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Why Portugal is becoming “the Silicon Valley of Europe”

Often referred to as “the Silicon Valley of Europe”, Portugal has become one of the most popular destinations for companies to grow and establish their nearshore software development teams in. And it’s not a coincidence.

High quality-price ratio for software development teams

Portugal has an incredibly high quality of engineers based in the country, which makes it one of the best places to set up nearshoring teams. Most countries make the same claim, but a vast number of both certified and internationally recognized engineering universities actually support this point.

According to World Digital Competitive Rankings 2021, Portugal also ranks higher than most traditional nearshoring countries in important categories like “Graduates in Sciences”, “Technological skills”, “Communications Technology”, and “Knowledge Transfer” (www.imd.org). In the specific categories in 2021’s IMD Digital Competitive Rankings Report, Portugal actually came out number 14, 12, 11, and 36 out of a total of 64 benchmarked countries.

Another strong point is the number and the quality of English-speaking people, which will make communicating with your teams much easier and fluid. Communication is one of the most important keys to success for a distributed team to be successful. According to the EF English Proficiency Index, Portugal ranks 7th out of a total of 112 tested countries. Additionally, Portugal’s low cost of living means that you can enjoy competitive rate values, which creates an unbeatable Quality-price ratio. According to the World Bank Organization, Portugal’s GDP per Capita is actually lower than other typical nearshoring countries like e.g. Poland and Lithuania.

Great location for nearshore teams

It’s important to have a partner with a location that allows for easy trips between locations. Having teams sitting together from time to time and an office with a privileged location is key to making these trips fast and enjoyable. Having a team sitting face-to-face on a regular basis will allow people to create bonds and better understand their cultures and differences.

There are already many challenges when setting up a team in a different location, so it makes sense to have a timezone with the maximum overlap on the working hours from both teams in order to minimize that impact. This is also one of the main differences between nearshore vs offshore outsourcing.

Portugal lies on the GMT meridian and has 1h less compared with CEST time zone – which is the time zone for most central european countries. This is an advantage as you can have both teams working within a large and comfortable window for communication while making sure that neither your local team/back office nor your Nearshore team will be blocked waiting for answers from each other for long periods. You can also take advantage of this extra hour (CEST – 1h) of working on your project, increasing delivery speed or the possibility of having your project running during eg. bank holidays.

Part of the EU

Portugal has been a member of the European Union since 1986 and is widely known as a stable country. Doing business with Portugal is overall easy and Portuguese companies have a proven maturity, compliance towards GDPR, and other regulatory measures. Furthermore, Portuguese employees are being supported by Article 18, The Charter of Fundamental Rights, and the residence rights for workers. In other words, ensuring reverse accountability throughout your entire value and delivery chain is much easier in a country where transparency and workers’ rights are central parts of an everyday business.

Cultural mindset

The Portuguese are known for being a friendly and quite adaptable type of people. They like to have contact with different people and cultures. It’s a social thing! They really do have strong social and communication skills and are always eager to learn more about others. Agility, speed, and team spirit are all values that Portuguese people live by. Also, Portugal has a history of being a safe country, and the Portuguese are known as a hard-working and dedicated people.

Weather and food

We know this might be the least important thing in this top 5, but Portugal is indeed an amazing country. With mild weather either in winter and an almost complete lack of rain in the summer, visiting Portugal will always exceed your expectations if you are looking for good beaches or a countryside to relax in either the Alentejo plains or hilly Trás-os-Montes. Portuguese people love to eat – and this is also one of the reasons you’ll always find an amazing variety of traditional dishes – meat and fresh caught fish – and great pastries in case there is still room for a sweet  after a meal or as a snack during the day.

Want to know more about nearshoring?

This article is part of our white paper: The Complete Guide to Software Development Nearshoring 2.0.