Can Bulgaria become the Silicon Valley of the Black Sea?

At Thursday’s conference in Sofia — “Realising the Potential – Bulgaria on the Outsourcing and Off-shoring Map” — leaders of Bulgarian private industry and government took an important first step towards collectively positioning Bulgaria as a nearshoring destination of choice for Western companies.

While the room full of leaders could not quite resolve the “chicken and egg” dilema over which entity–government or the private sector–should take the lead on this initiative, the panel agreed on several common themes that must improve in order to move the country closer to a shared vision of Bulgaria as an IT outsourcing hub for the region:

Infrastructure

Without a doubt, reliable roads, rail, ports, power & electricity are all prerequisites for investment by an outsourcing firm. Disappointingly, Bulgaria scored 135 out of 139 countries on quality of roads, according to this report presented by McKinsey & Company’s Detlev Hoch.

Management education

The Bulgarian education system has a strong tradition in churning out world-class engineers, mathematicians and scientists. But Sasha Bezuhanova of HP keenly pointed out the lack of quality management eduction in Bulgaria. Companies with large-scale outsourcing operations here in Bulgaria certainly require highly-qualified local managers, but now they are too reliant on importing expats to fill such roles.

University-industry partnership

Like the famous partnership between Stanford University and Silicon Valley, universities with strong R&D labs can spawn vibrant technology parks. Unfortunately, Bulgaria scored in the bottom quartile in the World Economic Forum (WEF) report for University-industry collaboration in R&D.

Intellectual property protection

Inventors and entrepreneurs need the assurance that their innovations will be protected from copycats. They will naturally invent in the places that give them the highest levels of protection for their ideas. Bulgaria must better protect firms’ intellectual property as a condition for fostering entrepreneurship.

Location branding

These are the total number of global monthly Google searches for “outsourcing + (location)” search phrases for specific countries in Eastern Europe:

[outsourcing Romania] 590

[outsourcing Ukraine] 210

[outsourcing Poland] 140

[outsourcing Russia] 140

[outsourcing Bulgaria] 73

[outsourcing Slovakia] 22

These results point to a marketing challenge for Bulgaria, at least relative to other countries in the region (namely Romania). Smart use of PR can drive awareness and cultivate demand. And with success stories like HP, Bulgaria’s Ministry of Regional Development & Public Works has a strong case study to showcase.

Quality of Life

Last, and perhaps most importantly, young people must find in Bulgaria a lifestyle balance between work and play. This is critical not only for retaining top Bulgarian talent, but also for recruiting young people from abroad to relocate and work in Bulgaria. Hiring companies, universities and the government should collaborate on how to best portray Bulgarian cities as offering the ideal work-life balance.

Participants left the event buzzing, with member-hungry organizations such as AmCham promising to lead the conversation forward. While Sofia or Varna may not become known worldwide as the Silicon Valley of the Black Sea anytime in the near future, this vision can and should prompt the public and private leaders of Bulgarian society to initiate the incremental improvements necessary to make Bulgaria a more attractive outsourcing destination in the region.

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