The Bulgarian Outsourcing Market vs. the Ukrainian

When choosing where to outsource or nearshore your software development, there are certain aspects to consider - geographical proximity, cultural fit, technical talent pool, local IT industry development, tax systems and legislation. The Bulgarian and the Ukrainian software outsourcing markets are often compared. Here are several reasons why Bulgaria's market has an advantage over Ukraine. Let’s dig deeper. 

A smaller workforce, in comparison to the Ukrainian market, necessitates concentration on high-value-added tech activities performed by smaller teams and companies rather than large Shared Services Centers and subsidiaries of multinational BPOs achieving economies of scale. Bulgaria has long-standing traditions in the IT industry and the software development sector, with more than half of the IT workforce being ICT certified.

Both countries have a significant number of educational institutions offering high quality education. Bulgarian and Ukrainian state universities are launching programs related to the Internet of Things (IoT), Artificial Intelligence (AI), and others. Bulgaria, on top of that, has a lot of excellent IT academies introducing high level of practical training, luring investors from all over Europe and producing capable professionals via a completly new and, some would argue, more efficient channel. Software academis offer applicaiton development, blockchain, IoT, digital marketing, AI, web design, and data science courses.

One more reason to choose the Bulgarian over the Ukrainian outsourcing market is the language proficiency. English is a compulsory subject in Bulgarian schools. Many Bulgarians pursue university degrees in the European Union, the US, or UK, which demands proficiency in more than one language – 73% of the students are fluent in a second foreign language.

A few years ago, the business environment in Ukraine was booming and the prospects were looking pretty good. However, since 2015, Ukraine has dropped 17 positions in the Global Competitive Index and now takes the 85th place in a list of 141 countries. Bulgaria currently sits at the 49th place in the same report. The index measures national competitiveness, which is framed as a set of institutions, policies and factors that determine productivity. 

Bulgaria’s economy has been stable for quite a while. An EU member since 2007, the national currency, the Bulgarian Lev, is tied to the Euro. Bulgaria has the lowest personal income tax in the EU at 10%, while the Ukrainian personal income tax currently stands at 18%. The Bulgarian government realizes the importance of the sector contributing disproportionally high to the country's GDP and creates conditions for better economical and business choice to outsource or nearshore software services.

Multinational corporations increasingly choose partners in Bulgaria. Apart from reasons already listed, it's become common knowledge that Bulgarian employees are ambitious and out to prove themselves in not just implementing specifications, but also engage actively in understanding the underlying goals of clients’ businesses. This and other similarities in the local mindset creates a cultural fit contributing to faster ramp-up, less miscommunication and more opportunities for long-term engagements.

The key to Bulgaria's success has been moving from sourcing to tech innovation. A rich ecosystem of start-ups supports developer communities in areas like mobility, Big Data, analytics, cloud services, social media, digital marketing and cyber security, feeding them with information, practical know-how and proven talent.

As a summary, Ukraine has more IT professionals, but Bulgaria is a top choice when it comes to advantageous economic environment and highly educated multilingual workforce of IT specialists. Bulgaria has already made the transition from pure outsourcing and nearshoring software development services to advanced IT engineering and business consultancy.

An increasing number of Bulgarian software companies have already built sustainable partnerships guiding the entire value chain cycle of the IT services of their clients. The developers’ teams understand the business problem and propose adequate, innovative solutions embracing end-to-end software development, including quality assurance and system support.

Many software development sourcing companies based in Bulgaria have also been expanding outside their borders achieving regional coverage. For example, in 2014, Melon founded a development center in Skopje, North Macedonia, after recognizing the significant potential of the local software development talent. Just six years after venturing into Skopje the local office has hit a tally of 70+ production staff.

The Bulgarian software companies’ growth and possible cooperation with peers in other parts of Europe will accelerate the development of the sourcing sector and make the whole region one of the most competitive BPO and ITO destinations in Europe and worldwide.

Bulgaria has several key advantages over any other sourcing destinations: language skills and education, cultural similarity to European and North American clients, government support and small time zone differences. And most importantly, the sourcing industry has evolved from providing relatively basic services, such as call centers, to offering advanced and complex services in the BPO and ITO fields.