In 2025, India remains the dominant global outsourcing destination, generating $350 billion in revenue and employing over 14 million professionals, while Bulgaria emerges as a leading nearshore alternative in Eastern Europe, with its IT services market projected to reach $463.3 million.
India’s Evolving Outsourcing Leadership
India continues to lead the global IT outsourcing market with a 17.58% share, driven by its vast talent pool of over 4 million IT professionals and deep expertise in software development, AI, and digital transformation. The country’s outsourcing sector is undergoing a strategic shift, with organizations increasingly prioritizing innovation and access to specialized skills over cost savings, which now ranks second to business alignment as the primary driver. A Deloitte report highlights that 81% of organizations plan to expand their outsourcing efforts in India, citing its thriving startup ecosystem and strong government support. The integration of AI and automation into outsourcing contracts has become widespread, with 98% of organizations relying on providers for AI and GenAI capabilities, and 36% adopting outcome-based models for performance tracking and cost optimization.
Challenges persist, including rising salary costs in major hubs like Bangalore and Hyderabad, as well as significant time-zone differences with North American and European clients, which can hinder real-time collaboration on agile projects. Nevertheless, India’s maturity in handling large-scale, long-term projects and its extensive infrastructure make it a resilient choice for global enterprises.
Bulgaria’s Rise as a European Tech Hub
Bulgaria has established itself as a top European outsourcing destination, with Sofia recognized as the second-fastest-growing tech center on the continent. The ICT sector has experienced a 300% revenue surge over the past seven years, reaching approximately €2.5 billion, and accounts for 5.5% of the country’s GDP. The IT services market is projected to generate $463.3 million by the end of 2025, with outsourcing contributing $180.43 million, and the BPO market expected to reach $129.9 million. This growth is fueled by a vibrant talent pool of over 105,000 engineers, with 6,500 new tech graduates annually, and a strong emphasis on engineering and computer science education.
Bulgaria offers a compelling value proposition, with development costs up to 60% lower than in the United States, while maintaining high-quality standards in fields like AI, cybersecurity, and automation. Its geographic and cultural proximity to Western Europe, combined with minimal time-zone differences and high English proficiency (ranked 16th globally), enables seamless collaboration. The country’s EU membership ensures strict GDPR compliance, making it a secure and stable choice for businesses in regulated industries.
Bulgarian software development as an alternative.
“Be so busy improving your self that you have no time to criticize others.” – Chetan Bhagat”
For the time being, numbers are still in favor of India. According to Tholons, The Asia Pacific region (mainly India and The Philippines) was the leading outsourcing market in 2013. Services exports for India were reported by NASSCOM to have grossed US$75.8 billion for FY2013 and Bangalore was the top outsourcing destination in the globe.
American and European companies are still flocking to send some of their business functions over to their Indian outsourcing partners. The US and Europe are the biggest drivers customers for the Indian outsourcing industry and account for 60% of IT and 31% of BPO exports in the country. Within these outsourced tasks are financial services, high-tech/ telecom services, manufacturing jobs, and retail. An estimated over 2.2 million people in India are employed by outsourcing companies.
Quantity does not equal quality
Despite the positive figures, the overall outsourcing trends are shaped not only by the number of contracts but also by the quality of the job done.
Complaints about the overall level of customer service, quality of help, and the linguistic aspects of communication are increasing. The international IT giant Dell faced a wave of customer complaints and criticism after an increasing number of clients had disappointing encounters with customer support. The company’s bulletin board included comments like “How do I know my credit card information is safe in India?”, “Customer service has been compromised”.
Dell’s headquarters in Texas received reports from customers who had to speak with technical support staff whose accents were barely understandable and instead of one-on-one support many people received generic scripted support responses.
What does the future hold for India?
According to Vivek Wadhwa, a fellow at Stanford university the key problem is not regional, or localized only in India: “It is not that Indian outsourcers have become less capable of servicing Western needs. It is that their customer base—the CIO and IT department—is in decline. With the advent of tablets, apps, and cloud computing, users have direct access to better technology than their IT departments can provide them”.
Customer needs and demands are changing and adapting to this challenge requires more than simple retraining or debriefing of your outsourcing partners. More and more IT services become customizable and new technologies are allowing for many processes to become automatized and thus—much cheaper. This can lead to a gradual decline in outsourcing especially for IT tasks, and many processes have a chance to be resourced back to the US or Europe from their current offshore destinations.
This, however, will take at least 5 to 10 years to spot a sharp decline and for now, India remains the most popular and cost-efficient option for outsourcing.
Alternatives:
Bulgaria as an outsourcing alternative
