In our series about top outsourcing destinations in Europe, we discuss essential criteria for choosing a location and the pros and cons of every country. In this article, we are going to compare IT outsourcing in Bulgaria and Ukraine, focusing on:
- Dynamics of IT market and business climate;
- Availability of the tech talent for successful IT outsourcing or team extension in Bulgaria or Ukraine;
- Availability of tech partners to choose from.
IT market dynamics and business climate
One of the most critical aspects is the attractiveness of the chosen outsourcing destination for business. Besides cost efficiency and a large tech talent pool, companies should know about the local IT industry, ease of doing business there, and the country's policies to support investors.
Comparison of IT outsourcing in Bulgaria and Ukraine
The software outsourcing market in Bulgaria is experiencing consistent growth. In 2021, the exports in the ICT sector surpassed €2.28B (approximately $2.48B), contributing 3.23% to the country's GDP. By the end of 2024, the exports of Bulgarian BPO and ITO services are projected to exceed €6.6B. Moreover, the country has a rather high number of R&D offices of multinational tech giants like HP, SAP, Johnson Controls, Oracle, VMware, Cisco, ProSyst, and Atos, indicating a robust ecosystem for technological innovation and collaboration.
According to Statista, the Ukrainian IT outsourcing market revenue is projected to reach $1.35B by the end of 2024, with over 3.55% of the country's GDP. Experts predict it will reach $2.32B by 2028, with an annual growth rate of 14.50%. Most software development companies work for clients abroad (USA, UK, Europe, and Canada). The country has over 100 R&D centers of global companies from various industries, including software, gaming, telecoms, and ecommerce. This list includes companies such as Microsoft, Samsung Electronics, Apple, Wargaming, Boeing, Skype, eBay, Siemens, IBM, and others. Also, global tech companies such as PetCube, Grammarly, DepositPhotos, Jooble, Viewdle (bought by Google Inc. for about $45M), and CleanMyMac have all started in Ukraine.
Read more: Everything you need to know about software development in Bulgaria
Business climate
The business climate for IT outsourcing to Bulgaria is favorable and improving steadily. The Bulgarian government aims to improve the country's business environment by offering a range of incentives for foreign investors. The country currently has one of the lowest personal income tax rates in the European Union, and it provides fiscal citizenship to foreign nationals who work in Bulgaria. IT outsourcing to Bulgaria has improved the country's score in many rankings. In 2023, Bulgaria ranked 32nd out of 176 countries in the Index of Economic Freedom. Among other notable achievements is the 25 place on the Global Services Location Index in the 2023 Kearney GSLI ranking and an improved Ease of Doing Business score.
Ukraine's business environment is evolving quickly. Starting a business is now much easier due to the simplified taxation system and improved registration procedures. Ukraine holds the 42nd position out of 78 countries in the 2023 Kearney GSLI ranking. Moreover, StartUp Blink ranks Ukraine 49 out of 100 locations in its Global Startup Ecosystem Index, with innovation hubs like Kyiv, Lviv, Kharkiv, and Ternopil contributing to its rising ranking. Local authorities recognize the need to support and develop the Ukrainian IT industry as a strategically important area for the country's tech advancement.
Tech talent pool
Another crucial aspect of IT outsourcing is the availability of experts in the chosen location. In terms of software development outsourcing, Bulgaria and Ukraine both have a decent tech talent pool of experts.
Bulgarian reports claim that there are over 108,600 ICT professionals, and almost 30,000 of them work in IT outsourcing in Bulgaria. The Ukrainian ICT pool has reached 291,500 experts, with approximately 116,600 working for IT outsourcing and outstaffing companies. Both countries are known for highly skilled developers, whose expertise has been recognized by many rankings such as Top Coder and SkillValue.
Keep reading: Hiring Bulgarian developers: talent pool, expertise, education and more
Most popular technologies in Bulgaria and Ukraine
JS is the most popular programming language in Bulgaria, followed by Java and C#. The Ukrainian IT industry seems to have a big interest in Java and JS, as well as Python, C#, and C++. Finding Bulgarian dedicated developers with almost any tech specialization would be easy enough.
Both countries also have a fair share of cloud and DevOps experts, along with solid embedded expertise.
Tech education in Bulgaria and Ukraine
Another reason IT outsourcing to Bulgaria and Ukraine is an advantageous option for businesses is the continuously growing talent pool, fueled by the robust tech education systems in both countries. Every year, nearly 2,330 IT specialists graduate from Bulgarian universities. Around 220 high schools offer tech courses, including software engineering, information technologies, and other IT-related subjects. The Bulgarian IT industry has a significant impact on higher educational institutions, encouraging them to launch new courses. Thus, more than 50 Bulgarian universities across 14 cities included STEM and ICT classes in their educational programs. Among the most renowned institutions that provide IT education are the Technical University of Gabrovo, Technical University of Sofia, Technical University of Varna, etc. Moreover, many Bulgarian students study English as a compulsory subject, contributing to the overall high level of English proficiency in the region.
Ukraine has a strong tech education, with around 22,450 highly qualified ICT graduates annually. Many of the Ukrainian 400+ educational institutions have IT-related programs. The most famous universities with tech programs are the National Taras Shevchenko University of Kyiv, the National Technical University of Ukraine "Kyiv Polytechnic Institute," V. N. Karazin Kharkiv National University, National Technical University of Ukraine "Igor Sikorsky Kyiv Polytechnic Institute, and Lviv Polytechnic National University. Many Ukrainian universities have also launched IT programs in IoT, Artificial Intelligence, Data Science, and other advanced disciplines. Most Ukrainian developers have a good command of the English language despite the moderate English proficiency of the general population.
Ukrainian and Bulgarian IT companies in numbers
The Bulgarian IT industry is home to around 240 software development companies. However, there are only 16 companies with 250-999 employees and nine vendors that employ more than 1,000 IT professionals. These companies work with clients in various domains, including business services, finance, healthcare, and education.
The Ukrainian software development market has a larger number of companies that represent different domains. Clutch lists around 1,000 tech companies, with 15 of them in the leaders' matrix. These companies have expertise in finance, ecommerce, healthcare, business services, and other industries.
Major IT hubs in Bulgaria and Ukraine
Bulgaria and Ukraine are known as convenient nearshoring options for European countries, as well as great options for companies from the UK and the US. Both countries are located within the same time zone (GMT+2), so both Bulgarian and Ukrainian developers are available for contact and work within convenient time slots from any country in the world.
The Bulgarian IT industry is concentrated within the four major IT cities. Sofia is the largest IT hub in the country, housing nearly 80% IT companies in Bulgaria as well as the majority of Bulgarian developers.
Due to the russian invasion of Ukraine in 2022, the country has seen a significant change in the distribution of developers across the country. While at the beginning of the invasion, the lion's share of IT specialists lived in the Western regions of Ukraine, now they start to return to other cities. According to DOU, 36% of Ukrainian tech experts reside in Kyiv, 18% in Lviv, and 6% in Dnipro. Despite hard circumstances, the Ukrainian IT industry keeps working and ensures delivery above 95%.
Why is IT outsourcing to Bulgaria a viable option for businesses?
Bulgaria has a large tech talent pool with strong tech skills and a sound command of the English language. Approximately 80% of Bulgarian tech companies have headquarters or delivery centers in Sofia, Bulgaria's most vibrant IT hub. Among other popular IT locations are cities like Plovdiv, Varna, and Burgas. There are at least 2,300 computer science graduates annually.
Apart from the stable political and economic climate, the Bulgarian IT industry also has strong governmental support. In 2022, the Ministry of Transport, Information Technology and Communication of Bulgaria announced the state-wide Digital Bulgaria 2025 National Programme. Its objective is to modernize and expand the use of intelligent information technology (IT) solutions in all spheres of the economy and society. The program aims to enhance digital competence and skills at all levels, meaning the IT industry will benefit from a steady inflow of new talent.
Bulgaria's IT industry is booming. The country appears high in numerous international rankings, including GSLI by AT Kearney, Ease of Doing Business by the World Bank, and many others. The country has a stable economy and political environment, favorable tax legislation and geographic location, and convenient flight connections, making it a great business destination.
Dimitar Manevski, Head of N-iX Bulgaria.
Summary
Both Ukraine and Bulgaria are growing quickly and keeping up with the latest trends in the software development market. Ukraine remains one of the top IT outsourcing destinations in the CEE region due to its impressive talent pool, moderate prices, constantly developing business infrastructure, and interest in the latest trends. Bulgaria offers an attractive investment climate and creates excellent opportunities for business growth. So, depending on your business needs, you may decide which of these destinations is better for you and choose your best IT outsourcing provider for a successful long-term partnership.
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Why should you choose N-iX for IT outsourcing in Bulgaria or Ukraine?
With a large number of companies on the market, it might be hard to choose a trustworthy vendor. Here are several reasons to consider N-iX for IT outsourcing to Bulgaria and Ukraine:
- N-iX has a development center in Sofia (Bulgaria), as well as offices and R&D centers in Poland, Ukraine, Romania, Colombia, Sweden, Malta, and the USA.
- We have over two decades of experience in the IT market and employ 2,200 well-versed tech experts.
- We have established enduring partnerships with international market leaders such as Lebara, AVL, Fluke, Currencycloud, Gogo, Travelport, and Ringier, as well as Fortune 500 companies. Each year, we successfully deliver more than 160 projects to our clients.
- N-iX has many industry recognitions (Clutch, GoodFirms, OpenText and Microsoft partner, GSA, Inc. 5000, Software 500, IAOP, and many more).
If you have any questions about IT outsourcing to Bulgaria or Ukraine, make sure to contact our experts.
References
- State of European Tech;
- Tertiary education graduates: main subject areas;
- Trading Economics
- Future of IT Report by Emerging Europe
- EMEA’s Business Services Landscape
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