The demand for high-quality tech professionals is soaring, and traditional hiring methods often fall short. To address this challenge, firms are increasingly turning to offshore teams through Global Capability Centers (GCCs) and Centers of Excellence (COEs). These centers are enhancing their quality of work, gaining the capability to manage entire functions independently, and fostering collaboration and innovation with academic institutions and start-ups.
Among the top locations for these offshore teams, the Central and Eastern Europe (CEE) region is rapidly emerging as a prime destination. Its skilled workforce, robust educational institutions, and strategic geographical positioning make it an ideal hub for technology talent and business ecosystems. As GCCs and COEs continue to evolve and deliver superior results, the Central and Eastern Europe’s Tech Ecosystem stands out as a key player in the global tech landscape.
Poland and Romania: The Powerhouses of CEE
Poland and Romania have positioned themselves as the frontrunners in the CEE region, particularly in Technology and Engineering sectors. These countries boast large, highly skilled workforces supported by strong educational systems and a deep pool of STEM (Science, Technology, Engineering, and Mathematics) talent. Additionally, they attract global companies seeking to establish research, development, and innovation centers.
Poland, in particular, has become a magnet for global companies’ Engineering, Research & Development (ER&D) and IT centers, hosting approximately 20% of these hubs in the region. Romania, with its similar strengths, continues to appeal to companies looking for a combination of technical expertise and cost efficiency.
The Rise of VC Investments and Start-Up Ecosystems
Venture Capital (VC) investments in the CEE region have seen a significant surge, doubling compared to the previous year. Countries like Latvia, Estonia, and Lithuania are leading the way, with their mature start-up ecosystems accounting for approximately 80% of the unicorns in the region. This growth in VC investments reflects the increasing confidence in the region’s potential to produce innovative, high-growth companies that can compete on the global stage.
The strong ecosystem for Software & Internet and Automobile companies further highlights Central and Eastern Europe’s growing importance in the global technology landscape. These sectors are key drivers of innovation and economic growth, making the CEE region an important player in the global market.
Evolving Tech Ecosystems: Challenges and Opportunities
While the tech ecosystems in countries like Czechia, Lithuania, Bulgaria, and Serbia are evolving, they face the challenge of a limited talent pool. To address this, these nations are focusing on increasing enrollment in university STEM programs, particularly those delivered in English. This strategic move aims to expand the talent pipeline and attract more international students, ultimately boosting the local tech ecosystem.
However, economic and geopolitical factors present additional challenges. For instance, Bulgaria, despite having the lowest expenses for Software Tech talent, is grappling with economic volatility, regional tensions between Russia and Ukraine, and higher inflation and energy costs. These factors have led to an outflow of tech talent to neighboring countries, threatening the stability of Bulgaria’s tech ecosystem. Addressing these challenges requires a concerted effort to create a more stable and attractive environment for both domestic and international talent.
Conclusion
The Central and Eastern Europe (CEE) region is rapidly transforming into a critical hub for global technology companies. With its highly skilled workforce, strong educational institutions, and growing tech ecosystems, the CEE region offers significant opportunities for companies looking to expand their operations and tap into new markets.
As part of our “COE Hotspots Report 2024: Country Deep Dives,” our latest report, titled “CEE COE Hotspots of the World,” provides in-depth insights into Central and Eastern Europe’s Tech Ecosystem and the advantages it offers firms aiming to establish their COE or GCC operations.
As GCCs and COEs become increasingly vital for global firms, setting up global teams will become the new norm. Despite the challenges that come with establishing your global teams, you don’t have to navigate this journey alone. Download our reports or reach out to us at info@zinnov.com to learn how you can advance your talent strategy today.
