Bulgarian cities suitable for outsourcing activities

Data sources: NSI, AIBEST report 2022, fDi intelligence

Sourcing sector in Bulgaria is rapidly developing in the recent years, becoming one of the major industries in the country. Bulgaria is gradually evolving from a popular cost-effective nearshoring destination, to a well-recognizable European digital hub. Country attracts traditionally western businesses, but also gains more interest from major organizations with Asian origin.

?Typically the biggest share of companies, talent pool and available education related to the sourcing sector is concentrated in the capital, Sofia. However, there are other major Bulgarian cities that develop their business environment to meet better the needs around the outsourcing services. These towns compete to offer attractive business conditions in terms of quality services, cost effectiveness and capable workforce on both national and Balkan regional level.

If you’re planning to start or expand your outsourcing operations on Bulgarian territory, here’s a summary of the top locations you should take into account.

Number 1 Bulgarian city for outsourcing: SOFIA

Demographics, talent pool & education environment of Sofia District

The population of Sofia city amounts 1,287,000 people. The employment rate of the population in the age range 15-64 years in Sofia city was?77.9% in 2022. Sofia holds the biggest share of educated people with every second person living in Sofia?being a high school graduate. Owning the highest concentration of capable workforce, it is no surprise that Sofia is the most popular Bulgarian city for outsourcing companies and activities.

In regard to the educational environment, the capital holds the biggest number of pupils, university students and graduates in the country. 93,590 students were enrolled in universities in Sofia during the academic year 2021/22. Over the last academic year a total of 17,909 students graduated. The number of pupils in secondary schools amounts at 32,355. There are 39 professional high schools in Sofia district. Also, more than 30 private software academies operate in the Sofia. The capital has 13 universities that offer majors relevant to sourcing.

Business environment in Sofia District at a glance

Sofia is the largest district and municipal economy in Bulgaria. The capital contributes 42.8% of the national GDP in 2020 as per the most recent data (AIBEST report 2022, page 18). Sofia is the major transport center of Bulgaria and an international hub of regional importance. The capital is easily reachable via Sofia Airport and three Pan-European transport corridors.

The first science and Technology Park in Bulgaria, Sofia Tech Park, is home to more than 35 high-tech companies and start-ups. Also there’s one of the eight supercomputers of the EU and 11 laboratories with high-tech equipment that can be used by companies.

The average gross annual salary in Sofia in 2022 amounted to?BGN 28,681?(EUR 14,637). It is the highest in the country and 50% higher than that in the second district in the ranking, (NSI data 2022).?In the 2023 fDi Intelligence ranking, Sofia takes 7th?position among the top 10 major European cities of the Future for FDI strategy, and 3th?position in the cost effectiveness ranking of Major European cities in 2023.

The capital is the country’s “brain business” center according to the Brain Business jobs Index. The 2022 report of the index?ranks Sofia in 22nd place, amongst 267 European regions,?in the concentration of brain business jobs. The index measures the share of the working-age population across Europe employed in highly knowledge-intensive enterprises in 31 countries and 284 regions. Compared to the rest of Europe, Bulgaria has strengths in design & other creative professions, as well as in IT services. Telecommunications is also a relative strength (data source: Brain Business Jobs Index 2022, page53).

Office space rents in Sofia

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 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.

Tech ecosystem in Sofia District

According to?AIBEST’s 2022 report?there are 666 sourcing companies with operations in Sofia. Some of the largest sourcing companies based in the capital are Amusenet Interactive EOOD, VMWare Bulgaria EOOD, Enterprise Services Bulgaria EOOD, Paysafe Bulgaria EOOD, Callpoint New Europe EAD, SiteGround Hosting EOOD, SAP Labs Bulgaria EOOD, IBM Bulgaria EOOD, Sutherland Global Services Bulgaria EOOD, Information Services AD.

Top Bulgarian cities for outsourcing – Number 2: PLOVDIV

Demographics, talent pool & education environment of Plovdiv District

Plovdiv is the second biggest city in Bulgaria in terms of size, population and economy. The population of Plovdiv region amounted?497,753 people in 2021. As per the data from NSI by the end of Y2021 the very city of Plovdiv had 343 070 citizens. The educational environment in the district consists of 30 vocational high schools and gymnasiums, with 16 of them in the very city. More than 9,200 students are in STEM fields. During the academic year 2021/2022, over 20?932 students were enrolled in universities on the territory of Plovdiv. University graduates in Plovdiv stood at 4,812 people last year. There are 7 universities with majors relevant to sourcing in the region. The number of pupils in secondary schools in Plovdiv district exceeds 11,100.

Plovdiv is the only Bulgarian city member of the UNESCO Global Network of Learning Cities which promotes lifelong learning and non-formal basic education.

Business snapshot of Plovdiv District

The 2022 AIBEST report?(page 20) shows that as of Y2020 Plovdiv was the second largest district economy in the country, contributing 8.1% of the national GDP in Y2020. Also, after Sofia, this is the second most popular Bulgarian city for outsourcing activities. The employment rate of the population in the age range of 15-64 years in Plovdiv stood at?67.3% in 2022.?In regard to cost-effectiveness?the 2023 fDi Intelligence’s ranking?of European cities and regions of the future put twice Plovdiv in top 10 lists. As a city, Plovdiv ranks 7th in the 2023 ranking of cost-effective small European cities of the future and the Plovdiv district is 4 th as a cost effective small European region.

Plovdiv District is a hotspot for freelancers and a rapidly growing IT & BPO destination. The number of employees is 8,000 (data source: AIBEST report 2022). The projection of the next 3-5 years is that another 5,000 new employees will be added to the current number.

Plovdiv is also the center of a well-developed cluster of automotive suppliers and machine manufacturers. Trakia Industrial Zone in Plovdiv is home to over 200 local and foreign companies.

In regard to remuneration of the workforce in the region, the average annual gross salary in Plovdiv District in 2022 was?BGN 17,948?(EUR 9,160).

The annual fixed capital expenditures by IT and BPO companies in Plovdiv is estimated at about 45 million euro (data source: AIBEST Report 2022).

Office space rents in Plovdiv

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.

Tech ecosystem of Plovdiv District

AIBEST report 2022?(page 20) states that there are 111 sourcing companies with operations in Plovdiv District. Among the largest sourcing companies based in Plovdiv are SBTech (Global) Limited – Bulgaria Branch, Bulanet EOOD, Reward Gateway (UK) Limited – Bulgaria Branch, Novarto OOD, Programista EAD. Also, with secondary offices in Plovdiv are present some major sourcing companies like Callpoint New Europe EAD, SiteGround Hosting EOOD, Sutherland Global Services Bulgaria EOOD, Information Services AD, Modis Bulgaria EOOD.

Popular Bulgarian cities for outsourcing – Number 3: VARNA

Demographics, talent pool & education environment of Varna District

Varna is the third biggest city in Bulgaria with?population of 332,686 citizens. According to NSI by the end of 2021 there were?390,480 people in Varna district?. In regard to the educational environment Varna district has 10 professionаl and 15 vocational high schools. There are 5 universities in Varna that teach majors relevant to sourcing. Programming languages taught in educational institutions include Java, JavaScript, Python, C++. During the academic 2021/2022 year 23,608 students were enrolled in universities in Varna. A total of 4,587 people graduated in Varna in the last academic year.?The number of pupils in secondary schools in the district stood at 8,766 in the 2021/22 school year.

Business snapshot of Varna District

In 2022 the employment rate among the working-age population (15-64 years) in Varna District stood at?77.2%. (data source: NSI). Varna contributed 6.1% of Bulgaria’s GDP in 2020. (data source:?AIBEST report, page 21). The district’s major strengths are the favorably structured demographics, including a positive migration balance, and the very good level of infrastructure.

Varna city is well-connected to the national road network via two highways and is the terminus of two major railway lines. The city is also easily accessible from Europe and Asia via Varna Airport and Port Varna.

The Innovation Neighborhood and a new STEM educational campus are in process of development as part of Varna’s vision as City of Knowledge. Varna Industrial Zone, in partnership with Aksakovo Municipality, is planned to become one of the leading industrial zones in Bulgaria (data source: AIBEST 2022).

In regard to remuneration, the average gross annual salary in Varna District in 2022 was?BGN 17,342?(EUR 8,851).?In fDi Intelligence’s 2023 ranking?of cost-effective small European cities of the future, Varna takes the top 6th position. As a region in the same category, Varna stands on 5th position.

Office space rents in Varna

Varna’s office space in Class A and Class B buildings stood at 262,200 sq m in Q1 Y2022. 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 Y2022. As a popular Bulgarian city for outsourcing activities Varna 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%.

Tech ecosystem in Varna District

There are 87 sourcing companies with operations in Varna District. Some of the largest ones based in Varna are myPOS AD, IGaming.com EOOD, Regiocom SE – Bulgaria Branch, Enterpryze Consulting EOOD, Fantastic Services OOD. Big sourcing companies with secondary offices in Varna are Enterprise Services Bulgaria EOOD, Paysafe Bulgaria EOOD, Sutherland Global Services Bulgaria EOOD, Information Services AD, Cargill Bulgaria EOOD. (data source:?AIBEST 2022 Report, page 21).

Popular Bulgarian cities for outsourcing – Number 4: BURGAS

Demographics, talent pool & education environment of Burgas District

Burgas is another major seaside town.?The very city of Burgas has 198 035 citizens?which makes it the fourth biggest city in Bulgaria. There were 311,009 people in the District of Burgas in 2021 (data from NSI).

In terms of educational environment the region has two universities that offer masters relevant to sourcing, 15 vocational high schools and 5 professional high schools. Since 2018, a computer programming and innovation vocational high school operates in the city of Burgas. It is part of the CISCO Networking Academy and the Microsoft Imagine Academy. Programming languages taught in educational institutions in Burgas include C#, Java, JavaScript, Python, C++.

During the academic year 2021/2022, there were 6,985 students enrolled in higher education institutions in the district. A total of 1,307 people graduated. The number of pupils in secondary schools in the district stood at 8,175 in the 2021/22 school year.

As the AIBEST report shows as many as 44% of the citizens aged 19-34 years old in Burgas speak at least two foreign languages. 20% of the population speak three foreign languages.

Business snapshot of Burgas District

The most recent data shows that the district of Burgas contributed 3.8% to the national GDP in 2020 (AIBEST Report 2022). Burgas municipality has four industry-specific zones to foster local economy – Industrial and Logistic Park phase 1, Industrial Zone Balgarovo, Industrial Park Ravnetz, Industrial and Logistic Park phase 2. The city is well-connected and easily reachable via Burgas Airport, Port of Burgas and Railway Station Burgas.

Employment rate for the population between 15 and 64 years in Burgas district stood at?67.5% in 2022?(NSI). The average gross annual salary in the district of Burgas in 2022 amounted to?BGN 16,523?(EUR 8,433).

Burgas is among the Bulgarian cities that have integrated a smart city platform. The municipality of Burgas has won the Municipality of the Year award five times. The city has seven business centers and a business incubator. In the 2023 ranking of small European cities of the future selected by cost-effectiveness,?the fDi intelligence ranked?Burgas on 3rd?position. On regional level within the same category, Burgas district won 6th position in 2023.

Office space rents in Burgas

Average asking rents in Burgas amounted to EUR 7.5/sq m for Class A offices. 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.

The Tech ecosystem in Burgas District

As per the?AIBEST 2022 report,(page 22) , the number of sourcing companies with operations in Burgas District amounts 36 entities. Some of the largest sourcing companies based in Burgas are IP Telecom Bulgaria OOD, Todos 2004 EOOD, Stivasoft OOD, IBA Bulgaria EOOD, Plutus BG EOOD. Also, Sutherland Global Services Bulgaria EOOD, Information Services AD, CNSys AD, Stemo EOOD, Scale Focus AD sourcing companies have their secondary offices in Burgas.

Top Bulgarian cities for outsourcing – Number 5: RUSE

Demographics, talent pool & education environment of Ruse District

Ruse is the fifth biggest city in Bulgaria with 133,813 citizens. It is situated on the south bank of the Danube river, on the border with Romania. The population in the district of Ruse amounted to?160,791 people at the end of 2021.

There are 13 vocational secondary schools, as well as 2 universities teaching masters relevant to sourcing in the district of Ruse. In the 2021/22 academic year 5,732 students enrolled in the district. In the same academic year, 1,290 people graduated from university. During the same school year, the number of students in high schools was 3,304.

Business snapshot of Ruse?District

The city of Ruse has three business zones – West Industrial Zone, East Industrial Zone and Business Park Ruse. Ruse’s proximity to Romania and especially its capital Bucharest makes it an attractive location for sourcing companies that seek international partnerships and expansion.

In 2021, Ruse University initiated the Danube Digital Hub which promotes digital transformation processes and provides access to technological expertise for various initiatives and product innovations.

Ruse University also features a Centre of Excellence – a laboratory research complex that supports innovative local businesses.

The employment rate among the working-age population 15-64 years old in the district stood at?72.3% in 2022. The average annual gross salary in Ruse District in 2022 amounted?BGN 16,797?(EUR 8,572).?In the category of cost effectiveness, Ruse stands at the top of the charts both as a region and as a city?in the 2023 fDi intelligence rankings?of small European regions and cities of the future.

The Tech ecosystem in Ruse District

There are 20 sourcing companies with operations in Ruse District. The AIBEST report states that the largest sourcing companies based in Ruse are SigmaPlan EOOD, Forschung – Direkt OOD, BAB Consult OOD. With secondary offices in Ruse are present also large sourcing companies like Information Services AD, CNSys AD, Stemo EOOD, Musala Soft AD, MentorMate Bulgaria EOOD.

Top Bulgarian cities for outsourcing – Number 6: STARA ZAGORA

Demographics, talent pool & education environment of Stara Zagora District?

Stara Zagora is the 6th?biggest city in Bulgaria with a population of 124,599 citizens (NSI data). In 2021 a total of 214,540 people lived in Stara Zagora District. In regard to the educational environment, there are 28 secondary schools in the region and one university teaching master relevant to sourcing. Some 14 secondary schools in the municipality of Stara Zagora offer education focused on technical, IT, mathematical and foreign language areas.

In Y2021 in Stara Zagora District were 34 registered professional education centers. In order to increase its competitiveness in the STEM field, Trakia University launched in Y2020 four new majors – Software Engineering, Information Technologies, Computer Systems and Communications and Information Technologies in Economics and Management. The planned annual admission in these majors is expected to exceed 170 students. During the academic year 2021/22 in Stara Zagora district enrolled 5,562 students in higher education institutions, and 1,052 students graduated from university.

Business snapshot?of Stara Zagora District

According to the data from the most?recent AIBEST report?(page 24), Stara Zagora District contributed 4.2% the national GDP in 2020. City has five industrial zones: Industrial zone – West, Industrial zone – East, Industrial zone – South, Golesh district as well as the newly developed zone Zagore.

In order to facilitate the development of the IT sector in the district, the local authorities have launched multiple events and initiatives, including ZagoraDev which had its first edition in November, 2022.

The employment rate for the population aged 15-64 years old in Stara Zagora District stood at?75% in 2022 (NSI). Average annual gross salary in the district as of Y2022 was?BGN 18,630?(EUR 9,508). In terms of FDI strategy,?the 2023 fDi Intelligence’s ranking?of European regions of the future put the district of Stara Zagora on 6th?position out of the top 10 small European regions.

The Tech ecosystem in Stara Zagora District

Stara Zagora is becoming a popular Bulgarian city for outsourcing among more and more national and foreign organizations. There are 15 sourcing companies operating in Stara Zagora District (as per AIBEST report). The largest sourcing companies based in Stara Zagora are ITI Soft OOD, Skynix EOOD, IT Specials EOOD. Secondary offices in Stara Zagora have major sourcing companies like SiteGround Hosting EOOD, Information Services AD, CNSys AD, Stemo EOOD, Regiocom SE – Bulgaria Branch.

7th Bulgarian city to consider for outsourcing: VELIKO TARNOVO

Demographics, talent pool & education environment of Veliko Tarnovo District

By the end of year 2021 Veliko Tarnovo District was home to?157,858 people. The very city of Veliko Tarnovo has 65 793 citizens. The educational environment consists of 16 vocational colleges and gymnasiums in the district, 6 of which are within the municipality. As of end-2021, the number of centers for professional qualification operating in Veliko Tarnovo District stood at 16 and 12 of them were in the city. There are 4 universities that teach majors relevant to sourcing in the district (data source: AIBEST report 2022).

In the 2021/22 academic year, 15,725 students were enrolled in universities in the district. A total of 4,604 students graduated in 2022. This is the third highest number in Bulgaria after Sofia and Plovdiv. The number of students in general education and special secondary schools amounted to 3,462 in the district and 1,824 in the city of Veliko Tarnovo in the 2021/22 school year. During the same year, 769 pupils in the district graduated, of which 440 in the city.

Business snapshot of Veliko Tarnovo District

Veliko Tarnovo District is located in northern Bulgaria and is well connected to the rest of the country via road and railway networks, and to Central Europe and Ukraine via the Danube port of Svishtov. The lack of airports and highways is a major setback for the local economy.

According to the most recent data available by AIBEST 2022 report, the contribution of Veliko Tarnovo district to the national GDP stood at 2.2% in 2020, unchanged from 2019. The GDP per capita in Veliko Tarnovo District was BGN 11,492 in 2020, below the national average of BGN 17,299.

The business environment in the District of Veliko Tarnovo is at average level according to the 2022 edition of the regional profiles by the Institute for Market Economy. Veliko Tarnovo performs well in labour market, education and culture, while infrastructure, economic development, foreign direct investments, local taxes and healthcare are considerably below the national average.

The employment rate in the district (workforce at the age range 15-64 years old) stood at?71.2% in 2022. The average gross annual salary in Veliko Tarnovo in 2022 was?BGN 15,549?(EUR 7,936).

The Tech ecosystem in Veliko Tarnovo District

The largest sourcing companies based in Veliko Tarnovo?are Osceola EOOD, Celtis OOD, VKA Solutions EOOD. Also, largest sourcing companies with secondary offices in the city are Information Services AD, CNSys AD, MentorMate Bulgaria EOOD, Regiocom SE – Bulgaria Branch, A Data Pro OOD (data source:?AIBEST report, page 25).

8th Bulgarian city to consider for outsourcing: BLAGOEVGRAD

Demographics, talent pool & education environment of Blagoevgrad District

As of end of Y2021 the population in?Blagoevgrad District amounted 180,448 people. The very city is home to 67 810 citizens. In regard to the educational environment in the district, there are 27 secondary schools offering education focused on technical, IT, mathematical and business areas relevant to the sourcing sector, with more than 5,500 students enrolled. Blagoevgrad also has 3 universities with majors relevant to sourcing. During the academic year 2021/22 a total of 8,702 students enrolled in the district’s higher education institutions and 2,417 people graduated from university.

In the District of Blagoevgrad there are 19 vocational secondary schools. In the 2021/22 school year, the number of students in high schools in the district was 7,510. The municipality of Blagoevgrad had the country’s second largest share of students in the local population during the 2020/2021 academic year – 12%. Nearly 16%, or 1,380 students, in Blagoevgrad are enrolled in majors directly related to the sourcing sector, such as STEM, economics and language programs. In 2021, Digital Art Workshop was launched in Blagoevgrad, aiming to provide computer modelling and IT education to students aged 9 to 13 years old.

Business snapshot of Blagoevgrad District

Being the fastest link of western Bulgaria and Romania to Greece, Blagoevgrad District has a strategic location. Despite the mountainous nature of the region, which impedes the development of infrastructure, all major centers lie on the main highway and railway axis Sofia – Thessaloniki. Those two are the nearest airports, accessible within two hours. Blagoevgrad District is also connected with North Macedonia.

As per the latest data available in AIBEST report, the District of Blagoevgrad contributed 2.6% to Bulgaria’s GDP in 2020. Employment rate among the population of working age in the district stood at?69.9% in 2022 (NSI). The average annual gross salary in Blagoevgrad district in 2022 was?BGN 13,762?(EUR 7,024).

Blagoevgrad municipality envisages tripling the current number of employees in the IT sector to 1,000 employees by 2025. The city has an ICT Cluster, established in 2016, aiming to facilitate the development of the tech sector in the district.

The Tech ecosystem in Blagoevgrad District

According to?AIBEST data, (page 26), there are 7 sourcing companies with operations in Blagoevgrad District. The largest ones are Top Skills Recruitment OOD, Code Plus EOOD. Biggest sourcing companies with secondary offices in Blagoevgrad are Information Services AD, Stemo EOOD, QaiWare OOD.

Conclusion

Bulgaria is one of the popular outsourcing destinations in Europe. Naturally, the country’s capital represents the biggest economic and workforce center, especially in regard to outsourcing. However, the availability of remote work in the sourcing segment, increases the appeal of other major Bulgarian cities. The practice of international businesses entering smaller Bulgarian cities by opening secondary offices becomes more common. Also, since the Covid pandemic this trend increased with part of the workforce in Sofia choosing to allocate to smaller cities and work from there temporarily and/or permanently.

?One of the greatest advantages of living outside the capital is the lower cost of living, recognized by both employees and investors. Universities and vocational high schools in the province put efforts to provide sourcing related majors in their programs in order to be in line with the economic trends and demands of qualified workforce outside the capital. Large sourcing companies invest in the province and partner up with educational institutions there to prepare better the workforce needed, which further supports the development of the sourcing sector on both regional and national level.

Are you considering specific Bulgarian cities for your outsourcing operations?

Then let’s have a talk. Being your outsourcing partner, we ACS Bulgaria can establish and manage various outsourcing operations, as per the needs of your business. Models we offer are?Agency contracting (staff augmentation),?Managed service, and?Transition & transformation?of processes. Our team has the required knowledge and experience you can rely on.