Numbers never lie…
…goes the saying. We did give it away with the title already, but would you, sincerely and honestly, have guessed which country we are talking about? Here we go:
With a total population of 7 Million, Serbian universities and colleges provide an average of 50.000 graduates (min. Bachelor level) per year, of which 33% come from technical schools. According to the Serbian Statistical Office, out of 242.000 enrolled university students, 40.000 study IT disciplines
More than 80% of students and graduates in Serbia master English as a second language
You may find comparable numbers in other smaller countries in Europe or the world, but the (ITC) education level is not where the attractiveness stops. On the cost front also, we can safely state that we are dealing here with a pearl in Europe.
Today, an average Serbian net salary is at 482€, which with taxes and contributions reaches 662 €.
The unemployment rate fluctuates somewhere between 10% and 12%.
Given the talent shortage in Western Europe, particularly in the ITC sector, it seems like a no-brainer to, at the very least, consider Serbia as a top-tier investment and settlement destination for any company. Add that attrition is low - courtesy of the high unemployment rate - you have just identified what sounds like a dream country.
It doesn't surprise that Serbia has a strong FDI track record, which is substantiated by internationally recognized awards. The country is ranked No. 1 on the FDI 2019 Europe list, based on the criteria of Greenfield investments relative to the size of the economy (Financial Times, FDI Report 2020).
Serbia is ranked No. 1 globally for the fourth year in a row, as the country that creates most FDI jobs per million inhabitants, according to “IBM Global Location Trends 2020“.
But there are a few other benefits so we concluded the list of the reasons why to invest in Serbia.
Top 10 Reasons to Invest in Serbia
High quality and competitive workforce (good educational system and a high level of English language proficiency)
Low attrition rates
Financial incentives aimed at new employment and tax incentives for attracting foreign investments
Encouraging investment regime (legal security, national treatment of foreign investors, and the possibility of repatriation of capital) and favorable tax system
Lower tax rates than at competing investment destinations: general VAT rate in Serbia is 20%, income tax for citizens is 10% and corporate profit tax is 15% with a proportionate exemption from this tax for investments in fixed assets larger than EUR 8.5 million and employment of at least 100 workers
Duty-free export of goods produced in Serbia
Implementation of double taxation avoidance agreements with 50 countries
Customs exemptions to foreign investors for the imports of equipment
Ideal geographical position between East and West, in the heart of Southeast Europe
As for the trade agreements, there are:
Interim Trade Agreement with EU
Central European Free Trade Agreement (CEFTA)
Free Trade Agreement with EFTA
Free trade agreements with Russian Federation (0% customs rate), Belarus, and Kazakhstan
Free Trade Agreement with Turkey
USA – Generalized System of Preferences
Free Trade Agreements
If it sounds too good to be true, it probably is...or not?
The talent offering and the cost structure are undeniable arguments that render Serbia a country that must be considered by any company planning to expand its footprint in continental Europe, the more so if that company needs skilled, technical labor, especially in ITC. But like everything in life, there are drawbacks, and the cynical among us would say that if the perspective were so rosy, Serbia’s prices and cost structure would have risen significantly already. So, what are the main challenges facing an international organization considering a Serbian foothold?
First, and foremost, Serbia is outside the EU legislative reach. As such, one cannot fully rely on the experience and knowledge accumulated in other EU jurisdictions. Norway, Switzerland, and Iceland are not in the EU either but have deployed a great deal of the same rules and regulations, hence starting operations in these countries feels like being in Europe. On the other hand, Serbia is aiming to join the EU and is already harmonizing its legal system along with the EU requirements.
But there are other issues that can arise: if the (largely very young) Serbian population is well educated and well versed in the English language, the (older) population at large is not.
Getting your way around the talent market, labor laws, and other legislation can prove a difficult ordeal for "newcomers". A smooth start requires experience, knowledge, and teams who speak the local language and know the intricacies of Serbian administration, habits, and customs.
Serendi’s added value
Serendi has a long history and experience in Central and Eastern Europe: among others, a sourcing center in Budapest (Hungary), regional offices in Serbia. As a matter of fact, Serendi has built its expertise and reputation in exactly these countries that seem, and are, less accessible, especially without prior experience.
Serendi is the ideal partner bridging the gap between a headquarter in a more traditional European country and subsidiaries in regional markets that possess significant competitive advantages.
We can together clear the way for accelerated compliance procedures, establish a transparent communication and reporting process with and to HQ. In short, speed up your greenfield project in Serbia and the entire Southern Eastern European region while guaranteeing a level of professionalism, second to none.
Serbia’s competitive advantages as a regional base are undeniable: availability of (ITC, technical and other) talent, a reliable, skilled, and multilingual workforce. The country’s position in the heart of CEE makes it an excellent choice since it shares the same time zone as most western European countries.
With a unique combination of high-quality, wide availability, and cost-effectiveness, the Serbian labor force is regarded as a strong business performance driver. Serbia’s favorable business environment features highly competitive tax rates and low operating costs. In addition, with developed telecommunication and ICT infrastructure, Serbia is aiming to become an alternative to more traditional ICT markets, with the ICT sector becoming one of the pillars of the Serbian economy.