We are all Bulgarians: the new recruitment target of Israeli hi-tech?

In the reality where high-tech companies face a personnel crisis, outsourcing has become a familiar phenomenon.

What is less known is one of the surprising destinations for finding new employees in the industry: Bulgaria

Talia Levin

14/10/2022

Friday, October 14, 2022, 10:54 a.m. Updated: 3:58 p.m.

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Vitosha Street in Sofia.

On the one hand - a European country that has invested in human capital in the fields of technology.

On the other hand - manpower is available and cheap compared to Israel (Photo: David Rosenthal)

Israeli hi-tech companies that consume software development services outsourced from Eastern Europe are nothing new.

However, an interesting trend in the field has been evident in recent months, where we are witnessing an increase of tens of percent in Israeli high-tech companies that move their activities mainly to Poland, the Czech Republic, Slovakia, Romania and another destination that so far has not made headlines - Bulgaria.

why is it happening?

The lack of workers in the high-tech industry in Israel, combined with the increasing competition for quality personnel, causes more and more high-tech companies to transfer their software development and technical support tasks to Eastern Europe.

In the spirit of the times, with the transition to remote work which does not require the entire team to arrive at a single location, in one city or even one country - and in order to speed up the recruitment of the team of experts (Time To Market) - companies that recruit in Eastern Europe are expanding the search for experts to Bulgaria as well.

There, it turns out, there is a pool of talented and professional software people.

The corona virus catapulted the online culture forward, this need resulted in an increase of about 35% in the development of websites and applications for the purpose of trading, receiving information and performing operations remotely.

The increase caused a strain on the Israeli software development companies that rushed to recruit employees and developers to meet the growing demand.

Changing the work method and moving to hybrid work where there is no obligation to come to the office on a daily basis allowed those programmers and developers to provide the service from home and basically from anywhere.

The load on the Israeli development market, together with the new way of working, have become a significant recruitment advantage that allows you to recruit employees and talents from different parts of the world.

Programmers at work: despite the efficiency in many high-tech companies, the demand for employees remains high (Photo: ShutterStock)

Discover Bulgaria

The Russian invasion of Ukraine last February posed a considerable difficulty to the Israeli high-tech companies, a significant part of whose development services were in the attacked country, and now they were required to find an alternative solution quickly.

Most of the companies found the solution in the technological fathers, mainly in Poland and to a lesser extent also in the Czech Republic, Slovakia, Romania and surprisingly also in Bulgaria.

Under the radar, in small but steady steps, Bulgaria has become one of the countries that offer software development services and high-level technical support, small in the field of its neighbors but definitely of high quality.

According to the data of the World Bank, every year about two hundred thousand students finish their studies in the higher education institutions in the country and about 5% of them finish studies related to high-tech.

One of the Israeli companies that recognized the potential in the quality market in Bulgaria, is ALLSTARSIT, an Israeli software development and outsourcing services company, which invested approximately four million shekels in expanding its existing development center in the capital city of Sofia.

"The expansion of business activity in the company's development centers in Eastern Europe provides a solution to the shortage of IT personnel in Israel," explains

.

With the massive shift of talent to hybrid work, the issue of location has become less relevant.

The name of the game for those who want to win in the software market is the availability of the engineers and the quality of their work and not their physical location.

Working with talent pools from several countries, including Bulgaria, is a complementary goal for us to our large centers in Poland and Ukraine and allows us to continue reducing recruitment times for each open position."

The company, which has been operating in Eastern Europe for over a decade, recognized that Bulgaria is a high-quality complementary market (about 70,000 software people) to the significantly larger market in Poland (about 450,000 software people), and when establishing distributed groups in Eastern Europe for its Israeli customers, it leverages its recruitment capabilities from its scattered centers in all of Eastern Europe, including in Bulgaria, in order to provide the client with faster and better quality recruitment.

Therefore, as mentioned, it decided to significantly expand its development center in the region.

In addition, the company operates a technological hub in Poland, eight hundred employees, large development centers in Ukraine, development centers in Romania, the Czech Republic, Slovakia and Portugal, with over 1000 employees.

All of them provide services to leading Israeli and American companies in the fields of high-tech, cyber, cloud technologies, fintech, insurtech, medical systems, semiconductors, management systems, banking and more.

In Bulgaria, there are development centers of large and well-known companies such as HP, SAP and Microsoft, so the establishment of the center in the country was a necessary step.

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Shlomo (Salomon) Amar, founder and CEO of ALLSTARSIT (Photo: Maria Spibak)

Talents and competition

"As a company that has been operating throughout Eastern Europe for many years, we have noticed that in the last two years there have been far-reaching changes in the industry that affect the ability to recruit high-quality, professional personnel who are above all loyal to the employer," explains Amar.

"Among them, the comparison of wages between experts from different countries and moving to an almost uniform global wage for experts with a similar specialization, the hybrid work, the resistance to returning to the offices, the silent resignation, and more. The success of the business activity of any company depends on its ability to maintain an available, high-quality and stable workforce over time ".

According to IDC - International Data Corporation, the leader in the field of consulting services and providing market data for the information technology, communication and consumer behavior markets, the information technology and communication industry in Bulgaria showed a 300% increase during the last 7 years with an activity turnover estimated at approximately 2.5 billion euros.

The ICT (Information and Communication Technology) industry in Bulgaria has proven in the last decade that it maintains stability and growth and has managed to establish itself as one of the more profitable industries in the country when the software business is considered to be the field that provides the best performance in the industry.

According to the EUROSTAT website, the official statistics website of the European Union, in the ICT industry in Bulgaria today about 2.3% of all employees in the country (about 70,000 employees) are employed, a figure that is below the EU average of 3.5% of all employees but is characterized by growth constant

The Bulgarian companies very quickly realized the advantages of the ICT industry in the country, advantages that the Israeli and American companies realized late and are only beginning to implement in recent years, which increases the competition between the various companies, opens up new positions in the economy and provides new opportunities for hiring employees in a variety of relevant positions - with an emphasis on local talents.

Added to this is the fact that the Bulgarian government is subject to EU directives and legislation on the digital economy and the fact that its corporate tax rate is only 10%, one of the lowest among EU member states.

Sofia, Bulgaria.

An attractive destination for recruiting employees for the Israeli high-tech industry (Photo: ShutterStock)

saving expenses

Investment in technology in Eastern European countries has increased significantly and the activities of local companies have expanded accordingly, making the young people working in the IT sector motivated employees hungry for success.

When you add to the equation the short geographical distance between Bulgaria and Israel and the fact that there are no time differences, you find that outsourcing work with Bulgaria is a WIN-WIN situation.

"Bulgaria is an attractive destination close to home with working hours synchronized with the Israeli market, English-speaking, professional and loyal programmers with a tendency to stay on the job longer compared to Israeli workers in the same position," says Amr, "while the average salary in Bulgaria is significantly lower than the average salary of a high-tech employee in Israel To reach up to a 40% discount in the company's expenses section and without harming the quality of the work."

The advantages of employing workers in Bulgaria for the Israeli companies are many and clear: the geographical proximity to Israel and neighboring countries in Europe without time differences, the availability of work for multilingual engineers and programmers, a stable political and economic environment, compliance with the very strict privacy protection regulations according to the European Union standard - all of these combined with the employment costs Low make Bulgarian talents the most sought-after workers in the IT industry.

It's no secret that recently many Israeli hi-tech companies have decided to deal with the crisis in the industry by making a long series of cuts, while other companies have continued to routinely outsource software, engineers and back office personnel and optimize work processes.

Some data: Towards the end of the first third of the year 2022, a shortage of 32.9 thousand jobs is estimated in the high-tech market, with two-thirds of these jobs being technology jobs, so it can be clearly seen that the demand for programmers, devoffice and product people still exists and is growing.

Although the recruitments have decreased, they still continue only in a different format.

"Hitex": not a crisis, but an adaptation of the companies to the new economic reality (Photo: ShutterStock)

Is there no crisis in high-tech?

"It is not at all a crisis in the high-tech industry, as the headlines of the newspapers and financial websites were quick to point out," insists Amr, "it is a call for efficiency in the industry, and the companies are now doing what they should have done a long time ago, which is to optimize work processes. The recruitment processes are becoming more focused, more precise and meaningless to the geographical location of the employee. These processes allow the company to refine its recruitment goals and sparingly choose the best talents for it."

"This is another change that becomes possible with the entry of the companies to Bulgaria, the possibility to recruit talents that were previously difficult to reach in other places, and not only to recruit good employees but loyal employees who will stay with the company for a longer time. The process of recruiting and retaining employees in the country makes it possible to recruit the relevant employees for the appropriate positions, to offer They have good conditions and above all stability, which will significantly reduce the percentage of people leaving."

"In the days of economic instability at the global level, high-tech companies that want to continue to exist and run efficiently must find creative ways to recruit and retain employees. It seems that the best way to do this is to use outsourcing services in Eastern Europe in general and in Bulgaria in particular as a complementary market to the leading markets in Eastern Europe ".

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Tags

• High tech

• Software

• Bulgaria