SERBIA AND INNOVATION - HOW NOT TO WASTE OUR CHANCE
For decades, we have been listening to the story of the decline of the Serbian village and the downfall of the Serbian farmer, due to a lack of competition through specialisation.
The formerly sustainable rural household: one cow, a couple of pigs, domestic chickens, an orchard, vegetable crops and even homemade brandy, has become unsustainable. There is no focus that will direct the effort, progress and the acquisition of knowledge in a direction for which that household has the best chance, depending on the climate, local market, heritage and existing knowledge.
Although at first glance it may be too far-fetched, this picture of the rural household, its capacity, opportunities and obstacles is very similar to the state of the development and application of innovation in Serbia. The ecosystem exists, the IT sector is growing rapidly, employing tens of thousands of people and becoming one of the most important export activities, startups are coming up with innovative products, enough investors are ready to invest, the state is ever more active, large business systems are looking for innovation and new business models... is this promising? Is intervention necessary then, or is the success actually a consequence of the free development of this market?
Here we come to two important challenges, which threaten to jeopardize the success of the hitherto huge potential and progress. The first is the fact that the enviable development of the domestic IT industry rests on outsourcing. Our companies work very successfully on a part or the entire development and maintenance of a product/system, but it is not their product
Here is where we are competitive: we have high-quality people, we are in a good time zone, we know English… However, with the constant growth of labour costs, it is only a matter of time before outsourcing companies from new markets start getting the work and squeezing our companies with much lower prices. In that case, the scenario and outcome will not look at all good - the potential and the industry can collapse markedly in a few years. As long as the essential advantage lies in the low price of human resources, stability and growth are uncertain. There is a good chance that someone else can offer a similar or greater advantage.
The solution to this challenge can be a more robust transition to creating our own products or technologies and tools that will enable the company to be an indispensable partner. However, no matter how visible this threat now is, this is not happening, and for companies that have the management, resources and knowledge to move in that direction, there is no justification for it. The value of the local product and the team that develops it is recognized and valued in itself rather than as replaceable "labour", as shown by examples of acquisitions and investments on the local market measured in tens or hundreds of millions of dollars, including Trilateral, Seven Bridges, Nordeus, Orgnostic...
Another challenge is the lack of focus. We must focus on the area of innovation with the greatest potential - to create, apply and test it in the local economic environment, and create a vertical of innovation by which Serbia will be recognizable and have a chance in developed markets.
As in our story at the beginning, where the average rural household stagnates because it deals with "anything and everything", so our spontaneous innovation ecosystem has no direction. We are trying to enter the world market with products ranging from gaming through blockchain to cyber security, and the truth is that we are not big enough to play on such a wide front.
We need a direction that will recognize the area of innovation into which we can direct our capacities, for the benefit of society, businesses and everyone who seeks their fortune in the innovation industry. Such a model has been applied in the world for years, through the direction and strong partnership of the innovation industry, traditional business, faculties and scientific institutes.
According to the latest results of the Global Innovation Index for 2021, after considerable progress Serbia is threatened by stagnation, which is precisely the result of an insufficient rate of development of innovative domestic services and products and their application in the business environment. The innovation industry will inevitably determine our future, and whether we will have an important place in this area depends on the ability of all local actors to recognize opportunities and take the necessary steps.
Dejan Ranđić, Chairman of the Board, ICT Hub
In cooperation with USAID, ICT Hub is implementing the SERBIA INNOVATES project, which in the next four years will identify and develop the area of innovation for which Serbia and the region have the greatest chance, in order to stimulate the local economy and create innovations for the world market. Following the example of successful global practices, the identified area will direct the development of superclusters, systems that will connect innovative companies, traditional businesses and educational institutions in creating and producing innovations in this area, as well as access to the finance needed for development. With the realization of this project, Serbia will make new innovations possible and place itself on the map of desirable destinations for the development of innovations in the selected area.