 32%
policies company and the industry plans are poorly…
Yes, I am fully acquainted Efficient and stimulating for

Current policies need to be
with the programs and 20% my company and the 4% 60%
redesigned
policies industry
0% 20% 40% 60% 0% 50% 100% 0% 50% 100%

Popularization of jobs offered in the ICT industry

• Internships and practical work (36%)
• Career fairs or fairs for vocational education and training (28%)
How to contribute to popularization of jobs offered

in the ICT industry?
No answer 6%
Other 17%
Participation in career fairs or

fairs for vocational education 28%
and training
Organizing internships or
practical training for secondary 36%
vocational students
Support in organizing individual
or smaller groups of job 10%
shadowing
Support secondary vocational
schools to visit your facilities
4%
0% 10% 20% 30% 40%

Other comments
• Total of 32 comments:
• Education system (60% of all comments),
• More practical work for students,
• Reforms in the education system to correspond to the market needs
• Promotion of life-long learning
• Government interventions (31% of comments),
• Incentives
• Better conditions for the teaching staff
• Market aspects
• Market developments and trends.
Interviews with companies

• Most of the ICT companies hire university graduates.
• Newcomers are not well prepared. Companies invest between six months
to one year for the training of the newcomers.
• Exceptions are students that had practical work or have done freelancing
work during their studies.
• In addition to ICT skills, employees may be required to have other
knowledge (e.g. design and implementation of ERP systems).

• Cooperation with high schools and universities are established by medium
sized and large companies, who have sufficient human capacities (HR
department).
• Good experiences from the cooperation with high schools and universities
is seen in the fact that companies can establish contacts with the future
engineers and may influence their career path and/or choice of technology.
• Bad experiences are mostly concerned with the slow communication and
lack of dynamics on the part of the high schools and universities.
• Technologies and markets are changing rapidly and educational institutions
are not able to follow the market changes.

• There is a deficit of well-trained experienced ICT engineers
• There is a deficit of well-trained and experienced people for marketing
and sales of digital products
• Internships have proven to be very successful way for recruiting new
staff
• Practical work during studies would be beneficial to achieve better
prepared young people for the ICT industry
• ICT related subjects, specifically programming, should be introduced
at the other faculties (including medical schools).
Interviews with associations
Interviews with ICT associations

• Associations are closely monitoring the changes in the technologies
and trends
• Information of training requirements:
• Daily communications with the members
• Regular business meetings with the members
• Regular annual surveys
• Regular contacts with VET schools and universities
• Specialized technical trainings can be expensive, and some of the
SMEs cannot finance the training. International donor support is
welcome.
Interviews with associations
Interviews with ICT associations

• External training is mostly used by the companies when there is some
kind of certification related to and required for their work.
• Promotion of the concepts of life-long learning and collaborative
learning on all levels.
• The number of certified trainers is still low, although increasing in the
last several years.
Conclusions
ICT companies:
• Most of the companies are micro or small – this may mean lack of
management functions and/or skills within the company;
• ICT companies “specialize” working:
• Mostly on the local market(s), or
• Mostly subcontracting for export markets (with exceptions)
• Local markets are small;
• There are great potentials for export of ICT services;
• Lack of well trained and experienced new employees;
• Companies invest time and resources for the training.
Conclusions
ICT experts:
• The employees in the industry are mostly engineers;
• The students are interested in the ICT sector because of the working
conditions, wages and the possibilities for personal growth;
• Continuous education is required for both technical and soft skills.
Conclusions
Education:
• The cooperation with the educational institutions is mostly carried out
by larger companies who have HR departments;
• Companies are relatively satisfied with the level of quality of trainings
provided by the local providers, universities and VETs;
• The companies are not happy with the speed the curricula is adapted to
the market changes, at the relevant educational organizations;
• Developing new curricula takes time and resources and is a procedure;
• There are private companies that provide training and education
services. Some of the larger companies have their own training
academies;
• Specialized training and certifications can be very expensive.
Conclusions
Associations:
• There is lack of sufficient communication between ICT companies,
academia, employment agencies and government.
• Governments need to see the broader picture on the contribution of the
ICT to the local economies
• The roles of the Associations are:
• to successfully bring the two sides, the recipients of training and the providers
of training, closer
• to promote the industry and to lobby before the government and its institutions
• help companies, where possible, access financing for training purposes.
Conclusions
Markets and market potentials:
• Countries in the region do not use the full potentials of their ICT
capacities,
• Lack of market information and international marketing and
promotion activities;
• Lack of adequate cooperation between the ICT companies
• Issues of contracts, protection of property rights
Recommendations
Institutional support:
• Support marketing and promotion for the ICT industry
• Support branding - both local and regional
• Improve and make the access to finance easier for the ICT companies
when they need financing for development of new products
(collateral)
• Tax and other financial incentives
• Sensitive issue - but indirectly there is a non-equal treatment for IT companies
who work on the local market and those who work abroad (meeting the IT
requirements of the local economies)
Recommendations
Education:
• Obligatory IT subjects in primary education starting from lower levels
of education (programming, informatics);
• Introduction of obligatory practical education and its full
implementation in real business environment, for the students in the
secondary and tertiary education;
• Introduce procedures for quicker adaptation of the curricula to the
needs of the ICT companies;
• Promotion of life-long learning and collaborative learning on all levels
of education.
Recommendations
Role of associations:
• Integrators of all stakeholders in the ICT industry
• Increase membership
• Accumulate and disseminate market trends and potentials data
• Develop services/products, including training
Recommendations
Employment and recruitment agencies:
• Specialization of the employment agencies for ICT (most of the ICT
freelancers in the region are recruited online by foreign recruitment
agencies)
• Retraining (requalification) opportunities for people who want to
change career paths.
Recommendations
for ICT companies:
• Create local/regional partnerships for joint approach to markets;
• Increase the use of consultants (legal, marketing, management, access
to finance);
• Improve on the job training;
• Establish procedures and culture of collaborative learning, job
shadowing.
Recommendations
for all stakeholders:
• Preparatory activities for education and training in the areas that are
expected to be dominant in the following period, such as:
• Artificial Intelligence,
• Internet of Things,
• Big Data,
• Virtual Reality,
• Robotics,
• Data mining,
• Etc.
Ви благодарам на вниманието.

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USAID ECONOMIC DEVELOPMENT, GOVERNANCE AND ENTERPRISE

GROWTH PROJECT (EDGE)

USAID PROJECT - PARTNERSHIP FOR BETTER BUSINESS REGULATION

Sources: Individual countries’ statistical offices (online statistical databases)

Source: WTO, data.wto.org, accessed on November 30, 2020

Bosnia and Herzegovina

Albania Bosnia and Herzegovina Kosovo Montenegro North Macedonia Serbia

Source: World Bank, https://tcdata360.worldbank.org, accessed on December 07, 2020

Source: World Bank, https://tcdata360.worldbank.org, accessed on December 07, 2020

2012 2013 2014 2015 2016 2017 2018 2019

Source: WTO, data.wto.org, accessed on November 30, 2020

*Source: World Bank, https://databank.worldbank.org, accessed on December 1, 2020

• Table: Number of employees in ICT

• ICT - average net wages by subsector (in Euro)

Sources: Individual countries’ statistical offices (online statistical databases)

ALBANIA: NORTH MACEDONIA:

Sources: Individual countries’ statistical offices (online statistical databases);

Surveyed companies by country and size

Main Business Activity

Main Business Activity

changed from 60%/40% 80%

Expectations for Sales in 2020

Certifications in the ICT industry

• In regard to certifications, more than half of the surveyed companies (74

Fluctuation of employees in the ICT industry

Fluctuation of employees in the ICT industry

Trainings in the ICT industry

Trainings in the ICT industry

Satisfaction with training

Trainings in the ICT industry

Finance / Financial Management Teaching skills 3%

Availability of labor force in the next three years

Contacts and cooperation with labor providers and internship opportunities

• Contacts with labor providers and internship opportunities

Formal contacts with potential providers

Lifetime Learning Centers 2%

Vocational education and

Employment agencies 11%

With faculties / universities 33%

With secondary vocational

0% 10% 20% 30% 40%

Availability of training providers

Government policies and strategies

No answer 1% No answer 2% No answer 4%

They are inappropriate and Both policies and action

Yes, I am fully acquainted Efficient and stimulating for

0% 20% 40% 60% 0% 50% 100% 0% 50% 100%

Popularization of jobs offered in the ICT industry

How to contribute to popularization of jobs offered

Participation in career fairs or

0% 10% 20% 30% 40%

Interviews with companies

Interviews with companies

Interviews with companies

Interviews with ICT associations

Interviews with ICT associations

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