The Technology Fast 50 Report for 2017 showed an interesting development among Croatian tech companies. The said report featured 8 Croatian companies in this year’s edition. Specifically, the featured companies included: Rimac Automobili (ranked 10 out of 50), Code Consulting (23/50), Telum (25/50), Profico (28/50), Undabot (35/50), Hangar 18 (40/50), Gauss (45/50) and Infinum (49/50).
The eligibility criteria included the following: minimum of 4 years of operations as a technology company; minimum turnover of 50,000 EUR in each of the past 4 years and headquarters located in Central Europe. The eligible sectors comprised IT & Digital Solutions, Internet, Media & Telecom, Biotech, Nanotech, Medtech, Clean Tech & Energy. The 2017 report included companies from a total of 11 countries: Bosnia and Herzegovina (1 company), Bulgaria (2), Croatia (8), Czech Republic (5), Estonia (1), Hungary (2), Latvia (1), Lithuania (6), Poland (19), Romania (3) and Slovakia (2). In 2016, Croatia was represented by 6 companies; however all of them were ranked below 18. In 2015, 8 companies participated with good ranking while in 2014 the report included only 4, but still fairly ranked. What is the reason behind the success of tech companies in Croatia?
Like many countries, Croatia is faced with the problem of finding and retaining quality ICT experts. Nevertheless, a recent report of the ICT Sector prepared by the Croatian Employers Association (HUP), presented impressive data: in 2016, the domestic ICT market employed a total of 33,000 people, generated an income of 32 billion HRK (approximately 4.2 billion EUR) and created 1,300 new jobs. The revenue growth of 4% makes this sector one of the fastest growing in Croatia. 19% of income is generated from exporting, with software and IT services contributing to 31% while IT production to 60% of the total ICT income of these segments. However, the sector depends highly on the availability of ICT experts which show a trend of leaving Croatia for countries where such professions are better paid.
The ICT sector of the Croatian Employers Association urges the government to review its strategy, particularly regarding STEM education which is lagging behind global standards. In the meantime, companies such as Rimac Automobili and Profico - both ranked in the abovementioned Deloitte report as one of top fastest growing companies in tech sector of the CEE - are making extraordinary progress in the development of their own business, creating new jobs and opportunities. A large number of local and regional entrepreneur centres and development agencies continue to open doors for many startups, offering facilities, advice, training, mentoring, idea development, assistance with EU funds and other valuable guidance that helps entrepreneurs in tracing their path to business success. The majority of Croatian companies included in this year’s Deloitte report have been founded as late as 2012 which clearly shows a potential of the Croatian ICT industry. IBM’s decision of establishing its Client Innovation Centre in Zagreb (as opposed to the other options in Slovakia and Slovenia), which is set to offer services to worldwide clients, further proves such potential. The centre’s projections are to employ around 500 people.
Despite the ongoing deficit of quality ICT force and certain drawbacks of the tax system, Croatian tech companies are doing extremely well. Rather than establishing their headquarters another, more tax favourable country, there is a niche of entrepreneurs who are bravely contributing to the growth of the Croatian economy and in the fight against unemployment. With their stunning growth, these companies are also helping the Croatian education system and economic strategy to adapt to the fast-developing industry of technology. Our highly experienced and flexible team in Croatia is already extensively involved in this sector and can easily assist any tech entrepreneur or investor in establishment of a business in Croatia, providing guidance regarding legal and tax issues. Furthermore, through our services of accounting, tax and financial reporting and payroll, we are able to provide an overall compliance with the complex Croatian legislation.