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south-east european

INDUSTRIAL MARKET

8

SEE ELECTRONICS

The outsourcing industry in Bulgaria has marked its

seventh consecutive year of double-digit growth, and

now accounts for 3,6% of the country’s GDP. This in-

formation was published in a 2017 report conducted

on the Bulgarian Outsourcing Industry by the Bulgari-

an Outsourcing Association (BAA). According to the

study, a number of factors contribute to the preserving

positive trends, with the most important being the

availability of skilled labor, active interaction between

business, education and the state, the preservation of

the flat tax and the expansion of the package to en-

courage foreign investment.

Geographically, outsourcing in Bulgaria is develop-

ing not only in Sofia but also in larger cities such as

Plovdiv, Burgas and Varna. Outsourcing companies

are usually interested in the necessary human re-

sources and educational institutions of a city, whether

it has well-developed infrastructure, an appropriate

class of office buildings and strategic geographic loca-

tion.

Outsourcing advantages

of Bulgaria

According to the BAA, Bulgaria is a leading outsourc-

ing destination in Europe and the world, situated in

the top 10 most desirable countries on a global level.

Several different international companies have already

established offices in Bulgaria and continue to expand

their business, while new investors are also entering

the market. The main advantages of the country are

its geographical position, the flat tax, which is very at-

tractive to investors, as well as the well-developed hu-

man resource in terms of language knowledge and IT

training.

Within the last 10 years, employees in the Bulgarian

outsourcing sector grew to above 15 000 people. The

sector serves various clients from Western Europe,

North America and Asia, the majority of which are For-

tune 500 or Fortune 1000 companies.

Additionally, Bulgaria has well-developed education-

al system specializing in electronics, engineering, and

computer sciences. The country has 46 universities

located in 21 different towns. At any given time, there

are more than 10 000 Bulgarian students majoring in

computer science, electrical engineering, mathemat-

ics, physics, and biotechnology, states another report

by the BAA.

Bulgaria boasts the lowest corporate tax in EU,

which is 10%. Among the other countries in Southeast

Europe, it ranks second, together with Macedonia, Ko-

sovo and Bosnia and Herzegovina, which also have a

10% corporate tax, whereas Montenegro imposes a

tax of 9,0%. Bulgaria also has some of the lowest op-

erational costs in the region.

Within the electrical engineering, electronics man-

ufacturing and R&D sector, Bulgaria also provides

several important advantages: Availability of experi-

enced engineers; Qualified assembly workforce at

affordable cost; Established traditions in the electri-

cal engineering and electronics sector; Infrastructure

well suited for the needs of electronics manufactur-

ing; Easy access to EU, Russian/CIS and Middle

East markets; Vibrant mix of international and local

Outsourcing Electronic Manufacturing

in Bulgaria

companies from the electronics sector with success-

ful operations in Bulgaria.

State of the electronic industry

The production of the Bulgarian electronics sector

has experienced steady growth with its volume in-

creasing nearly 4 times from 2000 to 2010. In 2010

revenues exceeded EUR 1,5 billion, which is the high-

est level since 1990. Around 45 000 people in 2300

companies are permanently employed in the industry.

Bulgaria is often considered the electronics manu-

facturing hub in Southeast Europe, because the sec-

tor has been developed on a basis of both local and

multinational firms who have established production

plants or outsource their production. These compa-

nies supply various European markets, among which

are the automotive, lighting, renewable and conven-

tional energy equipment, consumer electronics, secu-

rity, defense, telecommunications and others.

Among the most popular product groups which are

produced in Bulgaria are high end energy saving sen-

sors for various applications in different industries

ranging from automotive through food and beverage

production to agriculture equipment, top quality ampli-

fiers and high frequency power products used in the

radio communication sector, the latest generation

HVAC and climate control equipment used in modern

high speed electric trains, semiconductors and semi-

conductor products used in medical, machine building

and automotive manufacturing globally by companies

such as BMW, GM, Mercedes, Printed Circuit Boards

(PCBs) and microelectronic components for industrial

applications used all over the world, and more.

According to data by the National Statistical Institute

of Bulgaria, the InvestBulgaria Agency and the Bul-

garian Chamber of Commerce, the majority of elec-

tronic production in Bulgaria is export-oriented to sev-

eral key markets, including the EU countries, Russia

and CIS, and USA. These represent more than 75%

of total exports. By category, wires and cables account

for 25% of the total sector exports, followed by indus-

trial batteries with 11% of the exported production and

electrical apparatuses with 8% of the export. The rest

of the market is distributed to transformers (7%), inte-

grated circuit (7%), telephone devices (6%), panels

and el. tables (6%), PCBs (3%), electric heaters (2%),

radio and TV equipment (2%), and others (23%), ac-

cording to official statistical data.

Human resources and industrial

clusters

Because of the traditions in the sector, Bulgarian en-

gineers are highly qualified for the needs of the electri-

cal engineering and electronics manufacturing. There

are experienced assembly workers available at very

affordable labor cost, states a report by the Bulgarian

foreign investment agency Invest in Bulgaria. The sec-

tor is characterized by very good overall quality/cost

ratio of the workforce.

As for education, there are five technical universi-

ties in Bulgaria offering majors in electronics and

electrical engineering. A total of about 30 000 uni-

versity students are enrolled in majors related to the

Electrical Engineering and Electronics manufactur-

ing. About 9000 of the current Technical University

students study majors directly related to Electrical &

Electronics sector. About 20 000 more students are

enrolled in other majors in Technical Universities and

may be suitable for a career in the electronics sector

as well.

As for industrial clusters, there are several estab-

lished cluster zones in the country. Among them

Botevgrad is considered the electronic manufacturing

center of Bulgaria with its strong historic traditions in

the industry and close location to the capital and an-

other big cluster zone – Sofia. Sofia is the executive,

legislative and judiciary power, as well as financial hub

of the country. Another big cluster is the Plovdiv one,

which is the second largest city and major administra-

tive, industrial, transport and tourist destination.

Source: Dreamstime