Software Development: Is Bulgaria Your Dream Destination?
Innovation is one of the hottest buzzwords, which has been circulating in the global IT world for the past few years. Bulgaria is steadily becoming one of the most preferred countries for software development and IT excellence. Fluency in various European languages and traditions in software development and programming is what attracts foreign investors, while the macroeconomic stability and the membership in the European Union add even more value to Bulgaria’s image of a trusted software solutions delivery location. The Bulgarian software development industry offers offshore, nearshore and onshore delivery models to its allies, giving them the opportunity to choose the best option for their business needs.
From Cost Optimization Center to Value Driver and Innovation Engine
Bulgaria is gradually transitioning from pure outsourcing services to advanced IT engineering and business consultancy. An increasing number of Bulgarian software companies are already building sustainable partnerships, while guiding the entire value chain cycle of the IT initiative of their clients. They offer mature service partnerships with focus on generating measurable and significant business value, including less risk, more sales and higher margins – not just optimizations. The software partners from Bulgaria also assist customers in realizing high benefits from superior software delivery, such as lack of unnecessary code and system rework, high end-user satisfaction, lower total cost of ownership (lower OPEX/CAPEX). The self-contained engineering teams work hard to understand the business problem, propose adequate, innovative solutions, while embracing the entire software development, quality assurance and delivery processes.
The Bulgarian software development companies support customers around the globe to leverage transformative technologies and practices and move from low to high IT and organizational performance, complex R&D operations and world-class quality software development. Global Fortune 500 companies entrust the development and operations of business-critical applications to Bulgarian software companies and enjoy the benefits of working with a pro-active, quality-obsessed and innovative talent pool.
Bulgarian Traditions in IT and Software Development Excellence
Bulgaria has a known tradition in the IT industry. The country was one of the largest PC manufacturers during the Communist era. Exports were sold mainly across the former USSR. The software development companies started becoming visible in the mid 90’s, mainly due to the successful privatization of government labs and a rising foreign interest in Bulgaria.
Let’s not forget the fact that the first digital computer was developed by prof. John Vincent Atanasoff (Bulgarian), in collaboration with Cliff Berry (American) in the Iowa State College in 1942.
Ever since, the ICT sector has been gradually developing and paving its way to the global markets.
Why Should You Consider a Software Development Partner from Bulgaria?
Investing money in a business outside your country of operations is risky. Therefore, one should explore all macro and microeconomic aspects of a region, to determine whether an investment is worth it. Bulgaria is a small country, yet the indicators of the software development industry have been experiencing growth within the past few years.
Let’s take a closer look at some official data and statistics:
- The outsourcing industry has contributed 3.6% to Bulgaria’s total GDP in 2016. Experts predict an increase of 2% by the end of 2020.
- The software development companies employ more than 47200 full-time employees.
- Bulgaria ranks 2nd in Europe and 7th globally among the most attractive BPO pioneering locations in the Business Process Outsourcing and Shared Service Location Index 2016.
- Bulgaria has а well-established infrastructure and offers access to every point in Europe. European destinations are within a 2-hours flight from the Sofia, Varna, Bourgas and Plovdiv airports. The country also has proximity to airports (Istanbul – Turkey), which serve as transfer points to the USA, Asia and Middle East.
- Ranked in the top 20 countries with the fastest Internet speed in the world, Bulgaria’s mobile and web development exceed that of many other countries and makes it even more attractive to foreign investors.
Figure: Bulgaria in International Rankings
BOA Annual Report
All these add-up to the image of Bulgaria as an excellent choice for software development and IT outsourcing. Many companies are now starting to invest in building R&D and engineering centers, where innovation and technology meet to deliver software solutions of high quality. Companies like ScaleFocus, VMWare, Software AG, SAP, HP already established their R&D engineering centers and are starting to create innovative solutions.
Still wondering whether it is worth it? Let’s break things down even further.
Benefits of Choosing a Software Development Partner from Bulgaria
EU membership and well-developed infrastructure
Bulgaria has been an EU member for more than 10 years now and the national currency has been pegged to the Euro since 1999. This makes it a stable business environment and eliminates its exposure to foreign exchange risks. Information security and privacy regulations are in compliance with the existing EU legislation.
Low costs of doing business
Bulgaria offers one of the lowest corporate and personal tax rates of 10%. Income tax is also fixed at a flat rate of 10%. This further decreases operational costs for businesses. All property taxes, fees, utilities and office-related expenditures cost less than in most countries in the EU. Legislation in Bulgaria is aligned with the EU one and guarantees the free movement of people, goods, services and capital. There is a strong potential for growth of the GDP per capita in Bulgaria, which is currently lower than in other EU member countries.
Software-educated talent pool in Bulgaria
On average, there are more than 10000 Bulgarian students majoring in computer science, electrical engineering, mathematics, physics, and biotechnology. The Bulgarian software developers are ranked #12 on the listing with best developers in the world. Java and Python developers from Bulgaria rank #2 and #3 in the countries with best developers by domain expertise. These world-wide recognitions are mainly due to the many successful BPO solutions, executed by Bulgarian software professionals. Around 2 million Bulgarian citizens speak English. Most of them use it for business purposes. Companies now offer free language courses to employees, which further assists in removing language barriers and easing the communication process between clients and vendors.
The most vibrant startup hub on the Balkans
Young Bulgarian companies have been underfinanced in the past years, yet the environment is changing. The EU’s Jeremie program and the Bulgarian government invested over 120m EUR in making the country a leading hub for innovation and technology. However, these funds are insufficient to maintain the high growth rates and support the development and maturity of the startups. Most international private investors seek to invest in either export-oriented ventures or niche ones. The entrepreneurial spirit is vibrant and people are becoming more and more determined to prosper.
Product companies adopt new technologies to automate existing processes
There are many product companies in Bulgaria, starting to seek for partnerships with software development companies. The main reasoning behind is to start automating the existing and rather cumbersome internal process. Product owners want to focus more on the business expansion and strategic plans, rather than dealing with time-consuming internal processes. By delegating their IT operations to trusted software engineering partners, they can optimize core business processes while driving cost-effective technological progress.
Challenges of Pursuing Software Development in Bulgaria
The benefits of choosing a Bulgarian software partner are many. Yet, as we said, the country is gradually developing and moving its way up on international markets. There are also some challenges, associated with doing business in Bulgaria. Good news is they can be overcome with good will and a well-established action plan.
Let’s look at what hampers the software development industry here:
Senior talent pool
Even though many young people choose to pursue a degree in Software Engineering, the limited experience in real projects is what usually hinders them from being preferred candidates in some companies. The access to Senior Software Engineers is limited and gets more challenging. Juniors need proper training and time to build the necessary know-how and practical skills. This threat is being addressed as companies are starting to heavily invest in providing appropriate trainings and hands-on experience to young talent starting from early school and university.
Local readiness to adopt new technologies
Bulgarians are usually late adopters of technologies. The country is slowly starting to believe in and use software for automating heavy administration and everyday processes such as e-banking, online bill payments and more. Millennials easily become tech-savvy and are open to experiment with new technologies. Generation X has a hard time believing in technology and the benefits it brings to the everyday life. The transition is slow, yet indicators for the future are promising.
Legal and governmental issues
The software development companies in Bulgaria usually face some issues with tendering processes as they are complicated and often lack full transparency. The government is taking measures to tackle such problems, yet the country has a long way to go. Bulgaria still ranks among the poorest countries in the EU, with limited disposable income per capita. Opening new working positions is the first step towards achieving lower levels of unemployment and higher income.
Clusters and Competitiveness
The economy works well when companies from the same sector work together to provide greater value to citizens. This is well explained in Porter’s Diamond model, which defines a nation as having a competitive advantage over others when institutions from the same sector collaborate to deliver solutions/products of superior value. However, most businesses choose to follow the Five Forces Model, which focuses on how to beat your competitors rather than how to join forces with them and create a win-win situation.
The Bulgarian ITC Cluster follows both strategies, depending on the situation and need of the client. For example, ScaleFocus and SAP partner to provide the S4 HANA ERP system to customers. It optimizes internal planning and forecasting process, while enabling businesses to flourish and develop in the constantly changing environment.
The Future of the Software Development Industry in Bulgaria
The future of the software development in Bulgaria looks bright. Trends will continue to place the country among the top destinations for software development and ICT excellence. Here is an overview of Bulgaria’s growth potential:
Real GDP is expected to grow with 2% in the upcoming 2-3 years. Growth is expected to come mainly from private investments, exports, EU funds absorption and fixed investments. The Bulgarian economy will continue to benefit from offshoring and manufacturing outsourcing.
Keeping up with the growing need for software engineers, companies will enlarge their training programs for juniors. Computer Science and Information Systems will remain some of the most desired undergraduate and graduate programs. Startups will scale and mature in the upcoming years.
Evolution of the Startup ecosystem
The Startup lifecycle goes through various stages until it reaches maturity. As time passes by, Bulgarian startups will grow and evolve. More people will experiment with new ideas, business models and technologies to bring bright, innovative concepts to life. These new solutions will be mainly driven by Generation Z’s (in other words the Digital Natives) desire and willingness to adopt new technologies.
Choose a Software Development Partner from Bulgaria!
The coin has two faces. We know that. Bulgaria has its issues. Who doesn’t? Talented multilingual workforce determined to succeed, low operational costs, well-developed infrastructure and a fast-developing economy. All these have already shaped an excellent platform for collaboration. The software development industry in Bulgaria is dynamic and has an unlimited potential. That is what makes it even more exciting and worth pursuing.
Bulgarian Outsourcing Association (BOA), Annual Report 2016.
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