Software Development in Bulgaria

IT in CEE Region
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Software Development in Bulgaria

Over the last decade, Bulgaria has invested heavily in developing its IT industry. This has led to the country becoming a prime outsourcing destination. There are many reasons for this rise to prominence in the outsourcing market: great geographical location, affordable costs, good level of English language, and many others.

This article delves into these factors and explains why Bulgaria is one of Europe's most attractive offshore development destinations and why AllSTARSIT decided to invest in it.

Bulgaria: quick figures

  • Member of the European Union since 2007
  • Around 66,000 software developers working in the outsourcing business
  • Over 300 companies provide outsourcing services
  • IT outsourcing represents 8.9% of the national economy as of 2022 
  • Three main IT hubs: Sofia, Varna, and Burgas
  • The IT outsourcing industry is expanding at a Compound Annual Growth rate (CAGR) of 15.6%
  • Bulgaria is the EU country with the highest gender diversity rate
  • As of 2021, Bulgaria ranked 12 out of 50 in the Global Skills Report

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Why AllSTARSIT chose Bulgaria as an offshoring location

The country is well-communicated with the rest of Europe, with direct flights from many European cities to the Bulgarian capital, Sofia. This is more significant than it sounds, as personnel can fly into the country in about three hours or less from most places in continental Europe, which facilitates communication, meetings, etc.

Besides, Bulgaria became a member of the European Union back in 2007. The country is politically stable and offers Western primarily values, which clients highly consider across the continent and further afield.

Bulgaria's favorable geographical location is one of many circumstances supporting the country's rising outsourcing profile.

Emphasis on tech education

Bulgaria features a solid higher education system. Fifteen universities offer ICT programs, with about 5,000 graduates receiving engineering diplomas yearly. Many privately-run software academies complement the public education system and offer short- to mid-term educational programs. And on top of this, no fewer than 220 high schools offer ICT programs combined with English classes.

Great English language proficiency

English is the language of business and certainly in the IT industry. The Bulgarian education system ensures that most students learn English as a second language in school, a skill that proves invaluable later in life.

An estimated 60% of the working-age population speaks at least a second language, mainly English and German. Bulgaria’s English Proficiency Index is 580, which is relatively high.

Taxation

The Bulgarian tax framework is set up in such a way as to provide favorable tax incentives both for local and foreign businesses. For example, Bulgaria collects a flat rate of 10% in the corporation and income taxes. This is, in fact, one of the lowest compared to European averages, which tend to be up to twice higher. The only exception to this flat rate is when binding international agreements exist. Under such contracts, tax brackets may differ.

VAT or sales tax: The customer pays a VAT rate of 20%. It is calculated over the price charged by the supplier for the provided service.

Service taxes: Services are also subject to 20% VAT.

Tech talents: If hired on a B2B contract, software engineers are liable to 10% tax, making it one of the lowest taxation countries in Europe.

Corporate tax rates in Southeast Europe

Favorable location & culture

Because of the country's geographical location, Bulgaria's timezone is similar to that of central or western Europe (GMT+2). Again, this facilitates business and makes communication between teams easier. The country's capital, Sofia, is the nation's leading tech hub. Around 50,000 people work in the tech sector in the city.

Regarding working practices, Bulgaria aligns well with most western cultures and values. This is one of the reasons Bulgaria is an attractive area for western companies to do business in. Also, the country's time zone is GMT+2, which is quite similar to most western nations' working hours.

Rapid development 

The IT industry's growth in Bulgaria outpaces that of the country's economy. In 2020, IT accounted for around 2.76% of the nation's GDP or about €1.7bn.

Offshore development has been one of the fastest-growing industries in Bulgaria over the last 10-15 years. According to a recent report, this sector will contribute almost 9% of the national economy by 2022.

Several tech parks and other IT hubs have sprung up across Bulgaria over the last decade, with more than 320 companies operating in the outsourcing industry as of 2019.

Major IT Hubs in Bulgaria

Most of Bulgaria's IT talent is spread across four major cities: Sofia, Varna, Burgas, and Plovdiv.

Bulgaria's Leading IT Hubs

Sofia

As the country's capital, Sofia is home to many international IT giants and startups that need to leverage local talent to get off the ground. 

The city's rising relevance as an IT hub is quite striking. Sofia ranked 20th out of 80 cities listed as 'Tech Cities for the Future in 2020/21/.

About 50,000 specialists work in the IT industry in and around Sofia.

Varna

Situated right on the shore of the Black Sea, Varna is the third-largest city in Bulgaria. 

The city features a major port, serving as a leisure and professional travel hub. And back in 2018, Varna became a national hub for digital information, a project supported by the European Commission.

Varna offers many other advantages for IT professionals. The cost of living is substantially lower than in other major European cities, with affordable rents and tremendous and varied educational opportunities. Varna is well known for its solid freelance and startup community.

Burgas

Sited in southeastern Bulgaria, Burgas is home to a thriving digital ecosystem. As the sector grows, so do the opportunities in the region.

Burgas is the lynchpin of the ICT Cluster Burgas, established in 2016, and has grown to include over 40 member organizations and institutions. One of the Cluster's main goals is to further develop the IT environment in Burgas and its surrounding areas.

Plovdiv

Plovdiv is the second-largest city in Bulgaria, a leading industrial center within the country, and features a booming IT environment.

Much like any other major city in Bulgaria, Plovdiv offers a substantially reduced cost of living compared to much of Europe, plus significant opportunities for business and recreation. Plovdiv is, in fact, a much sought-after destination for digital nomads.

Hiring talents in Bulgaria with AllSTARSIT

AllSTARSIT is an international Software R&D, Technical Support, and Talent Acquisition service provider established in 2004. We specialize in software development services for clients across industries as diverse as cybersecurity, healthcare, Fintech, telecommunications, media, and more.

We use our deep expertise in recruitment and talent scouting to find the best software developers and build the best teams of developers in the CEE and LATAM Regions. Our driving principles are growth, integrity, and synergy.

With almost two decades of recruiting expertise behind us, our clients trust us to provide a top-class service when fulfilling their hiring needs. We can offer faster-recruiting timelines and a cost-effective solution to get your project off the ground.

Get in touch today to discuss your project.

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