Stoyan Mitov is the CEO of Dreamix, a custom software development company helping tech leaders increase capacity without giving up quality.
In the current age of globalization, it’s no surprise that companies are choosing to outsource their IT services. The IT outsourcing market was valued at $410 billion in 2022, only two years ago. Now, it’s expected to surpass $460 billion in 2024, and projected to exceed $777 billion by 2028. That’s an annual growth rate of 11%, well above the average for most industries.
With this type of practice, it’s important to pick the right location for your needs. As a CEO of a company that specializes in IT nearshoring services, I’ve had ample opportunity to observe the level of services different European countries offer. In this article, I’m going to share my experience, talk about the best IT nearshoring countries I know, and help you make an informed decision about your next provider.
Bulgaria
Over the years, Bulgaria has positioned itself as a reliable provider of IT nearshoring to Western European countries. Bulgarians are a collectivist society that values relationships, making them well-suited to teamwork.
The country has an IT workforce of over 110,000; every year, that number grows by 5,000 new STEM graduates. It’s also home to INSAIT —the world-class Institute for Computer Science, Artificial Intelligence and Technology in Eastern Europe, backed by companies like Google and AWS. It’s no surprise that Bulgaria is home to over 2,300 software development companies. According to the Global Skills Report of 2023, Bulgarian developers are in the top 20 European countries in IT expertise.
Due to the country’s low GDP, Bulgarian talent is accustomed to working with foreign companies and being part of remote teams. Additionally, Bulgaria offers the second lowest corporate tax in the EU (10%), making it a financially attractive outsourcing location. Between that and above-average English knowledge, it remains one of the preferred countries for Western European companies to nearshore to.
Poland
The Polish people are straightforward and loyal to their community. It’s easy to see why Poland is a key part of the global IT landscape.
The Polish software industry has proven itself over the years, with giants such as Google, Accenture and IBM opening offices within the territory. The combination of quality education, cultural similarities and high English fluency makes Poland a preferred nearshoring destination for other European countries.
In the last two years, there has been an even stronger growth of IT services in the region. According to a report by the Polish Economic Institute, in the first three quarters of 2022, 3,600 companies with Ukrainian capital and 10,200 Ukrainian sole proprietorships were established within Polish borders. Michael Dembinski, chief adviser to the British Polish Chamber of Commerce, told DW: “Poland is seen as the best logistical gateway and springboard for the rebuilding of Ukraine going forward.”
Romania
Romania has quickly been cementing its position as a software development market and is currently No. 12 in the EU IT industry. It’s also first in Europe and sixth worldwide by number of certified IT specialists per 1,000 people.
The country offers a very lucrative cost-to-quality ratio for its software services and features a high level of English proficiency. It’s also only one hour behind the largest European capitals, making it convenient from a time-zone perspective.
Romania is known for the value it places on business etiquette and proper business communication. Its culture emphasizes respect for authority and clear chains of command.
Estonia
While it’s sometimes overlooked due to its small size, anyone closely familiar with IT nearshore locations knows Estonia is one of the world’s powerhouses. Not only does it have one of the highest concentrations of tech talent per capita in all of Europe, but it also has the most funded startups and the largest number of billion-dollar companies per capita, according to the State of European Tech Report.
Estonia owes its software development successes largely to its highly digital society. The Estonian education system focuses on computer science from an early age, creating a skilled tech workforce. Additionally, Estonian citizens are proficient in English, helping them fit in with Western teams. They have a result-oriented culture that promotes humbleness and respects hierarchy.
Ukraine
Ukraine has long been a popular IT nearshoring hub. The country has a reputation for its excellent work ethic. Ukrainians are a social people with a can-do attitude, which translates well to business relationships. The country has a thriving IT industry and a large pool of software developers with diverse skill sets. Its location means it has little time zone difference from most Western European countries, making it a suitable nearshore destination for companies situated in any of them.
However, recent events have impacted the Ukrainian IT industry. According to data by the Ukraine IT Association, the country’s IT sector went from $7.3 billion in 2022 to $6.7 billion in 2023. Ukraine is still one of the popular nearshoring destinations, but some companies are choosing to move to other locations, at least for the time being.
How To Choose Your Next IT Nearshoring Destination
While all five countries I mentioned are great sources of nearshore IT services, you should factor in any unique needs you may have. For example, if you’re looking for expertise with a specific technology, check if it’s more popular in a certain country.
Beyond the technical, the level of competition in the country’s IT sector is something to keep in mind. A highly competitive local environment may drive innovation—but it also often results in a tight labor market where it’s difficult to find good talent.
Once you have narrowed down your choices, I would recommend a short on-site visit—done either by you or someone you trust. All my meetings with new clients have shown me there is no better way to evaluate potential suitability. If you can get firsthand experience with the business environment and engage with potential partners, that’s a surefire way to determine whether the region’s talent and culture match your standards.
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