The State of IT in Portugal: A Comprehensive Overview

The IT industry in Portugal has experienced steady growth in recent years, establishing the country as one of the leading hubs for IT companies in Europe. Renowned international companies like Google, Bosch, and Amazon have established offices in Portugal. According to a report by IBISWorld, the Software Development Market in Portugal is projected to reach €905.7 million by 2023.

As a result, Portugal has become a preferred destination for many software development companies and businesses seeking to outsource their projects. In our research, we have compiled key findings and tips about IT outsourcing in Portugal, including information about leading custom software development companies, the advantages of working with them, and more. Let’s delve into the details.

State of the IT Industry in Portugal: trends, challenges, and opportunities

The ITC sector in Portugal has been experiencing rapid development, with a growth rate of 5.2% since 2010. This trend has positioned Portugal as a central hub for companies seeking to implement innovative technologies. In addition, foreign investments and the development of advanced digital infrastructure are also on the rise.

Located in Southern Europe, Portugal has become an attractive destination for international businesses looking to establish offices. According to the Technology and Innovation Report of 2023, Portugal ranks 33rd among countries worldwide in terms of its technology and innovation landscape. However, the sector does face challenges, such as the need for qualified specialists and improved coordination between businesses and the government.

Despite these challenges, Portugal offers growth opportunities for IT companies of all sizes and specializations. The country’s innovation strategy presents numerous possibilities for investment and a wide range of IT services, making it an appealing destination for companies in the industry.

Major IT Companies in Portugal: areas of specialization overview

Based on our research, Portugal is home to approximately 9,000 software development companies and a thriving startup ecosystem. Here is an overview of the top five IT companies in Portugal:

Mindera PT

This company offers a wide range of IT services, including software engineering, consulting, and education. With a focus on long-term relationships and world-class projects, Mindera PT provides solutions for complex requests such as web app development, security, and audit preparation.

Capgemini

As one of the leading IT companies in Portugal, Capgemini specializes in Enterprise Software & Network Solutions. With over 10,000 employees, they provide quality services in areas such as data and AI, enterprise management, intelligent industry, and sustainability.

Novabase

With a history dating back to 1989, Novabase is a Portuguese company that offers IT and consulting services. Their digital solutions cover a wide range of business needs, including mobile and software development, analytics, and more.

Imaginary Cloud 

This IT firm delivers high-quality services to startups and international companies, including Nokia. Their primary services include custom software development and web development, with a track record of completing over 300 projects in the last 12 years.

Cleverti 

Dedicated to IT software development, QA services, cloud solutions, and more, Cleverti focuses on helping clients scale up their businesses with cost-effective solutions. They have worked with companies in 14 countries.

Portuguese B2B IT Services Market

The B2B IT services market in Portugal has shown steady growth over the years, becoming a significant sector in the country. In this analysis, we will delve into various aspects of this market, including its size, growth rate, export destinations, types of companies, salaries, industry associations, tax system, and key cities.

According to the latest report, the B2B IT market in Portugal is estimated to be nearly $20 billion, accounting for about 10% of the country’s GDP. This growth can be attributed to the increasing adoption of new technologies and the growing demand for online presence among businesses.

In terms of export destinations, Portugal primarily serves other European countries such as Spain, France, the UK, and Germany, due to its strategic location. However, Portuguese software companies are also being hired by businesses from the US and Africa.

Portugal has emerged as a hub for startups, small and medium-sized businesses, as well as global enterprises like Microsoft, owing to favorable government support, funding programs, and conducive working conditions. The IT services landscape in Portugal is largely driven by modern challenges such as artificial intelligence (AI) and machine learning (ML), cloud solutions, cybersecurity, and consulting services.

Salaries in Portugal’s IT market vary depending on factors such as job role, proficiency level, experience, tech stack, and location. According to a report by Payscale, the average annual salary in the IT market in Portugal is €20,700, or €8.31 per hour.

Industry associations play a crucial role in supporting the IT market in Portugal, providing a robust network for companies. Key associations in Portugal include ASSOFT (Portuguese Association of Software) and the Portuguese Association for Information Systems (PTAIS).

The tax system in Portugal is relatively straightforward, with a corporate income tax rate of 21%, which can be reduced to 17% for small and medium-sized IT companies, providing incentives for growth.

The IT hub in Portugal is primarily concentrated in cities such as Lisbon, the capital of the country, as well as Amadora, Porto, and Aveiro. For instance, Microsoft and Google have their offices located in Lisbon.

The advantages of working with Portuguese IT companies 

The IT sector in Portugal serves as a robust platform for companies seeking to hire dedicated developers for their projects. Let’s take a closer look at the main benefits of hiring Portuguese specialists:

• Convenient time zone. Portugal’s time zone is ideal for companies in Europe as it allows for real-time communication with developers, reducing the possibility of misunderstandings.
• Wide range of talents. The IT outsourcing industry in Portugal is rapidly growing, providing customers with ample options for finding and hiring developers with diverse skill sets.
• High level of English proficiency. Portugal ranks as the ninth most proficient country in English in Europe, according to the EF EPI (English Proficiency Index), ensuring effective communication with developers.
• Cost-efficiency. Despite offering competitive rates, Portugal’s developers maintain world-class quality in their results, making it a cost-effective option for hiring top talent.
• Government support. The Portuguese government offers tax incentives and funding programs for IT businesses, facilitating their work processes and providing additional support.

All these factors make hiring developers in Portugal an efficient and straightforward process, with the added advantage of government support. If you are considering hiring developers in Portugal, feel free to contact us via the form to team up for your project’s success.

Government Support for the IT Industry in Portugal: tax incentives and funding programs

The IT industry in Portugal is experiencing rapid growth, and the government recognizes its significance for foreign investments and the country’s future economy. In 2020, Portugal approved measures to promote the use of digital technologies in business and public administration. The government also provides support to the IT industry through tax incentives and funding programs, including:

1. Research and Development (R&D) Tax Deduction: This allows companies to claim a deduction from income tax for their expenses on research and development.
2. Investment Tax Credit: Businesses that invest in software and hardware can claim up to 25% of their investment amount as a tax credit.
3. Startup Exemption from Corporate Tax: Startups are exempt from paying corporate tax for three years after their operations begin.

In addition to tax incentives, there are funding programs available to support IT companies in their early stages, such as:

• Portugal 2020: This program offers funds to companies in the IT industry to support their growth and development.
• Startup Portugal: This initiative provides financing, mentoring, and a robust network to support innovative businesses.

The ongoing support from the government serves as a strong platform for startups and companies of all sizes in Portugal’s IT industry. These initiatives are aimed at creating a business-friendly ecosystem to attract investors and empower the country’s economy.

Future Outlook for the IT Industry in Portugal

The IT sector in Portugal is thriving and gaining recognition worldwide. Its future trends are geared towards global digitalization and the increasing demand for technology. One prominent trend is digital transformation, which is impacting all industries.

Another significant trend is the rise of startups and the strong support from the government. The favorable business environment in Portugal is driving the growth of new companies, aided by special grants for research and development in the IT sector.

In addition, Portugal boasts a large pool of talented and skilled developers, making it an ideal outsourcing destination. Companies have the flexibility to choose from a diverse range of professionals for their projects, whether it’s building a complete team or hiring a freelance IT specialist.

How Red Jumpers can help clients achieve IT goals?

When it comes to hiring software developers or other IT specialists, the process can be challenging and time-consuming. Reviewing countless resumes, checking references, and conducting interviews can take up to six weeks, according to various sources.

To streamline this process, look no further than Red Jumpers. Our partnership provides access to a network of over 7,000 verified developers and global connections. Simplify your hiring process with Red Jumpers and find the perfect IT specialist for your team.

Conclusion

In Portugal, you’ll find a wide range of highly skilled IT specialists, including developers and project managers. With a plethora of benefits, such as cost-effectiveness and a favorable work culture, you can easily find a developer who aligns perfectly with your requirements.

Put your trust in Red Jumpers to fulfill your developer hiring needs. We will connect you with skilled specialists who are tailored to your business requirements.