Why is outsourcing to Bulgaria gaining popularity?
AT Kearney’s 2019 Global Service Location Index (GSLI) places Bulgaria at the top of the chart for outsourcing in Southeast Europe. The index considers four major criteria – financial attractiveness, business environment, people skills, and digital resonance for ranking a country.
But that’s not all.
In this article, we’ll discuss the five significant benefits of outsourcing to Bulgaria and look at the top companies that have transferred their operations to Bulgaria. We’ll also highlight the top four Bulgarian companies that offer outsourcing services.
This article contains:
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- 5 Key Benefits of Outsourcing to Bulgaria
- 5 Major Companies Outsourcing to Bulgaria
- 4 Major Bulgarian Companies that offer Outsourcing Services
- 6 Simple Tips for Successful Outsourcing to Bulgaria
5 key benefits of outsourcing to Bulgaria
Outsourcing to countries in Eastern Europe like Ukraine and Bulgaria is becoming increasingly popular due to lower costs and their large talent pool, etc.
Several global organizations shared service centers, and research facilities have established their back offices in Bulgaria.
Let’s look at the benefits of outsourcing to Bulgaria in detail:
1. Cost savings
According to the European Union (EU) statistics agency Eurostat, Bulgaria had the lowest hourly labor cost in the EU in 2020.
The hourly labor cost in Bulgaria was 6.5 euro (7.69 USD) compared to the highest cost of 45.8 euro (54.18 USD) in Denmark.
The average salary of a software developer depends on their years of experience and level of expertise. In the country’s tech hub, Sofia, it starts at around $23,000 per month. The same position in the United Kingdom (UK) will cost you about $44,000 per month.
Additionally, the Bulgarian government offers tax incentives for local and foreign businesses.
It applies the lowest corporate income tax rate (10%) in all of the EU, leading to lower rates for software development.
2. Talented employee pool
Bulgarians value education, and a majority of the population is well-educated. As of 2016, more than 80% of the working-age population had secondary or higher education.
The quality of education in Bulgaria is relatively high, and most educational institutes are well equipped with computer facilities. These institutes now also offer a more significant number of courses in English.
Sofia University also offers a Master’s program in ‘Outsourcing Projects and Companies’ for developing skills required by the BPO industry.
Additionally, over 71% of the software companies in Bulgaria use English as their working language. 16% of companies use German, while 10% use French. That’s why most of the companies from Western Europe can easily communicate with the outsourced company.
3. Expertise in IT and engineering
The country has numerous Information Technology (IT) and other engineering experts owing to its investments in engineering education programs.
According to the AIBEST Annual Report (2020), more than 10,800 students graduated in computer science and software development streams from 2015 to 2020.
That’s why a lot of companies prefer IT outsourcing to this country.
4. Rapid development
The outsourcing sector in Bulgaria has been developing rapidly in recent years. The country offers services ranging from customer support to Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO).
This rapid growth has attracted many foreign investors to the country, further boosting Bulgaria’s GDP.
A report by the Bulgarian Outsourcing Association (now known as AIBEST) mentions that the Bulgarian outsourcing industry accounts for 5.5% of the country’s GDP.
5. Cultural and geographical proximity to Western Europe
Due to its proximity to Central and Western Europe, Bulgarians have a work ethic and a business attitude similar to that of the western business world. It minimizes issues arising out of cultural differences in the business setup.
For example, like the Western countries, Bulgarians value and expect punctuality in business and social events. If you’re going to be late for a meeting or a social event, they expect you to call ahead.
Additionally, Bulgaria’s geographical location is highly suitable for collaboration with companies in Western Europe. It is in the Eastern European time zone and is just two hours ahead of the Western European countries.
5 major companies outsourcing to Bulgaria
Considering all these advantages, major international companies outsource their business processes to Bulgaria.
Let’s look at the five big ones:
1. Hewlett Packard
Hewlett Packard, popularly known as HP, is one of the largest IT companies in the world and has been in the Bulgarian market for more than 30 years. The company operates in three core business areas – enterprise business, personal systems group, and imaging and printing group.
HP works with the public and private sector industries and employs over 3000 professionals in Bulgaria.
IBM established its Europe Finance Center in Sofia, Bulgaria, in 2013. It is an innovative center that provides financial services to multinational companies.
The company utilizes finance skills, business knowledge, and innovative tools to manage the financial processes for all IBM units.
IBM Bulgaria currently has more than 2000 employees in this location.
Bulgaria started producing Coca-Cola in 1965.
The Coca-Cola Hellenic Bottling Company is one of the largest names in the non-alcoholic beverages industry in Bulgaria. It began its operations in the country in 1992.
This entity has its shared services center in Bulgaria. It offers financial and IT services and human resources to other European countries where the bottler operates.
Coca-Cola Enterprises – another Bulgarian entity – opened a center that provides financial services to all Coca-Cola entities in Europe. Together, these entities employ about 2300 employees in Bulgaria.
VMware was established in Bulgaria in 2007. It’s the largest site for Research and Development (R&D) for VMware in EMEA (Europe, the Middle East, and Africa).
In recent years, it has transformed from a pure R&D site to a multifunctional hub that offers products, professional services, and business operations teams.
This center employs over 1300 professionals from more than ten countries.
The UK-based ProcessFlows has been in Bulgaria since 2010. It has three offices in Sofia and more than 120 people working for the company.
It initially transferred some of its back-end support processes to this center. The company then opened its Managed Facilities Center in Sofia to support core business functions and provide clients with high-quality outsourcing and development services.
The center offers 24/7 multilingual help desk solutions and dedicated software development teams to help clients easily outsource their business processes.
Such foreign investment has played a crucial role in boosting the Bulgarian economy.
4 major Bulgarian companies that offer outsourcing services
Bulgaria has several outsourcing companies that provide software development services across the globe. In fact, there are over 600 Bulgarian software companies engaged in ITO and BPO!
Many of these companies cater to giants like VMware, AstraZeneca, Salesforce, etc.
Here’s a detailed look at the four popular companies in the Bulgarian outsourcing industry:
MentorMate is a Bulgarian software development company that developed its first app back in 2001 to help students learn foreign languages.
Headquartered in Minneapolis, USA, MentorMate currently offers a wide range of software solutions to companies worldwide.
- End-to-end services across different platforms, technologies, and design methodologies.
- Provides scalable, flexible, and secure solutions for web development, mobile, and back-end platforms.
- Creates digital products using human-centered design tools to enhance value.
- Uses Agile development methods for seamless collaboration even with offshore teams.
Scalefocus is the largest Bulgarian-owned software engineering company that partners with internationally recognized partners like Microsoft, SAP, etc. It leverages the latest technologies and the top engineering talent to help customers grow their businesses.
Within Bulgaria, it has offices in Sofia, Varna, Burgas, and Plovdiv.
- Provides services like digital engineering, intelligent automation, etc.
- Fluent in technologies like application continuity center, cybersecurity risk manager, etc., to resolve complex business challenges.
- Offers solutions for insurance, logistics, manufacturing, e-commerce and retail, etc.
- Has a multinational client base that includes Fortune 500 companies in IT, healthcare, finance, etc.
Bianor is a software outsourcing company that designs and develops unique software solutions for technology, media, and telecommunication companies.
The company has more than two decades of experience in software development outsourcing and creates sustainable solutions for its partners.
- Provides dedicated engineering teams that adjust depending on the project’s requirements.
- Offers custom IT solutions and Quality Assurance (QA) services to businesses of all sizes.
- Creates a complete design frame for UI and UX designs – from wireframes to mockups.
- Enables fast and accurate deployment and integration of the client’s products.
Dreamix is a software development company that provides customized software solutions for businesses.
Based in Bulgaria and the United Kingdom (UK), Dreamix has a large team of professors, coders, and international experts.
- Uses Scrum methodology for easier collaboration with all stakeholders.
- Provides software solutions for industries like FinTech, pharmaceutical, banking, etc.
- Offers Artificial Intelligence (AI) services and machine learning solutions.
- Secures the project code in Bitbucket, SVN (Subversion), or Git.
While outsourcing software development to a third-party company has its benefits, there are a few things you should consider.
Here’s a comprehensive guide about outsourcing software development.
6 simple tips for successfully outsourcing to Bulgaria
Bulgaria is certainly a great outsourcing destination for your business processes.
However, like outsourcing to any other country, outsourcing to Bulgaria comes with its set of risks. Some of these may include poor communication, missed deadlines, additional costs, etc.
That’s why it’s essential to carefully consider certain aspects before finalizing your outsourcing partner.
Let’s look at the important ones:
1. Reviews and testimonials
You should always research the outsourcing vendor and look for reviews and ratings on trusted sites or go through their testimonial. It may also be a good idea to directly ask them for their previous work experience and client references.
This will help you verify the skills of their developers and the overall experience of working with the outsourcing company.
2. Work Process
Enquire with the outsourcing partner about their work process upfront. You need to mutually agree on timelines, milestones, and other processes before you commit to their company.
3. Cultural compatibility
Understand the outsourcing partner’s work culture, ethics, values, etc. If it isn’t compatible with your company’s culture, it can lead to a lot less friction between both companies.
4. Language and communication
Ensure that at least the top management of the outsourcing company is well versed in the language your organization uses.
Additionally, understand the communication technology they use, especially if you’re in a different time zone from them.
Before you sign the contract, discuss and agree on the expected quality with the service provider. It is especially important if you’re outsourcing highly complex tasks and those that need a certain level of quality.
6. Overall costs
Businesses generally prefer outsourcing to save costs.
However, there may be certain peripheral costs that may initially increase your expenses instead. Some of these may include frequent travel costs, legal fees, fees for networking websites, etc.
You should calculate and consider all these costs and how they’ll impact your bottom line in the long run.
Learn about the other risks of outsourcing and how to manage them.
Bulgaria is a popular outsourcing destination and with good reason.
A matured BPO sector, large talent pool, and a business culture similar to western countries make it a highly sought-after destination for startups as well as large companies.
Some of the big companies like Coca-Cola, HP, etc., already outsource to Bulgaria for these reasons.
If you’re also considering Bulgaria as your outsourcing destination, use the information we covered here to understand all the nuances and help you make an informed decision.
Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.