Many people know Bulgaria for its beach vacations, but today it is often referred to as the “Silicon Valley of Southeastern Europe”. Did you know that Bulgaria’s tech sector has grown from less than $500 million in 2011 to approximately $4.4 billion in 2024, attracting significant attention from both local and global tech businesses? But what can this thriving destination offer to tech businesses, and what benefits will nearshore software development in Bulgaria bring to you specifically?
My name is Dmytro Ovcharenko, and I’m the CEO and founder of Alcor, a full-cycle software R&D center solutions provider in Bulgaria and other Eastern European and LATAM countries. Thanks to our expertise, the Alcor team will not only hire the rarest specialists in just 2-6 weeks but also expand your company from 0 to 100 Valley-caliber programmers in a year, providing the necessary infrastructure and achieving 40% cost savings compared to outsourcers.
In this article, I’ll discuss the dynamics and trends, pitfalls, and advantages of this location, as well as an alternative and more efficient solution for your business – your own R&D center in Bulgaria with a team of Valley-caliber software engineers and full operational support.
Want to know more about the intricacies of nearshoring software development to Bulgaria? Then, let’s dive into it!
Bulgarian IT market in 2024 Dynamics and Trends
With IT services revenue projected to reach $428.7 million in 2024, Bulgaria’s tech industry continues to play a key role in the country’s economy. Driven largely by exports, the software sector now contributes over 4.5% to Bulgaria’s GDP, underscoring the tech industry’s vital importance.
In addition, the 37th position in the global startup index ensures Bulgaria’s leading position in this area among other Balkan countries. Thanks to the increase in startup funding from $51.1 million in 2022 to $82.3 million in 2023, we have seen a significant boost in the number of startups, which now exceeds 800.
To better understand the latest trends in Bulgaria’s startup ecosystem, check out the breakdown of startup numbers across different industries below:
- Social & Leisure – 160
- Software & Data – 159
- Fintech – 38
- Ecommerce & Retail – 27
- Marketing & Sales – 23
- Edtech – 22
- Healthtech – 17
- Transportation – 13
- Hardware & IoT – 12
- Foodtech – 9
- Energy & Environment – 7
One interesting fact: despite the relatively small number of fintech companies founded in Bulgaria, their total revenues have seen a historic increase, rising from $853 million in 2019 to $1.9 billion this year.
We should also note the development of the Internet of Things (IoT) sector. Although there are relatively few Bulgarian startups in this sector, the country is actively growing and gaining momentum in the IoT market, reaching $684.4 million in revenue in 2024. in revenue in 2024.
Looking at the Bulgarian tech sector forecasts, in 2024, the ICT industry is expected to reach a record revenue of $4.3 billion. This expansion is anticipated to create 58,000 jobs, with more than 6,000 new positions added annually.
Positive projections are also expected in the field of education—given the trends of recent years, by 2025, the number of ICT graduates is expected to exceed 2,500 per year, annually supplying the industry with fresh talent.
Does Tech Business Nearshore Software Development to Bulgaria?
The outsourcing industry is currently experiencing a real explosion, which is as impressive in its scale as the boom in the tech sector. Currently, the Bulgarian software development outsourcing sector ranks 28th in Europe with a projected market volume of $162.70 million in 2024.
Bulgaria ranks 11th in the world in terms of offshore and nearshore IT outsourcing attractiveness. Additionally, the presence of development centers from global titans like Oracle, HP, IBM, CISCO, SAP, Uber, VMware, Atos, Alphabet Inc., and Microsoft Corporation speaks for itself.
But what benefits can a tech product company gain from the offshore or nearshore to Bulgaria?
Benefits of nearshoring in Bulgaria
- Large talent pool
Among other European countries, Bulgaria stands out with more than 110,000 highly qualified specialists with expertise in programming languages such as JavaScript, C#, Java, C++, PHP, .NET, and Python. Moreover, Bulgaria ranks 18th out of the top 20 European countries for IT expertise. Thanks to this, you will always have a large pool of high-skilled Bulgarian software developers who will be a valuable addition to your team.
- Competitive labor pricing
Another important advantage of nearshore software development to Bulgaria is lower salaries for high-quality and top-notch services, which leads to significant savings for your tech business. For example, a senior AI engineer earns an average of $72,000 per year in Bulgaria, $92,000 in Germany, and more than $130,000 in the United States. Thus, to nearshore a team in Bulgaria is a significant economic advantage, amounting to 60% savings on labor costs for American IT companies and approximately 30% for Western European tech businesses.
| Gross Annual Salary for Senior Positions, USD | |||||||
| Positions | Bulgaria | Romania | Poland | Germany | France | Norway | USA |
| Java Developer | 78,000 | 81,600 | 84,000 | 90,000 | 90,000 | 102,000 | 114,000 |
| Node.JS Developer | 78,000 | 81,600 | 84,000 | 90,000 | 90,000 | 102,000 | 114,000 |
| C# Developer | 78,000 | 81,600 | 84,000 | 90,000 | 90,000 | 102,000 | 114,000 |
| Python Developer | 69,000 | 81,000 | 81,600 | 83,000 | 85,000 | 86,500 | 126,000 |
| C/C++ Developer | 62,400 | 78,000 | 81,600 | 85,000 | 85,000 | 92,800 | 114,000 |
| Mobile Developer | 78,000 | 81,600 | 84,000 | 89,000 | 89,000 | 91,000 | 114,000 |
| AI Engineer | 72,000 | 78,000 | 84,400 | 92,000 | 89,000 | 90,000 | 132,000 |
| Cloud Engineer | 57,000 | 84,000 | 72,000 | 88,200 | 87,000 | 89,900 | 174,000 |
| Blockchain Developer | 54,000 | 84,000 | 81,600 | 95,000 | 89,000 | 98,000 | 132,000 |
| Data Science Engineer | 84,000 | 54,000 | 66,000 | 87,600 | 76,900 | 87,900 | 126,000 |
For more insights, check out our detailed table on the gross annual salaries of developers in different countries.
- High-quality tech education
Bulgaria is proud to have more than 50 universities, vocational and technical schools, and private academies focusing on training specialists in STEM fields. These institutions ensure a constant supply of new talent to the market, graduating around 2,330 ICT professionals each year. That’s why you can rest assured that you will always be able to hire not only skillful but also well-educated developers in Bulgaria.
- Beneficial taxes
Bulgaria has one of the lowest tax rates in Europe: 10% on personal income and corporate profits. The social security and health insurance rate is 32.7%-33.4% of gross salary, shared between employer and employee in a 3:2 ratio, making Bulgaria one of the most tax-friendly countries in Europe. In addition to this, the A3 Business climate in this location will make it easy for you to do business and establish your own onshore, nearshore, or offshore development center.
- Geographic proximity
Bulgaria’s only 1-hour difference from major European countries and close geographical location make it an ideal choice for outsourcing a nearshore software team in Bulgaria. This advantage will ensure effective communication, simplify work for your international staff, and allow you to optimize workflows while maintaining high productivity.
- Advanced language skills
Ranked 16th out of 113 countries, Bulgaria has experienced a rapid increase in English language proficiency since 2016, rising from 24th place. In addition, Bulgarian developers are proficient not only in English but also in other European languages such as German, French, Italian, and Spanish, which significantly reduces language barriers when communicating in an international team.
The main tech hub of Bulgaria
Being not only the capital of the country but also the capital of the IT industry in Bulgaria, Sofia is the largest tech hub, where about 90% of all developers live and work.
Today, Sofia ranks 1st in terms of the number of startups, occupying 117th position in the world ranking, having risen by 6 points in two years. The city is now ranked second in the Balkans, ahead of Athens.
In addition, the Bulgarian capital takes 7th position among the top 10 major European cities of the Future for FDI strategy and 3rd place in the cost-effectiveness ranking of Major European cities in 2023.
Bulgaria’s leading tech hub is also home to the country’s first science and technology park, Sofia Tech Park. It serves as a cluster for international, regional, and national researchers, innovative startups, and mature companies, bringing together more than 40 high-tech enterprises and businesses in Bulgaria and the Balkans. In 2023 alone, companies from the Sofia Technology Park ecosystem attracted investments totaling over $5.04 million to develop their business ideas, projects, services, and products.
However, more broadly, the presence of other tech hubs in the country, such as Varna and Plovdiv, contributes to the expansion of the geography of IT specialization in the country and the creation of a developed innovation ecosystem covering the whole of Bulgaria.
Challenges of Nearshoring to Bulgaria
However, despite the numerous advantages of software nearshoring to Bulgaria, there are also certain challenges that must be taken into account by those who want to establish themselves in the new IT market.
Challenge 1: High competition for developers
50% of global organizations say finding the IT professionals they need is particularly difficult. This problem is not unique to Bulgaria. The lack of qualified candidates creates a high demand and competition for talented workers, which in turn leads to an increase in salaries to retain or lure top-notch Bulgarian developers. This pattern creates a significant challenge not only for the growth in the ICT industry but also for those who choose to nearshore outsourcing in Bulgaria.
Solution 1: With a skilled recruiter who knows the Bulgarian IT market inside out, you can confidently hire developers in Bulgaria without any concerns. At Alcor, we’ll secure 5 senior and lead-level specialists for you within a month and grow your team to over 20 in just three months. A strong employer brand is also crucial for attracting top engineers and building a successful nearshore software development team in Bulgaria. To enhance tech recruitment, we launched an employer branding campaign for Sift, a leading USA-based tech product company, featuring a video with their Hiring Manager that increased response and offer acceptance rates by 15%.
Challenge 2: Legislative complexity
One of the main disadvantages of opening a company in Bulgaria is the considerable time required to fulfill tax obligations, which can take up to 454 hours per year. Despite the attractive tax policy, companies have to put in a lot of effort to reap all its benefits.
Solution 2: To simplify this process, you can rely on a specialized agency like Alcor. We not only find top developers but also provide comprehensive legal and compliance support as part of our software R&D center solution. For example, ThredUP, the world’s largest consignment store, partnered with us to ensure full compliance with American and Eastern European law while also benefiting from our business visa and travel consultations.
Bulgaria vs. Other Eastern European IT Destinations
Bulgaria vs Poland
Being 1st in terms of the tech talent pool in Central and Eastern Europe with a total of 607,000+ IT specialists and 60,000+ tech businesses, Polish software development leads the way in the CEE IT market. However, Bulgaria, in turn, makes 4th place among other European countries in terms of software engineering, web, and mobile development, standing far ahead of Poland in these indicators.
Bulgaria vs Ukraine
As the 2nd largest IT market in Eastern Europe, Ukraine is notable for its number of IT hubs, including Kyiv, Lviv, Dnipro, Kharkiv, and Odesa. While nearshore software development in Ukraine offers substantial benefits, Bulgaria’s slightly better knowledge of English and other European languages gives it an edge. In addition, its status as an EU country and subject to European legislation creates easier conditions for nearshoring to Bulgaria.
Bulgaria vs Romania
Known as a leader in Europe and sixth in the world for the number of certified IT specialists per 1,000 inhabitants, nearshore to Romania still lags behind Bulgaria in terms of the number of tech companies, with Romania having 8,000 and Bulgaria hosting 2,000 more. In addition, the difference in the annual salary of software developers is also noticeable, which in Romania averages $72,000, while in Bulgaria it is $66,000, creating more favorable conditions for IT nearshoring to Bulgaria.
Are There Better Alternatives to Nearshoring to Bulgaria?
Our answer is a resounding yes! To fully capitalize on Bulgaria’s advantages while minimizing risks for you when nearshore IT outsourcing, Alcor’s comprehensive R&D solution is here to support you every step of the way.
At Alcor, we will help you build your own research and development center from scratch in one of our locations in Latin America and Eastern Europe! We provide a mix of the most delicious services, including:
- Top-notch recruitment: Qualified candidates, 80% of whom are approved by clients and invited to interviews. Not to mention that our tech recruiters fill 15% of vacancies from the first CV;
- Comprehensive EOR service: Enjoy seamless operations with no legal entity needed and benefit from expert navigation of legal matters, onboarding and offboarding of your developers, payroll management, and benefits administration, all to simplify your operations;
- 360° operational support: For your convenience, we offer office lease and hardware procurement for your software research and development team, visa support, insurance assistance, as well as employer branding to boost your company’s image.
Plus, here’s one more perk: no buy-out fees—your team is fully yours from day one, with your own corporate culture!
Without any additional risks or the need for a legal entity, you can basically take full advantage of the benefits of the build-operate-transfer model in IT outsourcing, gaining a fully staffed team while we handle all the operational processes.
Want to hear more? For Ledger, a product IT company from France, we hired 10+ QA professionals and expanded their team to 27 specialists, putting our wow effect into action. In addition, our experience in IT law helped to comply with Eastern European and French legislation and allowed us to easily manage all risks, handle tax documents, take care of documentation and SLAs, and ensure IT security for Ledger in the chosen location.
So, are you ready to scale up your tech business and take it to the next level? Alcor is already at the low start!