Top 6 Reasons to Build a Nearshore Team in Portugal

Top 6 Reasons to Build a Nearshore Team in Portugal

By: TEAM International | January 14, 2023 | 13 min

Let the truth be told, when selecting a location for IT outsourcing, Portugal isn’t very likely to appear on the list of candidates. However, the country is continually improving its innovation development capabilities and rapidly ascending to top-rated outsourcing destinations. Moreover, every year Lisbon hosts thousands of people who come to visit WebSummit—one of the biggest IT conferences. With that said, it is no surprise that nearshore Portugal is now confidently transforming into a mecca for tech leaders and investors.

You may be wondering what the secret that’s driving Portugal’s steady transformation into a country of opportunities for talented software engineers is. Why have IT outsourcing services offered by Portuguese companies skyrocketed? Continue reading to get all the answers.

The state of the IT outsourcing market in Portugal

Portugal has a service-driven economy, driving almost 65 percent share of the country’s GDP. The software and IT services sector registered 65 of 200 Foreign Direct Investment (FDI) projects, putting it ahead of other sectors.

The numbers of FDI projects in Portugal by sector

So why should you consider operating in or moving IT nearshore to Portugal? Let’s start with the basics. The main criteria that most companies consider when selecting an outsourcing destination are:

  • Government support
  • Data security and privacy
  • Level of IT infrastructure
  • Talent pool and mindset
  • Visa programs
  • Social stability

Notably, Portugal has over 80,000 graduates annually. Of them, around 30 percent are in the technology or engineering sphere. Furthermore, Portugal is ranked 26th in terms of talent quality and availability, comparing favorably with Slovenia (27th), Spain (35th), Poland (45th), and Ukraine (46th).

Nearshore Portugal is a booming tech hub that has been the fastest growing in Europe since 2017. Meanwhile, 2021 was the year of recovery for the local software market, valued at $892 million. Similarly, the market of IT outsourcing in Portugal has been steadily growing and reached $781 million in value, earning it increasing interest as a neighboring destination. With the colossal inflow of foreign investment in the tech field over the last few years, the country’s position on the international IT scene has risen tremendously.

Top 2 enticing factors in Portugal

Why business leaders choose outsourcing IT to Portugal

1. The government support of digitalization

Portugal has doubled its efforts to elevate digital and IT skills among the public and the workforce. The government has been unwavering in its support of the tech industry, rolling out policies and initiatives to foster digital proficiency and enhance the levels of tech literacy.

  • INCoDe.2030is one of the public policy initiatives to promote digital education and technology awareness, improve the existing employee qualifications, and offer specializations for graduates in digital jobs. As a result, the number of qualified tech experts in the country is growing, and their expertise broadens, transforming them into a quality pool of IT engineers.
INCoDe 2030 program

2. Strong cybersecurity and data protection policies

Data security is one of the key criteria when choosing a location for IT outsourcing. Portugal is ranked 14th worldwide and 8th within the European region in the Global Cybersecurity Index, reflecting the results of the investments and effort of local authorities.

As a member of the EU, Portugal’s main framework regarding personal data is the GDPR. Moreover, the government set a higher bar for cybersecurity and intellectual property protection. This alignment was crucial for establishing Portugal as a top IT nearshore destination.

3. Accessibility and technological infrastructure

High-quality ICT infrastructure is essential when you assess all the pros and cons of potential destinations. Portugal is the leader in high-capacity network connectivity, covering more than 90 percent of homes. Also, it provides ultrafast broadband access, a factor that many business leaders consider attractive. So, deciding to hire nearshore developers in Portugal, you can always have accessible software development infrastructure and easily deal with large volumes of documents and files.

4. Mindsets and contribution

National mentality plays a significant role in making Portugal a great nearshore candidate. The local people are great communicators, and communication is vital for managing remote employees and completing tech projects. This is something that companies should consider when planning to build a nearshore team in Portugal.

Additionally, the Portuguese have a knack for learning and adapting to new languages and cultures. They are one of the best English speakers, ranking 9th in English proficiency worldwide. Currently, English is a de facto standard, and it becomes critical in a multicultural business environment.

5. Special visa programs

Portugal has special, easy visa-obtaining processes and programs for IT specialists and tech experts living outside the European Union. Many countries now have such visas, but the Portuguese one is very attractive for numerous tech entrepreneurs and IT specialists who work remotely.

Freelancers and software developers can apply for a digital nomad visa that offers two categories: a temporary stay or a residency visa. Both categories enable foreigners to stay for a certain period and work independently from Portugal. Also, recipients can move within the Schengen area visa-free – one of the key advantages. What they need is to prove their average monthly income meets the requirements and provide a work contract or proof of self-employment.

Because of this flexibility and convenience, we can expect a new flow of tech experts to choose the country as their temporary or long-term place to work from.

6. Social, political stability and security

Portugal ranks in a fantastic 6th position as one of the most peaceful and safest countries in the world. And in recent times, there’s nothing more precious than peace. People want to live in a safe place with their families and raise their kids in security. The peace of mind that IT engineers find here allows them to create that great line of code.

At the same time, political stability strengthened at the beginning of 2022, supporting the country’s economic growth. After a strong recovery helped by a rebound in tourism and expansion of IT services, Portugal’s GDP advanced 4.9 percent in Q3 of 2022.

What’s more, the quality of life here is rather high. Who doesn’t like great food, sunny beaches, beautiful landscapes, and thriving cities? Portugal was listed 4th in the top destinations for expats who appreciate its leisure options, environment, climate, and safety.

top 5 best places for expats in 2022

The prospects of outsourcing IT to Portugal

Extending your team to a nearshore destination is the next natural step in a highly interconnected world. Offering a range of benefits and opportunities, it has become a winning model for many organizations looking to strengthen their business.

The market of IT nearshore in Portugal has all the necessary components of a modern digital world for fruitful partnerships and exceptional outcomes. Besides all these advantages, by cooperating with TEAM International Portugal, you get access to high-quality project management practices and a pool of top-notch talent to complete projects in record time.

Latest Industry Insights