The Technological Revolution of today radically transforms how we live, work, and communicate. It generates numerous commercial opportunities and disrupts every sector of the economy. The change is driven by an exponential increase in processing power and data volumes. AI, robotics, big data, blockchain, the Internet of Things, autonomous vehicles, 3D printing, VR, and other technology advancements provide organizations with limitless opportunities.
Businesses utilize digital technologies to automate manufacturing, boost productivity, penetrate new markets, and satisfy consumers' ever-changing expectations. Digital skills are rapidly becoming essential to the success of any firm. Unsurprisingly, the need for skilled tech professionals is rising in line with the overwhelming desire to adopt technological innovations. The shift is global in scope; however, the IT resources businesses require today are unevenly dispersed. It might be difficult for enterprises to locate the necessary knowledge in the United States, the United Kingdom, the Nordic countries, India, etc.
In this article, we will consider the features of the IT market in Albania, Ukraine, Romania, Israel, Bulgaria, Serbia, and Poland, as well as salaries and taxes in these countries.
Bulgaria
Bulgaria, located on the Balkan Peninsula in southeastern Europe, has a crucial geographical position as a link between Europe and Asia. As a member of the European Union, Bulgaria has one of the most financially stable economies in Europe's Central and Eastern regions. Bulgaria has become a more desirable location for outsourcing in various industries, including information technology.
The Bulgarian worker force is well-educated, and the country's labor costs are relatively low. The country's corporate income tax rate is 10%. (CIT). The World Bank classifies the Bulgarian economy as an "upper-middle-income economy." (https://taxsummaries.pwc.com/bulgaria)
Bulgaria is one of the wealthiest countries in the Balkans; during the Soviet era, it was known as the "Communist Silicon Valley" and is now a leader in high-performance computing. Current estimates indicate that more than 41,000 individuals worked in the IT outsourcing business in Bulgaria in 2021 alone. (https://ncube.com/blog/bulgarian-it-industry-an-overview)
Various education institutes are a feature of the Bulgarian educational system. It includes over 220 high schools that offer technology education, including software engineering, computer technology, and other IT-related courses. Moreover, Bulgarian students are learning both Bulgarian and English, and over 70% of students also study a third language of their choice.
(https://outsourcingreview.org/it-outsourcing-markets-review-bulgaria-vs-ukraine/)
The Bulgarian IT market is viewed as one of the most dynamic worldwide. Owing to the presence of R&D and BPO centers of large IT companies, Bulgaria shows great potential for reaching out to numerous foreign clients.
The local IT industry has a large number of companies in the highest value-added market segments, and this number is overgrowing. First, the main weaknesses and possible threats are high dependence on the EU since all the patented products and services mainly belong to the companies, usually foreign ones. Therefore, all the credentials go to the company. Many businesses employ Bulgarian IT specialists due to the relatively low cost of services, but this does not imply a lack of quality.
Comparing the Bulgarian and Ukrainian IT markets, it is clear that the Bulgarian sector is relatively small and employs fewer technologies that are now operational. This issue occurs due to the large number of international players such as HP, EPAM, Luxoft, and Ciklum. From this perspective, Ukraine has a lesser number of large enterprises but a significant number of smaller companies that provide software development and project management services on a massive scale. The spectrum of earnings also varies between the two markets; rates for junior developers are comparable, but beginning with middle developers, Ukrainians receive slightly higher compensation.
Bulgarian IT market capacity comprises almost 500 companies employing around 70,000 specialists, which is expected to reach 80,000 by the end of 2021. The country also benefits from the presence of the global IT giant — Hewlett-Packard, which employs more than 6,000 IT specialists.
Bulgaria has a relatively high number of R&D offices of multinational IT corporations such as HP, SAP, Johnson Controls, Oracle, VMware, CISCO, ProSyst, and Atos.
Moreover, in 2015, the country was named “Offshoring Destination of The Year” by the UK’s National Outsourcing Association (NOA).
The Average Salary of Bulgarian IT Specialists amounts to as follows:
Junior Software Developer | 1-4 years of experience | $33 000/year |
Middle Software Developer | 5+ years of experience | $60 000/year |
Lead Software Developer | 8+ years of experience | $81 000/year |
Benefits and Taxes
What makes Bulgaria attractive for foreign clients is one of the lowest tax rates in Europe:
Corporate income tax (CIT) rates 10%
Personal income tax (PIT) rates 10%
Most companies offer health insurance, and, in some cases, you can also get vehicle insurance. Perhaps, one of the significant advantages is that EU membership allows it to be officially employed by other European Union countries since 2013.
Romania
Romania is located at the crossroads of Central and Southeastern Europe, bordering the Black Sea between Bulgaria and Ukraine. The capital and largest city is Bucharest. The official language is Romanian, and the currency is the Romanian leu (RON).
Investment in the economy of Romania is rising. According to data issued by the National Bank of Romania (NBR), foreign direct investment in Romania from January to May 2022 totaled 3,787 billion euros (EUR) (compared with EUR 2.471 billion in the period January 2021 through May 2021) (https://taxsummaries.pwc.com/romania)
Romania has been amidst the fastest-growing IT pools in Central-Eastern Europe. As for workforce availability, Romania has a talent pool of approximately 192K ICT specialists (https://www.n-ix.com/it-companies-romania/) – this includes all the staff involved in business process outsourcing, such as custom software development and product development, client and product support, and various supporting services. Bucharest, Timisoara, Cluj-Napoca, Constanta, Iasi, and Chisinau are home to most of the country's top IT destinations.
Bucharest is home to 78% of Romania's IT specialists, one of the country's most distinguishing traits. Despite the vast number of specialists, Romanian IT services do not constitute a substantial threat to the global industry leaders in IT outsourcing.
(https://www.themayor.eu/en/a/view/cluj-napoca-is-stepping-up-as-a-technology-hub-nicknamed-the-silicon-valley-of-eastern-europe-1320)
Every year, close to 17,000 tech graduates fuel the Romanian IT industry. Most begin their careers while still students, and almost all maintain their careers after graduation. The latter opens up new prospects due to EU membership, which allows formal employment in all EU member states. All of Romania's lower high school students (100%) learn at least one foreign language, and 95.2% learn two or more languages.
Software Highlights:
Revenue in the Software market is projected to reach $402.00m in 2023.
The market's largest segment is Enterprise Software, with a projected market volume of $162.40m in 2023.
Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 8.12%, resulting in a market volume of $549.30m by 2027.
The Average Salary of Romanian IT Specialists amounts to as follows:
(https://www.levels.fyi/t/software-engineer/locations/romania)
Junior Software Developer | 1-4 years of experience | $24 000/year |
Middle Software Developer | 5+ years of experience | $61000/year |
Lead Software Developer | 8+ years of experience | $83 000/year |
The average salary starting from 2012 in Romania is growing by 4-4.5% annually.
Despite the most popular benefits employees get around the globe are tea/coffee/cookies, Romanian IT staff also receives the 13th salary (the 13th paid a month at the end of the calendar year) and short Fridays. As to various researchers, some companies offer their employees private health insurance, pension, life insurance, gym cards, casualty insurance, transportation, meal tickets, lunch, cars, etc.
The Romanian taxation system has been highly accommodating to the IT industry, making it one of Ukraine and Bulgaria's principal competitors. One feature encourages local IT specialists to enter the industry: if a company's yearly revenue surpasses $100,000 (and as of 2015, startups' as well), the personnel are eligible for tax exemption and, consequently, earn more money.
Benefits and Taxes
Romania has relatively small tax rates in Europe:
Corporate income tax (CIT) rates 16%
Personal income tax (PIT) rates 10%
Today, many Romanian IT specialists prefer switching to startups and developing smaller cities and towns such as Pitesti, Craiova, Sibiu, and Targu Mures, which are becoming increasingly attractive to investors. IT companies offer educational and internship programs and recruitment campuses for juniors to recruit more specialists. Therefore, by the time they graduate from the university, they’d already had a job, experience, and a massive opportunity for personal growth.
Poland
Poland, situated in Central Europe, borders Germany, Ukraine, Russia, Belarus, the Czech Republic, Slovakia, and Lithuania. Poland consists of sixteen provinces (voivodeships), with Warsaw as the capital. The official language is Polish, and the currency is the zloty (PLN).
Poland is a member of many international organizations, including, among others, the European Union (EU), the North Atlantic Treaty Organization (NATO), the World Trade Organization (WTO), and the Organisation for Economic Co-operation and Development (OECD).
Poland has one of the fastest-growing economies in Eastern Europe, which makes it an appealing destination for software development by international companies. The country has the most extensive working population in Central Europe, consisting primarily of individuals under the age of 34. Over 280,000 Poles are employed in the IT industry, and over 500 IT organizations offer software outsourcing services. In addition, approximately 15,000 IT graduates enter the Polish software development sector every year.
Application Development and Support constitute the most significant portion of the Polish IT market. In Poland, the major segments of the IT business are IT enabling services and user support/service desk, whereas the Ukrainian economy is dominated by software development. Western European companies receive the majority of services. Eighty percent of Polish IT companies target the Western market. However, 74% of businesses also opt to collaborate with internal entities. Regarding technology, Polish IT companies offer a vast array, including Java and MS stack, Web development, databases, and mobile.
The country's IT services market reached $4.62B in 2018, with a growth rate of 5.9% CAGR. Moreover, Poland was ranked 15th in Tholons Services Globalization City Index in 2019, with Krakow and Warsaw as the major centers of the country's IT development. At the end of 2019, the value of foreign direct investments amounted to 209 billion euros (EUR), according to data published by the Polish Investment and Trade Agency.
Poland's largest IT communities are Krakow, Wroclaw, Warsaw, Poznan, Gdansk, and Lodz. (https://taxsummaries.pwc.com/poland)
IT industry has the highest demand among Polish students – over 75,000 apply to IT specialties annually, with up to 14,000 graduates. 95% of IT students speak English, and 31% speak German. Poland has a tradition of multi-lingual education in its schools and universities. Of course, Polish is the primary language and is taught compulsorily, but many other foreign languages, such as English, French, and German, are also included in higher education. (https://www.polandeducation.info/education-system/academic-year-and-language-of-instruction.html)
The Average Salary of IT Specialists is equal among Polish companies:
Junior Software Developer | 1-4 years of experience | $40 000/year |
Middle Software Developer | 5+ years of experience | $71 000/year |
Lead Software Developer | 8+ years of experience | $89 000/year |
Benefits and Taxes
Practically all Polish IT corporations give their employees private medical insurance, life insurance, sports cards, and on-the-job training.
The Polish IT industry is also being built to create favorable business development conditions. Almost all companies pay taxes under the CIT (Corporate Income Tax) model, amounting to 19%. However, there are different extenuating circumstances helping to decrease the tax rate. For instance, a company may have a Special Economic Zone (SSE) tax exemption or be subject to local tax exemption, depending on the location and local government regulations. If speaking about an employee’s tax payment, the Income Tax is calculated based on the total income:
0-$750: 0%
$750-$21200: 18%
over $21200: 32%
Social taxes payments are split between an employee (around 13,7%) and an employer (between 19,5% - 22%).
Poland closed in number Ukraine in the number of specialists. Ukraine also has a beneficial location and lower prices for living, food, and transportation costs. As to the labor cost, Poland loses to Ukraine since the Polish taxation model corresponds to the EU requirements and requires official employment and significant sums paid for different types of taxes, while Ukrainian developers mainly work as Private Entrepreneurs signing an agreement with an IT services providers and are subject to single tax payment of 5% from their income.
Albania
The official language of the Republic of Albania is Albanian, and the official currency is the lek (ALL). Albania is in the western part of the Balkans, in southeast Europe.
Albania’s economy has been improving in the last couple of years, with the gross domestic product (GDP) increasing steadily. In 2019, the GDP real growth rate was 2.9%, after expanding by 4.145% during 2018, according to the Word Bank.
World Bank projections show growth will accelerate slightly from 3.4% to 3.6% by 2020/21 as labor income gains private fuel consumption. (https://taxsummaries.pwc.com/albania)
The higher education system in Albania consists of universities, academies, and non-public higher schools. (https://www.euroeducation.net/prof/albanco.htm)
Foreign language is one of the mandatory national exams for the secondary education system. High-school students can choose one of the following languages: English, French, Italian, and German. (https://invest-in-albania.org/foreign-language-skills-and-education-in-albania/)
Software Highlights:
Revenue in the Software market is projected to reach $49.95m in 2023.
The market's largest segment is Enterprise Software, with a projected market volume of $20.20m in 2023.
Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 8.39%, resulting in a market volume of $68.95m by 2027.
The Average Salary of Albanian IT Specialists amounts to as follows:
(http://www.salaryexplorer.com/salary-survey.php?loc=3&loctype=1&job=3&jobtype=2)
Junior Software Developer | 1-4 years of experience | $10 000/year |
Middle Software Developer | 5+ years of experience | $12 000/year |
Lead Software Developer | 8+ years of experience | $15 000/year |
IT technology is the fastest-growing sector of the republic’s economy. Hardware is the largest segment, with 55% percent, the ICT market in Albania is the second-largest segment, with 30%, and software represents 15% of the ICT market. The largest IT communities in Albania are in Tirana, the capital and largest city, followed by Durres and Vlore.
Albania has a good infrastructure, low taxes for corporations, and skilled, low-cost workers who speak English well and have been educated in ICT. The sector is constantly growing, sending well-trained IT workers to other countries.
Also, Albania’s outsourcing industry contributed 2.1% to the country’s GDP and employed 15 000 people in 2022.
Benefits and Taxes
There are many reasons to work with Albania, such as the highly qualified professionals, low salaries (the median salary for a software engineer with 1–2 years of experience is 500–600 € per month), low taxes for businesses, constant growth in the industry, and proximity to the European Union. Big IT corporations provide their employees with such benefits as private medical care, life insurance, sports cards, as well as on-the-job training.
Albania has relatively small tax rates in Europe:
Corporate income tax (CIT) rates 15%
Personal income tax (PIT) rates 23%
It's 2023 already, and Albania is still not an EU member state, which makes the country's ICT lose multiple opportunities for its tech industry. There may be different rules and laws, and you are not under the protection of some EU Agreements; this also applies to some international agreements.
However, things look okay after all - the EU is financing Albania's tech capabilities using EUR 7.5M in 2022, together with additional participation from Germany and Sweden. The funds will be used to power up the startup ecosystem and encourage tech entrepreneurship. Thus, with funding and ambition, the Albanian IT industry may succeed in Europe.
English and Italian languages are mandatory courses in high schools throughout the country. The other reason relates to Albanians’ TV shows and movie preferences since all Albanians are fans of English or Italian TV stations.
Serbia
Serbia, a small country on the crossroads in south-eastern Europe, is home to many IT talents. It is also a place where large-scale companies outsource their IT departments.
Global companies seeking reliable IT staff select Serbia as Europe's next IT talent hotspot. The official language of Serbia is Serbian, and the currency is the Serbian dinar (RSD). The IMF projects that Serbia's real gross domestic product (GDP) will grow by 3.5% in 2022.
The growing market increases the number of IT companies in the country. According to Europe’s IT competitiveness index of 2021, Serbia ranks as the 7th country with a record of 46.46 points. Like many other countries, Serbia has some of the best universities, and the Republic of Serbia offers access to tech and engineering faculties across the country. Standing at the heart of the capital, the University of Belgrade is the oldest, with two centuries of successful higher education. Best Global Universities Rankings of 2021 placed the University of Belgrade in the top 500 in the world.
According to the Statistical Office of the Republic of Serbia, there are 40,000 university students enrolled in IT disciplines. In other words, each year, a multitude of software developers and engineers graduate from universities.
At the end of January 2021, the Statistical Office of the Republic of Serbia surveyed all registered IT companies. Currently, there are 4,352 companies, and the local tech market has close to 40,000 IT experts. The sector is expanding rapidly, and government institutions are encouraging its growth in many ways. Each year, graduates with a solid mathematical and logical background are prepared to take on new challenges. Each is a talented IT specialist with a western flair and a high English level. Learning different languages is emphasized in Serbian schools very early, and most Serbian students begin learning their first foreign language, usually English. (https://www.nacelopendoor.org/culture-note/serbia)
Developers in Serbia had become a strong workforce for foreign companies. The country has become a popular in-demand software outsourcing destination in recent years. The largest IT communities in Serbia are located in Belgrade, Novi Sad, and Pristina.
A similar time zone to London is an additional advantage of the IT business in Serbia. One hour ahead of the United Kingdom, Serbia facilitates real-time communication between companies.
The IT industry in Serbia, along with the rising demand for labor, makes it an ideal location for outsourcing services. Software solutions, testing, and applications are only a few services that software outsourcing businesses provide.
Benefits and Taxes
Serbia has the following tax rates in Europe:
Corporate income tax (CIT) rates 15%
Personal income tax (PIT) rates 20%
Software highlights
Revenue in the Software market is projected to reach $176.80m in 2023.
The market's largest segment is Enterprise Software, with a projected market volume of $71.46m in 2023.
Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 8.56%, resulting in a market volume of $245.60m by 2027.
The Average Salary of Serbian IT Specialists amounts to as follows:
(https://www.levels.fyi/t/software-engineer/locations/serbi)
Junior Software Developer | 1-4 years of experience | $32 000/year |
Middle Software Developer | 5+ years of experience | $63 000/year |
Lead Software Developer | 8+ years of experience | $84 000/year |
Ukraine
Ukraine, located in the heart of Eastern Europe, is the second largest country in Europe after Russia. Kyiv is the capital and the largest city. Ukrainian is the official language, and the currency is the hryvnia (UAH).
Ukraine's proximity to the European Union (EU), the sheer quantity of its consumers, and the country's physical size make it an opportunity for investments. The country's main asset is its extensive human capital, and Ukraine's well-educated workforce provides a competitive advantage.
As a result of the ongoing confrontation with the Russian Federation, which escalated on 24 February 2022, the territories of Crimea, some territories of Donetsk, Luhansk, Kherson, and Zaporizhzhia regions are currently treated as 'temporarily occupied' with a specific legal regime.
In 2003, Ukraine's IT market was worth around $110m, a comparatively low amount. The war affected the IT sector, but despite this, Ukraine exported IT services in 2022 for more than 7.4 billion dollars.
(https://biz.nv.ua/ukr/tech/it-eksport-ukrajini-perevishchiv-poznachku-v-7-mlrd-dolariv-novini-ukrajini-50301255.html)
Regardless of the pessimistic forecasts regarding IT in the Ukrainian market, this sector achieved good results and showed how Ukrainian outsourcing could adapt to new realities while employees showed good performance.
The latest stats from the National Bank of Ukraine show that the transition between 2020 and 2021 alone saw a 20.4% growth rate in Ukraine's IT services, pushing the value of Ukraine's IT exports to $5.4bn for the first time. It's not surprising that Boeing, Siemens, Oracle, Cisco, Apple, Microsoft, and many other big names in the industry have research and development centers in the country.
Technologically and economically speaking, Kyiv, Kharkiv, Lviv, Dnipro, and Odesa are home to most development hubs. According to the most recent data, these five cities are home to as many as 158,000 IT workers, with the highest concentration of software developers (41%, or approximately 78,000) in Kyiv.
Ukraine is now the fourth-largest supplier of IT talent due in significant part to the country's booming IT market. Kyiv, Ukraine's most populous city, features two passenger airports, Boryspil and Zhuliany. (There are 13 passenger airports in total across Ukraine.) Major European business hubs like London and Berlin are only 2-3 hours away by plane.
Ukraine is in the GMT+2 time zone, meaning its working day is almost the same as every European country. A perfect thing for business. And then, of course, there is the sheer size of Ukraine's talent pool, which has grown by at least 4% over the past few years.
Because of this near-constant influx of new business, Kyiv is constantly growing in size and population (the city is one of the fastest-growing cities in Ukraine.) Over the past decade, Ukraine's software development market has steadily risen, becoming a critical economic driver for the city and the country.
Benefits and Taxes
The Ukrainian IT market works on a private entrepreneur model with a flat tax rate of 5%.
There is a so-called simplified tax system (due to martial law) for individual entrepreneurs with a tax rate of 2%.
Software Highlights:
Revenue in the Software market is projected to reach $839.30m in 2023.
The market's largest segment is Enterprise Software, with a projected market volume of $338.60m in 2023.
Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 11.06%, resulting in a market volume of $1,277.00m by 2027.
(https://www.statista.com/outlook/tmo/software/ukraine)
The Average Salary of Ukrainian IT Specialists amounts to as follows:
(https://www.levels.fyi/t/software-engineer/locations/ukraine)
Junior Software Developer | 1-4 years of experience | $42 000/year |
Middle Software Developer | 5+ years of experience | $72 000/year |
Lead Software Developer | 8+ years of experience | $84 000/year |
Israel
Israel, a parliamentary republic, is located on the eastern shore of the Mediterranean Sea. The capital of Israel is Jerusalem, and its currency is the shekel (ILS). Hebrew and Arabic are the two official languages of Israel.
Israel has a technologically advanced market economy. The Bank of Israel expects gross domestic product (GDP) growth in the Israeli economy to increase 2022 by 5.5%.
With over 321,000 IT Specialists and Software Developers, 8.7% of Israel’s workforce is employed in High-Tech Jobs. For most Israeli companies, outsourcing is the only financially viable option. (https://taxsummaries.pwc.com/israel)
Israel's Silicon Wadi is one of the world's leading locations for IT technology, and it spans the Israeli coastal plain and is cited as why the country has become known as the world's "start-up nation." The most significant concentrations of the high-tech industry around Tel Aviv, including small clusters around the cities of Raʽanana, Petah Tikva, Herzliya, Netanya, Rehovot, and Ness Ziona. Haifa and Caesarea also have areas with a lot of high-tech businesses. Cities such as Jerusalem and Beersheba and communities including Yokneam Illit and Airport City are home to more recent high-tech establishments.
Many worldwide technological corporations, including Intel, IBM, Google, and Facebook, have research and development facilities in this region.
Software Highlights:
Revenue in the Software market is projected to reach $2.96bn in 2023.
The market's largest segment is Enterprise Software, with a projected market volume of $1.20bn in 2023.
Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 6.23%, resulting in a market volume of $3.76bn by 2027.
In global comparison, most revenue will be generated in the United States ($321.60bn in 2023).
According to the Webometrics ranking, six of Israel's universities place in the top 100 schools in Asia. Four universities place in the top 150 in the world according to the Shanghai Jiao Tong University Academic Ranking of World Universities. Three are in the Times Higher Education-QS World University Rankings (i.e., amongst the "Top 200 World Universities").
In modern Israel, Hebrew is the language of instruction, and English or French is the required second language in all schools, beginning in the primary years .(https://education.stateuniversity.com/pages/707/Israel-SECONDARY-EDUCATION.html)
The Average Salary of Israeli IT Specialists amounts to as follows:
Junior Software Developer | 1-4 years of experience | $103 000/year |
Middle Software Developer | 5+ years of experience | $182 000/year |
Lead Software Developer | 8+ years of experience | $235 000/year |
Benefits and Taxes
Israel has the following tax rates:
Corporate income tax (CIT) rates 23%
Personal income tax (PIT) rates 50%
Israel is a big tech player around the world. And Israeli companies are better at making do with less because they are flexible, quick, and good at changing directions.
Let's analyze the number of specialists in various professions in different countries.
It shows the distribution of specialists among countries is highly varied. IT market leaders are Ukraine, Israel, and Poland. (Source: linkedin.com)
Frontend Developer
Ukraine - 32 000
Poland - 27 000
Romania - 7 900
Israel - 6 800
Serbia - 5 900
Bulgaria - 3 400
Albania - 786
Backend Developer
Full Stack Developer
QA Engineer
IOS Developer
Android Developer
The world's data supply doubles every 20 months, Internet-connected devices have surpassed 20 billion, and mobile payments will soon exceed $1 trillion. Every year more and more money is invested in the technology industry. The IT industry is developing very dynamically, and knowledge of IT markets in different countries can help you plan your business more rationally and successfully use the opportunities of IT outsourcing. Despite the economic crises, the technology sector of the global economy remains stable and growing and is increasingly attracting the attention of investors.
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