Portugal’s advantages in 2025 compared to the main competing geographical destinations for nearshore IT services


Portugal has emerged as a highly competitive nearshore IT destination in recent years, and by 2025, its advantages over other competing destinations in Europe and around the world are likely to become even more evident. Below are some of the main advantages the country can offer:
1. Competitive costs compared to Western Europe
Portugal has lower costs compared to other IT destinations in Western Europe, such as Germany, France, and the Netherlands. Although salaries for IT professionals in Portugal are increasing, they are still lower compared to these countries, allowing European companies to reduce operational costs without sacrificing quality.
2. Skilled and multilingual workforce
Portugal has invested significantly in education and technological training in recent years, creating a highly skilled workforce in information technology and engineering. Additionally, many professionals in Portugal speak fluent English and other European languages (such as Spanish, French, and German), facilitating communication with international clients.
3. Convenient time zone
Portugal, located in the Greenwich Mean Time (GMT) zone, holds a significant advantage over destinations like India or Latin American countries for European companies seeking temporal proximity. This facilitates real-time collaboration and better integration of nearshore teams with in-house teams.
4. Advanced technological infrastructure
Portugal has a highly developed technological infrastructure, with widespread availability of high-speed internet and a favorable environment for startups and technological innovation. Cities like Lisbon and Porto have rapidly growing tech hubs, such as the Web Summit, which attracts global companies and talent. The 2024 edition of the Web Summit from November 11 to 14, will be its 9th edition. The event, which has been held annually in Lisbon since 2016, brings together global leaders from the tech industry, startups, investors, and media.
5. Political and economic stability
Portugal is a country with a stable political and economic environment, providing security for companies seeking a reliable outsourcing destination for the long term. Regulatory stability, combined with EU membership, makes Portugal a safe destination for investments.
6. Tax incentives and government support
The Portuguese government has offered tax incentives and support programs to attract foreign investment and foster innovation. Programs like Tech Visa facilitate the hiring of foreign professionals, and there are specific tax incentives for companies establishing IT operations in the country.
7. Attractive quality of life
Portugal offers a high quality of life, with a mild climate, safety, and a relatively low cost of living compared to other Western European countries. This makes the country attractive to both local and international talent looking to relocate to a pleasant environment without sacrificing career prospects.
8. Growth of startup ecosystems and innovation
Portugal has witnessed the growth of a vibrant ecosystem of startups and tech companies, especially in areas such as artificial intelligence, fintech, blockchain, and more. This growth creates potential synergies and partnerships for companies seeking innovation and collaboration.
9. Cultural proximity to Europe
Portugal has a cultural affinity with the rest of Europe, particularly in terms of work ethic, quality standards, and business expectations. This proximity facilitates team integration and reduces the risk of misunderstandings or cultural challenges, which may be more frequent in more distant destinations like Asia.
10. Access to the European market
Being part of the European Union offers direct access to the European market, without trade or customs barriers. This is a significant advantage over destinations outside the EU, such as Ukraine or India, which may face regulatory obstacles like GDPR or trade barriers.
Comparison with other competing destinations:
– Eastern Europe (Poland, Romania, Ukraine): While Eastern Europe still has a skilled workforce at competitive costs, Portugal offers greater cultural proximity to Western European markets and political stability.
– India and other destinations in Asia: Although these countries still have significantly lower costs, Portugal is favored for its geographic and temporal proximity, as well as greater cultural affinity with Europe.
– Latin America (Brazil, Colombia, Venezuela): Portugal has the advantage of access to the European market and more developed infrastructure, in addition to closer geographic proximity compared to Latin America.
In short, by 2025, Portugal will continue to strengthen its position as a competitive and strategic destination for nearshore IT services, benefiting from a combination of factors including quality, proximity, and innovation, remaining an attractive option for European and global companies.
Key sectors benefiting from nearshore services include software development, data engineering, and cybersecurity, areas where Portugal has a strong talent pool and growing expertise.