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The 10 largest Polish software houses in Krakow – 2021 UPDATE

Michał Piątkowski 0

The Krakow IT market is by far dominated by large international corporations. They employ at least 16 000 engineers here, and this number is growing by at least 5% annually.

There is also a growing number of Polish tech firms in Krakow. Some of them are young start-ups, with over 150 of them in the city. Another group, and this is going to be the focus of our article, are the Polish software houses in Krakow.

The 10 largest Polish software houses in Krakow - 2021 UPDATE

Let’s first define what a software house is. For the purpose of this article we are going to use a broad meaning of this term to include:

  • Traditional software houses that build custom software
  • Consulting firms that specialize in building software solutions, sometimes using third party platforms, frameworks or tools, but not implementing third party software (like ERP or the like)
  • Firms that simply outsource engineers

Also, we have decided to only look at software houses that work internationally and are Polish. By our subjective standards a company qualifies as being Polish if it has at least 25% Polish capital and at least 50% of the workforce are situated in Poland.

 Check out also: Krakow IT Market Report 2019 

To assess the size of the team in Krakow we used LinkedIn data. Yes, in some cases LinkedIn data can show figures that are as much as 20-40% lower than the actual number of employees. We assumed that this gap is comparable between companies.


At first glance

There are at least 100 software houses in Krakow that meet our criteria. More than half of them (62%) have a range of between 10 and 49 employees. At least 8% of them are small firms that employ up to 10 people. These small firms often started as an initiative by a couple of friends who found a client for their services. Some of the largest ones grew as staff augmentation providers for the big players in the Krakow market, such as Sabre or ABB.

The 10 largest Polish software houses in Krakow - 2021 UPDATE


Technology

The majority of small software houses specialize in Web and Mobile apps. They build websites, web applications and mobile applications to clients’ specific requirements. Only a handful of software houses specialize in some specific technologies, like Virtus Labs (Scala) or domains and industries like Ailleron (telco, fintech, hospitality).

Relatively few of the software houses will work using the Microsoft stack, with most companies specializing in Java, JavaScript, Node.js, Python, PHP, Ruby, or similar on the back end, and Angular or React on the front end, plus the mobile apps.

All of the software houses try to follow Agile practices, with some of them like Lunar Logic being particularly focused on having best-in-class processes.


Acquisitions

The last several years saw a growing trend of mergers and acquisitions. Here are some of the recent transactions. For most of the acquisitions, the values were not disclosed, except for Grand Parade, which was acquired for approximately 15M EUR.

Original entity New/Acquiring entity Date of acquisition
Grand Parade William Hill 2016
Ericpol Ericsson 2016
Solid Brain IT Kontrakt 2018
IT Kontrakt, Sevenval, CoreValue and Solidbrain Avenga 2019
Maise ITMagination 2020

This trend is going to continue for several reasons. First, the market is consolidating with the aim to identify some dominant players. Second, IT consulting firms from outside of Poland are looking for ways to save time that they would normally spend on growing organically and decide to acquire local players with experience. The third reason is that companies that find it difficult to grow teams quickly (internal capacity to grow organically, challenges in recruitment) decide to expand by merging with smaller companies.


Strengths

The technical proficiency and Krakow’s large talent pool are the two key factors that remain the key strengths of software houses in Krakow. Clients appreciate the quality of the work done, the good organization of projects and the proficiency in communication.

Most of the teams are young and vibrant, which, to many organizations that outsource can be a refreshing experience.

Also, Poland, ranking very high in English proficiency (16th according to the EF English Proficiency Index (EF EPI)), makes it easy for teams to work internationally.

The cost remains to be an important factor; however, what really matters is the value. The perceived team quality, the overall results of projects, and the standards in communication are quite high comparing to other locations in CEE countries or Asia.


Challenges

We’re Polish, so it should come as no surprise that we include more challenges than strengths here. Please take it with a pinch of salt and consider it to be an entirely subjective view.

Let’s start with saying that being a body leasing shop is not the best strategy for the city, if it wants to stay competitive internationally. In the end, if you need a generic software developer for a temporary assignment, it really matters least where the person is located.

The real value is delivered when a software house can compete as a solution provider that builds an end-to-end solution based on the client’s needs. This would involve requirements analysis, project management, QA and, internal integration processes. This would also allow companies to foster more senior roles with project management skills in software houses. Otherwise firms primarily employ engineers that do the tech job and the project is managed by the clients.

Another challenge is the decreasing salary gap. As much as Krakow remains competitive compared to the UK, Switzerland, Scandinavia or Silicon Valley, there are locations in Europe where wages are not that different from the wages in Krakow anymore. Still, the ability to recruit and retain quality engineers continues to be a huge advantage that Krakow can boast about.

The majority of software houses in Krakow specialize in Mobile and Web projects. As much as these areas are in the epicenter of the technology world today, what pays more and brings more value is to specialize in specific technologies or industries to offer a higher-value service. Focusing on specific domains would allow firms to build functional skills in specific industries.

Krakow software houses only recently started building their sales capacity to be able to increase the volume of their international sales. They are opening offices in the UK, the Netherlands, Sweden, Germany or the U.S. to attract new clients and build sales teams that are able to talk to client abroad.


Krakow’s Top 10 Polish Software Houses

Approximately 1 200 engineers work for the 10 largest software houses in Krakow. Interestingly enough almost all of these companies were created in the last 10 years, which means they have very young teams. On average these firms have grown by approximately 15 engineers each year in the last 6-7 years.

With our criteria to include only firms with some Polish capital, we had to remove u2i (http://www.u2i.com) from the list, which is owned by a UK entity as well as some large players like Epam (http://www.epam.com/), which has over 600 employees in Krakow, Luxoft (https://www.luxoft.com/) and SII (https://sii.pl/), which is a French-owned company.

For the purpose of this analysis, we are not going to include traditional system integrators like Qumak or Sygnity, which have offices in Krakow as they primarily focus on implementing third party software.

Here are the 10 Polish software houses with the largest teams in Krakow:

Name Year founded Est. team size in Krakow* Technology / Domain LinkedIn
Ailleron 2011 320 Telco, Fintech, Hospitality LinkedIn
j-labs 2014 210 Java LinkedIn
Avenga 2019 170 Custom Dev LinkedIn
VirtusLab 2010 150 Scala LinkedIn
Miquido 2011 140 Mobile LinkedIn
Software Mind 1999 100 Custom Dev LinkedIn
Codete 2010 90 Data Science, Big Data, Web, Mobile LinkedIn
Software Mansion 2012 60 Web, Mobile LinkedIn
Codibly 2011 50 Custom Dev LinkedIn
Railwaymen 2009 40  Web, Mobile LinkedIn

* based on LinkedIn data, likely understated by 20-40%


Conclusions

It is staggering to learn that EPAM and Luxoft together employ as many engineers in Krakow as all the 10 largest Polish-owned software houses in Krakow combined. It appears it is much easier for large companies to offer competitive salaries and packages, possibly more interesting projects and more opportunities to grow.

It is, however, in the small and medium software houses where diversity can flourish and local entrepreneurship can grow. They can offer a real start-up-like environment and a more agile organization and processes.

The difficulty is in the ability to acquire large clients for bigger, long-lasting projects. Without having this capability, the firms remain relatively small.

Seeing the incredible growth of the market in the last 10 years, we can assume the trend is going to continue with more new software houses popping up and existing ones growing at a relatively fast pace.

Finally, it would be a significant contribution to the Krakow IT market if large software firms present here in the city would work more with smaller software houses from Krakow, not only in the body-leasing mode, but to actually delegate complete software projects.


If you are looking for information about setting up your presence in Poland, download our Krakow IT Market Report 2019.

If you are interested in alternatives to outsourcing, contact us at MOTIFE to learn more.


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