Andrew
Burak
CEO at Relevant

Outsourcing Software Development to Bulgaria: The Ultimate Guide

Outsourcing

The software development industry continues to grow on a global scale. According to the 2020 Business Wire Report, IT outsourcing will reach $410.2 billion by 2027 with a 2.6% CAGR. Businesses worldwide have a wide choice of countries for hiring offshore developers. And outsourcing software development to Bulgaria is one of the most popular options for companies that want to work with a team from Eastern Europe.

growth of IT outsourcing

So, what advantages can you expect from the tech market in Bulgaria? And should you choose it for your next software project? In this article, we’ll analyze the software development environment in this country and stack it up against other outsourcing destinations, including Ukraine.

Five IT outsourcing markets to consider 

Before we look at Bulgaria in more detail, let’s briefly touch on other popular outsourcing markets. We’ve studied several destinations in terms of their talent pool, geographical location, and value for the money. Below are the top countries to outsource software development.

Poland

Poland stands as one of the leading destinations for software development in Eastern Europe. According to Statista, the Polish market for outsourcing services has been steadily growing since 2016 and will reach $2.3 million by 2021. 

One of the reasons might be that the country has an exemplary education system, and the children are taught programming from an early age. According to the 2018 HackerRank Developer Skills Report, over 7.7% of Polish programmers started coding when they were from 5 to 10 years old. On top of that, universities in Poland place a great emphasis on STEM degrees and attract students from all over Europe.

Today, Poland has an impressive talent pool and an extremely competitive market. According to the 2021 Emerging Europe IT Landscape Report, Poland has a score of 61.40, making it one of the most competitive IT sectors in Central Europe. The country is home to thousands of engineers well-versed in different programming languages. The most popular tech stack includes PHP, Java, and .NET languages.

The country also has over 800 outsourcing software development companies registered on Clutch. Many of these vendors have a high rating, driving more clients to work with Poland.

Argentina

Argentina is a top choice for outsourcing web development, mobile app creation, and cloud computing solutions in South America. Argentina’s IT market in 2019 generated over $1,5 billion in revenue. Moreover, the software industry in this country is continuously growing due to the increased demand for development services from foreign companies.

In addition, the Argentinian government is investing heavily in education, including STEM disciplines, which is why it stands among the top 35 countries with the best education system. Tens of thousands of students graduate from Argentinian universities yearly. Most developers in the country are familiar with Java, Javascript, PHP, C, and .NET. 

Another benefit is that the developer retention rate is high in most Argentinian companies. It means that clients are likely to work with the same teams throughout the duration of their projects.

In general, Argentina is a good destination for US-based companies because of the time-zone proximity. The business hours overlap, meaning developers are working at the same time as their clients and can communicate in real-time.

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India

India is by far the largest outsourcing market, with thousands of software firms and millions of developers. According to Nasscom, the Indian IT sector accounts for 8% of the national market, with IT export services reaching $150 billion by the end of 2021.

Companies worldwide often choose India to outsource mobile development and low-budget projects. The reason is that software developers in India charge lower than engineers in other countries. Some of them are ready to work for less than $8 per hour. But the quality of work often suffers from these low rates. 

Despite being home to many talents, there’s a high risk of hiring technically incompetent developers. Many Indian engineers don’t have sufficient coding experience. Instead, they undergo only some intensive programs that don’t provide enough knowledge to successfully complete an actual project. So, you should pick India only if you’ve had a positive experience with a particular company.

Ukraine

Ukraine has one of Europe’s most prominent software development destinations for outstaffing and outsourcing. The IT Ukraine Association predicts that the IT market will reach $9 billion by 2025.

EU companies might find Ukraine a perfect choice for nearshoring because of its advantageous geographical position. At the same time, this country is an excellent destination for offshore projects. Many businesses are outsourcing to Ukraine because of its vast talent pool, reasonable rates, and high-quality services.

Ukraine has over 184,000 software developers, and this number is expected to reach 250,000 by 2025. Thanks to 150 tech universities and colleges, along with numerous boot camps, courses, and active community members eager to share their knowledge, local developers have all opportunities to gain excellent tech skills. According to the SkillValue 2019 IT ranking report, Ukrainian programmers have shown an average of 93.17% success score during tests, ranking Ukraine among the top 5 countries for outsourcing IT solutions.

Many big cities in Ukraine have their own IT cluster with tech specialists, companies, institutions, and boot camps. Based on the AVentures Capital 2019 report, Ukraine has over 245 large software development enterprises that make over $2.07 billion annually. On top of that, there are more than 1,000 outsourcing companies on Clutch. All these factors make Ukraine appealing to clients in the EU and the US.

Bulgaria 

Bulgaria is a popular choice when it comes to outsourcing software development to Eastern Europe. The country has a well-developed infrastructure, favorable geographical location, and reasonable pricing rates. Besides, the local IT outsourcing market benefits from close cooperation with the government and associations with foreign businesses. 

The country also invests in diverse education programs. According to the 2020 AIBEST Annual Industry Report, there are hundreds of education establishments in the country and about 2,000 graduates every year. Overall, more than 66,000 Bulgarian developers work in IT outsourcing, and their number is growing every year.

Source: pentalog.com

Now, let’s look at Bulgaria’s IT ecosystem and software outsourcing market up-close.

Overview of Bulgarian IT industry 

The Bulgarian software development industry is growing faster than the rest of the national economy. Based on the 2020 AIBEST Report, the IT outsourcing services in the country will contribute to 8.9% of the national economy by 2022. 

Since 2010, Bulgaria has been developing IT hubs and tech parks around the country. Over 322 companies were operating in the IT outsourcing sector in 2019, with two-thirds falling into the categories of micro and small businesses. Overall, the software development market in Bulgaria was growing at an impressive rate of 19.6% in 2019.

The optimal IT hubs to outsource a project or hire developers in Bulgaria include:

  • Sofia. The focal point of the outsourcing industry and the capital of Bulgaria, Sofia is the home for 80% of software development companies in the country. IT is a leading segment here with about 19,000 employees and 30 software education institutions.
  • Varna. A second popular destination for outsourcing companies, with six universities providing degrees in technical industries. 
  • Burgas. This IT hub has a network of training centers for programming and software engineering. Over 1,500 students here are enrolled in various IT programs.

The country has a favorable tech environment for local and foreign organizations. The most popular outsourcing vendors in the Bulgarian IT industry include Melon, Accedia, Sciant, and UkrInSofT. Some of the biggest product companies, based on net revenue and full-time workload equivalent, are: 

  • IBM Bulgaria
  • VMWare Bulgaria
  • SAP Labs Bulgaria
  • Experian Bulgaria

Leading global enterprises are also expanding their businesses to Bulgaria. Companies like Microsoft, IMB, Hewlett-Packard, and Oracle are opening R&D in the country and host numerous conferences for developers every year. 

So, let’s see why Bulgaria’s outsourcing solutions attract companies from around the world.

Five main reasons to outsource software development to Bulgaria

The EU and US companies find hiring outsourcing companies in Bulgaria more cost-effective than working with local companies. Every sixth Bulgarian company in the outsourcing sector works with US-based partners, and one out of nine companies is active in the German market. Plus, the UK is a fast-growing source of clients for Bulgarian outsourcing providers.

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What makes software development outsourcing to Bulgaria a favorable option for so many businesses? Let’s take a look at the main benefits this destination offers.

Growing talent pool

The country’s outsourcing capacity is constantly growing. For example, about 66,000 full-time IT professionals were employed in Bulgaria at the end of 2018, compared to 60,000 in 2017. Besides, the country invests in engineering education programs to further expand its IT sector. Over 10,800 students graduated in software development and computer science from 2015 to 2020. 

In general, the IT outsourcing industry in Bulgaria is expanding at a CAGR of 15.6%—almost twice as fast as the industry average.

Technical skills

With an abundance of full-stack, back-end, and front-end programmers, Bulgaria proves to be a great place to outsource software development. Bulgarian developers are well-versed in C#, Java, JavaScript, SQL, and PHP. Over 10% of programmers know how to code in Python.

Moreover, the country was one of the earliest adopters of agile software development methodology. According to the 2019 State of Software Quality Assurance Survey, 93% of programmers use an iterative approach, which improves communication between teams, stakeholders, and clients during the development.

Cost savings

The Bulgarian government actively promotes tax incentives for local and foreign businesses. The country has a flat 10% for corporate and personal income taxes. That’s two times less compared to EU-average rates. Low taxes affect pricing rates for software development in Bulgaria. 

Moreover, Bulgaria has the lowest hourly labor costs of all EU member states. You can hire dedicated software development teams in this country more cheaply than in other European countries. 

English skills

A good level of English skills is one of the most overlooked software outsourcing challenges. However, communication skills can make or break an outsourcing software project.

Thankfully, over 71% of software companies in Bulgaria have English as their working language. Therefore, native English speakers rarely experience language barriers. The German and French languages follow with 16% and 10% respectively. 

Geographical location

Bulgaria has a beneficial location with geographical proximity to Western and Central Europe. The country is also an EU member, which influences developers’ business attitudes and ethics.

Most European countries share the time zone with IT companies in Bulgaria. The time difference can vary from 9 to 12 hours for US companies, but it still allows business hours to overlap. Many companies consider this a major benefit because they can communicate with vendors and get support in real-time, which is crucial for outsourcing projects. 

Five main reasons to outsource software development to Bulgaria

Bulgaria vs Ukraine: Which market to choose for IT outsourcing?

Bulgaria offers favorable conditions for clients in the US, Europe, and the UK. However, it has tough competition from other countries, and Ukraine is one of them.

Ukraine is an excellent alternative to outsourcing software development to Bulgaria due to an active tech community and IT clusters across the country. The IT service and software R&D market is growing about five times faster than the global figures, based on the 2019 Software Development CEE Report.

The talent pool in Ukraine is several times more than in Bulgaria, with about 200,000 tech specialists. Plus, Ukraine has many more tech universities and yearly graduates.

The cost of IT outsourcing to Bulgaria is slightly more expensive compared to Ukraine’s. According to Clutch, Bulgarian software companies charge from $35 to $50 per hour, while Ukrainian hourly rates range from $25 to $45. The pricing depends on the software development outsourcing model, but you have a wider choice with Ukraine, meaning you’re more likely to find a company with the right price.

Both countries share a time zone and have a similar level of English proficiency. In other words, miscommunication won’t be a problem for your software project.

Leading companies recognize Ukrainian developers as some of the world’s best. In addition to a higher SkillValue ranking, Ukraine stands as a top 5 country with the best programmers on the TopCoder Country Ranking, whereas Bulgaria is in 13th position.

Overall, Bulgaria and Ukraine both have an actively growing IT market. However, Ukraine has a bigger talent pool, tech stack, expertise, and slightly lower rates.

Wrapping up

To sum up, IT outsourcing to Bulgaria can help companies receive high-quality software products for a reasonable price. However, the Bulgarian IT market is still entering its maturity, while other Eastern European countries like Ukraine offer more possibilities and expertise for less money.

In any case, finding a qualified tech partner is much more important than choosing the country for offshore outsourcing. When searching for a provider, you need to pay attention to its expertise and track record of successful projects.

Relevant is an IT company that offers web, mobile, and design outsourcing to companies from all over the world. We have extensive experience and over 200 successful projects. You can look at our cases to see solutions we’ve built for our clients. Drop us a line if you want to entrust your software project to our hands!

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Written by
Andrew Burak
CEO at Relevant
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