IT and software development outsourcing in Poland – FAQs

DESTINATION Poland – costs, culture, taxes, travel and everything else you might need or want to know if considering outsourcing software development and IT functions to Europe’s most popular nearshore destination

IT OutsourcingUPDATED ON November 25, 2021

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As an IT outsourcing services and software development company based in Munich, Germany, K&C provides tailored software development teams to customers mainly based in the D-A-CH region and Western Europe. Understandably, potential clients often have a lot of questions about why they should work with software developers and other IT specialists based in our offices across Eastern Europe, including Krakow, Poland.

There are also often questions around the logistics of working with remote, nearshore software development teams. How easy is it for them to occasionally visit us onsite or for us to travel to the team? Is the level of English of Polish IT specialists generally high or often problematic? Can we recruit developers more cheaply and quickly than on our domestic market and are they as good as local alternatives?

For others considering a deeper commitment to Poland and potentially setting up a local business unit, there are a lot of questions around the country’s tax regime, digital infrastructure and political climate.

In this blog we’ll adopt a FAQs style to address all of the questions we regularly encounter from clients and potential clients considering IT outsourcing in Poland or setting up a technical hub in the country. And we’ve flung in some fun trivia as a bonus so you can impress your hosts when coming to Poland for yourself or chatting remotely.

And if you have any additional questions to those covered here, please drop us a line to let us know what you’d like to be added or ask us directly.

Poland – Geography and population

According to the latest publications of the Polish Central Statistical Office, Poland’s population is about 38.16 million people. The most populous cities in Poland are Warsaw (1.7m), Lodz (0.77m), Krakow (0.76m), Wroclaw (0.63m) and Poznan (0.57m). Poland has a land area of about 312.7 km² (120.7 sq mi).

As well as covering relatively large area for a European nation, Poland is also very centrally located. Connections with other countries such as Lithuania, Russia, Belarus and Ukraine in Eastern Europe, as well as connections with Slovakia, the Czech Republic, Austria and Germany in Central/Western Europe make Poland a convenient hub for many European businesses.

Poland’s national language is exclusively Polish and it is the country’s dominant language. However, Polish IT professionals and younger Poles in particular have a good command of English and communication problems are rarely an obstacle when it comes to recruitment. Due to the historical proximity to Germany and Russia, it is also not unusual for Poles to have a basic understanding of German or Russian and some can speak these languages to a professional level.

In the Krakow branch of K&C, English is the official language of the company.

Business to and from Poland

Since the onset of the Covid-19 pandemic that developed last year, the trend towards remote working accelerated greatly. This has meant that many teams have only been able to meet online, regardless of their location.

Under normal circumstances, it often makes sense for development team members to meet on-site periodically, but the last few months have shown us that it can also work well without that luxury, at least for a while. Nevertheless, physical meetings are possible again, and the Polish borders are very easy to cross from EU countries. In addition, Poland’s very convenient location means compatibility with other European time zones, a direct connection to Germany and several airports throughout the country make travelling by train, car or plane quite versatile.

How long does it take to travel to Poland from major European cities?

Depending on the location, travel options and times can vary, but connections to the IT hotspots of Krakow and Warsaw are easily accessible from major European cities. Here are some direct flight connections with travel times:

Amsterdam – Krakow ~ 2h

Frankfurt – Warsaw ~ 1h 45min

Munich – Krakow ~ 1h 20min

Berlin – Warsaw ~ 1h 20min

London – Krakow ~ 2h 30min

Source: https://www.skyscanner.de/

How much does it cost to travel to Poland from the main European cities?

Although nearby cities such as Poznan can be easily reached from Berlin by car or train in about three hours, flying is still the more efficient and preferred method for many. Flight costs vary depending on the departure and destination cities, as well as the year and time of day. For a return ticket booked 2 to 4 weeks in advance, you can expect to pay between €100 and €350.

What documents do I need to enter Poland as an EU, EEA or GB national?

Poland has been a member of the European Union since 1 May 2004 and is therefore also a member of the EEA. This means that citizens of EEA countries such as Norway or Iceland, but also all citizens of EU member states, can enter Poland without a visa. EU citizens as well as citizens of Switzerland and Liechtenstein can enter Poland without a passport, only with an identity card, and stay in the country for at least 3 months.

Since the UK finally left the EU at the end of the transition period in 2020, some things have changed for British nationals. However, this does not include stricter entry requirements for Poland or other Schengen area states. British citizens can still enter Poland without a visa, but only for a maximum of 90 days within a 180-day period.

Can Polish IT professionals enter other EU countries as well as Great Britain or EFTA countries?

Poland has been a member state of the European Union since 1 May 2004 and is therefore also a member of the EEA. Just as other EU and EFTA nationals can enter Poland, Polish nationals can also enter EU and EFTA countries without a visa. This also applies, to a slightly lesser extent, to the United Kingdom, where Polish nationals can enjoy a visa-free stay of up to 90 days for a period of 180 days.

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Digital Economy Poland – FAQs

Poland has experienced rapid growth in economic power after the final end of the planned economy in 1990. Between 1990 and 2015, gross domestic product (GDP) per capita increased by 7.3 times, which is the highest GDP per capita growth rate of all OECD and European countries during this period.

Poland’s education system is also well regarded which bodes well for future generations. This is confirmed by the latest PISA studies in which Poland is above the OECD average in all areas and thus on a par with Germany, Finland and Ireland. All this has an impact on the prospects of the digital economy. Poland, which accounts for 25% of the combined CEE economy, is probably the most successful country in the region (Central and East Europe).

Source: DealRoom

As the chart shows, the CEE region in general has shown promising developments in the IT sector. However, it is worth highlighting that Poland has produced the most exits and unicorn companies worth over USD 1 billion since 2000, ahead of Estonia and Ukraine (https://dealroom.co/uploaded/2021/10/Dealroom-CEE-report-2021.pdf page 11). In addition, there are other future unicorn companies such as “Brainly” or “Uncapped” that have already reached the $250 million mark.

Are there many IT specialists in Poland?

Poland not only has a rapidly growing IT market, it also accounts for 8% of Poland’s total GDP. Accordingly, it is not surprising that there is an affinity for IT among many Poles. Poland is in first place with about 400,000 to 430,000 developers, ahead of Ukraine with 220,000, making it the country with the most developers in Central and Eastern Europe (CEE).

IT and technology have a long tradition in Poland; accordingly, every major city in Poland has a technical university, especially the IT hotspots Krakow (Cracow University of Technology, AGH University of Science and Technology) and Warsaw (Warsaw University of Technology) produce many IT graduates. Computer science is the most popular field of study in Poland, with around 70,000 students per year.

Source: Statista

Are Polish IT professionals and software developers typically high quality?

Poland has good technical universities, many software developers and successful IT companies. But can Poland also convince in terms of quality? The answer is definitely yes, Polish developers often achieve top rankings in various programming and algorithm competitions such as the “Google Code Jam” or the IBM competition “Linux Scholar Challenge”. This is confirmed by the rankings of SkillValue, HackerRank and the TopCoder ranking, in which Poland is always to be found in the top 5 or top 3.

How fast is the internet in Poland?

Digital infrastructure is an important part of the digital economy, which is largely dependent on it. Poland has a solid digital infrastructure in 2020, according to the latest evaluations, and is in line with European averages with a median of around 25.8 Mbps download and 10.1 Mbps upload. Internet speeds vary across regions, but Poland is relatively well-positioned in terms of mobile internet speeds, with 4G mobile networks available in most of the country, even in rural areas.

However, the median and average internet speed of the country is not important for most companies. Practically all IT companies and most IT specialists are located in larger cities such as Warsaw, Lodz, Krakow or Wroclaw. In addition to new5G mobile networks, the general internet connection is much better in these urban locations.

Doing business in Poland: Salaries, overheads and taxes – FAQ

Poland is a country on the rise economically, and of course there are reasons for that. In addition to a good standard of education, the Polish government has also set a course that makes it easy for companies to do business locally.

A very important point for companies is the tax regime. Since 01.01.2019, Poland has changed a lot in this respect to the advantage of small and medium-sized enterprises, which makes it an even more attractive location for start-ups. With a CIT (Company Income Tax) of 9% for small companies, Poland is very attractive, if one takes into account the trend in the cost of living, the high standard of education in the country and the attractive labour market with many skilled workers.

Large companies also see Poland as an attractive IT location. Large tech giants from all over the world, including companies such as Intel, IBM, Microsoft, HP, Google and Uber, have invested in Poland and established a strong presence there. IBM alone has opened six new facilities in Poland since 2000, including the “IBM Computing Center” in Warsaw, the “IBM Software Laboratory in Central Eastern Europe” in Krakow and most recently the “IBM Client Innovation Center” in Katowice.

How do IT specialist salaries in Poland compare to Western Europe and other nearshore alternatives?

We have already discussed some good reasons why Poland is a good IT outsourcing location. One of the main reasons why companies outsource their IT projects abroad will be cost savings. Poland has produced many successful companies, the country is full of highly skilled developers, and international companies benefit from their expertise.

Yet despite all this, Polish developers are not even among the top 10 best-paid in the world, according to the latest HackerRank Report 2020. Driven by the high demand for software developers and other IT specialists combined with the current trend towards remote working, salaries are constantly adjusting towards the global average. Although IT salaries continue to grow, they are low compared to Western European markets such as Germany or the UK.

Source: Hackernoon

The times when IT specialists from Central and Eastern Europe received salaries almost three times lower than those in Western Europe at a comparable level of work are long gone.

Nevertheless, savings of 20%-40% in salary costs compared to Western European countries are quite possible. Due to the high IT salaries in this country, this difference can have a huge impact on the budget of a company project and even on smaller development projects. The quality level of Polish specialists can also mean a headline 20%-40% saving on salary is actually more in the context of output value.

How easy or difficult is it to recruit software developers and other IT professionals in Poland?

The recruitment process and time to final hire can be incredibly important for certain software development projects. Glassdoor’s 2015 recruitment study stated that it takes about 35 days on average to hire a software developer. Similar estimates are also published by other organisations and may have been correct in 2015.

Things are different in 2021 and 35 days is now too optimistic to expect for an average hiring cycle. IT specialists are in short supply, and it is also not uncommon for notice periods of several weeks to two to three months to be observed.

Companies that need to implement IT projects on time should therefore start recruiting suitable IT specialists early. IT outsourcing companies can usually reduce the timeframe of recruitment processes by quite a bit. If they have suitable developers becoming available from other projects, positions can sometimes be filled within one or two weeks. Even if recruiting for a new software development team, the experience outsourcers have can make the process more time efficient.

Income Tax in Poland: Gross to Net Calculation for IT Professionals

People who are employed in Poland and therefore pay taxes in Poland can generally earn a certain amount tax-free. Income above this threshold and below PLN 85,528 (€18,645) is taxed at 17%. Income above PLN 85,528 (€18,645) is taxed at 32%. There are also social security contributions though individual tax concessions may apply and vary according to personal circumstances.

The following is an example calculation with a salary of PLN 275,000 (€59,950). Under current tax law as well as the latest adjustments in 2019, the net income of a gross salary of PLN 275,000, is still over 65%, approximately PLN 186,700 (€40,700). Compared to a person with the same gross income in Ukraine (48,300€), this is about 7,500€ less, but compared to a person with the same gross income in Germany (35,700€ with church tax), it is about 5,000€ more.

How much social security contribution do Polish companies have to pay per employee?

Companies that want to hire software developers or other IT professionals in Poland have to pay additional social security contributions on top of the general employee income. However, these are lower than in Germany or Belgium, for example.

Source: PWC

The Polish company’s social security contributions generally total 34.19% of gross income per employee. However, this amount is partially capped at an annual income of PLN 157,770 (34,400€), and pension and disability insurance contributions do not increase further after this income is exceeded, so that they can amount to a maximum of PLN 43,418.30. With an annual income of PLN 275,000 (59,950€), the social security contributions payable by the company are about PLN 61,760 (13,460€).

In Germany, the lowest possible tax burden for the company (employee is single, has no children and pays statutory health and other compulsory insurance) would be around 14,500€ on the same salary.

How much is corporation tax in Poland?

Poland enforced new tax laws in 2019, which have benefitted low-tax-paying companies. Companies with an annual turnover of up to 2 million euros now pay only 9% corporation tax. The standard corporate income tax rate, on the other hand, is 19%, which puts it close to the European average.

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Trivia – A lucky dip of funfacts about Poland

Now we’ve covered the most common questions about IT outsourcing in Poland here are some bonus interesting facts about Poland. You can use them to impress your work colleagues during a coffee break, over an after-work beer or, of course, over a glass of vodka. 😊

Poland has the highest animal diversity in Europe

In Poland, you can still find free ranging brown bears, wolves, lynx, elk and wild boar. There are also a wide variety of bird species and the most storks in Europe. Many migratory birds breed in Poland and come to Western Europe in the summer. To protect its natural heritage, Poland has 23 national parks, which account for just under 1% of the country’s total area.

Poland has the largest statue of Christ in the world

In Poland, about 87% of the inhabitants are baptised Roman Catholics. Poland has long been considered a very Christian-affiliated country. For example, Pope John Paul II, born in Wadowice, is the first non-Italian pope since 1523. Some even think Poland is the country with the highest consumption of holy water in Europe 😉

Little Polish Crash Course

Good day! – Dzień dobry!
Goodbye! – Do widzenia!
Hello! – Cześć!
Thank you (nice) – Dziękuję (bardzo)
Please – Proszę
Excuse me – Przepraszam
Yes – Tak
No – Never
I don’t know. – Never howm.
What is your name? – Jak się nazywasz? / Jak masz na imię?
My name is .. – Nazywam się .. / Mam na imię …

Poland has been publishing its own licensed comics since the 1940s

The first comics were printed in Polish daily newspapers even before the Second World War. Inspired by the American comics of the 1930s and 1940s, Poland began to publish comics on a large scale in the form of booklets or paperbacks around the end of the 1940s. In the years before the end of the Soviet Union, especially self-produced, idealistic, politically engaged titles and series were part of the comic landscape in Poland.

There are 17 UNESCO World Heritage Sites in Poland.

In 2021, the Primeval Beech Forests and Ancient Beech Forests in the Bieszczady National Park became the 17th UNESCO World Heritage Site in Poland. Probably the best known UNESCO World Heritage Sites in Poland are Auschwitz-Birkenau, the Old Town of Warsaw and the first UNESCO World Heritage Site, the historic centre of Krakow.

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