ICT sector in Kosovo

ict business-environment
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The ICT market in Kosovo is growing with the fastest pace in comparison to other markets since the end of the war in 1999. Currently, the ICT sector is considered as one of the few sectors with positive trade balance. The vast presence of international organizations has been one of the main drivers for the rapid ICT growth, starting with demand for equipment and later shifting to software and services. The ISPs were among the first services, making Kosovo’s network one of the most developed fiber optic networks in the entire Balkan region. The coverage of Internet access in Kosovo territory has then exceeded 90%.

The digital economy holds great potential as a sector to drive Kosovo’s economic development. It also represents a promising field for generating jobs, increasing exports, and income for Kosovars. The Kosovo government recognizes Information and Communications Technology (ICT) as one of the six priority sectors for Kosovo economic development.
More than half of the Information Technology companies in Kosovo are exporting their services. According to the Kosovo ICT Association - STIKK report, IT companies are mainly providing services and products to the international IT Services and Outsourcing sector and the Technology sector.

ICT Education System

Kosovo has the youngest population in Europe with 53% of the population being under 25 years old. Computer science and IT related subjects are taught in 6 universities and approximately 350 students graduate each year. Additionally, a private VET institution Cacttus Education offers diplomas in network and system administration, web and mobile application development.

Outsourcing possibilities and Kosovo IT companies

Kosovo has emerged as one of the Europe’s top locations for global sourcing of IT services. According to the Global Sourcing Association (GSA) the Southeast Europe – Kosovo region has become an attractive location for sourcing/outsourcing due to the low cost of qualified staff and a large number of highly educated, bilingual and qualified IT professionals. Almost 1/3 of Kosovo companies are engaged in export services.

The International Association for Outsourcing Professionals has chosen Kosbit (https://www.kosbit.net/ ) among the TOP 100 Global Outsourcing Providers. Kosbit is working with companies such as AT&T, IBM and Cisco, and with over a decade worth of experience it is providing a wide range of services, IT outsourcing services, global telecom solutions, system integration, and software development services to reduce ICT costs, improve service delivery and enable business growth. Stellarion (https://stellarion.fi/ ) is a company established in Finland by Finnish and Kosovan partners. It has been expanding quickly and works with AR/VR projects including the project in developing the tourism for the city of Hämeenlinna. The American company Kode Labs, a company specialized in IoT for ‘commercial real estate’, bought a Kosovan company Zag Apps, an IT company developing software products. These are only some examples to show how great the potential of this sector is in Kosovo.

EU Compatible Legislation and WB Doing Business Report

Kosovo has reformed its legal system to be completely compatible with the EU legislation. All the laws are available in English. With simple and transparent tax system as well as with Euro as the official currency make doing business in Kosovo effortless. Kosovo has signed the Stabilization and Association Agreement with the EU. Kosovo is also a CEFTA member, thus giving free access to 520 million EU consumers and offering a better investment environment and steady relations with its counterparts. In conclusion, the legal and regulatory framework for business registration and licensing are welcoming for ICT companies. Out of 190 countries, Kosovo ranks 40th in the World Bank Report in Doing Business 2018. General procedures are easy to implement while business registration is free of charge.

ICT Ecosystem in Kosovo

Kosovo established the ICT Association – STIKK (https://stikk.org/en/ ) in 2008 which represents 90% of the ICT Sector. According to STIKK, there are approximately 120 IT software businesses in Kosovo employing around 3,000 IT professional programmers, presenting the IT sector as an employer of importance. In addition to these IT businesses, there are 10 IT start-ups located in the Innovation Centre of Kosovo (ICK).
Low labour costs and relatively skilled labour force in some sub-segments have been the primary drivers of continuous growth of export of services among the ICT companies in Kosovo. The availability of sales channels and availability of skilled labour have conditioned the business process outsourcing (BPO) to be the best model for exporting software development services, telemarketing, mobile application development, and multimedia production.
Other well-known non-governmental organizations in the ICT sector are CEED Kosovo, an organization providing trainings for entrepreneurs, connections to finance and access to new markets; and UNICEF Innovations Lab, a unit of UNICEF Kosovo aiming to support youngsters with innovative ideas.
Innovation Center Kosovo (ICK) runs a structured incubation program with access to mentors and international funding networks. ICK incubator provides pre-incubation, training, courses and co-working spaces. Since 2 years, ICK hosts the SLUSH GIA Local Pitching Competition in Kosovo.

Kosovo Government and ICT sector

The Kosovo government has recognized the strategic importance of the IT industry for economic development and structural transformation towards a knowledge-based economy. Consequently, in 2013 the government of Kosovo officially declared the IT industry a high priority sector for its economy. The Kosovo IT strategy was developed in 2016 and foresees that by 2020, IT is to become the main driver for economic growth, employment and innovation.
Kosovo established the Ministry for Innovation and Entrepreneurship in 2017 and has since allocated around 10 mil Euros to support the sector. Recently the Ministry has signed the MoU with Pristina University to support the project “Centre for Innovation and Entrepreneurship at Pristina University”.
The Ministry of Finance decided to release the customs tax for all basic IT equipment imported to Kosovo in the beginning of 2019 to encourage opening new innovative businesses in Kosovo.

Donor community support

In June 2018, the European Commission together with Ministers from six Western Balkan partner countries – Albania, Bosnia and Herzegovina, Kosovo, Montenegro, the Republic of North Macedonia and Serbia – committed to implement the Digital Agenda for Western Balkans. Under the Western Balkan Investment Framework (WBIF), €30 million in EU grants will be made available to deploy broadband infrastructure in the region to mobilise strategic investments and foster socio-economic growth.
In July 2018, the World Bank’s Board of Executive Directors approved the Kosovo Digital Economy (KODE) Project to increase access to better high-speed broadband services and online knowledge sources, services, and labor markets. The loan for the project is in the amount of € 20,700,000.