Where to place your new IT office among European hubs

There are many well-established and well-known IT hubs that have been in the spotlight for years. This is the case in London, Paris, Amsterdam, Berlin, and even Dublin, where the language factor is attracting American companies. The language variable also makes Madrid a common city to have offices for South American companies.

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This map shows the number of non-European companies established in the 20 most popular European countries for foreign investments. Data source: TalentUp’s database.

Many hubs are emerging due to investments in funds, cheap resources, or highly qualified talent. This article will focus on understanding these IT hubs and discovering the origin of foreign companies investing there.

General overview of companies investing in the European Hubs

The hubs studied in this article are:

• Barcelona, Spain
• Bucharest, Romania
• Budapest, Hungary 
• Copenhagen, Denmark
• Helsinki, Finland
• Lisbon, Portugal
• Milan, Italy
• Prague, Czech Republic
• Stockholm, Sweden
• Warsaw, Poland

They will be grouped into three regions: southern (Barcelona, Lisbon, and Milan), Scandinavian (Copenhagen, Helsinki, and Stockholm), and eastern (Bucharest, Budapest, Prague, and Warsaw).

Investments come mainly from Europe and North America. In the Scandinavian countries, it is clear that they mainly come from North America. Some Asian companies are also always present, even if, usually, it does not exceed 10% of offices.

Looking at countries individually, in all hubs, most companies come from the US. American businesses usually represent 30%; however, in Prague, Milan, and, especially Warsaw, they represent 50%. Many also come from the UK or Germany. The southern countries have a high presence of French companies.

Copenhagen, Helsinki, and Stockholm’s hubs are exceptions, and they act differently: they receive lots of investments from other Scandinavian countries, especially Norway.

This is clear, for example, when looking at the cities where companies investing in Helsinki are based. 61% of them come from a former Scandinavian country.  In general, Scandinavian headquarters are mainly in Oslo, Stockholm or Helsinki.

The city where most offices have their headquarters is New York. London and Paris make up the rest of the Top 3. London has a remarkable presence in eastern hubs.

Southern European Hubs

The main sector of foreign companies in these hubs is information technology, followed closely by business services. Consumer services and manufacturing industries share third place. 

It may seem superficial and not decisive, but good weather is a favorable point for these cities. The good vibes from the sun and the relaxed way of life that seems to reign in the Mediterranean make these hubs more attractive.

Lisbon in particular is also known for having more female entrepreneurs than the average. 

Analyzing the cost of living, these countries are placed in the middle of the European spectrum. The salaries in these cities for IT workers are usually between 20k and 50k€ annually, having very few exceptions earning more than 60k€.

Hubs seize their relevance based on the successful startups (also called unicorns if they are worth more than 1 billion dollars) they hold. Glovo, a delivery service company, is the most well-known startup in Barcelona. In Lisbon, there is the machine translation service Unbabel, and in Milan, there is the talent platform Talent Garden.

Scandinavian Hubs

This zone has a huge concentration of IT companies, just a few for business services, and none of the other sectors are especially relevant. Denmark is prone to attract talent in health and sciences, like the Nordic headquarters of the Japanese pharma giant, Daiichi Sankyo.

This is the most expensive area to live in Europe, which is also reflected in higher salaries. IT workers earn between 40k and 85k euros per year on average. However, these countries are known for the quality of their talent, which attracts investments even if the price is high. They also have many accelerator programs, like Sting, that help build international reputations.

The first big Scandinavian startup was Skype, a shared creation between Sweden and Denmark. The most successful Swedish startups are Klarna (online banking) and Spotify (music streaming services). Another relevant unicorn in Sweden is Northvolt, a supplier of batteries for electric motors. In Finland, Wolt (food delivery services) is the most relevant one.

Eastern European Hubs

Eastern countries usually have many business services companies. Having said that, when it comes to foreign organizations investing there, once again the most popular sector is IT.

One of the main advantages is that the cost of living is cheap compared to other European countries. This also means that the salaries are lower. IT workers in Easter European countries rarely make more than 50k€ a year. The most popular range of salaries is around 20k€ annually. 

As seen in the previous map, Prague and Budapest employ more than 10% of the working population in IT. Looking for companies, in Budapest, there is TIER (Europe’s leader in micro-mobility), and in Prague, there is the cyber security company Avast.

In Poland, big companies such as Google, IBM, and Motorola, among others, have established R&D centers that hold 80% of IT professionals.

In the last 20 years, the Romanian IT industry has grown by more than 15%. The country also has a reputation for good English dominance, which is a positive aspect for foreign investors.

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