Couple of facts about it:
Country of 4.5 milion people, a EU member located in the Mediterranean (sharing the Adriatic sea with Italy).
Croatia is very sunny (over 250 sunny days) in it’s coastal region.
City of Rijeka with it’s population of 200.000 has over 5 US IT companies but most of the companies are about 100 miles in Croatia’s capitol Zagreb
Croatia’s labor costs are 4 times below the EU average
95% of locals have elementary proficiency in English…while 70 % have very good English writing/ conversational skills.
Croatian language is almost the same as in neighboring Bosnia & Herzegovina and Serbia meaning that with branches opened up in Croatia you’ll be able to reach markets where there is similar work conditions.
Mindset and work ethics is very similar to western countries like Germany and US.
People look down on things like showing up late to work or being lazy.
Crime (petty crime/street crime) is almost non existent – you can feel safe walking in every part of town in the middle of the night.
The reason why US based IT companies are making money:
I’ve met over 100 developers during my 8 year IT career – needless to say I’ve moved around a lot, changed 4 companies and this gave me an incredible insight into the mindset typical Croatian developer.
You have to realize that there is a 20% unemployment rate in Croatia – so there is this whole mentality built up that when you get a job you have to stick to it no matter what because regular paycheck is king in Croatia.
People in Croatia generally have a sense of extreme loyalty to the company they are working for and it’s not rare of a case to find people working in the same company for 30+ years.
So let me break it down to you (you’ll read about how complicated the bureaucracy and labor laws are in Croatia and they are…but if these guys:
http://extensionengine.com/ (located in Split)
are making a business out of it…there must be something to it.
(these are just part of the companies that illustrate what type of US IT companies come in Croatia)
For more stats about Croatia go to http://data.worldbank.org/country/croatia
Developer salaries in Croatia (main reason why the companies are here)
1 USD = 6.78 KN (On 15th of August 2015) for a today’s currency value check out this link
Let’s break it down:
Junior developer will get something around 4000 kn net salary per month
( this is 5.238,64 KN or 772 USD Gross)
Intermediate developer gets around 6000 kn net salary per month
( this is 8.440,00 KN or 1243 USD Gross)
Senior developer gets around 8000 kn net salary per month
( this is 11.773,33 KN or 1735 USD Gross)
Top developer (CEO/CTO cries-a-lot if this guy leaves type of developer)
gets usually around 12.000 kn net salary per month ( this is 18.440,00 KN or 2717 USD Gross)
So for you to employ a CTO material type of developer in Croatia it would come down to around 15USD /h ( 1 month = 180 work hours) to get this guy to work for you full time.
If you google translate this web page you’ll be able to do this calculation yourself.
Keep in mind that figures above are considered good salaries – in reality there is a around 10 – 20 % decrease.
Apartment rent + Office space + infrastructure
Apartments go around 250 USD / month for 400 USD you can have a luxury apartment for yourself.
City of Rijeka,Zagreb,Split (three of the biggest cities in Croatia) all have fiber optic internet connection (100 MBIT /100 MBIT) that usually comes with the provided office space which goes around 8 USD per 10 square feet (expenses included)
Building a team
So let’s recap – imagine you have a 1000 sq feet office with s team of 5 senior developers.
This would cost you in total in any given city in Croatia roughly 9400 $ / month.
If you think about it this is a salary of a intermediate developer in Silicon Valley – you could have a team of experienced professionals for the same price.
A place for your next subsidiarity ?
Everything said I think that every up and coming IT company working in the US should really think about opening a branch in Croatia.
If you have some question feel free to contact me via e-mail (email@example.com)