Bulgaria is Losing Its Competitive Edge in the IT Sector – but There Is a Way Forward
Ivan Lekushev, CEO of BGO Software, in “UpDate,” January 12, 2025
There is a real risk that businesses that came to Bulgaria for its lower costs may relocate elsewhere. The sector’s growth for 2024 (based on preliminary data) stands at 12.4%, the lowest in at least the past ten years. This is a red flag that should prompt us to consider what we can do to reverse this trend. For markets like Eastern Europe, and Bulgaria in particular, the solution lies in specialization.
This was the key message from Ivan Lekushev, CEO of BGO Software, in an interview on Bloomberg TV Bulgaria’s “UpDate” with host Elena Kirilova.
BGO Software started as a classic outsourcing company but later specialized in developing IT solutions for the healthcare sector, Lekushev shared. “At present, the majority of our clients are large corporations involved in clinical research and pharmaceutical companies developing new drugs.”
The company’s 16-year journey to building such a client portfolio “has not been easy,” as companies of this caliber have a “wide choice of partners for their projects,” he added. “What they are certainly looking for is high quality at a good price. Fortunately, Eastern Europe, including Bulgaria, remains one of the IT destinations that can offer this.”
Bulgaria’s Position in the Digital Healthcare Market
When asked about Bulgaria’s positioning in the digital healthcare sector and its growth potential, Lekushev admitted that the country is not currently ahead of others in Central and Eastern Europe. However, this can change, as Bulgaria holds significant potential. The healthcare industry itself still has vast room for digitalization.
“The healthcare industry is not yet digitized to the same extent as others. In Bulgaria, we have had mobile banking for over ten years, yet only recently have we been able to access our electronic medical records on a mobile device. This is a clear example of where healthcare digitalization in Bulgaria stands – there is still a long way to go.”
The United States is undoubtedly the leader in healthcare digitalization, Lekushev emphasized. “Some European countries are trying to catch up, but at present, they lag by at least two to three years.”
A Shrinking Competitive Advantage
The IT industry in Bulgaria has performed well over the past two decades, but growth is slowing due to various macro- and microeconomic factors. The outlook is not particularly optimistic because Bulgaria (like some other countries) has relied on low costs to remain competitive. Another factor that cannot be ignored is cultural differences. Compared to India or other parts of Asia, Bulgaria and Eastern Europe have a closer cultural fit with Western European and American companies.
However, the cost advantage that Bulgaria once had is disappearing, Lekushev noted. “When we started, IT service costs here were two to three times lower. Today, the difference is only about 20-30%, which is no longer significant enough to be a decisive factor.”
“This is concerning because businesses that seek lower costs will continue to do so. The risk is real that companies that came to Bulgaria for its low prices may now look elsewhere. This is a real threat. The sector’s growth for 2024, at 12.4%, is the lowest in at least ten years. This is a red flag that should make us think about how we can change this trend. For markets like Eastern Europe, and particularly Bulgaria, the solution lies in specialization.”
The Role of AI and Future Technologies
According to Lekushev, the entire pharmaceutical and healthcare sector will be significantly impacted by emerging technologies, including artificial intelligence. However, AI is just one piece of the puzzle. “Many other technologies are evolving in parallel and will help improve the process because, ultimately, we are dealing with people’s health.”
“Our company is an example of how an outsourcing business can specialize in a specific field to become more competitive – both in the labor market and internationally. Our ambition is to help the Bulgarian IT industry become more competitive. The cost-based advantage we have today will soon no longer be something we can rely on. This is why best practices from companies like ours can be leveraged by many others in the industry, leading to a more specialized Bulgarian IT sector. We will pass on this know-how through educational initiatives, investments, and leading by example.”
Watch the full interview in the video.
Author of the article: Galina Marinova
BGO Software is a renowned IT company specializing in healthcare technology solutions. With over 15 years of industry experience, we offer comprehensive technology consulting, software development, and IT infrastructure services. Our focus on healthcare technology enables businesses to mitigate technological risks and accelerate growth, ultimately delivering enhanced value to patients.
