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Where is Poland on the world map of IT and outsourcing part 1?

• 2020-09-15
• Maciej Szczerba
• Business

This entry was inspired by one of my previous entries (and research spent on it) on the future of outsourcing in India. So I decided to write a short text (very subjective, I warn you), where Poland is today on the IT services market and outsourcing of services on a global scale. In competition with Asia, but also with other regions of the world. I reserve in advance the right to reserve that this is a rather subjective opinion, which is based more than on meticulous market research and reports from large research companies such as Gartner, Tholons or Forrester on my twelve-year observation of the market, but also on dozens of conversations with customers and hundreds (if not thousands) of conversations with candidates.

Below, I will try to respond to the opinions prevailing on the Polish and world market about our IT services market and its role in the global ecosystem in two contexts: the market for particular technologies and product markets.

In Poland there is a narrative about our uniqueness on the world map of IT suppliers. True or false? To a large extent I agree with this view, but nevertheless I consider this opinion a bit exaggerated. In Europe, Poland is certainly a unique market. One of my bosses in one of the three largest recruitment companies in the world, an Italian, said that according to him, Poland is the largest IT labour market in Europe. Again, if you look at the absolute numbers of programmers in Poland and, for example, Germany and France (PL is estimated at 300 k, Germany at 800k and France at over 500k), the Polish market is still smaller, but it certainly has bigger prospects ahead...

What are the global advantages of Poland?

First of all, the still cost of IT specialists: I still estimate that we are about 40% cheaper than rich 'old-west' countries like Scandinavia, Switzerland, Bavaria, the Netherlands and London. The difference in the cost of labour is diminishing if we take countries like France, the UK outside London, Belgium (outside the EU institutions), not to mention Italy, Spain, etc., where we are probably no longer cost-competitive, but...

Comparing Polish programmers' rates with the most 'hot' markets in the United States, such as California and New York, we have rates of less than 40% of those in Warsaw, Wrocław and Krakow. Let us assume that a programmer with about 5 years of experience costs 180 thousand PLN gross per year in the main centres in Poland - in Silicon Valley it will certainly be 120 thousand USD gross per year = about 500 thousand PLN per year. A Polish programmer is still 64% cheaper...

I therefore assume that outsourcing of software development to the United States (in particular, California and New York) will develop faster in the coming years than hitherto popular outsourcing for Scandinavian or German customers. This is due to the still high level of price arbitrage.

But it is not just about the cost. Poland is a large country, with a large labour market, including a very large pool of IT specialists (as already mentioned above). Yes - there is also a structural shortage of IT specialists (programmers in particular), but it is still smaller than elsewhere (this is already a long-standing opinion of my clients). The people here are simply here.

Thirdly, our programmers are quality. Personally, I think this is largely due to the Polish scientific tradition in the field of science (the Lwow school in mathematics, but not only), which in turn has translated into cryptography (the famous Enigma), and this in turn into computer science. It is no coincidence that Wrocław is today such a strong IT centre - my readings show that the then Elwro and the Odra computer it created were in their time (although today one can laugh at it) a truly breakthrough solution. It is no coincidence that Elwro was bought by such a giant as Siemens just four years after the breakthrough...

My very subjective opinion is based on the fact that gaps in the education system cannot be simply made up. With all due respect to Asian countries,  they do not have as developed an education system in the area of science and engineering as I have - my Indian interlocutors have confirmed this.

Most Polish outsourcers passionately use the Hacker Rank (as far as I know a few years ago) in their promotional materials, which states that the best Java programmers in the world are in Poland. Again, there is something about this, and even a lot of it is probably true, but Java is such a huge ecosystem in global IT that I would certainly approach it with caution. 

Nevertheless, from my conversations with clients, it appears that our Java developers really stand out from the world. It is difficult to find a similar quality/price ratio here somewhere else in the world. Additionally, in the financial sector (and this is an industry particularly based on Java), Polish banks very early on adapted modern business solutions, including payment solutions, which are often only now being implemented in the "Old West" countries. People participating in these projects are now very much needed in Scandinavia, for example, not to mention Eastern banking centres such as Singapore. Therefore, I predict a constant demand for Java specialists in Poland in the financial sector and locating (as soon as the fear of Covid has subsided) more software development centres of large global banks (after Brexit I bet another large British bank, HSBC and Standard Chartered we already have).

Web development in Poland is at global level. The creation of corporate websites, online shops or any kind of websites, whether in PHP, Ruby or even in .NET, is at a similar price and quality level in Poland as in India, China or the Philippines. And aside from that, we still have countries such as Romania and Bulgaria, which are still somewhat cheaper in terms of cost...

Mobile in Poland - development of Android software is also cheaper according to our customers in Asia.  The quality is also similar. It is difficult to bring the development of iOS applications to Asia - Apple hardware (phones, tablets) is too expensive for a young programming student from Asian countries...

What most clients (global companies) stressed in the conversation: Poland is a unique market when it comes to the development of embedded systems. Low-level programmers are very well priced and at the same time their competences are very high. It seems on this basis that we have great potential to build the so-called "smart industries".

Wait for the second part of the entry!