Opening an IT company in Poland

Poland’s IT industry is going solid with or without the coronavirus. It is especially true if you compare this sector to other businesses that were hit hard by the effects of the current pandemic.

Numerous companies from outside the EU region see the current unfolding events as a perfect opportunity to enter an entirely new market. It shouldn’t be forgotten that Poland was also one of the few countries that had the upper hand during the last financial crisis and one of the few European economies that did not fall into recession.

So why major companies and start-ups alike are choosing Poland as their next home. We will explain a couple of points why Poland should be on your shortlist as well.

Let us get one thing out of the way: the location. Poland’s good location in the Eastern part of the European Union (although usually called Central Europe here for political reasons) and its CET/CEST time zones is one of the small but important merits of doing business in Poland.

And while those things are handy indeed, they are not essential. We would have a different Europe had this been the only thing one should consider before developing a new strategy.

That is especially true for Russia’s west-most Kaliningrad region, which is merely a 2-hour drive from Gdańsk. Unfortunately for that region, political instability is plainly not good for any country’s economic development, especially for the young and fast-growing IT sector.

Poland’s major merits

So, why Poland, apart from being in the same time zone as the majority of Western EU members? What are the main advantages to anyone looking for a fast way to test up headquarters or a local base here in the EU?

For starters, the foreign investors are already interested in Poland, so you are not diving into the market completely blind. Business analytics consider these three to be the principal characteristics of today’s Polish IT sector.

• a highly qualified workforce;
• high services quality but at the same time
• low costs or production (compared to other EU members).

But let us talk numbers. What about the current pandemic’s impact on all sectors of the global economy? We know that the need for IT services is rising rapidly everywhere, not to mention the shortage of IT workers is growing stable. Is Poland affected?

In a way, yes. The number of job openings in Poland’s software development sector rose to a record level, an 80% increase, compared to the previous period last year¹. Fortunately for Poland, there is a constant stream of qualified specialists from beyond its Eastern border (see the section below).

As we noted, compared to the old EU member countries, the labour and the initial start-up costs are relatively lower. At the same time, you can expect the same quality of services you would get in Germany or France.

Top local IT cities such as Warsaw and Wrocław (pronounced Vrohts-wahf) are already home to many Western IT companies, which chose Poland as their next target to open an office.

The final figures are as follows: there are currently 50.000 software companies, including those delivering custom software services (800)². The market is rapidly growing as merely 5% of those companies were established more than 20 years ago. More than half of those software businesses are less than ten years old.

Figures are pretty impressive as many still consider Poland to be an emerging market in Europe. This overview is plainly outdated. Even officially. FTSE Russel reclassified Poland from the emerging market to developed market status during its FTSE Country Classification annual review of markets in September 2017³.

To sum it up: Poland is a developed market and has been providing high-class IT specialists and high-class services for quite some time to meet the current market demand.

The considerable interest that multinational corporations currently have in Poland and the local IT software houses that keep competing with each other helped create a vast number of new jobs, employing thousands of software and web developers.

The overall software houses rivalry and competition helped increase the quality of the services. While sometimes it is hard to stay afloat while constantly competing for local clients, some are working together to support each other through various cooperation and innovation initiatives (such as SoDA (Software Development Association Poland).

It gives them an additional opportunity to work together and shift their focus to international clients. This is what keeps fueling the Polish economy these days.

Let’s take a look at one of the recent reports available.

The latest The IT Landscape: The Future of IT in Emerging Europe report confirms Poland is home to the most competitive IT sector.

Poland’s overall score of 61.40 is 3 points higher than popular Estonia (58.13). The most northmost baltic state usually scores many points thanks to its ease of doing business index, overall business climate towards foreigners, and the implemented e-government solutions.

And while neighboring Ukraine has one of the highest talent scores, which can be confirmed by the overall number of Ukrainian developers relocating to Poland, it has fallen behind due to the political instability and its poor business climate score⁴.

Government-sponsored programmes & the foreign IT workforce

Let’s talk for a moment about the government interferences (or lack thereof in Poland’s case) that are sadly quite commonplace lately due to the global instability. That is not about Poland.

Poland’s future as the new European IT centre looks very promising, considering the impressive number of software- and web-developers from Ukraine, Belarus, Russia, and other countries that chose Poland as their new home.

Owing to several government-sponsored programmes, such as Poland.Business Harbour, which exclusively targeted the high-skilled workforce from Belarus. Hence the rapidly rising figures of the skilled and multilingual workforce available on the market.

If you are unsure about the language barrier or have doubts about that workforce’s language proficiency, you actually shouldn’t. Poland placed 16th⁵ in the 2020 EF English Proficiency Index.

And that’s not the EU-only figures we are describing here. That’s the world data. If you do not think that’s impressive, compare Poland’s results to Switzerland’s 18th place or France’s 28th. All the Baltic states are far behind as well.

For most Polish software and web developers communicating with their clients or superiors from other ethnic backgrounds is not an issue one should worry about.

Regardless of the political party currently in charge, it is the primary goal of the Polish Government, including the current one, to make the local economic environment as business-friendly as possible. Long gone are the days of bureaucratic inefficiency.

The new e-government services are fully digitised and available to foreigners. In 2020 as much as 90% of all large companies doing business in Poland noted that the digital transformation positively impacted their revenues.

The large internal market helps the Polish economy grow, and it is expected that the trend will continue in the upcoming years despite the later events. Poland has already ratified⁶ the $966 billion EU stimulus package, which will further help the country preserve and protect jobs to ensure nothing affects the local economy in the next couple of years to come.

As foreign investments (including R&D activities) are encouraged in Poland, rest assured that any foreign entrepreneur is treated the same way as the local ones. That applies to both EU investors and entrepreneurs from outside the European Union. If you are from India or Pakistan, China or Singapore, Russia or South Africa, you can conduct business activities freely.

Summary

Several reasons and factors contributed to Poland becoming one of the prominent IT centers in the European Union. High-skilled labour, efficient e-government, business-friendly environment, and steadily going economy are to name a few.

Poland is the way to go if you are looking for an efficient way to outsource your software development. If you are still unsure about opening a subsidiary, a full-scale company, or you would like to relocate a part of your team, get in touch with us.

We will find you the perfect solution available. Perfectly suited to your needs and in full compliance with the applicable Polish and EU laws.

Sources:

¹ Praca.pl: Job openings report (1st quarter of 2021) — praca.money.pl:
² Clutch: Top Software Developers in Poland;
³ FTSE Russel: FTSE Annual Classification Review September 2017
⁴ Emerging Europe: IT Landscape Report;
⁵ EF English Proficiency Index: EF EPI 2020 Report;
⁶ Forbes: Poland Ratifies EU Recovery Legislation;