Outsourcing to Bulgaria_what businesses should know

OUTSOURCING TO BULGARIA – Here’s what you need to know

Bulgaria is one of the recognized, popular outsourcing destinations in Europe. International businesses from various sectors have been running operations from and to Bulgaria for decades. Also each year more new enterprises enter the Bulgarian market from all around the world. This step gives them great opportunities not only within the local market, but also within the EU as Bulgaria is a member of the Union since 2007. 

It is no surprise that the outsourcing sector in the country gains more influential in Bulgaria’s economy with each passing year. Some of the major factors in favor to choose Bulgaria for outsourcing are the available capable workforce, convenient time zone and location of the country, attractive business conditions in terms of low corporate and labor taxes compared to the Western Europe and North America.

Since you’re exploring the topic of outsourcing to Bulgaria we’d gladly provide you with a more detailed overview as to why choose to outsource your operations here.


The oldest country in Europe…

There’s a lot to be said so let’s start with the basics. The Republic of Bulgaria is located in the southeastern part of the European continent on the Balkan Peninsula. Nowadays Bulgaria is the sixteenth-largest country in Europe and it is also the oldest country on the continent. (Official year of establishment of todays’ Bulgaria is accepted to be the year 681. There are recent studies that prove the actual date was around 200 years earlier.) It has a population of a 6,899 million people. Approximately 85% of the population is Bulgarian, with other major ethnic groups being Turkish (8.8%), Roma (4.9%) and about 40 small minority groups totaling 0.7%.

Main cities and business hubs except for the Capital Sofia are Plovdiv, Varna, Burgas, Stara Zagora, Ruse and others.

Country has a service-based economy with over 60 % share of services, followed by Industry& Agriculture. Being part of the services sector, the outsourcing segment gains more value and level of importance in the country’s economy every subsequent year and with good reason. Here are the key points that make Bulgaria an appealing business location and popular outsourcing destination.

I. Why are businesses outsourcing to Bulgaria?


1. Strategic location and convenient time zone

Bulgaria borders the Black Sea to the East, Romania to the North, Serbia and Macedonia to the West, Greece and Turkey to the South. The country’s location is often associated as a “bridge” between Europe and Asia on many business and political levels.

Bulgaria offers time zone and location convenience that is highly valued both geographically and culturally. Country is only a 1- to 3hour flight away from major European capitals like Berlin, Brussels, Paris, Amsterdam, Vienna, London, and many others.

It enables western companies to efficiently collaborate with their teams in Bulgaria often in real-time communication. Another plus is the ability to travel to each other for a short amount of time in order to do business in person whenever needed.


2. Cultural and economic proximity to the Western world

Bulgaria benefits in terms of geopolitical stability and integration into the global economy. Country is a member of the European Union since 2007, NATO(2004) , IMF (1990) , WTO (1996) and many other international unions and alliances. As a member of the EU the Bulgarian currency BGN (Bulgarian Lev – “lev” in Old Bulgarian means Lion) is pegged to the euro at a rate of EUR/BGN 1.95583. Bulgaria hasn’t adopted the Euro, yet. Country has nevertheless joined the ESCB (European System of Central Banks) and uses the same payment practices as in the Eurozone.


2.1 Bulgarian economy split

As we’ve already pointed out services sector dominates in the Bulgarian economy. In a way this confirms that the major part of the working population is well versed in delivering quality services especially in the outsourcing field. For the past decade Services segment has a growing share in the gross domestic product (GDP), exceeding 60% in the last 4 years. The other two major contributors are Industry with 23.4% share (Y2021) and Agriculture with 3.73% share (Y2021) in the GDP. (source of data:  statista.com).

Business environment in Bulgaria traditionally attracts western businesses with its capable workforce, location and time zone, as well as the generally cheaper costs for doing business in terms of corporate taxes, hiring qualified personnel, cost of living and so on in comparison to the conditions of western countries like France, USA, UK and Germany  for example.

In the recent years there’s also a growing interest for entering the Bulgarian market from countries that are part of the MENA (Middle East and North Africa) region. Businesses from MENA consider Bulgaria as a strategic point of entering both the local and EU market and capabilities.

3. Bulgarian population – capable talent pool


As we’ve already mentioned the current population is estimated at a little under 7 million citizens. Over 80% of working age Bulgarians have a secondary or higher education. Country’s talented employee pool is backed up by 50+ universities. Some of them, Sofia University for example, offer courses on “Outsourcing Projects and Companies”. 30 000 new professionals graduate every year (data from BASSI).

3.1 Languages availability

Over 50% of the 3.5 million workforce speak 2 languages, with 35 languages spoken overall. The top 5 used languages in the Bulgarian outsourcing sector are English, German, French, Italian, and Spanish. The outsourcing sector in Bulgaria indicates also a growing demand on Asian languages. Some of them are Arabic, Chinese, Japanese, Korean and Hindi.


3.2 Qualified & affordable IT workforce

The country has numerous Information Technology (IT) and other engineering experts owing to its investments in engineering education programs. These full-stack, back-end, and front-end Bulgarian developers are well versed in C#, Java, JavaScript, SQL, and PHP. Most IT professionals use the Agile software development methodology, which enhances communication between all stakeholders and clients during the project.

3.3 Hiring in Bulgaria


The Bulgarian Labor Code governs the employee-employer relationship in Bulgaria, regardless of both parties’ nationality. Written employment contracts are required under the code. Bulgarian legislation has clear rules governing employer-employee relations, employee termination, including protection from unlawful dismissal.

Staff augmentation in Bulgaria is governed by the Agency contracting regulation. (Staff augmentation, also known as contracting services & Agency contracting is a hiring practice for a temporal increase of personnel with qualified outside resources where company uses the services of a certified agency). The Agency contracting in Bulgaria  is predefined legal framework for how the Staffing service can be ensured, guiding the relations and interactions between customer, provider and employee.

4. Attractive overall business conditions

4.1 Lower Taxes


As business destination Bulgaria boasts some of the lowest operational costs in the region. Country offers the most favorable tax conditions in the SEE. At 10% its corporate tax is the second lowest in the EU. (Hungary 9% corporate tax). Bulgaria’s rate is more than two times lower than the EU-average of 21.3%.  Bulgaria is also among the most attractive business locations both at regional and European level with its flat rate of 10% Personal income tax.

4.2 Lower Labor costs

According to Eurostat in 2021 Bulgaria had the lowest average hourly labor cost among all EU members – EUR 7. That was more than four times below the EU average of EUR 29.1 & nearly seven times lower than the EU’s highest of EUR 46.9 in Denmark. Despite the large distance with the rest of the member states, the country is slowly catching up. Its labor costs amounted to 24.1% of the EU-average in 2021. They’ve increased from 19.1% in the beginning of the five-year period 2017-2021.

In addition, Bulgaria’s hourly labor cost increased with 8% which was one of the fastest annual rates in the EU. Hourly labor cost in Bulgaria grew four times faster than the average for the 27 EU members of 2%, going slower only compared to the rates in Lithuania and the Czech Republic.

N.B. All EU members in the region reported higher hourly labor costs. Romania ranked just ahead of Bulgaria with EUR 8.5.  Croatia had an average cost of EUR 11.2 per hour. The most expensive labor in the SEE region again was registered in Slovenia with an hourly cost of EUR 21.1.

4.2.1 Bulgarian Average gross monthly salary

In Q4 of 2022 the average monthly gross salary in Bulgaria amounted to 1879 BGN (EUR 961), accelerating with 16.6%. The growth is the highest since 2008 . It comes amid rapidly rising consumer prices and a tight labor market that has left many employers short of workers. Wage growth almost caught up with inflation, which in the months of October – December was around 17-18% on an annual basis.

While remaining one of the countries with lowest labor cost rates, within SEE Bulgaria belongs to the nations with higher paid sourcing and IT talent.

In Bulgaria a Project manager’s salary varies between 2,900 BGN/month (EUR 1,484 per month) and 6,800 BGN/Month (EUR 3,480 per month). Ranges in salary depend on level of seniority, experience, skills, language(s) proficiency. In Y2023 the remuneration (base pay and additional pay) of a software specialist in Sofia, Bulgaria ranges mostly between BGN 5,000 (EUR 2,559 per month) and BGN 11,000 (EUR 5,629 per month).

4.3 High-level Internet speed & connections


The country has a well-developed digital infrastructure with one of the fastest fixed broadband Internet connection speeds in SEE. As of January 2023 fixed broadband internet in Bulgaria ranked on 58th position out of 179 countries worldwide (Speedtest by Ookla). Fixed broadband internet in Bulgaria is now trailing behind countries like Romania and Slovenia, but is also well ahead of other locations such as Austria, Slovakia, Czech Republic Croatia, Serbia, Turkey, India, Australia, Mexico, etc.

 Also in January 2023 rankings by city, Sofia was 81st out of 195 cities worldwide. In terms of fixed broadband internet speed Sofia was ahead of major cities worldwide such as Istanbul, Ankara, Athens, Prague, Delhi, Mexico city, Sydney and others.

Regarding the Mobile internet Rankins of the Speedtest in January 2023 put Sofia on 24th positon (93.15 Mbps) ahead of the cities Paris, Berlin, Brussels, Bucharest, Barcelona, Tokyo, Moscow, Istanbul, Delhi, etc.   As a country Bulgaria takes 21st position in Mobile internet (75.73 Mbps). Its position is ahead of the United Kingdom, France, Germany, Belgium, Austria, Croatia, Hungary, Romania, Italy, Spain, Russia, Turkey, Greece, etc.

In terms of average price per megabyte, in 2022 global internet comparison website Cable.co.uk ranked Bulgaria as the sixth cheapest location for fixed broadband internet in Europe. However, all five countries with cheaper internet are close nearshoring competitors of Bulgaria – Romania, Moldova, Belarus, Russia and Ukraine.

4.4 Favorable Cost of living

Bulgaria boasts some of the most favorable living costs among the major SEE countries. It was measured by the Cost of Living Index based on the database of user contributed data Numbeo. Living costs in Bulgaria are on par with Romania and slightly higher than those in Serbia. However cost of living in Bulgaria is considerably lower than in Slovenia and Croatia. Bulgaria offers moderate quality of life, according to the Numbeo Quality of Life Index.

The country excels the most in safety, climate and low traffic commute time. Performance in healthcare, property price to income, pollution and purchasing power is weaker. Within the country, living in the capital Sofia is considerably more expensive than in other major cities like Plovdiv, Varna and Burgas. The main differential are rent expenses. The availability of remote work in the sourcing sector increases the appeal of those cities with lower cost of living to both employees and investors.

4.5 Electricity prices below the EU average

In the second half of 2021 and the first semester of 2022 electricity prices through Europe, including for industrial consumers, became a hot topic. Factors affecting the price increase were the global energy crisis and the soaring inflation. Electricity for industrial consumers in H1 2022 was on average by 38% more expensive than in the corresponding period of 2021. While still below the EU-27 average of EUR 0.22 per kWh, Bulgaria’s industrial electricity price of EUR 0.21 per kWh, including all taxes and levies, is no longer among the 10 lowest in Europe. At regional level, electricity for industrial consumers in Bulgaria was the second most expensive in the first half of 2022. It was cheaper only compared to that in Romania and over two times more costly than in Bosnia and Herzegovina, Kosovo and Moldova.

Meanwhile, according to Eurostat electricity prices (including taxes) for household consumers in the first half of Y2022 in Bulgaria were 0.1093 euro/kWh which was the third lowest price in the EU.

4.6 Affordable cost of Office space

high-class-offices-in-Bulgaria-at lowest price-in-SEE

Bulgaria’s office property market is highly concentrated in the capital. In 2022 the office-based employment there reached 314,000 people. In Sofia completed office stock almost hit the 2.5-million-sq-m mark in Q3 2022. The strongest office construction activity is concentrated in the already most popular areas in Sofia: the Hladilnika area and Tsarigradsko Shose Blvd. These two districts are home to more than half of the office projects under construction in the capital.

Office spaces in Sofia are highly competitive with the other SEE capitals

In comparison with the other SEE capital cities, Sofia offers highly competitive rental rates for prime office premises. With an average price of EUR 15/sq m per month in Q3 2022, the prime office rents in the central business district of Bulgaria’s capital were below rent price levels among its regional competitors. Outside of the central business district of Sofia, Class A office rates varied between EUR 12/sq m in the suburbs and EUR 14/sq m alongside main transport arteries. Class B office space rents were in the range between EUR 8/ sq m and EUR 10/sq m depending on the location.

 Due to climbing construction costs, the upward pressure on headline office rents is expected to persist in the short run. At the same time, vacancy rates reached 16.6% in the third quarter of 2022. It was the highest not only in Bulgaria but also compared to the SEE region and with the major Central European locations. Vacancies were at their highest since 2015, due to the reduced footprint of some occupiers and a number of significant new project developments entering the market in the last year.

Office space market in Plovdiv

Plovdiv, the second largest city in Bulgaria, is also the second most developed office market in the country. Asking rents for Class A office space in Plovdiv stood at EUR 9/sq m in Q1 2022, (as per the latest available data by Colliers). The average monthly asking rent for Class B offices was considerably lower – EUR 5/sq m. Compared to the end of 2021, the average rent levels remained unchanged. Plovdiv is the most dynamically developing market outside Sofia. Within the last year, Plovid’s office space increased by 9,000 sq m to a total of 271,110 sq m.

Office space at the seaside

Varna’s office space in Class A and Class B buildings stood at 262,200 sq m in Q1 2022. Unlike in Plovdiv, the office stock in Varna barely expanded over the last year, mainly in several small buildings. The area of office space under construction stood at 24,500 sq m, or about half of that in Plovdiv. The average asking rents in Varna amounted to EUR 8/sq m for Class A office space. Class B buildings amounted EUR 5/sq m in the first quarter of 2022. The city is characterized by a strong dominance of IT and sourcing occupiers. They form 70% of the office space demand, followed by trading companies with 25%.

Burgas, the second major sourcing location at the seaside, has the least developed office market with the lowest rent levels. Also the city has by far the most limited supply of office space. With its office stock of 66,460 sq m in Q1 2022, Burgas equaled about a quarter of the size of Plovdiv and Varna’s markets. Average asking rents amounted to EUR 7.5/sq m for Class A. For Class B office space rents stood at EUR 5/sq m, comparable to those in Varna. Office buildings in Burgas are heavily concentrated in the central business district and the port area. They are occupied by vendors in the professional services sector with 53% of the total area. IT and sourcing companies form 47% of the office occupation.

Asking rents prices in the SEE


Asking prime rents in Bulgaria’s four major office markets remain the most attractive in regional aspect. Renting of Class A office space in Plovdiv, Varna and Burgas is way cheaper than in the other significant sourcing locations in SEE. Prime rent levels in Sofia were almost on par with those in Ljubljana and slightly lower than in Zagreb and Montenegro’s capital Podgorica. Bucharest and Belgrade formed the higher tier with asking rates ranging between EUR 15/sq m and EUR 19.5/sq m. Meanwhile Class A office rents in Albania’s Tirana went through the roof. they reached EUR 25/sq m due to a mismatch between supply and demand of high quality office stock. In terms of total office space, Bulgaria’s major location Sofia remained second only to Bucharest among all SEE markets. Sofia’s office stock amounted 2.459 mln sq m in Q3 2022.

Since we’ve covered the main points as to why businesses invest in outsourcing to Bulgaria, let’s explore the very sector.

II. Bulgarian Outsourcing sector


Sourcing sector in Bulgaria is rapidly developing in the recent years. Country is gradually evolving from a popular cost-effective nearshoring destination, to a well-recognizable European digital hub. Country has become a competitor of Central European and Western European nations on the global tech scene. That is due to the more complex activities performed in Bulgaria. Operations of Bulgarian tech companies have moved higher up the value chain from support and services to product creation, innovation, research, and development.

 BPO dominates the industry, followed by ITO. There is a balance between local and foreign investors in these two segments. International investors are more common in the BPO with 50.4% of all companies versus 47.2% in ITO (as per the repost of AIBEST 2022). This can be attributed to the strong development of small local IT companies, more suitable for independent entrepreneurs rather than BPO centers.

Also there’s a growing presence of the R&D centers in Bulgaria. All companies in the R&D segment have foreign ownership. It is largely due to the nature of the companies’ core activities as part of multinational groups. The increasing share of R&D in Bulgaria is a good indication for the development of the technological sector in the country. It further increases the complexity and quality of Bulgaria’s industry services.

1. Bulgarian outsourcing sector in numbers


Being one of the major industries in Bulgaria, outsourcing adds $4.2 billion to national’s GDP in 2021. Sector continues to grow considerably faster than the national economy. Operating revenue in the industry reaches an almost double growth of 22.4% compared to 12.7% in 2020 (data from AIBEST report 2022). The rapid growth has attracted many foreign investors to the country, further boosting Bulgaria’s GDP.

There’re over 89 000 people employed in Bulgarian outsourcing sector (as of 2021). Employment in the sector is projected to reach 120,000 by 2025. BPO is the biggest employer at the segment level (61% of the total FTE number in 2021). ITO comes second with 28% share, followed by R&D with 11% (AIBEST report 2022)

Bulgarian outsourcing vendors ensure security and compliance to their foreign clients in terms of EU legal regulations, especially GDPR.

As per the of report by the Bulgarian Outsourcing Association – AIBEST the Bulgarian outsourcing industry is projected to double its share in national GDP by Y2025.

2. Dominance of foreign investors & parent companies

Foreign parent companies from 46 different countries own more than half of the sourcing vendors included in the 2022 analysis of AIBEST. Investors from the UK remain the most numerous in Bulgaria’s sourcing. 8% of all companies in the sector have a British majority owner.

Four countries – the UK, the USA, Germany and the Netherlands, are home to more than half of the foreign investors in Bulgaria’s sourcing sector. The bulk of local entities with majority owners from the UK and the USA operate in ITO. Investors from the Netherlands and Germany are distributed more uniformly between the two major segments.

According to AIBEST report 2022 Germany also clearly dominated the ownership structure of the R&D segment in 2021, accounting for more than a third of the companies in it. Other significant foreign investors in Bulgaria’s sourcing sector include Switzerland and Belgium – with shareholders from both countries more active in the ITO segment. Israel and Cyprus are concentrated on the BPO segment. France and Austria are the other two countries with 10 or more majority owners of Bulgarian sourcing vendors.

3. Major international companies outsourcing to Bulgaria


The presence of international investors and enterprises on Bulgarian soil definitely shapes the speed of development and the outlook of country’s outsourcing sector. It’s only natural to mention some of the most significant players:

Hewlett Packard, popularly known as HP

HP is one of the largest IT companies in the world. For over 30 years the company is present on the Bulgarian market. HP operates in three core business areas: enterprise business, personal systems group, and imaging and printing group. Hewlett Packard works with the public and private sector industries and employs over 3500 professionals in Bulgaria.


The company established its Europe Finance Center in Sofia, Bulgaria, during 2013. It is an innovative center that provides financial services to multinational companies. The company utilizes finance skills, business knowledge, and innovative tools to manage the financial processes for all IBM units. IBM Bulgaria currently has more than 2000 employees in this location.


In 2007 VMware was established in Bulgaria. This is the largest site for Research and Development (R&D) for VMware In EMEA (Europe, the Middle East, and Africa). During the recent years, it transformed from a pure R&D site to a multifunctional hub. As such it offers products, professional services, and business operations teams. This center employs over 1455 professionals in Bulgaria (AIBEST report 2022).


Did you know that Bulgaria started producing Coca-Cola in 1965, making it the first country in the ex-socialist block to bottle the product? Also, for the first time, the Coca Cola trademark was translated using Cyrillic script and featured in various promotional campaigns.

In 1992 The Coca‑Cola Company opened an office in Bulgaria. The Coca-Cola Hellenic Bottling Company is one of the largest names in the non-alcoholic beverages industry in Bulgaria. This entity has its shared services center in Bulgaria. It offers financial and IT services and human resources to other European countries where the bottler operates. Coca-Cola Enterprises – another Bulgarian entity – opened a center that provides financial services to all Coca-Cola entities in Europe. Together, these entities employ about 3000 employees in Bulgaria.

III. Bulgaria – international recognition as popular outsourcing destination

The favorable business and outsourcing conditions in the country have earned Bulgaria a well-deserved recognition by various competent institutions in the field. Some of the honors Bulgaria has earned as outsourcing destination over the years are:

  • Most attractive location for outsourcing in Europe in 2014 by GSLI.
  • Offshoring Destination of The Year in 2015 by UK’s National Outsourcing Association
  • 3rd most attractive outsourcing destination in BPO & Shared service location index of Cushman & Wakefield (2015)
  • “Outsourcing destination of the year” 2016 by the Global Sourcing Association.

High positions among various Global index rankings

In 2021’s Kearney Global service location Index Bulgaria maintains a stable position among the top 25 business locations. In 2021 Bulgaria takes 17th position.

(About the GSLI: The index evaluates 60 countries worldwide, ranking them by 47 different metrics. Among the main indicators are financial attractiveness, people skills and availability, digital resonance.)

The Global Innovation index 2022 ranked Bulgaria on 35th position out of 132 featured economies. Bulgaria performs best in creative outputs, followed by knowledge and technology outputs, and infrastructure.

(About the GII: it consists of roughly 80 indicators, grouped into innovation inputs and outputs. Global Innovation Index aims to capture the multi-dimensional facets of innovation as well as ranking the world economies by them.)

 The 2022 GBCI (Global Business Complexity Index) ranked Bulgaria on 50th position. That is only 17 positions before the top 10 world’s least complex jurisdictions. The 2022 GBCI indicators valued Bulgaria as country with much less business complexity. In this regard Bulgaria stands ahead of countries like France, Poland, Germany, Russia, Spain, Portugal, Hungary, Croatia, Romania, Greece, Turkey, China, India, Philippines, Brazil, etc.

(About the GBCI – it provides an authoritative overview of the complexity of establishing and operating businesses around the world. The GBCI measures 77 jurisdictions worldwide, forming 32% of the total country count. It captures the world’s largest economies and investment hubs, representing 71% of world’s population, 92% of world GDP & 95% of the net FDI inflow.)

Last thoughts

Bulgaria is an attractive and fast-growing outsourcing market due to location, expertise and affordability. Its tech and other outsourcing sectors help entrepreneurs and businesses source high-quality services at a fraction of what they cost in western countries. It is always a good practice for a foreign enterprises entering the Bulgarian market to use the help of local experienced outsourcing partner that will look after their best interest on multiple levels. As such partner we, ACS Bulgaria, know how to help you establish, run or transfer your business operations as smooth as possible and in compliance to the Bulgarian legislation. So if you’re planning to start outsourcing to Bulgaria then let’s get it done together.