Croatia's entrance into the EU in July 2013 is and will be a key driver of ICT growth, facilitating increased trade between European markets. Over the next years, the process of EU convergence, which still has far to go, will drive spending on IT projects. Funds such as the EU Cohesion Fund are already providing funding for IT projects related to modernization initiatives in both public and business segments. The combined government sector also remains the largest spender on IT products and services, unsurprising bearing in mind that the state still owns a wide range of companies across sectors like transport, telecoms, oil and gas, and insurance. Despite all the difficulties, the ICT sector in Croatia is one of the best sectors of the Croatian economy, especially since a large part of it is focused on exports. The ICT sector in Croatia has annual revenues of around 21 billion kunas. 

To get to know better the Croatian IT industry, we created this article together with Vibor Cipan and Mladen Glavinic from Point Jupiter and AXPRI - two reputable Croatian IT companies. 

In this way, Vibor mentions that what makes Croatia attractive are the excellent geographic position, very highly skilled workforce with excellent English-speaking skills and a mindset that's similar to those of people in Western Europe and the USA which makes Croatians highly adaptable. Challenges are related to a bureaucratic burden and sometimes slower government with too many regulations. Although there have been significant improvements in this area as well, slow bureaucracy and sometimes too much paperwork remain a challenge. Additionally, for highly-paid IT experts income taxes and social contributions are very high compared to those in neighboring countries.

On the same topic, Mladen thinks that If you mean moving the HQ here, then the laws are awful, the tax is huge, etc. But the positive is that a ton of super smart people live here, people amazing in tech.

Why work with Croatian IT companies

IT companies from Croatia are relatively new to the market and rely on the already existing infrastructure when providing web & software services and solutions to the local and international markets. Based on a report from Belgian company ”Wallonia”, Croatian IT companies managed to implement the newest IT standards and specialized in the subsector of software development more than the web, and cloud computing. 

The choice is based on local market demand, as 45% of products and services provided by Croatian IT companies are sold to the government and implemented in the local public sector, which is supposed to increase the digitalization rate of the country overall. Nonetheless, some other 55% of IT services are designed for regional export and are considered a part of the regional IT backbone in the western Balkans. 

In addition, Vibor Cipan from Point Jupiter adds that Croatians are open-minded and well-educated. They have a pro-Western mindset and are following tech developments. You can also expect them to provide you with good and innovative solutions. They are not just people who will write code based on specs, if they see an opportunity for improvement, most of them will tell you about it and propose a new solution. Hourly rates are not low as compared to some Eastern European countries or in Asia, but the ROI and value for money you get when working with Croatian companies are among the best in the industry.

The same thing is confirmed by Mladen. Among others, he considers that Talent and commitment are the core reasons why it's good to work with Croatian IT companies.

What to pay attention to when working with Croatian IT companies

It is important to know that most Croatian IT companies were in the startup phase in 2013, and this makes them new and probably inexperienced in providing competitive services in the global IT market. However, working with Croatian IT companies may be an interesting experience after all. 

Local IT leaders such as Vibor is, thinks that Croatia is not the place to expect bottom-of-the-market prices - Croatian companies can't and won't compete with low-income lower-quality IT destinations like those in Asia. Hourly rates here will be higher than those in Asia, but the quality of work, innovation, and overall business professionalism is going to be also significantly higher. You can expect the best value for money and some of the highest quality work to be delivered.

How reliable are Croatian IT companies

Croatian IT companies are at an early stage of creating their reputation on the global market. Since not so many IT companies located in Croatia managed to highlight their performance, it is challenging to relate to how reliable they are.  But taking into account that in the XXI century all companies have a chance to create a name for themselves, most probably Croatian IT companies will manage to break the ice, and why not - make out of their country an important regional IT hub.

“Croatian Business Environment Evolved In The Last 10 Years”

The business environment in Croatia improved significantly in the last 10 years since the country joined the EU and earlier this year Schengen Area and the euro-zone. Smaller companies can enjoy attractive profit taxes of just 10% and there are also R&D credits and government support for companies hiring and growing their businesses.

Also, according to Mladen from AXPRI, the business environment is dominated by Hi-Tech companies, and a lot of quality Agencies and you can literally work with anybody without getting screwed or a bad project or whatever. Almost everyone is highly educated and speaks perfect English.

Infinum, Infobip - Among The Names of the Dominant Croatian IT Companies

Vibor Cipan and Mladen Glavinic identified several dominant Croatian IT companies in the local market. 

Vibor points to Infinum, Notch and Five: Infinum is independent mobile apps and web development agency that kept growing, Five used to be an independent agency, but it was acquired by Endava and now the business model has changed. Notch (formerly AG04) grows significantly and specializes in Java-based solutions and Point Jupiter pioneered the data-informed approach to product development and design to deliver solutions globally.

At the same time, Mladen thinks that Infobip is one of the largest that's worthy to name: Well, there are a ton but most are mid-range… Maybe one standout: Infobip. They are rather a big tech company employing about 1k high-quality individuals.

Opening a New IT Company In Croatia Is Easy

According to Vibor, the climate is pretty positive. There have been several highly successful companies in recent years including the acquisition made by Google (Photomath) and the first Croatian unicorn (Infobip) so there's a lot of talent and motivation. The company formation procedure has been greatly simplified but the earlier mentioned slower bureaucracy can present challenges.

How Does the Croatian Government Help The IT Sector?

There are R&D credits, accessible loans and governmental support for opening new workplaces. Most of these are realized through the HAMAG-BICRO agency in Croatia.

How well does the Croatian IT industry relate to the neighboring countries?

On the regional background, the Croatian IT industry is neither a shiny country nor an underdeveloped IT environment. But is one of the promising destinations for international clients and foreign companies ready to invest or work with Croatian IT companies and bring the entire region closer to what the Western-European IT industry is. However, local professionals think differently about it. Vibor Cipan told us that Croatia's IT sector is the most developed in the region despite the fact that it's not the largest country in the region. Excellent knowledge of English, alignment with Western ideals and values, highly-educated workforce, and deep integration into the European economic and political system make Croatia outstanding among its neighbors

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This article was created together with Vibor Cipan and Mladen Glavinic from two reputable Croatian IT companies - Point Jupiter and AXPRI

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