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COMPUTERWORLD | Articles | Market Analysis
25 Feb
2014
 
 

No Brain Drain in Bulgaria as IT Experts Stay Put

Nick Farrell


Under communism, Bulgaria was the Soviet bloc’s IT hub, with many of the schools geared for programming and maths training. While Bulgaria’s thriving PC manufacturing business died with the fall of the Berlin Wall, many education facilities there are still churning out highly qualified IT professionals. The population is small and focused on only a few towns. In the east there are unspoilt beaches, which used to be the preserve of Russia’s elite and the refuge of Euro-bucket shop holidays. In the west there are rugged mountains and hidden lakes. A decade ago these young Bulgarian developers would be taking their expertise overseas, but now they are staying and taking advantage of the low tax rates, cheap rents, and Bulgarian lifestyle.

Even the relaxing of EU migration rules that will open the doors to visa-less working in Germany, the UK and France aren’t likely to see a rush of Bulgarians away from the Balkans. IT services have been in demand in Europe for the last three years and most of those who wanted to leave will have done so a long time ago. Money holds many of them. Those who stay say that the Bulgarian IT market is full of opportunity and, in real-world terms, financial packages are better than other EU countries like the UK. Income tax in the country is 10% and housing costs are a fraction of those in many other countries. Property, food and drink cost a fraction of the prices in the largest Western European economies.

Kiril Karaatanasov is typical of the experienced developers and their success. He owns a house and a flat, and is about to buy his third property, something unthinkable among his foreign contacts.

"A friend of mine in Silicon Valley can hardly afford to pay the rent for a house smaller than my flat,” Karaatanasov says. “Silicon Valley is better than most of the older EU countries and most of my German friends and French friends move there for money.”

Karaatanasov worked initially with a Bulgarian outsourcing company Sciant, until this was bought by VMware, one of the many foreign companies that set up developer teams within Bulgaria. Others that have done so include Oracle, SAP, Ubisoft, Microsoft and HP.

There are a few differences for many developers and engineers within Bulgaria. While there is always a shortage of developers for roles, companies pay enough to keep their staffing levels stable. Karaatanasov says that in his company staff attrition rates are low, probably because it is such a small market.

“In the US you have companies going under all the time, new players come in and new opportunities arise. However, in Bulgaria you get a job and stick to it for much longer … [annual] staff changes are less than 3% here.”

However, things are starting to change, as investors and IT startups are becoming more active in Bulgaria, making any exodus of staff even more unlikely. Also, Western companies are starting to see that Bulgaria is a good option to supplement their Indian, Chinese and Israeli offices. Office rents are cheap and bases in Sofia give them a good basis to work in the EU.

Generally, salaries start at €1,000 ($1,350) per month for a developer with a little bit of experience, to €3,000-4,000 ($4,000-5,500) for a more senior person. When you have a low tax rate though, you end up taking home more than a German or UK developer. Niche experts, such as those with experience in embedded systems, can get a lot more.

Didi Dimitrova is another one who is staying. She is a project manager for a Dutch outsourcing company Virtual Affairs. Her husband is a developer in the same company. They have a house in the foothills of Sofia’s mountain region which used to be a no-go area for anyone but the Communist Party elite. Dimitrova says that the only people who are leaving Bulgaria are the very young who need to get some life experience. However, a lot more of these are staying now because they can find job security.

If you have money in Bulgaria, and most IT workers do, then you can afford luxuries like healthcare and private schools, which are modern and good.
“It is the public-sector health and school systems which are not good [but] if you have money you do not need them,” Dimitrova adds.

She thinks that, when the labour market frees up, there will be immigration towards Bulgaria rather than the other way around, particularly among the younger and more adventurous IT people.

Steve Keil, CEO of Bulgarian database company MammothDB, says he is getting calls from students who are finishing their IT studies in the UK and want to come home. He just hired a young developer from Iceland and there are others who are keen to have a Bulgarian adventure.

“I certainly can’t see a brain drain happening in January, in fact I can see it happening the other way,” he contends. There is also the simple maths and cost-of-living equations referred to earlier. If an average developer in London gets £46,000, they are going to lose a lot of that to tax and accommodation. They will probably have more money to spend and a much better lifestyle here, Keil says. And he isn’t alone. One call-centre company, Sofica, has been attracting young Germans to Sofia to work for a couple of years just for experience.

Either way, it does not look like anyone is going to be leaving Bulgaria soon.

Nick Farrell is a freelance writer who was born in New Zealand and recently migrated from Bulgaria to Italy. He writes widely on technology, magic and the esoteric. | IDG Connect

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