The IT sector in Serbia is navigating increasingly complex challenges, with signs of a global industry crisis continuing to manifest sporadically through extreme cases such as mass layoffs and abrupt office closures.
The root causes—unstable economic conditions, poor business decisions, and profit declines—are forcing companies to rapidly rethink their strategies to adapt to shifting market demands. Recent developments involving companies like Playstudios Europe and Better Collective serve as stark examples, with hundreds of jobs unexpectedly terminated in Belgrade and Niš.
Mass Layoffs and Business Closures
Gaming company Playstudios Europe, operating in the U.S., Asia, and Serbia since 2021, recently laid off around 125 employees in its Belgrade office—nearly 70% of its workforce there. This drastic restructuring follows a significant drop in the company’s stock prices, driven by profit losses, including a $3.1 million deficit compared to the same period last year. Employees, reportedly uninformed in advance, spanned all profiles—programmers, designers, animators, HR personnel, and managers. Globally, the company cut 30% of its workforce (over 200 employees) in an effort to save $30 million annually.
Simultaneously, Danish company Better Collective, known for its focus on innovative technology in sports betting, initiated layoffs globally, including in its Niš office, which employed approximately 400 people. This decision followed a 36% drop in the company’s stock value and reduced revenue targets. The company’s leadership pointed to challenges in the U.S. market and a slowdown in Brazil as key factors.
Industry-Wide Strain
These recent layoffs are not isolated incidents. Over the past year, global giants like Google, Microsoft, Meta, and Amazon laid off tens of thousands of workers in waves aimed at cutting costs during the ongoing economic crisis. Serbia, too, has seen significant cuts, with Quantox and HTEC eliminating 130 and 200 positions, respectively.
According to Boban Mikšin, partner and technical director at Vega IT, the situation in Serbia’s IT sector is not improving:
“The signs of crisis are increasingly evident. Many IT companies are downsizing significantly or halting operations altogether. The recent mass layoffs and office closures reflect the severity of the situation. Conditions today are worse than at the start of the year, with no clear signs of recovery on the horizon.”
Mikšin also notes that the boom of 2022, which saw unprecedented demand for IT talent and services, is unlikely to return. Instead, companies must adapt their business models to the “new dynamics” of the market to survive.
He emphasises that, despite the challenges, Serbia’s core potential in the IT industry remains untapped, and that Vega IT has, since its founding, operated responsibly, adapting to the real needs of the market and global economic conditions.
“Our investments are carefully planned and diversified, ensuring stable growth and resilience to change. We are proud that we have not been forced into mass layoffs due to the current crisis,” says Mikšin.
He points out that Serbia’s IT sector, under its current business model, is becoming increasingly less competitive in the global market.
“This is why it is essential to improve our services and business models to remain attractive and profitable in the international market in the coming years. We believe that significant investment in products is key to further development and strengthening our position in the global market,” Mikšin concludes.
Global Trends “Spilling Over” into the Serbian Market
Kristina Janković Obućina, Executive Manager of the Serbian Gaming Association, told NIN that around 10,000 layoffs occurred globally in the gaming industry in 2022, and this year the number has surpassed 13,000.
“Unfortunately, all global trends are ‘spilling over’ into the Serbian market, particularly when it comes to global companies, especially those publicly traded. Adjusting results to pre-COVID levels will take some time. What is happening is not a sign of industry collapse, as many like to claim, but rather the expected outcome of unsustainable overgrowth. Therefore, it’s important to emphasise that many companies are still hiring, no mass studio closures have occurred in Serbia, and over 80 games are actively in development,” she pointed out.
Economic Challenges and High Interest Rates Impacting the IT Industry
Vuk Popović, owner of IT company Quantox, explained to NIN that the economic crisis and high interest rates continue to significantly impact the IT industry, leading to layoffs.
“The problem remains the same as before. Projects haven’t disappeared, but cheap money is no longer available on the market, and interest rates are still high. I can’t even apply for a bank loan because financial statements are scrutinised. If there’s been a reduction in workforce or turnover, there’s no discussion with the bank. Many companies are now working to optimise as much as possible to reduce costs and maintain positive operations. In my company, we are constantly in a state of reorganisation, hiring and laying off simultaneously due to technology shifts,” Popović explained.
Adjusting to Market Realities
Janković Obućina added that aligning business results with pre-pandemic levels is a necessary but ongoing process for global companies, especially those with a stock market presence. Despite challenges, she remains optimistic about Serbia’s gaming and IT sectors:
“It’s important to highlight that many companies are still hiring and investing, and the Serbian market has not experienced mass closures. Active work on numerous projects and games continues,” she said.
Popović echoed this sentiment but stressed the need for strategic adaptability: “Companies must optimise operations and adjust business models to withstand these challenging conditions. The current climate demands a constant balance between resource management and technological adaptation.”
A Bleak Outlook?
The optimism once associated with Serbia’s IT sector, often seen as a stable and lucrative industry, now seems overly simplistic. The global tech crisis has laid bare its vulnerabilities, with firms struggling to adjust to reduced revenues and market shifts. The rapid expansions and hiring sprees of recent years appear unsustainable under current conditions. If Serbian IT companies fail to recalibrate and innovate amid these challenges, the sector risks deeper stagnation.
For now, the pressing question remains: how will companies regain stability and prove resilience in an increasingly unforgiving market? For Serbia’s IT professionals, the future may depend on how quickly the industry can pivot to meet these challenges.
(NIN, 15.11.2024)
https://www.nin.rs/ekonomija/vesti/61538/globalna-ekonomska-situacija-usporava-napredak-it-firmi
This post is also available in: Italiano
Source link : http://www.bing.com/news/apiclick.aspx?ref=FexRss&aid=&tid=673945f6c81248bea6c9eb0c4a60c714&url=https%3A%2F%2Fwww.serbianmonitor.com%2Fen%2Fthe-it-sector-in-serbia-grapples-with-challenges-amid-mass-layoffs%2F&c=10968077983306910119&mkt=de-de
Author :
Publish date : 2024-11-15 07:44:00
Copyright for syndicated content belongs to the linked Source.
