Winning the Talent War: What are the Best Countries to Build a Tech Team
The old continent is home to a bustling startup atmosphere that has seen record investment in recent months. But in the global war for talent, which are the best locations in Europe to hire a tech team?
Europe has over 6 million professional developers. This vast and rich talent pool can vary immensely among countries. Pay for similar roles can range by four times from Lisbon to Geneva. London, Paris and Berlin alone are home to as many developers as Silicon Valley. Across Europe, cities and countries compete to position themselves as the most attractive place for founders, with some of them being the best locations in the world to set up a tech hub.
MAP OF PROFESSIONAL DEVELOPER DISTRIBUTION ACROSS EUROPE BY COUNTRY - Source: Stackoverflow
So, which are the best countries to put together a winning tech team?
Portugal
Portugal isn’t just a country with great cuisine and endless days of sunshine. It’s also one of the best countries in Europe to build a tech team.
Portugal’s population is warm and welcoming. Most of the population understands and speaks English, and many speak Spanish or French as well. Portugal ranks #7 out of 100 countries in the English Proficiency Index.
Around 7 000 ICT students graduate every year from Portuguese universities. Additionally, more discreetly, informal education is gaining momentum and credibility. Self-teaching and coding boot camps are popping up across the country and adding to the talent pool.
The Portuguese workforce, highly-skilled, is still significantly less expensive than most Western European countries. For example, the average gross annual salary for a full stack developer in Portugal is around 31.000€, but this number can range from 14.000 € up to 50.000 €.
However, Portugal is seeing a rise in hard-to-fill software engineer job postings, a reflection, amongst other factors, of the emerging strength of local tech ecosystems and, with Portugal, a trend for larger international companies to build a presence to source local talent.
Why build a tech team in Portugal: high living standards, affordable prices, vast and highly skilled talent pool, English proficiency and a vibrant tech scene.
The downside: competition for top talent is becoming more fierce.
Bottom line: Portugal is currently a top choice for companies looking to establish a base of technical operations in Europe. The relative share of tech jobs is far higher than other European countries and the pandemic has underlined this even more. Portugal is attracting global tech companies, because of its attractive immigration policy, high standard of living, as well as logistical factors such as time zone and direct flights to San Francisco.
Spain
In the Spanish labor market, tech plays a decisive role. Since 2017, Spain has had the greatest share of tech job postings in Europe meaning that the relative share of tech jobs exceeds that of every other European country.
In some regions, the importance of tech in the labor market cannot be understated. Take Madrid, where the information and communication technology (ICT) sectors generate over 38% of all job offers.
Crucially, for founders, the Spanish educational system is hard at work to bridge the talent gap. While the number of developers has increased by 4.2% throughout Europe, in Spain it has grown by 15.1%. Barcelona, in particular, has 72.500 professionals that fit this profile, which makes it the second European city with the highest number of developers.
In addition, the wage for digital and tech professionals is higher than the average salary offered in Spain, but still lower than the average for Western Europe. For instance, salaries for Python developers in Spain are 18% higher than the national average, but still lower than the UK, Denmark, Germany or France.
PYTHON AVERAGE DEVELOPER SALARY, 2020 - Source: Beetroot
And although Madrid and Barcelona are still the main talent Hubs, other cities are picking up pace. Malaga, Valencia and Bilbao are some of the fastest growing and exciting new hubs that shouldn’t be overlooked, offering top talent and a more affordable cost of living.
Why build a tech team in Spain: A rich and varied talent pool, outstanding quality of life, affordable prices, and a tech-driven labor market.
The downside: Spain still faces significant inequality across its population. Many regions, such as Andalusia, still report high unemployment, negative net migration, and low business dynamism. Also, startups in specific areas such as blockchain, IoT, 5G, Big Data or artificial intelligence might struggle to hire top talent. Language is another barrier founders might struggle to overcome, as Spain has one of the worst levels of English in Europe.
Bottom line: Spain is a top choice for companies looking to set up an operational base in Europe. However, to offset talent shortages in specific areas, founders might consider establishing tech teams in other countries as well.
Ukraine
It wasn’t until 2011 that most of the world realized the full potential of Ukraine’s IT ecosystem. That year, service exports, mostly composed of ICT, exceeded $1 billion. As a result, the former soviet country now ranks 4th for the most attractive country for outsourced tech services, according to Business Insider.
Fast forward to 2018 and software development became the second largest export service in the country. With a current market growth of 26%, around 160,000 Ukrainians work as software and IT professionals.
Kyiv’s capital city has a cluster of tech startups, made possible by the country’s robust education system. Scientists and cyber experts graduate every year, providing highly motivated, sharp, and employable tech talent to leading companies worldwide. Lviv, the charming, westernmost city, has roughly 25% of Ukrainian IT developers. KPMG has listed the city as one of the world’s top cities for technology outsourcing.
Part of this rapid rise is because of a friendly government atmosphere towards innovation. The government has established dedicated IT and cyber research centers in both school and university level institutes, which offer education for a minimal cost.
Why build a tech team in Ukraine: A large pool of talented, motivated workers ready to cast off the tireless oppression and reach their potential as a world superpower in innovation, creativity and technology.
The downside: Besides the fact that English proficiency is still an issue, Ukraine also keeps suffering from systemic corruption that affects both its educational system and state organizations.
Bottom line: Although still reeling from its soviet past, Ukraine is fast becoming a knowledge economy and is a solid choice for outsourcing a tech team, while, due to low English proficiency it may not be the top choice for your in-house, remote, development team.
Poland
Poland is one of the fastest-growing economies in Europe, with an average annual GDP growth rate of 2.8% over the last decade, an average that includes 2020’s Covid-related retraction.
The country’s solid academic and scientific traditions are to praise for this rapid development. Poland stands at 4th place in Europe for the number of students enrolled in higher education programs, out of which approximately 14,000 have taken up engineering courses. As the ninth largest country in Europe with 38 million citizens, Poland is a hotspot of tech talent and one of Europe’s biggest hubs for global tech companies.
Poland’s labor costs have been consistently increasing since 2008, and those increases have come at a faster pace than many other European countries. However, salaries remain relatively low compared to other European countries.
For all the openness that has benefited the country’s economy in recent years, a meagre 19% of the population speak English, meaning that founders might struggle to find qualified employees who are also fluent in English.
Why build a tech team in Poland: A large internal market, affordable prices and highly regarded universities
The downside: Communication skills
Bottom line: While Poland’s strong educational system produces qualified IT workers at a rapid pace, communication can be an issue as only a fraction of the workers speak English.
Romania
Over the past few years, the IT sector in Romania has become an essential part of the country’s economy. The IT industry has an annual growth rate of 14.3%, and tech-related activities contribute about 6% of the country’s entire GDP.
Romania now boasts nearly 220.000 IT experts, mostly specialized in JavaScript, SQL, and PHP. But Romanian developers don’t just excel at technical skills–they are known for common sense, positive and flexible attitude and high responsibility. Romanian developers have strong communication skills, a sufficient level of English and a close cultural affinity to the UK, US, and EU.
Although Romania is not remarkably cheaper than other countries for software development services, labor costs are still around 50% lower than USA markets and 20% below the EU average.
Currently, the government is running a series of long-term incentive programs to support and encourage the growth of this sector.
Why build a tech team in Romania: Specialized pool of talented professionals, affordable cost of living, standout social skills
The downside: Although highly qualified, the talent pool is not as large as that of other countries, with an average of just 7.500 ICT students per year.
Bottom line: Romania is a great place to establish at least a partial presence in Europe. To offset the smaller talent market, founders should consider setting up a presence in other countries.
Most leaders recognize the importance of access to top talent, wherever they may be. The best workers do the best and the most work and this is most at play in complex tasks:
PRODUCTIVITY GAP BETWEEN AVERAGE PERFORMERS AND HIGH PERFORMERS, BY JOB COMPLEXITY (%) - Source: Mckinsey
Startups today have access to a wide talent pool that can encompass a multitude of locations and countries, granting founders access to the best of every talent hub. For instance, a company might choose to hire part of its tech team in Portugal, to tap into the developers’ technical expertise, language skills and the country’s high standard of living, which make this a great place to attract and retain foreign tech talent. if you are considering expanding operations to Europe, we can help you through the entire process. Book a call today.
