Poland – the New Silicon Valley and Software Hub for Europe?
Poland – the New Silicon Valley and Software Hub for Europe?
The world is changing, as is the economic landscape. Economies have generally leaned toward more specialized industries in the past half-century, based on the strength of their regional characteristics. While places like have traditionally been synonymous with technological innovation, other, lesser-known outposts are emerging with real potential to become deep-tech hubs (perfect for software development outsourcing).
It has become increasingly evident that Poland and the CEE region are on course to gain a similar level of influence as G7 countries in just a few years. With so many eyes watching for the next tech unicorn, could Poland soon break through into this exclusive tech circle? It is likely that by the end of this decade, we will see an exponential increase in technological development coming from Poland – who knows what possibilities can be unlocked then!
The global technology market surge
The high-tech sector is growing exponentially, as software continues to feed into all areas of life – from healthcare and transport to retail and finance. To meet this demand, organizations around the world are increasingly looking at software outsourcing options in Poland. As one of the oldest members of the European Union (EU), with a low unemployment rate, high-level language proficiency, and a favorable salary/cost of living ratio, Poland’s software sector is quickly becoming one of the most attractive destinations for global tech businesses.
Technological advancements have had a massive global impact, and virtual services are now the bedrock of our digital society. The recent pandemic’s onset has only increased public dependence on these solutions even further.
The history of Poland’s Software Hub
The emerging scramble for tech solutions and software development positions Poland as fertile soil for innovation, particularly since the country entered the EU. Since the turn of the century, a new development strategy has defined Poland’s new engines of growth, enabling it to exploit the opportunities of digitization. That has included obtaining grants and launching accelerator programs, such as Start in Poland, the largest platform in Central Europe founded through European funds, and government financing devoted to developing startups.
The beginnings of Poland Silicon Valley
Since joining the EU in 2004, Poland has seen an increase in the standard of living while at the same time maintaining low tariffs. Its central location within continental Europe makes the country a convenient base for businesses, strengthened further by Brexit, which has helped cement Poland’s position as a hub for Europe within the EU, all of which has attracted foreign investment and talent.
Meanwhile, ‘Google for Start-ups’ opened a campus in Warsaw in 2015 and has since welcomed around 100,000 start-ups and community members, contributing to and driving innovation in the tech sector.
In addition to foreign investment, Poland has had two public institutions providing tech companies with grants and funding since 2016; NCBR (The National Centre for Research and Development) and PFR (The Polish Development Fund). They have invested around $5 billion into the tech ecosystem, with an additional $250 million ringfenced for deployment over the next two years.
With Poland firmly established as a significant technology hub, Big Tech companies have unveiled their plans to move in. Microsoft announced in 2020 that it would invest $1 billion in a data center outside Warsaw, including access to local cloud services. In October 2021, Google committed to building a $2 billion Cloud Data Hub in the Polish capital, the most significant development center on the continent.
Intel, which already has the most extensive research and development center in the EU based in Poland, and employs over 3000 people, is reportedly considering the idea of building a brand new €80 billion semiconductor factory somewhere within the European Union, and Poland is on the shortlist.
Transforming into Software Development Hub
As many successful tech start-ups and Big Tech firms continue to grow their operations in Poland, the country is becoming renowned as a new global tech hub. This, in turn, attracts more tech businesses to the area along with top tech talent who want to be where the action, and perhaps more importantly, some of the highest tech salaries can be found with predicted salary increases for tech professionals working in Poland of between 15% for Java and PHP experts to up to 34% Ruby and Kotlin specialists.
With this recognition as ‘the place to be’ for all things Tech, events organizers are now choosing Poland as their preferred choice for holding large-scale events too, such as Polish Tech Day, which was held in June this year in Warsaw, London and Paris and the Big Data Technology Warsaw Summit which will take place in March 2023.
The more Poland is recognized as a global tech hub, the more tech events and companies will be attracted to the location, growing the country’s profile further as a dynamic and innovative workplace. This can also be seen in infrastructure improvements, with the world-famous Foster & Partners completing work on Varso Tower in Warsaw. This brand-new skyscraper now claims the crown of the tallest building in the EU, 14 floors of which will be occupied by Google. The tower, located directly adjacent to Warsaw Central Station, boasts a selection of offices, restaurants, retail spaces and even a sky garden.
So, with improved infrastructure and living standards, top tech companies and some of the most successful start-ups in the world based in Polish locations, Poland is making a name for itself as a global tech hub and could fast become the location of choice for tech professionals from across the globe.
The snawball effect
The economic growth in Poland has seen the country spearhead a series of technological innovations and advancements. Poland’s IT industry constitutes about 8% of the GDP, employing over 470,000 people. Poland is the largest economy in central and eastern Europe with a 30% share of the total GDP and 25% of the population.
Poland’s software outsourcing industry has also grown significantly over the last decade. As of 2021, Poland was the fifth-largest provider of software services globally with a market share of 5% and over 2700 software development companies. This is mainly due to the wide availability of highly skilled engineers in the country, making it an attractive destination for software outsourcing.
Poland’s status as central and eastern Europe’s technological beating heart has been well-recognized by those inside the industry for some time. As of 2022, market leaders such as Google, Samsung, Facebook, Amazon, and Intel have set up shop here, alongside more than 500 other R&D facilities. .
Big-tech giants investing in the Polish market
The company established a software development center in Warsaw back in 2013. It is responsible for developing products across all Samsung divisions, including mobile devices, wearables, TVs, and home appliances.
Google opened its research and development center (R&D) in Poland back in 2009. The R&D center focuses on creating solutions for Google’s products, such as Google Ads, Google Cloud, and Google Maps.
Facebook Facebook opened its R&D center in Warsaw in 2019, it’s first in the CEE region. The office is situated in the same building as Samsung’s R&D facility, making it a hub for tech innovators.
Amazon Amazon opened its software development center in Poland in 2011. The office focuses on developing Amazon products, such as the Alexa digital assistant and other services related to e-commerce and cloud computing.
Intel Intel opened its R&D center in Kraków back in 2002. Its team of engineers is responsible for creating solutions across a broad range of Intel’s products, such as mobile devices and PCs.
Salesforce Salesforce set up its software development center in Wrocław back in 2012. The office provides technology and expertise to help customers and partners succeed with Salesforce solutions.
Poland’s software startups success stories list:
Ten Square Games
CD Projekt Red
What Stands Behind Poland’s Success?
Attractive business environment
Poland offers a wide range of incentives to companies looking to invest and grow their operations here, such as generous tax breaks, access to the EU’s single market, a stable economy, and a business-friendly regulatory framework. This has made Poland an attractive option for firms both large and small from all over the world who are looking to expand their operations in an environment with low levels of bureaucracy.
Booming investment lever – Venture Capital In Poland there are two major public institutions that are responsible for providing VCs and tech companies with grants and public funding, those are NCBiR (The National Centre for Research and Development) and PFR (The Polish Development Fund). PFR Ventures in this case is Poland’s Yozma, which directly serves the budding VC ecosystem, and NCBiR is an entity that provides grants to startup companies and VCs alike.
NCBiR has deployed around $7B US into the Polish Tech Ecosystem since 2016. Of that, 65% or $4.5B went directly into Startups or VC Funds in the form of non-refundable grants. PFR Ventures has deployed around $0.5B since 2017 and will deploy an additional $250 MM over the next couple of years.Israel’s Yozma, again for comparison, invested $250 MM by 1996. PFR Ventures alone will have invested 3 times more than Yozma, and combined with NCBiR, will have invested 20X more than Yozma.
Now, what will that do to the local ecosystem? Well let’s go back to my previous chart on how Yozma propelled the Israeli tech ecosystem, and let’s take a look at how we’re doing here in Poland.
The large pool of tech talents (software developers, IT project managers)
Polish software developers base that is available in Poland has been crucial to its success. Polish developers are considered-shaped specialists: they have a broad understanding of software development and a deep knowledge of specific subdomains. Polish engineers are also praised for their creativity-shaped specialists: they have a wide range of technical knowledge, but also specialize in specific areas.
Tech giants such as Google and Microsoft actively recruit software engineers from the country for their teams, thanks to their highly-skilled workforce with an average of 8 years of experience in software development.
Attractive software developers’ rates
In addition, software outsourcing in Poland is becoming popular due to cost savings when compared to other countries (eg. the US, and Western Europe) and the availability of high-quality services. As a result, multinationals often choose to outsource software engineering projects to Poland as it offers them access to an experienced workforce at comparatively lower costs. An average mid-senior Polish software developer earns around $3,500-$4,500 per month.
Read more about software developers’ rates in Poland.
Quality educational system
Poland’s success in software outsourcing is largely attributed to the country’s well-developed tech university system. More than 13,000 IT students graduate annually with over 140 universities providing industry-standard IT courses and programs. Companies are able to source highly-skilled software engineers from a pool of graduates who possess excellent technical skills as well as the language and cultural proficiency required for a successful software development project.
Poland’s high-quality technical universities, such as the Warsaw University of Technology and AGH University of Science and Technology in Krakow, have been instrumental in producing a well-educated tech workforce. This tech talent is highly sought after by employers from across the globe, making Poland an attractive place for tech professionals.
In terms of absolute numbers, Poland ranks #4 in Europe in terms of most STEM graduates educated over the last 7 years. It’s important to note that Poland sits right behind the highly developed nations of France, Germany, and the UK.
Proximity to western countries
Furthermore, the country’s geographic location within the EU makes it an ideal choice for businesses seeking to expand into central and eastern Europe, with the added benefits of shorter time zones and lower costs than more traditionally popular outsourcing destinations such as India or China.
Western standards of work
Finally, software developers in Poland are accustomed to working with western standards of work and this is a major factor in its success as a hub for software outsourcing. Developers in Poland are well-versed in coding languages such as Java and Python, and they also understand the need for quality code that meets customer requirements. This makes them an ideal fit when it comes to software development and working with western clients.
The cultural alignment between Poland and western countries also helps with software development projects. As the country is well-versed in the use of English, clients don’t need to worry about a language barrier and can trust that software developers are able to understand their requirements accurately.
Well-developed software development outsourcing market
According to the latest data, there are over 2700 software and IT consulting outsourcing companies in Poland (10-5000 employees). Those numbers are still growing creating more and more chances to attract clients all over the world.
Together with tech companies, they generate up to 8% of Poland’s GDP becoming the fastest-developing industry in recent years. If you consider relocating of your software project to Poland you can do it very easy to find a quality outsourcing software development company.
IP legal protection standards
Many of companies around the world have exerienced an infringments of their intelectual property and patent rights. That is why there are still doubts when making crucial decisions like opening a nearshore Research & Development IT Hub in “emerging countries”. When it comes to CEE region this is not a matter. The coutries aligned their laws to international (US) and EU standards to create fully safe and stable environment for business.
Modern business infrastructure
Poland’s great infrastructure is another factor that has contributed to its success as a software outsourcing hub. The country boasts world-class transport networks, advanced telecommunications systems, and reliable electricity supplies at very attractive rates in comparison to western cities.
Stable economy and political system
In comparison to other popular software development outsourcing locations in emerging markets, Poland’s political system is highly stable. This makes it a safe choice for companies who are looking to outsource software development projects as they don’t need to worry about the country’s political climate changing drastically on the way.
All these factors combined make Poland an attractive destination for software outsourcing, and the country is quickly gaining a reputation as the “New Silicon Valley”.
What Lies Ahead?
With the momentum gained from its growing tech industry, Poland is rapidly becoming a key player in the software outsourcing market. The country’s diverse talent pool, excellent infrastructure, and competitive costs make it an attractive alternative to other more established software hubs. As such, businesses looking to outsource their software development projects should consider Poland as a potential destination.
By working with software developers in Poland, companies can benefit from access to a highly skilled and reliable tech talent pool that offers world-class quality at competitive prices. With the right partner onboard, businesses can gain an edge over their competitors and enjoy the many benefits of outsourcing software development projects to Poland – the New Silicon Valley.
Creating a Software Development Hub in Polish Silicon Valley
Poland has an extremely interesting location (especially for BOT model) between west and east. GMT+6 from New York, GMT+1 from London, GMT+0 from Berlin, Amsterdam, or Stockholm – making it a much better option than India or China. Poland is also a part of the EU which is a good proof of stability, security, and western work standards.
Although Poland is a member of the EU since 2004, it has still to offer very attractively labour costs even in the IT industry. The average rates are around 50% lower than in Europe and 60% lower than in the US. Yes, it is true that you could find more competitive countries for outsourcing – but in IT the end game is to find quality for an attractive price – not the opposite. Considering all cons of Poland the rates are still a bargain. The below table shows the differences for 5 countries.
Over 0,8M population, 13% of total IT Engineers supply
Over 1,8M population, 24% of total IT Engineers supply
Over 0,7M population, 12% of total IT Engineers supply
Over 1,8M population, 9% of total IT Engineers supply
Over 0,7M population, 8% of total IT Engineers supply
Over 0,7M population, 7% of total IT Engineers supply
Over 0,6M population, 6% of total IT Engineers supply
Over 0,5M population, 4% of total IT Engineers supply
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Finding a Build Operate Transfer local partner.
You’d probably find hundreds of local HR agencies or IT outsourcing providers in every location in the world. But it isn’t that easy to find a specialized, local IT BOT partner. Let’s now analyze what describes the perfect BOT provider and what is worth analyzing from the owner company perspective:
1) BOT Specialization
As we mentioned earlier – a reliable provider is focused on the BOT model. In other words, there is no option for short-term outsourcing or acquiring 1 developer. The real Build Operate transfer partner should focus its efforts only on “building long-term software development teams” for future transfer. Specialization refers also to one specific industry – IT & software development. Providers offering BOT in multiple branches will never build the necessary level of competence.
2) Real know-how
BOT and team-building projects require much more IT and management knowledge from the partner than simple outsourcing or HR services. Although the HR team is crucial, there must be also a strong IT team to handle a variety of tasks and processes.
3) Experience (an IT experience!)
It’s always a good habit to do some research on LinkedIn and make sure that the partner company owners have solid experience in IT areas. The same goes for company history, customer case studies, testimonials (BOT preferred).
Launching your own Build-operateTransfer hub in Poland
NxTide is specialized in helping other companies to establish local Software Teams or larger Software Development Hubs in major cities in Poland. We can prepare the whole deployment strategy for you and then run all recruitment and quality control processes making it faster and more cost-effective for you. Here is what makes us unique:
We are an IT company with real, industry IT Experts on board
We have over 7 years of experience in creating small and large Software Teams
We are focused on delivering realistic results
That is why we have created a dedicated and flexible offer to meet our client needs::
1) Software Development Teams: for companies looking to expand their software development teams or to create small remote teams from scratch.
2) Software Development Center: for companies looking for larger, more permanent solutions like IT hub or IT operations center (20+ software developers). Our innovative Build Operate Transfer model makes the whole process faster, more efficient, and transparent.
If you would like to know more about NxTide please visit our page: https://nxtide.com/about-us/
We're ready to discuss a project with you
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