Polish IT Is Heading Into Middle Income Trap

Polish IT Is Heading Into Middle Income Trap

According to a recent article Polish IT industry goes through a deep transformation. It seems that the only part of it that’s growing is the already strong outsourcing sector. It is a problem for the IT sector which may be showing a trend for the whole Polish economy.

Polish IT sector traditionally has been heavily dependent on the public sector, which severely limited their spending in recent years. At the same time Poland hasn’t build a strong leg in form of product-driven companies operating internationally. Not to mention building global platforms.

Top Outsourcing Location

Due to high quality and supply of good software engineers Poland continues to be one of the best places in the world for software outsourcing. We tend to be cheaper than western countries and we are a part of European Union with all of it’s practical and legal benefits. The result is that we already produce software for small, medium and big companies from around the globe and more and more of them are coming here each year. I’m a part of this process because it’s what we do at Evojam exporting nearly all of our services.

Polish Companies & Startups

Outsourcing creates competition for talent and tends to raise salaries over time. This makes IT too expensive for Polish companies who operate on domestic market. The same goes for startups - people having alternative of big salaries and fat bonuses will be less eager to join a startup and work for shares. Especially given the small size and weakness of Polish startup ecosystem.

Why is it a problem? Outsourcing will not build high-margin, high-profit products based on intellectual property (IP). All of the benefits of the IP goes to the companies funding the development. And Polish economy needs high value adding businesses, which become harder to build. This situation looks a lot like the middle income trap and IT is only showing where the rest of the economy is headed.

unsplash-logoAdam Grabek