Which European country earns 10 per cent of its GDP from ICT, has the second-fastest broadband in the world after South Korea – and has attracted the interest of tier-one, global information technology firms like SAP, Cisco and HP?
You’d be forgiven for replying Germany, or perhaps Poland, if you’re familiar with the growing power of central and eastern Europe.
The surprising answer turns out to be Bulgaria, which is mounting a convincing challenge to be your next candidate for cost-effective, high-quality nearshoring.
Calling it ‘the Silicon Valley of Europe’, as some of its more fervent backers do, is probably a little premature. There’s no denying, for example, that it has a smaller IT workforce than local rivals like Poland. It also can’t be denied that at least some parts of the Bulgarian SMB heartland believe that more could and should be done by the state to better support growth and open up even more possibilities for business development.
But there’s also no denying that there is real evidence of a head of steam building up here. The Global Entrepreneurship Index recently placed Bulgaria in the top 50 of its top 100 rundown of countries with a business-friendly culture. This was behind Slovakia but ahead of Hungary, for example. Business office space in Sofia is insanely competitive compared to cities like Berlin – costing about half the amount of the German capital – and more and more Bulgarian tech graduates want to work in start-ups.
Bulgaria at a glance
The European Information Technology Observatory (EITO) has stated that the local IT sector is consistently growing at two per cent annum
BASSCOM, the official trade body for Bulgaria’s local software industry, revealed that he local software sector was worth €702m in 2014, 60 per cent of which was earned in the export market
IT is one of the fastest-growing of all Bulgaria’s industries, now accounting for 1.75 per cent of total GDP, according to BASSCOM
Some 12,000 jobs were directly created in the local tech sector between 2005-14, with a 10 per cent jump from 2013 to last year. There are now a total of 17,000 IT professionals in the country, says the trade body.
These IT professionals earn more than most of their local peers in the services or other engineering fields but their average wage is still highly competitive by EU standards, at €22,000 per year.
Good outsourcing destinationThe country prides itself on imposing a 10 per cent corporate income tax – the lowest rate in the EU. This is one of the reasons multinationals are beating the path to its handsome capital, Sofia(pictured). But a smart company like VMware doesn’t go to a locale for tax breaks alone. It, like other enterprises, also sees the attractions of a highly skilled workforce, available at competitive labour costs. In fact, so competent are Bulgarian tech workers that the requirement for them has stretched across Europe and are also in high demand in the US.
As a result, AT Kearney rates Bulgaria very highly its worldwide list of good outsourcing destinations for 2014, making the country number nine. No wonder that the Bulgarian Outsourcing Association says outsourcing now accounts for just under five per cent of all national income. Its inward investment agency, InvestBulgaria, advertises to the world that the country can help clients in a wide range of nearshoring activity, from HR, to other core business processes – especially BPO (business process outsourcing). Finally, Bulgarian proficiency in useful business languages – with English and German at the top of that list – add the cherry on top for anyone genuinely interested in a fresh alternative to the ‘usual’ list of CEE nearshoring candidates.
Perhaps it’s your turn to be surprised by what Bulgaria can offer your company?
Tomas Turkovic is head of outsourcing at Soitron