Industries of all kinds can benefit from outsourcing, particularly when it comes to software development. From outsourcing major projects to minor functions, you’ll increase efficiency, reduce operational costs, and enable in-house staff to focus on more important tasks. But the big question is this: Should you outsource to a software development team based in your own country or further afield?
Nearshoring has become increasingly popular, with Poland as the top IT nearshoring destination in Europe. But while nearshoring offers numerous benefits, many companies lack the in-house knowledge and expertise to plan and execute a successful project. That’s why Intellias offers nearshore services in Poland and is ready to help you every step of the way.
What is nearshore software development?
Nearshoring, also known as nearshore outsourcing, is basically subcontracting work to vendors in neighboring or nearby countries. Onshoring involves outsourcing in your own country, while offshoring is outsourcing to countries farther away.
Nearshore software development lets companies augment their existing structure by outsourcing crucial aspects of software development to experts in nearby countries. As these outsourcing companies are often in the same time zone, it allows for greater communication and ease of access to partners.
Companies based in the UK, Germany, Austria, Switzerland, Belgium, Luxembourg, the Netherlands, Norway, Sweden, Denmark, and Finland often choose to outsource to Poland. Not only does Poland offer great expertise; it also shares the same time zone (CET) or differs by only one hour, while travel is relatively quick and cheap for in-person meetings.
Overview of Poland’s IT Industry
Another reason why Poland is a popular choice for nearshoring is the strength of its IT industry. Featuring a quarter of the population of software developers in Central and Eastern Europe, Poland has one of the biggest IT talent pools in the region. The total number of developers and IT specialists in the country is estimated to be over 500,000, while the number of custom software development companies is over 1,000. Unsurprisingly, the vast majority are located in Warsaw, Kraków, and Wrocław; however, Katowice, Łódź, Poznań, and the Tri-City area are also well-known hubs.
IT outsourcing revenue in Eastern Europe has a CAGR of around 18%, and the market is forecast to reach 5.94 billion dollars by 2027. Poland, Ukraine, and Romania are the current leaders of nearshore software development trend.
Advantages of nearshore outsourcing to Poland
There are many benefits of choosing Poland for nearshoring IT services:
- Global talent hub: Poland is renowned all over the world as a hub for IT and technology talent.
- Quality-price ratio for software development teams: Hiring software developers internally comes with a range of employee acquisition and onboarding costs. Outsourcing to Poland is much more cost-effective, as the cost of labor is notably lower than in many other European countries.
- Geographical location: Convenient transportation links are key to successful business partnerships. For countries on the other side of Europe, such as the UK, a flight to Poland takes only a couple of hours.
- Cultural compatibility: Offshoring to countries much further away leads to issues of cultural incompatibility that can impact communication and productivity. Poland, on the other hand, has a culture very similar to that of most Western European countries.
- English proficiency: Shared languages are vital for communication between companies. Over half of the population of Poland is fluent in English (while a fifth speak German). In the global EF English Proficiency Index, Poland ranks 13th out of 111.
- Skilled workforce: The Polish IT talent pool is renowned for their technical and technology-related skills when it comes to software development.
- Business-friendly environment and access to the EU market: Cities like Warsaw and Kraków are well-known as global business hubs, with convenient international transport links and an entrepreneurial culture. Access to the EU market — one of the world’s most powerful trading
blocs — is another significant benefit, with much of the red tape associated with other international trading removed.
- IT infrastructure: Poland has free, accessible Wi-Fi in most public spaces, and internet speeds are much faster than in other outsourcing locations in Asia and Oceania. It also ranks highly for digital transformation. Polish software developers have clients in many industries, including finance, retail, eCommerce, and healthcare.
Dynamics of Polish ICT (Information and Communication Technology) Exports and Value Added
Source: Future of IT Report,2022, Emerging Europe, Ltd
- Time zone: A shared time zone improves communication, project planning, and many other tasks. Poland’s time zone is CET (Central European Time), which is shared by many other European countries.
- Ease of doing business index: On the World Bank’s Ease of Doing Business Index, Poland ranked 40th out of 191 countries.
- Connectivity: Over 93% of people in Poland have internet access, with high-speed internet being extremely widespread, especially in the big cities.
- Data & IP privacy: Like other EU countries, Poland follows GDPR legislation. This means that outsourcing developers and teams will, by default, comply with the same regulations as developers in other European countries.
- Gender diversity: The employment rate in Poland is higher for men than for women (similar to the average rates across the EU in general). However, the gender pay gap is lower than in most other OECD countries (including, notably, the UK). Although the field of computing is male-dominated in Poland, there are many opportunities to hire a diverse workforce in the country.
- Taxation: Overseas companies aren’t required to pay payroll tax in Poland when outsourcing to workers based there. However, sales tax and individual income tax must still be paid. Companies also need a Polish bank account and a local signatory to add a Polish engineer or developer to their payroll. Many companies trust their Polish business partners to manage compliance with these tax requirements.
- Employee laws: Although there is a Polish Labor Code, much of the country’s employment laws follow those of the EU in general, closely matching those followed by companies all across Europe.
Nearshore outsourcing rates in Poland
Saving money is one of the key benefits of nearshoring services in Poland. Software developers’ average rates are notably lower in Poland than in many other countries.
For example, the average junior frontend developer in Poland makes around $20,000 a year compared to $35,000 in the UK, while the average senior frontend developer makes around $37,000 annually in Poland compared to $78,000 in the UK. For backend developers, the average yearly salaries are $24,000 in Poland and $29,000 in the UK at the junior level and $58,000 and $75,000 respectively at the senior level.
Hiring a nearshoring team in Poland can therefore be much more cost-effective than onshoring a development team
Challenges of nearshoring in Poland:
Outsourcing to any location comes with challenges. Common problems faced when nearshoring to Poland include:
- Competition for talent: Polish developers’ skills are well-known, as is their cost-effectiveness. This means that companies may face high levels of competition when choosing developers in Poland.
- Finding the right people: Choosing the best people for the job can be tricky, especially if you’re new to outsourcing in Poland. Working with a nearshoring partner can help with this, as they are likely familiar with Polish talent pools and able to aid in communication with prospective candidates.
- High staff turnover: With developers in high demand all over the world, they often change jobs regularly. To retain staff, you must provide competitive experience both financially and in terms of working conditions.
- Remote management: Managing external staff introduces additional challenges that you may not face with in-person management. Any organization outsourcing work has a responsibility to manage remote staff as effectively as in-house staff.
- Compliance with Polish employment laws: Understanding the labor laws of any country is a requirement for outsourcing work. Thankfully, Poland’s employment laws are mostly based on standard EU regulations.
Which global companies currently nearshore to Poland?
The IT outsourcing market in Poland is substantial, and many global firms participate. Companies hiring IT teams in (and outsourcing to) Poland include Google, Microsoft, IBM, Intel, Amazon, Accenture, and Cisco. Many companies establish research and development hubs in Poland.
Why nearshore IT services to Poland with Intellias?
While nearshoring IT services has many benefits, it’s tricky to do successfully without help. You would be wise to hire a professional agency experienced in helping companies nearshore services to Poland.
At Intellias, we offer the experience and expertise to help companies successfully nearshore their software development services. Our office in Kraków has a team of dedicated local software engineers. Partnering with Intellias helps you avoid the stress of hunting for the right talent and dealing with the ins and outs of managing teams from overseas.
Nearshoring to Poland is definitely worth considering if your company is based in Europe. Whether you’d like to create a new SaaS product or update an old app, our team has the skills, knowledge, and expertise to guide your custom software development projects.
You can count on us to ensure that the nearshoring process is smooth, easy, and produces the results you expect. To build a skilled, effective nearshoring team partner with Intellias.