Poland’s IT Industry Overview
The Central and Eastern European (CEE) IT sector is rapidly developing today. In 2021, the Global Outsourcing 100 included more than a dozen of companies in their list with the main office in the CEE region with IBA Group, Solberg, Sigma Software, and others among them. According to The IT Landscape: The Future of IT in Emerging Europe report, the CEE IT sector estimated 2 million people employed in 2020 and the number is growing by 3% each year. Meanwhile, the largest IT talent pool in the region is in Poland. It reached 401 thousand software developers in 2019.
Poland is considered to be one of the leading IT outsourcing destinations in emerging Europe and in this article we’ll figure out why. We’ll have a look at the state of the Polish IT industry, what are the main IT industry trends, and why many businesses prefer outsourcing software development to Poland to other world IT hubs.
Overview of IT Industry in Poland
Poland has one of the most progressive IT sectors among 23 countries of Central and Eastern Europe. In the Emerging Europe rating, Poland gained the highest 61.40 points of the overall score, being put in first place. The countries were ranked by the top software development talents, development of IT sector, and business climate components. Poland showed high results in the three of them, demonstrating a high level of competitiveness in the ICT sector and a positive business climate for investments.
Poland has significant economic potential. Many international tech companies are ready to invest in the development of the Polish IT sector and a great number have already opened their R&D centers in the country, including Microsoft, Intel, Google, IBM, Delphi, Samsung, and many others. According to the latest FDI Report 2021, Poland announced 101 STEM FDI projects in 2020, being placed among the top 10 destination countries for STEM FDI. It means that projects in ICT and science are among the major investment attractors in the country.
There are more than 50.000 software development companies in Poland and more than 800 are aimed at the international software development market. Based on the above, it’s evident why SMEs and large companies from the US and the EU are actively seeking IT expertise, custom software development services, and team augmentation in Poland. This is because Poland has one of the most favorable environments for business development and a large pool of IT talents with a strong professional background, and working experience with global companies.
Reasons Why Poland Becomes More and More Valuable for IT Industry Centers
World-known IT companies readily invest in the Polish IT sector and start their industry centers there. The three main reasons why Poland is worth investing in are a high level of specialists skills, adaptive legislation, and a stable and rapidly developing economy. Let’s have a closer look at them.
Human Capital
Businesses around the world are struggling to find skilled specialists. According to Randstad Sourceright’s 2021 Talent Trends survey, 40% of HR leaders claimed that their organizations were negatively impacted due to talent scarcity in IT. Poland, in its turn, has much available highly-skilled IT workforce to offer.
Poland has a strong STEM educational base, there are more than a dozen of technical universities around the country that get into the top 1,000 QS World University Rankings. Each year in Poland tech universities graduate 78,000 ICT students on average. The specialists start working for local and international tech companies. Meanwhile, while providing high-quality services, labor costs in Poland are generally much lower than in the US and EU countries by 20-50%. All these factors contribute to the popularity of Polish IT specialists, therefore, businesses of different scales search for Poland outsourcing services.
Adaptive and Effective Legislation
Poland attracts substantial investments into its ICT sector. It has become possible due to the establishment of an investment-friendly environment and compliance of its legislation system with the EU laws.
One of the recent Polish government initiatives is to enforce a new tax plan to encourage the implementation of innovations in Poland. A new system of tax incentives is aimed at decreasing the tax burden for the businesses that commercialize the results of their R&D services, being involved in prototype development and robotics, or employing innovative workers such as researchers, programmers, inventors, and engineers. The tax plan is expected to start working from the beginning of 2022 and will last until 2025.
Resilient Economy
The Polish economy is one of the fastest-growing in the CEE region. Since 2016 the Polish GDP has been steadily increasing from $472.26 bn to $595.92 bn in 2020. In 2026 Poland’s GDP is expected to reach $954.58 bn. Given this, the IT industry constitutes about 8% of Polish GDP, continuously growing in its value. In 2019 Polish ICT market valued 46.4 bn zloty ($11.3 bn) and in 2021 it reached 52.8 bn zloty ($12.8bn).
IT Industry Trends in Poland
There are a number of global IT trends that Polish software developers successfully realize in their work. Here are the most prospective directions in the development of the Polish IT sector for 2022.
FinTech
The development of banking and financial services has become very popular in Poland. The number of financial institutions and digital services they provide has been growing year by year. Virtual wallets, online shopping, loans, crowdfunding, mobile banking applications – all these have triggered the massive establishment of FinTech companies around the country.
The number of FinTech users is also growing. According to The Paypers, the most popular Polish mobile payment system BLIK processed over 153 mln transactions from January to March 2021, performing almost twice as many operations as in the same period of 2020. Moreover, the system estimated 7.6 mln users in Q1 2021, representing one of the fastest-growing channels among other P2P mobile payment systems.
Polish FinTech will continue its progressive development. Statista predicts that by 2025 the digital commerce segment in Poland will reach over $33bn and mobile POS payments volume will account for nearly $45.7 bn by the same year.
Read more on Polish FinTech and why to develop your FinTech solutions in this country.
Blockchain
The popularity of blockchain technology in emerging European countries is fast-spreading. Although blockchain is a new technology, it’s already successfully implemented by many industries for improved data protection, increased traceability and transparency, and much more.
Apart from the improvement of digital solutions for various industries, blockchain has also gained popularity for safe and quick cryptocurrency exchange. Being one of the fastest-growing sectors in the Polish FinTech Market, blockchain promotes the development of startups aimed at virtual currencies exchange and distributed data structures.
Healthcare
The pandemic outbreak of 2020 and demand for private healthcare gave a boost for health tech development and Polish programmers followed the trend. Poland turned into one of the major health tech exports in the region. It became possible due to the availability of IT specialists with expertise in Artificial Intelligence (AI), Machine Learning (ML), Big Data, telemedicine, and others.
Now, Polish health tech start-ups are expanding internationally. For example, a start-up from Warsaw HomeDoctor recently raised 3.7 mln euros ($4.1 mln) from Cogito Capital Partners, Ingermedica, an AI-driven multi-language platform, gained 8.4 mln euros ($9.4 mln) from the European Bank for Reconstruction and Development (EBRD) and Heal Capital.
Automotive
In the CEE region, Poland represents the largest automotive market. Although the country doesn’t have its own vehicle brands, it manufactures and sells automotive components like motor engines, and provides various vehicle services, e.g. maintenance and repair. The automotive industry is one of the substantial contributors to the Polish economy. In 2019, it generated 8% of Polish GDP and 21% of export value.
Polish vehicle production plants closely collaborate with Polish IT companies, aiming at modernization of their products as well as digitalization of the manufacturing processes, making them more automated. This results in the emergence of startups and companies that implement innovative approaches to the automotive industry. For example, the development of online marketplaces for cars and their parts, the development of autonomously guided vehicles, the development of IoT-related software and hardware for cars, and much more.
Gaming
Poland is gaining popularity as a significant contributor to the world’s game dev industry. Being for long an outsource destination for major game dev companies, it started creating its own video games highly commended by critics.
Apart from major publishers such as CD Projekt, there are a variety of smaller independent studios and the mobile sector that also actively participate in the game dev market. According to The Game Industry of Poland 2021 report, there were around 470 game dev producers and publishers in Poland in August 2021. In 2020, the industry revenue was estimated at 969 mln euro ($1.08bn) with annual growth of 17%.
Today, Polish game dev is actively developing. In 2019, the Warsaw Stock Exchange (WSE) established a special index the WIG Games Index “based on the value of the portfolio of 5 most liquid companies covering game developers’ sector” to attract more technology companies to the industry. And by the end of 2020, the WSE already included 54 gaming companies, overtaking the previous leader, the Tokyo Stock Exchange. This shows how important the Polish game dev segment is and that it’s one of the major development directions for Polish IT.
Bottom Line
In some years Poland has become a major IT powerhouse. Consistently developing economy, strong STEM education, adaptive legislation, favorable location in Europe, and extensive base of unique IT talents helped this country to turn into one of the major IT leaders in the world.
Today, world-known technology companies are seeking ways to start their R&D and BPO centers in Poland, especially in FinTech, blockchain, health tech, automotive, and game dev sectors. Whereas SMEs and large-scale businesses readily utilize Polish IT outsourcing and staff augmentation services.
