Bosnia and Herzegovina is the Next Hub for AI and IT Talent

Authors

Amir Grabic is a Project Manager specialising in digital transformation within the insurance, government, and IT sectors. He is actively engaged in initiatives connecting the Bosnian diaspora with IT opportunities and youth development.

During the research for this article, experts from the IT sector were consulted. Among them was Professor (Prof. Dr.) Amila Akagić from the Faculty of Electrical Engineering, University of Sarajevo. Her insights and expertise were invaluable, and her contributions are gratefully acknowledged.

As the global race for artificial intelligence (AI) supremacy accelerates, regions like the European Union (EU), the United States (USA), China, and the Middle East are locked in fierce competition to dominate this transformative space. Yet, all face a common challenge: a significant shortage of skilled AI engineers and data professionals. The rapid transition of AI projects from research and development to production has outpaced the availability of qualified talent, sparking intense competition for talent in this space. Amid this global talent deficit, Bosnia and Herzegovina is emerging as a surprising but promising contender in the quest for AI and data professionals. With a growing IT market and a young and educated workforce, Bosnia and Herzegovina has the potential to foster economic growth while addressing international talent shortages. This opportunity could also help counteract the brain drain that has long plagued the Western Balkans. Moreover, Bosnia’s IT sector will reshape its economic future and position the country as a vital partner for regions in need of AI expertise. This article provides a perspective on Bosnia and Herzegovina’s potential to carve out a new role in the global IT landscape. We focus on two regions: the European Union, which shares close geographical and economic ties with Bosnia, and the Middle East, which is striving to become a global IT hub.

Bosnia and Herzegovina: A Solution to the EU’s and Middle Easts’ Talent Shortage

The Country: Bosnia and Herzegovina

Bosnia and Herzegovina’s IT workforce is on a steady rise: In 2024, the IT services sector experienced a 10.85% increase in employment compared to 2023, with no indications of this upward trend slowing down. This upward trajectory, if supported by government initiatives fostering a stable and secure growth environment, could position the sector for sustained expansion in the coming years.

Festina Lente Bridge in Sarajevo, Bosnia and Herzegovina—symbolizing the country’s innovative spirit and growing IT sector — The Festina Lente bridge in Sarajevo

A notable demographic advantage lies in Bosnia’s relatively young population, particularly when compared to aging societies in many Western European nations. This is also reflected in the IT sector, which consistently attracts younger professionals. The average age of IT professionals in Bosnia and Herzegovina is estimated to be in the late 20s to early 30s, creating a dynamic and adaptable workforce ready to meet the demands of a fast-paced industry. Another noteworthy aspect is the remarkably high number of women engineers in the IT sector, a trend that has consistently distinguished Bosnia and Herzegovina over the years. This unique characteristic sets the country apart in a field traditionally perceived as male-dominated in many parts of the world. The strong presence of women in engineering and technology highlights a culture that values talent and expertise over stereotypes, creating a progressive and inclusive environment within the industry.

The country’s IT market is experiencing robust growth. In 2024, the sector is projected to generate $155.9 million in revenue, with IT outsourcing leading the way at $61.56 million. This aligns Bosnia and Herzegovina with a global trend where organizations increasingly seek cost-effective and skilled labor for their IT needs. The dominance of IT outsourcing in Bosnia’s market suggests the country is well-positioned to become an attractive destination for international organizations seeking specialized talent.

With a young, skilled workforce and a thriving IT market, Bosnia and Herzegovina has the potential to solidify its position as a significant player in the global IT ecosystem. However, to maintain this momentum, strategic investments in education, infrastructure, and international partnerships are critical to ensuring long-term success and competitiveness.

The Markets: EU and Middle East

Organizations within these regions are starting to reap material benefits from Generative AI (GenAI) use, such as cost reductions and revenue increases, which in turn spurs demand for more talent in this field. However, companies leading in AI adoption report challenges related to data governance and integration, highlighting a pressing need for specialized talent, not only in AI but also data.

Europe

In Europe, the AI market is projected to grow substantially, with an estimated value of $209.5 billion by 2027. This growth is expected to drive demand for a wide range of AI professionals, including AI engineers, data scientists, machine learning specialists, and experts in large language models (LLMs). However, the European Union (EU) is already grappling with a significant digital skills gap in advanced technologies like AI, as highlighted in prior McKinsey reports. As AI adoption accelerates, the strain on an already limited talent pool is expected to increase.

Furthermore, the EU faces intense global competition in attracting and retaining top AI talent, as companies worldwide compete for a finite pool of skilled professionals. Without focused interventions, Europe risks falling short in meeting the demands of its rapidly expanding AI market.

Middle East

In the Middle East, nations such as the UAE and Saudi Arabia have launched ambitious national AI strategies, aiming to establish themselves as global leaders in the field. The region is set to experience rapid growth in AI adoption, with a CAGR of 44.8%. from 2024 to 2030.

Historically, the Middle East has relied heavily on foreign professionals to fill specialized roles, but this approach may no longer suffice given the escalating global competition for AI talent. With demand outpacing supply, the region faces a critical need to develop homegrown expertise while also attracting international professionals to sustain its growth ambitions.

Key Challenges and Solutions

Both the EU and Middle East are expected to face significant shortages in AI and data-related roles, driven by three key factors:

Rapid Increase in AI Adoption
Global Competition for Talent
Existing Skill Gaps.

To mitigate these talent shortages, several solutions are possible:

Investment in Education and Training: Updating educational programs to include AI, machine learning, and data analytics.
Attract Global Talent: Simplifying visa processes for AI professionals.
Upskilling the Current Workforce: Encouraging and facilitating ongoing education.

Or..

Outsourcing: A Strategic Opportunity

Outsourcing presents a practical solution to the global shortage of AI and data talent, and it is already Bosnia and Herzegovina’s largest revenue generator within the IT sector. By expanding its focus on this market, the country could both address international talent needs and create substantial economic benefits.

This approach could also help mitigate Bosnia’s long-standing brain drain. While emigration has been driven by social issues, low wages, and economic uncertainty, a thriving IT outsourcing sector could offer competitive opportunities in a high-demand field, addressing the latter two challenges.

Recent initiatives, such as the Data Science and Artificial Intelligence-focused studies at the University of Sarajevo and Kiss the Future AI Summit, signal a commitment to building a skilled workforce. Though not a complete solution, outsourcing could be a key factor in slowing or even reversing talent emigration.

Bosnia’s workforce is well-positioned to meet global outsourcing demands. Combined with its strategic location near the EU and the Middle East, the country has the potential to become a premier destination for IT outsourcing, reshaping its economic future while addressing global talent gaps. The country shares many cultural and historical ties with Europe, such as a strong emphasis on education, technical expertise, and structured organizational practices. At the same time, its rich Ottoman heritage fosters an understanding of and alignment with Middle Eastern business etiquette, interpersonal communication, and collaborative approaches. These shared values enable Bosnian professionals to work seamlessly across diverse cultural contexts, making them ideal partners for international clients seeking not only technical competence but also cultural fluency.

As a result, Bosnia and Herzegovina is uniquely equipped to serve as a cultural and professional conduit between these two significant economic regions, enhancing its appeal as a strategic IT outsourcing hub.

Considerations: Balancing Growth and Sustainability

While Bosnia and Herzegovina has the potential to become a key player in the global IT and AI markets, sustainable growth in this sector requires careful planning and strategic action. Both the government and organizations must address critical considerations to maximize the benefits while minimizing unintended consequences.

For the Government: Safeguarding the Workforce

To ensure long-term success, the government must take proactive measures to protect and retain its skilled workforce. Remote-friendly policies, such as digital nomad visas and incentives for international professionals, could help attract highly skilled diaspora and global talent while providing opportunities for local workers. Examples like Croatia’s digital nomad initiative demonstrate how these policies can position a country as a hub for global remote work.

However, such initiatives come with risks. Attracting higher-income professionals, including returning diaspora, could exacerbate income disparities in a country where wages remain relatively low. Without proper planning, Bosnia might face tensions similar to those seen in cities like Amsterdam, where gentrification has caused social friction. The government must strike a balance, fostering IT sector growth while ensuring it benefits the broader population.

Additionally, Bosnia should avoid over-reliance on the IT sector. The country has strong industries such as manufacturing, which should be nurtured alongside IT to maintain a diversified economy. Betting on a single sector leaves the country vulnerable to market fluctuations.

For Bosnia: Mitigating Brain Drain

Unchecked growth in the IT sector could unintentionally accelerate brain drain, as opportunities abroad may still be more attractive to skilled professionals. To counter this, the government and private sector must create competitive conditions within Bosnia. Offering competitive wages, fostering innovation hubs, and improving infrastructure could encourage professionals to stay or even return.

For Organizations: Strategic Outsourcing

While the country offers high-quality talent and cost advantages, organizations should adopt a partnership mindset rather than exploiting lower costs. Investments in upskilling local teams, supporting sustainable practices, and fostering long-term collaboration will ensure mutual benefits.

A Delicate Balancing Act

For Bosnia and Herzegovina, the challenge lies in growing its IT sector without undermining other industries or creating societal imbalances. By carefully managing growth and prioritizing sustainability, the country can unlock its potential while safeguarding its economic and social stability. Similarly, for organizations, adopting a thoughtful and respectful approach to outsourcing in Bosnia will ensure long-term success in this promising market.

Conclusion

Bosnia and Herzegovina stands at a pivotal moment in its economic development. With a young, skilled workforce, a thriving IT sector, and growing recognition as a hub for outsourcing and AI talent, the country has the potential to address global talent shortages while transforming its own economic future. The European Union and Middle East, grappling with intensifying competition for AI expertise, can find a valuable partner in Bosnia and Herzegovina.

However, this opportunity comes with challenges. To fully realize its potential, Bosnia and Herzegovina must balance IT sector growth with the preservation of its broader economy, mitigate the risks of brain drain, and ensure that rising prosperity benefits all residents. For the government, creating a stable, competitive, and remote-friendly environment is critical, while organizations must approach outsourcing with a long-term, partnership-driven mindset.

The global race for AI dominance demands innovative solutions to the talent crisis. Bosnia and Herzegovina, with its strategic advantages and rising IT sector, could provide just that—emerging as a vital partner for regions in need of skilled expertise and a model of sustainable growth for others to follow.