Usually, when nearshore outsourcing examples come up, Portugal and its specialists are not among them. It has a lot to do with a major financial crisis that took place in 2008 and caused a lot of troubles to Portugal’s economy state. However, for the last couple of years, this country’s popularity in the IT world grew up rapidly and decision to choose software development Portugal seems already a good idea. What draws major companies like Mercedes-Benz, Cisco or Microsoft to Portugal and its outsourcing services? Let’s find out.
Nearshoring Portugal: How Popular It Is These Days?
Portugal has always been rich for talents and IT industry is not the exception in this case. According to Gartner Portugal made it to the list of the most desirable locations for outsourcing and nearshoring in particular. However, why all of a sudden this strike of popularity for Portugal? The 2008 and a few of the following years have been rather hard for this country, nevertheless, its government managed to not only lead it out of the crisis but also make it a center of the European outsourcing community. While nearshoring to Portugal may be an attractive option for some businesses, it’s important to explore alternatives such as Ireland software companies, which offer a competitive edge in terms of English proficiency, a strong IT ecosystem, and a favorable business environment.
These days Portugal is so appealing for investors because of its financial incentives, such as support of the startups, cheap rent for the offices and many more. However, what about the exact reasons for nearshoring in Portugal and how is it better than nearshoring to Romania?
Nearshore: Portugal and Its Benefits
There is hardly any other country that would be such a perfect place for nearshore outsourcing as is Portugal. Over the years, lots of worldwide known companies transferred some part of their offices to Lisbon. What made them do so? Well, there are several reasons for that:
- Cheap rent. Big investors from Europe come to Portugal in hopes to reduce their expenses and receive the product that would be just of as great quality, as if the production center was at their homeland. The first thing they can save their money from is the rent. Because of the recent financial crisis, the supply on the real estate market is now much higher than demand. So finding an office for an outsourcing team is very cheap and easy.
- Transparent laws. Portugal is known for its transparent law system. There is no bribery or bureaucracy in this country, most permits and necessary papers one can even receive online. That is why services of nearshoring, Portugal has to offer, are in such high demand – no one wants to worry about documentation anymore.
- Low rates. Nearshore Portugal services are incredibly low in price due to the high competition on the Portuguese job market. An average salary or a Portuguese software developer is around $2400, which is considerably lower than, for example, salaries of US developers. More than just that, all specialists from this country have to compete against each other to get a job, which affects their rates’ size a lot.
- Convenient location. The nearshoring Portugal services are among the most convenient ones due to this country’s superb location. Being in the very heart of Europe, it is perfect for nearshoring for any other European country. This also implies the minimized amount of cultural and language difficulties. Considering the language benefits, Nearshore to Portugal can be the best option, particularly when projects involve complex Portuguese text annotation. This ensures linguistic precision and cultural understanding during the process.
- Online registration. Portugal is one of those countries, the government of which finally realized, that online business registration might attract many new investors. And they could not be more right about it. These days an online registration of a new company takes just three days! Obviously, that is good news to those, who decided to try nearshore Portugal services.
- Low taxes. Nearshoring in recruitment is supposed to lower company’s expenses and with Portugal’s low taxes services of nearshoring Lisbon and the rest of the country are willing to offer, become even more appealing. Moreover, for those, who are only starting out with their business in Portugal, there are no taxes at all during their first year.
Nearshoring Examples: Which Companies Outsource to Portugal?
For the last couple of years, a tremendous amount of companies moved their facilities to Portugal or at least opened their second office there. One of the greatest nearshoring examples, in this case, will be a London-based company called Second Home, that decided to open their another, bigger location in Lisbon in 2019. Their biggest hope is to start catering to local companies, therefore improving the situation on the Portuguese job market.
Another great nearshore example of outsourcing in Portugal would be a company called Factory that provides office spaces for other companies all around the world. As has already been stated, Portugal’s cheap rent makes it a perfect place for nearshoring examples like Factory’s.
Other examples of nearshoring companies in Portugal could also be such well-known brands as Mercedes-Benz or Volkswagen. Just as other nearshoring companies examples, they quickly realized, that outsourcing to Portugal is a great way to give their business a boost.
Nearshoring in Portugal: Why Is It Your Best Option Nowadays?
Outsourcing in general and nearshoring in particular became a true savior for the Portuguese economy. Basically, the country went from one of the poorest in Europe to one of the most promising in terms of the financial state. Hundreds of investors are now relocating their facilities there, as this move will allow them to make their lives so much easier.
Portugal’s government made truly appealing conditions to businesses that want to outsource some of their jobs. With lowered taxes (or no taxes at all!) cheap real estate renting prices, great talent pool and more than just amazing location Portugal quickly became heaven on Earth for IT industry.
FAQ
What are the key benefits of nearshoring to Portugal?
Nearshoring to Portugal offers several advantages, including a highly skilled workforce, cost-effective labor, and a favorable business environment. The country has a strong IT sector, with many professionals fluent in English and experienced in working with international clients. Additionally, Portugal’s time zone alignment with most European countries makes collaboration easier and more efficient.
How does Portugal compare to other nearshoring destinations in terms of cost?
Portugal is generally more affordable compared to Western European countries, but slightly more expensive than Eastern European options. However, the balance of cost and quality, along with factors such as political stability and a high standard of living, make it an attractive choice for companies looking for reliable nearshoring partners.
What is the IT talent pool like in Portugal?
Portugal has a rapidly growing IT talent pool, with many professionals skilled in various programming languages, software development, and project management. The country also boasts a strong academic background in technology and engineering, supported by a number of renowned universities and tech schools.
Are there any legal or regulatory challenges to consider when nearshoring to Portugal?
Portugal is part of the European Union, which means that businesses operating there must comply with EU regulations, including data protection (GDPR) and labor laws. However, the legal environment is generally straightforward and business-friendly, with government incentives available for tech companies and startups.
What are the potential risks associated with nearshoring to Portugal?
While Portugal offers many benefits, potential risks include competition for top talent due to the growing tech industry, and potential language barriers in smaller, less internationalized cities. Additionally, although Portugal is politically stable, companies should stay informed about any changes in regulations that could impact business operations.
It could be said, that Portugal and the IT industry are now having quite a fruitful relationship. The Portuguese economy is thriving because of all the investments and the rest of the world finally has a great place for outsourcing. Hopefully, with time, this country will become even more popular with investors and company owners and eventually will turn into the very center of the world IT community.
