Bulgarian business relies on innovation and technology

Bulgarian business have demonstrated determination to grow despite the uncertain economic and geopolitical environment. This is according to the results of the EY Entrepreneurship Barometer, part of a large-scale analysis for Central, Eastern and South-Eastern Europe.

Innovation, technology and growth – the top priorities

65% of Bulgarian companies place product innovation among their top priorities – significantly above the regional average of 53%. In addition, 71% of companies are actively investing in digitalisation and artificial intelligence, using it primarily for data analytics and improving customer experience.

“Bulgarian entrepreneurs are clearly showing that they are striving to make their businesses sustainable through strategic innovation and investment in people and teams,” said Nikolay Garnev, EY Managing Partner for Bulgaria and Southeast Europe.

Challenges for AI deployment

71% of Bulgarian companies report that they have increased their use of AI in the last year, mainly for website improvements and digital presence – above the regional average (65%). 58% are actively developing online marketing and e-commerce, while cloud technologies and CRM systems are also on the rise.

Despite high expectations – 87% believe AI will improve productivity and quality control – more than half of firms have not yet made significant investments in this technology. AI is most often applied to data analytics (87%), while automation of service, administrative processes and marketing remain underutilized (40%).

Interestingly, none of the Bulgarian companies surveyed use AI for supply chain optimization – in contrast to about 10% in neighboring countries. At the same time, 40% express concerns about data security and lack of regulations – a similar trend observed in the region.

Recruitment: need and shortage

Bulgarian businesses are actively planning to expand their teams – 65% of companies are looking for full-time employees. This is significantly above the regional average (48%). At the same time, 71% have difficulty finding qualified staff and 68% have difficulty finding people with the right experience. High labour costs and strong competition for professionals are also major barriers.

Financing and investment plans

Bulgarian business rely mostly on reinvestment – 68% of companies say this is their main source of funds. Outside investors and government subsidies remain little used – only 6% of companies mention them as an option.

The uncertain economic environment remains a major disincentive to investment, with 71% of companies identifying it as a leading factor holding them back. Geopolitical risks (55%) and regulatory changes (48%) also have a major impact on business attitudes.

Expectations for the future: challenges and resilience

Bulgarian companies show higher sensitivity to economic and political shocks than their regional competitors. As many as 94% of respondents in Bulgaria expect increased labour costs to have a negative impact on the financial stability of their business – significantly above the Central and Eastern European average (85%).

Geopolitical uncertainty is also a major concern, with 81% of Bulgarian firms expecting it to have an adverse effect, compared to the regional average of 74%. This underlines the more acute reaction of Bulgarian businesses to foreign policy risks.

Regarding inflation, 71% of respondents in Bulgaria expect it to put pressure on the business environment, while in the region this share reaches 78%. Although somewhat less pronounced in Bulgaria, inflationary pressures remain a serious concern.

The differences between the countries are clear – while in Greece high operating costs come to the fore (82%), in Romania the dominant concern is geopolitical instability (90%).

Despite these risks, 90% of Bulgarian entrepreneurs say they do not plan to sell their businesses in the near future. This is a clear sign of long-term vision and a drive for sustainability.

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