Roel Hakemulder, Andrew Wilson & Zenebe Uraguchi
Young people in Bosnia and Herzegovina’s (BiH) are losing hope and making drastic choices. Between 2006 and 2012, some 150,000 people left, mostly for the EU, the US and Australia. The reasons are much the same as for the more prominent exodus from Albania and Kosovo: an overall unemployment rate of 43% over the past five years. The Information and Technology (IT) sector is one of the most promising sectors to create attractive job opportunities for youth in BiH, but the sector is not performing as well as it should.
In this blog post, we present the work of the MarketMakers project that stimulated, using a systemic approach, job creation for young women and men in BiH by supporting key functions which were slowing growth of the IT sector.
Companies were unable to access qualified professionals they needed….
The formal educational system in the Sarajevo region produced 300 IT technicians and engineers annually, but according to firms, there could be jobs for up to 1,000. The quality of existing graduates was also problematic, as IT firms found their skills to be out-dated, incomplete and too academic. Some level of obsolescence in IT education is normal, as the IT sector is developing at high speed and educational institutions struggle to keep up, but the gap between curricula and current requirements in BiH was unusually wide.
…. contributing to firms struggling to grow headhunting each other’s employees
The lack of qualified staff led to an intensive search for the limited numbers of skilled workers, causing distrust and divisions among companies and making collective dialogue with government to improve the education system impossible. Companies and young people interested in IT careers relied on expensive private training courses and internal trainings to compensate for the inadequate public education system. Individual firms had no confidence in the government’s interest or capacity to improve the regulatory and policy environment and avoided contact with officials and politicians. Thus, the IT sector was not on policy makers’ radar and its current significance and future potential were not recognised.
….and BiH economy is small, fragmented and offers limited scope to IT firms
Despite the abundance of outsourcing opportunities internationally, only an estimated 10% of locally oriented firms were successful at entering these markets, and even these believed they were not able to make full use of the opportunities. Firms lacked information on international markets – who the players were, what their requirements were, and what standards had to be met. Branding of the sector was also a problem: BiH was not considered an “IT destination”, and there was no strategy to market or promote the sector.
It was clear from the analysis of the project that the root causes were lack of adequate/relevant information about IT opportunities; lack of or weak support system (marketing, linkages); and a weak advocacy support system.
The MarketMakers project could have attempted to tackle each of the IT sector’s constraints directly (e.g. doing a regulatory impact assessment, promoting improvement, hiring consultants to draft strategies and update curricula, or contributing funding to a government IT agency). These would have required substantial human and financial resources which the project did not have. Even if successful, the interventions could lead to one-time gains, but the process of change would likely have stopped when the project ended.
MarketMakers had very strong contacts with IT firms to stimulate improved IT market system changes. The project engaged key players and facilitated the development and realisation of their ideas in the shape of an IT Hub (HUB387) and a formal association (BIT Alliance). The main focus was not HUB387 and BIT Alliance themselves, but improvement on key functions around the sector: the public and private education system for a qualified workforce, an effective strategy for promotion of the IT sector, and a support system for influencing regulatory and policy environment.
Has the sector improved?
Training and new internship programmes have led directly to more young women and men being placed in IT jobs, close to 900 by the end of June 2016. This success, supported by promotion activities, is leading to greater awareness of IT as a career choice and a large number of students choosing IT education. Dialogue has led to initial steps to improve the business environment, which should result in more investment and more job opportunities. This, however, will only happen on a relatively long timescale.
MarketMakers’ facilitation resulted in HUB 387’s inclusion in the Cantonal Committee for Development of Canton Sarajevo, which drafted the 2014-2020 Cantonal Development Strategy. The strategy included IT as one of three priority sectors, a first in BiH, and included concrete development plans.
Trust and interaction among companies has increased. While this has not yet led to significant numbers of larger or joint projects, it has contributed to more international contracts and growth. Increased trust and interaction also created an environment where entrepreneurship and innovation are valued, encouraging small companies and start-ups to grow more aggressively. Joint efforts are also underway to increase the number of young women employed in the sector, through promotion, targeted training and improved HR practices.
On balance, the sustainability of both HUB 387 and BIT Alliance as individual organisations is reasonably secure, although not absolutely certain. As a “community”, HUB 387 has very few cash costs, while BIT Alliance’s membership fees ensure enough revenue for core operations.
The two business models are having an effect on other players, inside and outside BiH, and the process to reach larger-scale impact is underway. HUB 387 has expanded to Zagreb, Croatia as HUB 385 and has influenced thinking on similar initiatives in other countries, while BIT Alliance is adding new members inside and outside Sarajevo. This is unusually soon after their establishment less than two years ago. This also includes expansion into other parts of BiH (e.g. smaller cities) and the opportunity for the already nascent co-working spaces (often also with “start-up incubators”) to participate in the continued growth enjoyed by larger Sarajevo-based IT companies or serve as a breeding ground for self-employment.
The most important routes to large scale change are due to HUB 387 and BIT Alliances’ ability to shift social perceptions of the IT sector among young women and men, in government, and possibly the general public. MarketMakers and its partners cannot fully attribute these changes to their activities, and these shifts were likely underway already. The Hub and the Alliance were, however, the only IT bodies in BiH that have specifically aimed at accelerating these changes and that have undertaken targeted activities to make them happen.
The story in this blog post demonstrates that facilitation pays off when one finds the right partners, business models that address their incentives, and when one has the credibility that gets partners to accept that large sums of money are not what they need most.
Using a facilitative approach can also have an impact on job creation even in a context where other donors take a different approach, in a country where accession to the EU is one of the main drivers of change, and in a sector and context quite different from those where this has already been well demonstrated (e.g. in agriculture in lower income countries).
Strong business models and partners lead to successful new businesses, which attract the attention of media, government and the general public. It is this attention (or buzz) and MarketMakers’ response which led to other companies and organisations replicating the concepts promoted by HUB 387 and BIT Alliance. Even more importantly, this attention motivated government to create a more supportive policy environment for IT and encouraged more young women and men to choose IT educations and careers.
Roel Hakemulder is an independent consultant in inclusive private sector development. Since graduating as a cultural anthropologist, he has been working in enterprise development, then local economic development and finally MSD, in Asia, the Middle East, Africa and the Balkan countries. He counts laying the foundation of ACLEDA in Cambodia, now the largest (micro)finance bank in the country, and the EnterGrowth project in Sri Lanka, both for the ILO, as his main successes. As a consultant, he formulates and conducts reviews primarily of SDC MSD projects. He lives in Dakar and has a beautiful wife working in Mali and three more or less grown up kids.
Andrew Wilson studied rural development, business administration and law. Andrew worked as a lobbyist for the food sector in Canada, before starting his career in development with HELVETAS in Laos. Andrew has worked with the MSD approach in Eastern Europe (as Project Director of MarketMakers), the South Caucasus and South-East Asia and is keen to apply systemic thinking in a practical, common-sense way.
Zenebe Uraguchi is a development economist with multi-country experience working for a multinational private company, an international development bank and a research institute. He currently works with HELVETAS Swiss Intercooperation, based in Switzerland, as Programme Coordinator for Eastern Europe and Senior Advisor in market systems development.
- On systemic approach: what it is and what it is not
- Emerging impacts in using a systemic approach to enhance youth employment
- MarketMakers case study in the IT sector
- Case study on skills development in ICT sector
Cover picture: Courtesy of HUB387
 MarketMakers is project of the Swiss Agency for Development and Cooperation (SDC) implemented by HELVETAS and KOLEKTIV D.O.O.
 This figure is only for the IT sector. MarketMakers also works in other sectors such as tourism, food processing and tradable services.