In order to find competent software developers and avoid overpayment, Western businesses set up their development teams in financially beneficial locations like Poland. Google, Oracle, IBM, Apple, Uber, Amazon, and 60,000 other technology companies have already chosen this country as their go-to offshoring/outsourcing destination. But why is the Polish IT industry so appealing to foreign investors?
As a professional vendor of IT recruitment services in Poland and other Eastern European countries, Alcor BPO knows the answer to this question. I’m Maryna Panchuk, Head of IT Recruitment at Alcor, your trusted software R&D service provider.
In this article, I’ll share my 6-year experience regarding how offshore software development in Poland closes the talent gaps for Western companies, the reasons for investing in software engineering, which hub for IT in Poland to select for creating your dev team, and how our company can assist you!
Software Development Industry in Poland Overview
The first and foremost reason Western tech businesses recruit Polish software developers or choose IT outsourcing to Poland is the shortage of software developers. According to data from the Bureau of Labor Statistics, the lack of software engineers in the USA is alarming and going to reach 1.2 million by 2026. At the same time, McKinsey states that 87% of American companies faced a skills shortage last year. However, predictions are even grimmer since the global developer shortage is expected to reach over 85 million by 2030, following a recent Korn Ferry report.
At the same time, Eastern European countries like Poland do not seem to lack software engineers for the near future. Poland boasts the most extensive IT talent pool in both Central & Eastern Europe — over 607,000 IT specialists. Moreover, since the beginning of the full-scale russian war in Ukraine, European countries have provided shelter to up to 57,000 Ukrainian software engineers, while Poland hosted 35,2% of them.
|Number of Software Engineers|
Thus, numerous software development companies in Poland effectively bridge their skills gaps. Furthermore, Polish ICT exports are expected to hit $13 billion in 2026, showing an annual 3.6% growth rate from their revenue of $10 billion in 2021. But what about other reasons for offshoring software development to Poland?
Polish Software Development Latest News
Software development in Poland is stable and growing since the country is one of the top 5 go-to startup destinations in Eastern Europe and 33rd in the world. Deloitte included 17 Polish companies in its fastest-growing tech businesses list in 2022. There are 5,000 startups, with 21% offering AI and machine learning products. Other spheres include productivity and management software, analytics, HRtech, and FinTech.
In addition, Poland recorded 11 unicorns in 2022, the highest number in the region. The most renowned Polish $1B company is DocPlanner, but the scene actively creates soon-to-be-unicorn businesses, such as Brainly, Ramp, Silent Eight, Booksy, ICEYE, Allegro, LiveChat, and others. Also, Poland is among the 4 countries that accumulated over 70% of total VC funding in the CEE region — namely, it attracted 550 million euros in 2022. All of this became possible not only because of legislative compliance with EU standards, including GDPR, but also due to a strong economy and well-developed IT infrastructure.
Software Development in Poland Trends
According to the Polish Agency for Enterprise Development, Polish ICT specialties revolve around the following technologies:
- Machine Learning. ML programmers build autonomous, sophisticated learning systems with the help of algorithms and models. These systems drive AI applications and require dataset and fine-tuning skills, as well as Python, C++, and Java, but also frameworks (TensorFlow, PyTorch, scikit-learn) and API packages and libraries, such as MLlib and CNTK.
- VR/AR. Virtual and augmented reality refers to immersive digital environments generated by a computer. To work in this sphere, coders should be proficient in C++, JAVA and C#, 3D technologies, UI/UX, game or web development, and video and sound production.
- 3D printing. Also known as additive manufacturing, 3D printing is an innovative sphere for making hardware details. It requires knowledge of data processing, 3D printers, design and simulation, application engineering, 3D modeling, and primary programming languages, such as Python and Java.
- Big data. Big data software development deals with managing the large amounts of data generated by organizations on a daily basis. Developers in this area develop systems and tools to analyze, store, and process this data. For that, data visualization tools, Hadoop, NoSQL databases, and other data-related technologies are indispensable.
The demand generated by foreign companies outsourcing software development to Poland adds to the rise of such industries as IoT, cloud computing, and cybersecurity, the latter being the priority of Poland’s government. Transportation, Fintech, and Enterprise Software attract the most VC investments into CEE. Other burgeoning industries include Crypto & Web3 and Gaming.
Reasons to Opt For Offshore Software Development in Poland
Apart from offering access to the largest tech talent pool in the CEE region, Poland also provides Western technology companies with the following benefits:
1. Exemplary software development quality
2. Attractive engineer compensation & tax incentives
Compared to engineering salaries in the United States, the compensation of Polish programmers is 2-5 times smaller. For instance, a Senior Front-End Software Developer in Poland earns $68,000 net per year on average, while their colleagues in the States receive $144,000 gross. Another example is Polish Senior Data Engineers, who have an annual net salary of $70,000, while the yearly gross rate of their American counterparts is $170,000. For more examples of how you can save half of your budget on salaries and channel it into product development instead, consult the table with our latest salary data below.
3. Favorable tax incentives
Regarding the taxation system in Poland, there are three main taxation formats for B2B contractors: tax scale, flat tax, and lump tax. The first one presupposes that developers pay from 17% of the personal income tax of PIT if their income is less than PLN 120,000 ($25,500) to 32% if this threshold is exceeded, while the second requires them to pay 19% of the tax. The choice of the tax rate depends on the employment contract agreed upon by businesses and software developers:
Employment contract (Umowa Zlecenia)
If software developers are engaged within the traditional employment model, their taxes are paid according to a tax scale rate (12%-32% depending on the income). Usually, the needed amount of tax and social contributions is withheld and remitted by the employer. Social contributions constitute up to 35% of a developer’s salary, where the employer pays between 19.21% and 22.14%.
B2B contract (Umowa o Prace)
If the cooperation follows a B2B contract, developers have more tax options. They can either opt for a flat tax at a fixed 19% rate or choose a lump sum tax. Lump tax rate options allow self-employed programmers to pay 8.5% or 12%. Also, under a B2B contract, developers pay social contributions independently. Typically, it is a fixed sum calculated on the basis of the developer’s annual revenue. In most cases, a B2B contract with a lump sum tax is a more convenient option both for companies and programmers alike.
The corporate income tax equals 19%, while startups established during the fiscal year and small businesses with annual revenue of less than 2,000,000 EUR, including the VAT due, can pay a reduced 9% rate. Beyond that, the Polish government introduced investment incentives that presuppose only a 5% tax from income generated by IP rights.
4. Excellent ICT higher education
Poland accounts for over 400 higher education institutions, 22 of which are listed in the QS World University Rankings 2024. Beyond that, around 60 universities and institutes in the country prepare tech specialists, with IT being the most popular choice among students for the last couple of years. For instance, recent statistics indicate that more than 75,000 students chose the ICT major, with 20,000 more graduating annually.
5. High level of English
Polish software development specialists learn English from childhood and further advance their skills in university or language courses. Thus, Poland ranks 13th in English proficiency in Europe. Most local programmers have B2+ levels of English and can communicate with foreign employers and colleagues without barriers.
6. Western work values
Polish coders share the Western European work ethic in terms of dedication and punctuality. Their culture is relationship-oriented and hierarchical, while fairness, hard work, and being result-oriented and committed to the process at the same time are highly valued. In addition, the Polish also appreciate directness, politeness, and precision in their work affairs.
Learn more about the development market, software qualifications, relevant rates, as well as other advantages of working with developers in Poland in our recent article “Polish Developers: Pros, Cons, Rates & Insights”.
Prominent Software Development Hubs in Poland
If you’re enthusiastic about obtaining professional software development in Poland, you should learn about the biggest technology hubs in the country that provide all conditions for running a successful IT business. Among them are Warsaw, Krakow, Wrocław, Katowice, Tri-city, and Poznan.
Software development in Warsaw
Warsaw is the capital of Poland and home to 24% or 103,000 Polish IT specialists. When it comes to qualification guarantees in software development, Warsaw has the best higher education tech institutions in the country which graduate over 3,000 ICT professionals each year. The University of Warsaw and Warsaw University of Technology are the leaders of STEM education.
On top of that, fDi Intelligence states that Warsaw is in the top 10 major European cities of the future due to the highest economic potential in Poland and focus on ground-breaking technologies, tech startups, and number of software developers. Thus, the city is the #1 choice for setting up an R&D branch or establishing a software development team in Poland for almost 450 IT companies, including IBM, Google, Amazon, Microsoft, Oracle, Cisco Systems, and Dell Technologies.
Software development in Kraków
When it comes to the number of professionals in software development, Kraków offers access to 13% or 56,000 IT experts plus the city tech talent pool grows by 10% annually. Local tech universities, such as the AGH University of Science and Technology, Cracow University of Technology, and Jagiellonian University, graduate over 2,350 ICT professionals yearly. The biggest employers in the Krakow IT industry are IBM, Motorola Solution, Ericsson, Nokia Networks, as well as half of the tech unicorns present in the country.
Kraków is the most business-friendly city with the best human capital in Poland. What is more, this city is the leader in investment and famous for its remarkable ecosystem for start-ups which consists of incubators, technology parks, communities, associations, and other organizations. Overall, over 150 start-ups have decided to grow and develop in Kraków.
Software development in Wrocław
Also known as the “Polish Silicon Valley”, Wrocław belongs to the top 3 IT hubs of Poland and hosts around 12% or 51,500 development professionals. There are around 1,400 graduates with STEM backgrounds, and the best local university that offers such programs is the Wrocław University of Science and Technology. These and other factors have already encouraged more than 200 tech companies to grow at Wroclawski Park Technologiczny alone.
Software development in Katowice
Katowice accounts for 9,3% or 40,000 tech specialists who are employed by around 180+ tech businesses. Local students can study computer science, program engineering, or other STEM fields at the University of Silesia of Katowice, Katowice School of Technology, and other tech universities. So, each year the city boasts 1,500 tech graduates. Katowice is also considered one of the most technologically advanced cities in Poland by the CBRE “EMEA Tech Cities” ranking, along with Krakow and Poznan.
Software development in Tri-city
Tri-city is the metropolitan area that consists of Gdańsk, Gdynia, and Sopot. Together these cities house 8,1% or 35,000 IT specialists, as well as over 60 companies in the IT industry. Furthermore, Tri-city graduates 1,000+ tech students from the Gdansk University of Technology, the University of Gdansk, and other ICT higher education institutions. Companies like Amazon, Intel, Nike, GetResponse, and many others already have offices in the area.
Software development in Poznan
Simpler Than Offshoring Software Development to Poland
In 2020, an American software product company Sift which produces smart anti-fraud software, decided to set up its development R&D team in Eastern Europe. The company had an ambitious goal to hire 30-35 programmers in Eastern Europe in 1 year yet faced a lack of qualified IT headhunters, who not only could manage to recruit such a huge number of professional coders on time, but also do it effectively. Fortunately, Sift found out about the software developer recruitment agency Alcor and entrusted us with this responsible task.
First of all, we dedicated 14 recruiters and 1 account manager to focus exclusively on Sift vacancies. We hired the Head of R&D from the second CV, as well as recruited Front-End and Back-End Developers, managing to satisfy the staffing plan of our client without delays. Other than that, we took care of other operational functions and shot a powerful employer branding video with Sift’s Hiring Manager, which streamlined the recruitment process.
Apart from Sift, we have already helped Grammarly, Globality, ThredUP, People.ai, Ledger, and other product IT companies achieve their talent acquisition goals and be successful when they offshore or nearshore software developers. Our team of 40+ skilled tech recruiters and researchers specializes in hiring Senior/Lead engineers in Poland, Romania, and the rest of Eastern Europe.
Our clients benefit the most from hiring engineers with rare tech stacks, recruitment marketing, payscale & availability analytics, weekly progress reports, and our other IT recruiting services. In fact, 80% of our candidates receive interview invitations, while 98,6% successfully pass the probation period.
Being an all-in-one-place R&D center provider, Alcor offers R&D services that may partially or fully cover the following areas:
- full-cycle IT recruitment — our team of 40 recruiters finds the rarest tech gems from the 2,3M IT talent pool of Eastern Europe and Latin America;
- EoR (Employer of Record), where Alcor can hire foreign candidates in your team, pay their salaries, handle their taxes, and manage benefits without you having to establish a legal entity;
- legal & compliance, where our team ensures your team abroad complies with local laws and keeps you in the loop of the relevant information on legislation updates in a foreign location;
- employer branding, i.e. promotion of your company on the local IT market, professional communities, and tech media to attract Senior/Lead tech candidates willing to accept your offers;
- office lease, equipment procurement, and IT infrastructure setup for your R&D branch employees;
Need other services? Just say the word — we always go the extra mile for our clients!
References on Software Development in Poland
- The State of CEE IT Outsourcing and Offshoring Report 2022
- Deloitte, Fast 50
- Business Services Sector in Poland 2022
- IT Cluster Lviv
- Google Startups & Dealroom 2022
- Polish Startups 2022
- PARP IT Report 2023
- Pentalog Report 2022
- QS World University Ranking 2024
- EF EPI 2023
- Krakow IT Market Report 2023
- Investment potential of the IT sector in Poznan