Building these capabilities in-house can be a significant drain on time and resources. That’s why an increasing number of companies are choosing to outsource instead.
Outsourcing enables you to tap into a global talent pool of IT experts — often at a significantly reduced cost. In recent years, Eastern Europe has established itself as a hotspot for IT software development outsourcing. In this article, we’ll explain why Bulgaria stands out as one of the most cost-effective and attractive outsourcing destinations in the region.
Bulgaria has vast potential for Intellias’ expansion in both business development and talent pool growth streams. Currently, we are staffing a couple of big projects in Sofia and other cities by virtue of our flexible approach to remote and hybrid work modes.
Read on to explore everything you need to know about outsourcing to Bulgaria. We’ll look at its advantages, how it compares to neighboring destinations, and what you need to know before making a decision.
Why is Bulgaria a great outsourcing destination?
With IT outsourcing, you have most of the world to choose from. So why choose Bulgaria over another destination? We’ll answer this question in detail throughout this guide, but let’s kick things off with a snapshot of the key data:
How Bulgarian outsourcing compares to the global IT market
In recent years, Bulgaria has established itself as a growing force in the global IT outsourcing market. It’s now considered part of the “Silicon Valley of Eastern Europe”, alongside countries such as Romania, Poland, and Ukraine.
While it may not match the scale of larger markets in the region, Bulgaria’s low costs and high expertise make it an attractive destination for businesses looking for the best deal.
Outside of Europe, Bulgaria faces competition from outsourcing destinations in Asia. It may not be as cost-effective as markets such as the Philippines or India, but Bulgaria offers many advantages that those destinations cannot, such as:
- Excellent levels of English proficiency
- Close proximity to major European capitals
- A more Western mindset and culture
Software development outsourcing in Bulgaria vs Ukraine
Unlike Ukraine, Bulgaria benefits from EU membership, offering stricter data protection (GDPR) and greater political stability. It also provides a more convenient location for European businesses and higher English proficiency levels.
That said, Bulgaria can’t compete with Ukraine when it comes to market size. Ukraine’s IT industry is valued at over $3.5 billion — more than seven times the size of Bulgaria’s. Ukraine’s large population of 41 million results in a vast IT talent pool of around 250,000 specialists, roughly double Bulgaria’s.
Despite regional conflicts and political challenges, Ukrain’s IT sector is projected to grow at a CAGR of 5.88%, slightly less than Bulgaria’s 6.08%. Cost-wise, Ukraine and Bulgaria are fairly similar, although Bulgaria’s tax system is more business-friendly.
Software development outsourcing in Bulgaria vs Romania
Neighboring Romania’s IT sector is valued at more than $1.3 billion — about three times the size of Bulgaria’s. Over the coming years, Romania’s IT sector is projected to grow at a slightly faster rate (6.78%) than Bulgaria’s (6.08%).
Romania’s population of 19 million dwarfs Bulgaria’s, resulting in a larger IT talent pool of around 230,000 professionals compared to Bulgaria’s 125,000. That said, Bulgaria has a higher percentage of IT specialists relative to its total workforce.
When it comes to costs, there’s little to separate the two IT outsourcing destinations.
Software development outsourcing in Bulgaria vs Poland
Poland has established itself as a leader in the European IT and tech space. Today, its IT sector is worth over $9 billion, while Bulgaria’s is worth around $0.45 billion. Over the coming years, Poland’s IT sector is projected to have a compound annual growth rate (CAGR) of 5.92%. This is just less than Bulgaria’s projected CAGR of 6.08%.
Poland is a much larger country than Bulgaria, with a population of 36 million compared to Bulgaria’s 6.5 million. This difference is reflected in the IT talent pool of each country. Where Poland has over 500,000 IT professionals, Bulgaria has around 125,000.
In terms of costs, outsourcing to Poland is likely to cost you more than outsourcing to Bulgaria. Poland has a higher nominal GDP per capita ($25,000) than Bulgaria ($20,000), and this difference is reflected in local salaries and hourly rates.
| Bulgaria | Ukraine | Romania | Poland | |
|---|---|---|---|---|
| IT sector size | $463 million | $3.5 billion | $1.3 billion | $9.2 billion |
| Projected annual growth rate | 6.08% | 5.88% | 6,78% | 5.92% |
| IT talent pool | 126,000 | 250,000 | 230,000 | 546,000 |
| English proficiency global ranking | 16th | 40th | 12th | 15th |
| Average hourly rates | $30-$50 | $30-$50 | $25-$45 | $40-$55 |
| EU membership | ✅ | ❌ | ✅ | ✅ |
The Bulgarian IT ecosystem
The Bulgarian IT ecosystem is growing fast. This is due to a favourable business environment, a highly skilled workforce, and an influx of international clients that are driving innovation and growth.
To understand why software development in Bulgaria is thriving, let’s start with a bigger-picture view of its economy.
An economy on the up
The Bulgarian economy has been growing steadily since the early nineties. In the coming years, GDP is forecast to continue growing at a rate of at least 2.5% through 2029. This represents significantly faster growth than more established economies in Europe, such as France and Germany.
Source: Statista
At the same time, Bulgaria’s corporate tax rate of 10% — the lowest of all EU member states — has provided fertile ground for tech startups and IT companies. Personal income tax is also extremely low at 10%, encouraging top talent from neighbouring countries to move to Bulgaria.
One thing is clear: Bulgaria is a country on the up.
A booming IT industry
The success of the Bulgarian economy is partly down to its booming IT industry. Bulgaria has been quick to maximize the benefits of digital transformation in both the public and private sectors. Today, Bulgaria is home to more than 10,000 ICT companies, around 300 of which are outsourcing companies.
IT outsourcing dominantes Bulgaria’s tech sector. It represents 5.5% of the country’s GDP and is projected to generate $180 million in 2025 alone. Over the coming years, IT outsourcing is projected to grow faster than other IT areas in Bulgaria as well. Other major IT growth areas in Bulgaria include IT services and software and app development.
Cumulative growth of tech companies in Sofia
Source: Trending Topics
In addition, Bulgaria has been quick to adopt major tech trends such as artificial intelligence (AI), with a growing number of businesses and developers specialising in AI applications. In 2022, the Bulgarian government launched an AI research center in Sofia to boost international investment and make Bulgaria a local hub for AI development.
A growing tech talent pool
Bulgaria’s IT sector is powered by a vibrant software developer and engineer community. There are currently 126,000 IT specialists in Bulgaria, with 66,000 software developers dedicated to outsourced services. Bulgarian developers tend to be strong in a broad range of languages, with JavaScript, C#, Python, SQL, PHP, and .NET being the most popular.
What’s more, Bulgaria’s talent pool looks set to continue growing. There are more than 50 universities across Bulgaria, many with a strong focus on IT and STEM subjects. Each year, Bulgaria produces around 6,000 new IT graduates. And with living standards and local wages increasing, more and more IT specialists will be tempted to stick around rather than moving abroad.
Software development across industries and locations
By outsourcing software development to Bulgaria, companies can build modern technological solutions at affordable prices. Bulgarian IT outsourcing companies help clients from a range of industries, including:
- Healthcare
- Travel
- Financial services
- Insurance
- Education
- Marketing
- ECommerce
- Telecommunications
IT hubs in Bulgaria
Bulgaria has several thriving IT hubs. In this section, we’ll look at the four most important centers for software development and IT outsourcing services in Bulgaria. While each location has its advantages, all of them are attractive propositions for businesses looking to outsource software development to Bulgaria.
Sofia
- Bulgaria’s capital and largest city, with a population of 1.2 million
- The nation’s primary economic and IT hub
- Attracts global tech companies such as IBM, SAP, and Microsoft
- Home to Bulgaria’s most prestigious universities
- Has an international airport with connections to all major European cities
Plovdiv
- Bulgaria’s second-largest city, with a population of around 370,000
- Traditionally the industrial center of Bulgaria
- Now a major IT outsourcing hub with an active tech startup scene
- Close proximity to the capital but with a lower cost of living
- Home to Plovdiv University and a branch of the Sofia Technical University
Varna
- Bulgaria’s third-largest city, with a population of 350,000
- Booming local tech scene
- Located on the shores of the Black Seas in the east of the country
- Home to major corporations such as Coca-Cola and Siemens
- Benefits from a highly educated population and local university
Burgas
- Bulgaria’s fourth-largest city, with a population of 210,000
- Located near the Romanian border
- Then chosen location for several digital innovation hubs
- A nascent startup ecosystem with plenty of room for growth
- Home of Burgas Free University
Offices of BPO and software development companies across Bulgaria
Investing in the Bulgarian IT market: is it worth it?
In a word, yes. Bulgaria has all the conditions in place to become a hotbed of IT innovation and talent. The country boasts a highly skilled and fast-growing talent pool, strong IT infrastructure, and a convenient location.
The country has been fast to adopt the latest technologies, with several innovation hubs being built in recent years. This aligns with the government’s forward-thinking approach to modernizing public services. At the same time, Bulgaria has the lowest rates of corporation tax and income tax in Europe, while also benefiting from EU membership.
Key benefits of outsourcing to Bulgaria
Software outsourcing in Bulgaria is booming — and for good reason. As an outsourcing destination, the country offers many benefits for businesses seeking high-quality IT services. Here are the key advantages to consider:
Cost-effective services
Bulgaria has a relatively low cost of living. This allows software development service providers in Bulgaria to offer high-quality services at a significant discount compared with more established destinations.
Generally speaking, you can expect to pay between 30% and 60% less when outsourcing to Bulgaria compared with Western European countries or the US. Bulgaria also offers slightly lower rates than nearby Poland while offering many of the benefits of its Eastern-European counterpart.
A highly skilled workforce
The country boasts a highly educated and skilled workforce. The number of IT specialists is constantly growing, with 6,000 new graduates entering the workforce each year. Bulgarian software developers are proficient in a broad range of coding languages.
According to HackerRank, Bulgaria has the twelfth best developers in the world. Pretty impressive when you consider the size of the country.
Strategic location
Bulgaria is located in Eastern Europe, offering a convenient time zone for collaboration with both European and US companies. It’s also just an hour or two from most major European cities, with direct flights to Sofia. This makes it an excellent nearshoring choice for European companies looking to outsource their IT services.
Cultural compatibility
Bulgaria’s business culture is highly Westernized. Unlike outsourcing destinations in Asia or South America, you can expect similar social and cultural norms. The result is smooth collaboration and clearer communication.
Language proficiency
Bulgaria ranks 16th in the world for English proficiency. English is the go-to language for the Bulgarian tech industry, reducing language barriers and communication issues to a minimum.
Challenges of outsourcing software development to Bulgaria
Of course, no outsourcing destination is perfect. While Bulgaria’s benefits significantly outweigh any drawbacks, here are some potential challenges to consider if you’re planning to outsource IT services to Bulgarian companies:
- Time zone issues for US companies looking for offshoring opportunities
- Growing demand for top developers
- Data security concerns (not specific to Bulgaria)
That said, working with a trusted outsourcing partner will help you overcome these challenges.
Unleash the full potential of outsourcing in Bulgaria with Intellias
We opened our Sofia office in 2022. Having already established ourselves in Poland and Ukraine, Bulgaria was an obvious choice for regional expansion for the reasons we’ve highlighted in this article.
Our Sofia office is now home to a growing team of more than 35 IT specialists. It has helped solidify our presence in the EU and further our goal: to help Fortune 500 companies and global enterprises embrace digital innovation at scale.
We’ve also made a real difference to the Bulgarian IT ecosystem. Last year, we were named one of the best IT employers in the Bulgarian Career Shows Awards. We also received a silver award in the “Working Environment” category at Forbes HR & Employer Branding Awards.
Our commitment to creating the best possible working environment enables us to attract the country’s top developers — and offer industry-leading outsourcing services.
Choose Bulgaria for quality, culture fit, and expertise
Bulgaria stands out as one of the most attractive IT outsourcing destinations. Its growing success is a product of its stable economy, expanding pool of skilled IT specialists, and thriving software development community.
As an international IT outsourcing company, Bulgaria was an obvious choice when looking to expand our operations in Eastern Europe. If you’re looking for a reliable IT outsourcing partner to drive meaningful change, Intellias has the expertise and innovation you need.
