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Mark Warburton (Croatia) - IT in Croatia: pending, with bags of potential

During the 20th century, Croatia was home to some of the most significant inventors and technologists in Europe. There was the pioneer of fingerprint identification, Josip Vucetic. Two Croatians received the Nobel Prize for science. Lavoslav Ruzicka won it in 1939 for his work in organic chemistry, and Vladimir Prelog won in 1975 for quantum physics.

Perhaps Nikola Tesla, an early developer of wireless and high-frequency technologies (whose name was given to the magnetic unit), is the most poignant symbol of the Croatian technological trajectory. The lack of recognition received by Tesla during his own lifetime, echoes the faded memories of such a rich era of Croatian innovation, left behind by advancing technology and a broadened informational highway. Currently, as it stands, Croatian IT is looking to rekindle the kind of dynamism found in its forgotten golden era of scientific and technological discovery.

With the birth of the Croatian state in 1991, very few IT companies existed. This was due to both a limited private sector that had yet to find its feet, and the subsequent migration of Croatian IT professionals to foreign IT departments and companies. Croatia does have the appropriate labor power to establish a successful IT sector. Its tech workers are educated to US level, and willing to work for less money than across the Atlantic. With the older IT companies being slow to co-operate with governmental initiatives, workers have been limited to working in other sectors. The impetus, then, is to stabilize a market economy and adopt an IT startup, entrepreneur culture.

Chaotic events in the Balkan region, and the recent economic crisis, have created a wary, tentative government that has held back investment on the more financially aggressive aspects of the IT sector. The government has limited its funding to smaller IT/tech projects, office space subsidies, licensing costs and startup incentives, mainly supported by companies like Microsoft. Also, national infrastructural initiatives like e-Croatia  are in their early stages, and looks to establish a comprehensive information system that would allow citizens access to public services over the Internet.

Even though this is fairly rudimentary, it does take into account data security as well as citizen identity protection. In fact, the last decade of IT projects and creation has concentrated mainly on these kind of governmental and local IT infrastructures. It was this concentration on infrastructure that has provided Croatians with competent broadband and a high number of computers per capita - core foundations which paved the way for a telecommunications industry that is thriving; consisting of 3 large, competitive providers and several small ones. Croatia has a 98% mobile signal coverage, a testament to the industry's success.

Along with the telecom industry, the financial and banking industry has also made progress in Croatia. Although some of the custom developed software is designed in Croatia, a lot of the systems that run its financial institutions are implemented by representatives in countries like Bulgaria or Germany. The extent of Croatia's progress, then, is mixed. For instance, before the tumult in the 90s, Bulgaria was a country miles behind Croatia in terms of technological and IT advancement. Even though Bulgaria still has a lower GDP and general level of education, it provides IT software and implementation for Croatia.

The reality is there has been relatively little in the way of private sector Tech/IT development in Croatia; especially if you consider the quality of its IT workers and fundamental IT infrastructure. On the other hand, some application solutions have been implemented by Croatian teams. For instance, SAP was among the first global companies that Croatia provided for; developing an IT infrastructure for the national oil company, INA. The potential is there, and the occasional developmental success like the iPhone app Doodle Jump does show signs of what could be, but Croatia needs to branch out.

Even the most optimistic Croatian working in the IT sector realizes that the pace of program implementation in the private sector is slow. The government needs to improve legislation. Conditions have to be favorable for IT to flourish. The government's IT sector budget is only 1% of the total budget, and most of this goes on public sector/governmental structural improvement. The emphasis should be allocated to startups that provide consultation and implementation services.

A software industry needs external stimulus via subsidies and the lowering of taxes (e.g. VAT is as high as 23% in Croatia). External investments need to be sought, and as several Croatians I spoke to have concluded, entrance to the European Union next year will give them more opportunity to compete in the IT market. Today you can find virtually all the world's leading IT companies looking to invest in Eastern European countries. Which means that the market is maturing, and there is potential in Croatia to get back on track and reach the zenith of its 20th century achievements.

By Mark Warburton, Editorial Assistant, at the IDG Connect Blog

Thanks go to:

Josip Saban ,Project Manager at Equidem d.o.o

Nenad Jelovac, Lead Auditor, ICT Audit, Internal Audit at Zagrebačka banka d.d.

Ivan Belic, Director of Business Development Applications at KING ICT

 

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