Fragments

Why would an IT company invest in Serbia?

July 10th, 2008 | by Klemen Stular |

It’s no news that, fueled by owners’ constant demands for higher profit and revenue, managers are challenged to find a way to make it happen. I know what I’m talking about, because I’m one of those beleaguered managers.

It sometimes looks like an impossible mission, but in reality success is more or less about making the right decisions. For example, what country should the company focus on in order to ensure constant growth – difficult to achieve if you just stay at home? What’s the right timing to go somewhere? What indicators should we follow when evaluating our options?

I sometimes like taking a different approach. Reading business analyses about certain countries might provide a by-the-book approach, but anybody can do that.

It crossed my mind the other day that, as an evaluating tool, we should focus on something more connected to what we’re doing. Coincidentally, I encountered some interesting information that attracted my attention immediately – Internet bandwidth costs per Kbps for various territories (in U.S. dollars):

• $0.1 in Japan
• $1 in the U.S. and Canada
• $2.5 in Asia and the Pacific, Europe
• $4 in Latin America
• $15 in Russia
• $40 in the Middle East and Africa

Information like this could be a good start at helping us to make a decision for a target area. Using the data above as an indicator, and simplifying our decision-making process a lot, do we want to go where the Internet cost is ten times higher than that of the cheapest place on Earth?

Balancing the rather fast return on investment usually required by the owners versus the general inclination to more »virgin« areas that seem to promise longer ROI but more profitable involvement (in the long run), we can reach a compromise. We typically select something in between. That’s where Central and Eastern Europe (CEE) run about average. Of course, this judgment cannot completely replace all other analyses, but it’s nice when it confirms the outcome. At NIL, we’ve recently decided to invest in Serbia, a country in the center of the CEE region.

In my next post, I’ll share with you what we plan to do there – and how!