IT and Outsourcing as "Islands of Prosperity": Can They Pull the Entire Bulgarian Economy?

Over the last 15 years, information technology and the outsourcing sector have become a symbol of the "new Bulgarian economy" – high salaries, modern offices, clients from the USA and Western Europe, English as a working language. While traditional industries such as mechanical engineering, textiles, and some services are struggling with low productivity and a shortage of staff, IT and outsourcing are growing above the average for the economy and concentrating an increasing share of the added value. Data for 2024–2025 show that the sector is already among the key drivers of growth – but can it "pull" the whole country on its own?

The figures: almost 10% of the added value and over 100,000 employed

According to the latest analyses by AIBEST and sectoral studies, in 2024, high-tech services and processes – IT, ITO, BPO and R&D – provided around 9.6% of Bulgaria's gross value added (GVA). This puts the country among the leaders in the EU in terms of the share of ICT in the economy. The market size of the ICT sector is estimated at over $4 billion in 2024, with a projection to over $6.5 billion by 2032 with an average annual growth of over 6%.

According to data from the annual reports of AIBEST, 833 companies in BPO, ITO and R&D provided 105,436 full-time jobs in 2024, with a sustainable growth in employment and revenues of 7–11% per year. Within the sector, business process outsourcing (about 43% of the market) holds the largest share, followed by IT outsourcing (approximately 39%) and R&D activities with nearly 18% share – the fastest growing segment.

High salaries and "islands" of a new middle class

Salaries in IT and outsourcing form a separate universe compared to the national average. Data from DEV.BG and other platforms for the period May 2024 – May 2025 show net monthly salaries starting from around BGN 2,000 for entry-level positions and reaching BGN 20,000–22,000 for highly specialized roles in infrastructure, cybersecurity, DevOps, ML/AI, Data Science and back-end development. Project managers and business analysts in large centers can receive up to BGN 13,500 net, and senior DevOps and ML/AI specialists – over 6,000–7,000 euros per month at median maximums.

This salary structure makes the sector an "island of prosperity" in an economy where the average net salary in many regions remains below BGN 1,500, and entire areas suffer from low employment and outflow of staff. In Sofia, Plovdiv, Varna and Burgas, IT and outsourcing companies are already forming a new urban middle class – young people with higher education, global incomes and consumer habits similar to those in Western Europe.

Export of brains… without leaving the country

One of the paradoxes of the IT and outsourcing model is that Bulgaria exports highly qualified labor without people physically leaving. According to industry data, over 80% of the software companies' revenues are from exports – services for clients in the USA, Great Britain, Germany, Scandinavia. International projects also prevail in outsourcing – customer service, technical support, back-office and analytical services for global corporations.

This means that the sector "imports" currency and stable revenues, often with long-term contracts, and is less dependent on internal consumption. In macroeconomic terms, this is a plus – IT and outsourcing act as a shock absorber against local crises. In times of political instability and fluctuations in other industries, the sector continues to grow and provide high tax and social security revenues.

Can IT and outsourcing compensate for the weaknesses of the rest of the economy?

Despite its impressive indicators, IT and outsourcing cannot mechanically compensate for the structural problems of the entire economy. First, the sector is highly geographically concentrated – in Sofia and a few large cities. In Northwestern Bulgaria, small municipalities and depopulated regions, the "islands of prosperity" are hardly felt: low-income activities, agriculture and low value-added services dominate there.

Second, IT and outsourcing require specific skills – mathematics, programming, foreign languages, soft skills – which cannot be acquired in a few months through short courses for the entire unemployed mass. The Bulgarian education system lags behind in STEM training, and the shortage of experienced engineers and specialists is a permanent problem. In this sense, the capacity to "absorb" new staff is not infinite.

"Islands" versus "archipelago": the question of connectivity

The key question is not whether IT and outsourcing can "pull" the economy on their own, but whether they can turn from isolated islands into an "archipelago" connected to the other industries. Where technology companies work with industry – industrial software, automation, logistics, fintech solutions for banks and companies – a multiplier effect is already visible: increased productivity, better processes, access to new markets.

Conversely, if the sector remains limited to back-office services and outsourcing of foreign processes, the risk is that it will turn into a "high-tech enclave" with a weak effect on the real transformation of production, services and public administration. This would leave a discrepancy between modern office towers and outdated infrastructure, between high-tech teams and low-tech everyday life for the majority.

Risks: dependence on foreign markets and global cycles

The sector is not vacuumed from global risks. The slowdown in the world economy, reduced outsourcing budgets, layoffs in technology giants and geopolitical tensions can lead to slower growth or freezing of projects. Data for 2024 already show a slowdown in the growth of revenues in high-tech services to below 8% per year compared to over 13% a year earlier – a sign that the "golden years" of double-digit growth are not guaranteed forever.

In addition, Bulgaria competes with a number of countries in the region – Poland, Romania, Serbia, Ukraine (despite the war), Turkey – in terms of costs, talent and tax environment. If education, infrastructure and legal security lag behind, the risk of exporting projects and teams is real. In such a scenario, IT and outsourcing will not only not "pull" the economy, but may turn out to be more unstable than they seem today.

What is needed for the sector to become an engine, not just a showcase

In order for IT and outsourcing to be a real engine of the entire economy, and not just a showcase of a "success story", several conditions are needed. First and foremost – a systematic policy for education: strong STEM programs from school, modernized universities, dual programs between companies and universities, incentives for the return of Bulgarian specialists from abroad. Without mass training of staff, the sector will remain elite and limited.

Secondly – connection with other industries: programs and incentives that encourage the digitalization of small and medium-sized enterprises in industry, agriculture, tourism, transport. If IT solutions "enter" production lines, warehouses, farms and hotels, the effect on GDP and incomes will be deeper than the pure export of services.

Thirdly – a predictable regulatory environment: stable tax rules, clear regulations for data and cybersecurity, fast administrative procedures for permits, visas and relocation of specialists. Otherwise, Bulgaria's competitive advantages – low taxes, relatively low costs and good location – will be eaten away by uncertainty and bureaucracy.

Can the "islands" become a continent?

IT and outsourcing have already proven that they can be a stable and high-income segment of the Bulgarian economy, occupying nearly 10% of the added value and providing over 100,000 well-paid jobs. They are an example that Bulgaria can compete successfully in global value chains when it combines talent, language skills and relatively low costs.

But whether these "islands of prosperity" will pull the entire economy or remain separated from the reality of low incomes and demographic decline depends on the decisions today. If IT and outsourcing become a catalyst for the digitalization of industry, services and administration, Bulgaria can build a new, more competitive economic model. If they remain closed in their own bubble, they risk being just a well-lit showcase in a country that is changing too slowly.