Powered by thriving tech companies, a skilled workforce, government support, affordability, and an emerging AI ecosystem, Portugal is fast becoming a European custom software development destination. The country has become increasingly recognized as a competitive outsourcing hub in Europe, drawing interest from renowned companies such as Google, Mercedes-Benz, and Siemens. This surge in attention can be attributed to various factors, including Portugal's well-developed infrastructure, a pool of highly skilled IT professionals, and its status as a member of the European Union. What other factors influence multinational companies to choose software development services in Portugal? What are the key considerations when partnering with local vendors to bring your project to life? Let's delve deeper.
The tech talent pool in Portugal
Portugal has emerged as a prominent player in the European tech landscape, attracting businesses seeking a skilled and diverse workforce. While Portugal's tech talent pool offers expertise in areas like software development, IT services, and emerging technologies, several key factors contribute to its growing reputation and differentiate it within the European market:
A growing pool of IT professionals
Portugal offers a significant pool of qualified developers, with nearly 230,000 ICT specialists comprising 4.5% of all workforce. With 28% of university graduates pursuing computer science and engineering, the ICT sector enjoys a continuous talent influx. This focus on STEM education guarantees a reliable pipeline of future developers, ensuring the continued growth and sustainability of the ICT sector's workforce.
Extensive technical expertise
Java emerges as the most popular programming language among developers in Portugal, with 18.85% specializing in it. JavaScript follows closely behind at 15.82%, highlighting the prevalence of web development and general-purpose programming expertise. SQL, crucial for database management, sits at 13.92%, indicating a solid foundation in data handling within the Portuguese developer community. The remaining languages, like C#, Python, and .NET, hold significant shares, ranging from 8.86% to 7.79%, demonstrating diverse skills and a capacity to handle various project requirements. While Android development (6%) and mobile app development generally seem present, other mobile and platform-specific languages like Ruby and C++ have a lower presence at 1.72% and 3.45%, respectively. This distribution reflects a well-rounded talent pool equipped for the diverse needs of software development in Portugal.
Excellent English proficiency
Portugal boasts impressive English proficiency, ranking 7th in Europe and 8th globally based on the 2023 EF English Proficiency Index. This is a significant advantage for the country's software development outsourcing sector. Additionally, many professionals are fluent in other European languages, contributing to the appeal of software development in Portugal.
Software development vendors in Portugal
Collaborating with an established outsourcing partner like N-iX unlocks access to a vast talent pool in 23 European locations, including Portugal. The Portuguese market boasts around 150 companies prepared to assist businesses in recruiting tech professionals for their needs. To gain a deeper understanding, let's explore Portugal's tech scene, examining companies’ size, service offerings, domain expertise, and target clientele.
The vendor’s size
In Portugal, the software development industry is dominated by smaller companies, with 58.7% of the market share belonging to vendors with less than 50 employees. They are followed by companies with 50-249 employees, accounting for 27.7% of the market. Larger companies, categorized as those with 250-999 or 1,000-10,000 employees, collectively comprise a smaller portion of the market, at 5% and 8%, respectively. This distribution highlights the prevalence of smaller, agile development teams within the sector of software development in Portugal.
Key services offered
The Portuguese IT vendor landscape is characterized by a strong presence of vendors offering website (56%) and mobile app development (52%), highlighting the country's expertise in creating digital solutions. User experience and user interface design (27%) further emphasize the focus on user-centric development. Additionally, the presence of vendors offering AI development (16.2%) and blockchain (8.7%) indicates a growing focus on emerging technologies. In comparison, established services like IT staff augmentation (18.2%) and IT strategy consulting (16.2%) cater to diverse business needs. This blend of established and emerging offerings positions Portugal as a well-rounded hub for software development projects.
Industries served by software development companies in Portugal
The leading industries Portuguese tech vendors cater to are financial services (54 vendors) and information technology (49), indicating deep expertise in handling complex data and systems. Additionally, the presence of vendors specializing in healthcare (44), ecommerce (38 companies), and business services (30 vendors) reflects Portugal's capacity to cater to diverse industry needs. This trend continues with vendors focusing on education (26), retail (26), and telecommunications (22). Notably, the presence of vendors focusing on consumer products & services (20), advertising & marketing (16), and energy & natural resources (15 companies) further underscores the breadth of expertise available within the Portuguese IT sector. This diverse skillset positions the country as a versatile hub capable of supporting various projects in software development in Portugal that span different industries.
Client type
Portuguese IT vendors cater to a diverse range of businesses, demonstrating their adaptability and expertise across project scales. Nearly two-fifths (36%) of vendors service small businesses with revenue under $10M, showcasing their capabilities in handling smaller projects effectively. Mid-market companies, representing the largest client segment at 38% (81 vendors), also find Portugal's IT sector well-equipped to address their needs. Notably, Portuguese IT vendors are no strangers to large-scale projects either, with a quarter (26%, 55 vendors) having experience working with enterprise-level clients exceeding $1B in revenue. This versatility in client focus positions Portugal as a strong outsourcing partner for businesses of all sizes and budgets.
Read more: 10 trusted software development companies in Europe
A market overview of software development in Portugal
The Portuguese ICT sector is a significant driver of the national economy, representing almost 10% of GDP and generating a $20B turnover. The IT services market in Portugal is expected to reach a value of $2.54B in 2024, with IT outsourcing projected to be the dominant segment at almost $1B in the same year. The market is anticipated to grow at a compound annual growth rate (CAGR) of 6.52% from 2024 to 2028, reaching a projected value of $3.27B by 2028. What key drivers are propelling the growth of the software development sector in Portugal?
Business climate
Portugal attracts a growing number of foreign investors. It now ranks as the eighth most attractive European country for Foreign Direct Investment (FDI), according to the 2022 EY European Attractiveness Survey. This rising popularity is evidenced by the 30% increase in FDI projects secured in 2021 compared to the previous year. Portugal has surpassed Poland and Ireland in this key ranking, with software and IT services leading the top sectors attracting investment. Moreover, according to the OECD, Portugal is now the most affordable country in Europe to run a business. Portugal has also produced seven unicorns to date.
Advanced tech infrastructure
The country’s tech infrastructure offers a solid setting for software development in Portugal, boasting several key strengths. Widespread internet connectivity, ranking 40th globally on the GII, with an ICT access score of 90.7, ensures a strong foundation for digital participation and economic activity for citizens and businesses. Furthermore, the country's commitment to digitalization is evident in its rankings for government online services (35th) and e-participation (41st), streamlining access to services and fostering citizen engagement. This robust infrastructure positions Portugal well for continued advancement in the tech sector. Ongoing investments and focus on key areas like digital skills development, innovation, and business technology integration further solidify its position as a thriving tech hub. Portugal's 15th place ranking in the Digital Economy and Society Index (DESI) among 27 EU member states further underscores this. This ranking, combined with its well-developed digital infrastructure and skilled workforce, makes it a conducive environment for software development outsourcing, with resources readily available to support international projects.
Governmental support for the industry
The Portuguese government actively supports the development of digital skills and the technology sector through various initiatives.
- National Initiative for Digital Skills (Portugal INCoDe.2030): This initiative aims to foster and ensure digital skills development across various demographics. Structured around five core pillars (inclusion, education, qualification, specialization, and research), it outlines public policy goals and measures implemented by diverse institutions. The Foundation for Science and Technology (FCT) leads this collaborative effort, which seeks to improve Portugal's position in the Digital Economy & Society Index (DESI) and enhance its competitiveness in the digital world.
- Digitalization of the economy: Portugal's second phase of the Indústria 4.0 national strategy allocates €600M over the next two years to support the digital transformation of the economy.
- "AI Portugal 2030": This is a national strategy to use AI for economic and societal growth. It aligns with the European Union's plan to build a better future with AI in areas like education, public services, and industry. The strategy emphasizes research, skills development, and ethical application of AI, targeting Portugal as a hub for innovation and a real-world testing ground for AI advancements.
Main tech hubs
While the presence of software development companies spans across Portugal, certain cities stand out as IT hubs due to their concentration of talent, infrastructure, and supportive environments:
- The capital city, Lisbon, is undoubtedly the dominant IT hub in Portugal. It hosts 82 software development companies and a large talent pool, with universities churning out skilled graduates and established companies attracting experienced professionals. The city offers a vibrant start-up ecosystem, well-developed infrastructure, and government support initiatives that foster innovation and attract international investment. Companies like Google, Microsoft, and Siemens have established research and development centers here.
- Aveiro is known for its concentration of high-tech businesses and research institutions. Notably, it houses the University of Aveiro, a leading institution in engineering and technology, and has a strong focus on biotechnology and renewable energy. This specialization attracts companies seeking expertise in these specific areas.
- Portugal's second-largest city, Porto, is home to 55 IT companies. Thanks to its universities and a focus on STEM education, it offers a strong talent pool, particularly in engineering and technology.
- Located in northern Portugal, Braga has emerged as a Western European tech hub in recent years. Thanks to the University of Minho, one of the largest universities in Portugal, the city benefits from a skilled workforce.
With its array of tech talent and rewarding tax conditions for multinational companies, it makes sense that some of the world’s biggest corporations, such as Google, Siemens, IKEA, Cisco, Unilever, Nestle, Volkswagen, and Mercedes-Benz, have all established hubs for software development in Portugal in recent years.
Wrap-up
Portugal's software development scene is booming, driven by a skilled workforce, government support, and a focus on emerging technologies. This growth, Portugal's strategic location, and EU membership make it an attractive destination for outsourcing software development. Companies can find abundant talent, established infrastructure, and a supportive business environment in tech hubs like Lisbon, Porto, and Braga. To maximize the benefits of outsourcing to Portugal, partnering with the right software outsourcing partner is crucial—one that aligns with your project's requirements, ensures transparent communication, and has a track record of delivering high-quality solutions.
Why choose N-iX as your software development partner in Portugal?
MARKET REPORT
Get a complete overview of Central and Eastern European tech markets!
Success!
