The Next Underdog of European Engineering Talent: Why Serbia Should Not Be Overlooked as the Nearshore of Tomorrow

For more than two decades, Eastern Europe has played a central role in the global engineering ecosystem. Companies in the United States, the United Kingdom, Germany, and Israel have relied heavily on talent in Poland, Romania, Ukraine, and the Baltic states for scalable, cost-effective, and high-performing engineering teams. These countries earned their position through a combination of strong STEM education, cultural proximity to Western clients, and the ability to consistently deliver high-quality software.

As demand for engineering talent continues to rise, the market has become more competitive. Salaries have increased in the region, especially in Poland and the Czech Republic. Western Europe faces a growing shortage of senior technical talent. At the same time, global demand for AI-related skills has exploded. According to LinkedIn’s 2024 Workplace Trends report, roles related to generative AI adoption grew more than 30 percent year over year in Europe. Nearshore teams are now expected to do more than write code. They are expected to think productively, contribute to architecture decisions, and ship with reliability and speed.

In this environment, companies are looking for the next market that can offer the engineering excellence of Poland or Romania without the cost inflation or hiring bottlenecks that now mark these regions. This is where the next ‘David’ in Europe’s talent landscape enters the story, long before most companies notice the shift. A smaller country that is often overshadowed by its larger neighbors is quietly building one of the strongest engineering ecosystems in the region, supported not only by homegrown talent but also by an influx of engineers from multinational companies impacted by layoffs and restructuring in recent years.

Serbia is the underdog worth watching.

Despite its size, Serbia has become one of the fastest-growing technology talent hubs in Europe. It has done this without the attention, branding, or promotional budgets that larger markets enjoy. What Serbia lacks in scale today, it compensates for with depth, cost competitiveness, and a rapidly maturing tech culture. The story of Serbia is a classic David vs. Goliath narrative. It is a country that has spent a decade in the shadow of larger markets, yet it is well positioned to become a nearshoring powerhouse in the next five to ten years.

This article examines why Serbia deserves serious consideration from global technology leaders and why overlooking it today may be a strategic mistake tomorrow.

A Strong Engineering Foundation Built Quietly and Consistently

Serbia’s rise in the regional tech ecosystem has been steady rather than explosive. This may be one reason it has escaped the spotlight. Yet the data reveals a country that has cultivated one of the highest densities of engineering talent in Europe relative to population size.

According to Eurostat and UNESCO, Serbia produces more than 3,300 ICT graduates annually, placing it among the top European countries in engineers per capita. The University of Belgrade, the University of Novi Sad, and several technical faculties across Niš and Kragujevac produce talent with a strong grounding in mathematics and computer science. Serbia consistently ranks in the global top ten in competitive programming contests, an indicator of problem-solving ability and algorithmic fluency.

The World Bank reported that ICT services account for nearly 10 percent of Serbia’s GDP in 2023. This figure places Serbia in the same bracket as countries like Estonia, which built its global reputation as a digital society through heavy investment in engineering capacity. Serbia’s ICT exports reached 3.2 billion USD in 2022 and grew again in 2023, one of the highest year-over-year growth rates in Europe.

These are not the metrics of a small, low-impact market. They are the metrics of a rising engineering hub.

The Talent Quality Story: What Sets Serbian Engineers Apart

Serbian engineers are known for strong fundamentals. This is partly due to the education system, which emphasizes mathematics, physics, and engineering from secondary school onward. Serbian students consistently place high in international math and informatics olympiads. Companies that hire in Serbia frequently comment on strengths in systems thinking, backend engineering, and scalable architecture design.

There is also a cultural factor. Serbia’s technology workforce grew initially through outsourcing relationships in the early 2000s, which meant engineers needed to communicate frequently with German, British, and American clients. As a result, Serbia developed a workforce that is unusually comfortable with cross-cultural collaboration. English proficiency has grown substantially, especially in Belgrade and Novi Sad.

One of the more interesting indicators of talent maturity is the seniority distribution. Data from several large outsourcing firms operating in the region suggests that Serbia has one of the highest percentages of senior engineers in the Balkans. Many have over ten years of experience working with Western clients. This is increasingly important as companies shift from outsourcing basic application development to building integrated product teams that require senior-level decision-making.

A Competitive Advantage That Larger Markets Cannot Maintain

Cost competitiveness has always been a major driver in nearshoring decisions. Serbia currently sits at a unique intersection of affordability and quality. Salaries for senior engineers in Serbia are still significantly lower than those in Poland, the Czech Republic, or Estonia. According to Glassdoor and local market salary surveys, a senior backend engineer in Belgrade earns on average 25 to 40 percent less than their counterpart in Warsaw or Prague.

This cost gap is not expected to close quickly. Serbia is not part of the European Union, which means it does not experience the same inflationary pressures or wage harmonization trends affecting EU member states. Companies seeking long-term cost stability without sacrificing quality will find Serbia particularly attractive.

Serbia also offers favorable tax incentives for technology professionals and employers, an additional competitive edge that many EU markets cannot match. Lower personal tax burdens for tech employees and government-supported relief programs have helped Serbia retain talent and keep total compensation costs predictable.

There is also a population dynamic that supports future growth. According to the Statistical Office of the Republic of Serbia, the number of ICT professionals has been rising at a compound growth rate of nearly 8 percent annually. Domestic youth interest in STEM fields is high. Private academies and coding bootcamps are expanding. In contrast, several mature markets like Slovakia and the Czech Republic face demographic decline and shrinking cohorts of technical graduates. Serbia does not face the same long-term supply challenges.

A Thriving Startup and Product Culture Signals a Shift from Outsourcing to Innovation

When a country transitions from outsourcing-heavy service delivery to startup creation, it is a sign that the talent ecosystem is maturing. Serbia is now in this phase. The Serbian startup ecosystem has grown dramatically since 2018. According to Dealroom, Serbia is home to more than 400 startups, with Belgrade and Novi Sad leading in early-stage funding activity.

The most visible success story is Nordeus, acquired by Take-Two Interactive in 2021 for a reported 378 million USD. A second is Seven Bridges Genomics, a leader in bioinformatics. There is also a growing hardware startup scene, with companies like Strawberry Energy gaining international attention. These signals point to a talent ecosystem that is learning to think in terms of products, not just code execution.

Why does this matter for nearshoring? Because companies today want nearshore teams that behave like product teams. They want engineers who can influence architecture, understand the user journey, and contribute to long-term roadmap planning. Serbia’s shift toward product thinking is one of the strongest indicators that it is moving from a support market to a strategic market.

Serbia’s Geopolitical Position Offers Stability within a Region of Change

While Serbia is not an EU member, it sits geographically and politically aligned with European markets. It maintains strong partnerships with Germany, the Netherlands, Austria, and the Nordics. Its infrastructure is well integrated into the European economic network and its time zone overlaps effectively with both Western and Eastern Europe.

For companies in the United States seeking nearshore alignment for teams in Israel or Western Europe, Serbia is a convenient middle ground. Most U.S.-based teams can onboard Serbian engineers without practical or legal friction, especially when using employer-of-record or contractor management solutions.

Importantly, Serbia offers stability. While the Balkans carry historical associations with political volatility, Serbia’s business environment over the last decade has been consistent and predictable. The World Bank ranks Serbia among the stronger performers in the region for ease of doing business. The country has invested in digital infrastructure and government modernization. This creates a reliable environment for long-term nearshoring strategies.

Why Serbia Is Still Underestimated by Global Companies

If Serbia has so many strengths, why is it still undervalued in the global engineering market?

There are three primary reasons.

1. Serbia does not have the international branding of Poland or Romania. Those markets entered the global outsourcing arena earlier and benefited from EU integration. Serbia entered the scene later and without the benefit of EU-funded branding.
   
2. Many companies rely heavily on legacy supplier relationships. Outsourcing partnerships tend to persist for years, even when new markets offer better value. This creates a lag effect. Serbia is not ignored due to lack of quality, but due to inertia.
3. Serbia’s scale is smaller today than more established markets. Companies that need to hire hundreds of engineers at once may not immediately find Serbia suitable. However, for companies building integrated product teams of 5 to 50 engineers, Serbia provides an ideal blend of talent density, seniority, and cost competitiveness.

This is exactly how Poland and Romania began their rise. They were not the largest markets at the start. They were the most prepared when demand shifted.

Why Serbia Could Become the Nearshore Powerhouse of the Next Decade

Serbia’s trajectory suggests that it could become one of the most strategically important engineering markets in Europe within the next decade. Several macro trends support this prediction.

Global engineering demand is increasing faster than supply. The European Commission estimates that the EU alone will face a shortage of more than 1.3 million ICT specialists by 2030. As mature markets saturate, companies will seek high-quality alternatives. Serbia is positioned to absorb this demand.

AI adoption is fueling demand for strong fundamentals. Companies now prioritize engineers who understand distributed systems, data structures, and performance at scale. Serbia’s education system excels in these areas.

The push for integrated teams over outsourcing favors markets with strong communication and cultural alignment. Serbia already has a long history of collaboration with Western clients.

Cost competitiveness will become increasingly important as startups and scaleups navigate tighter investor climates. Serbia delivers senior quality at mid-market cost.

Most importantly, Serbia is still early in its growth curve. Companies that begin building presence there now will benefit from the compounding effect of early familiarity, brand recognition in the local market, and long-term retention advantages.

Do Not Overlook the Underdog

Every major engineering hub in Europe began as a quiet contender. Poland was once considered an overlooked alternative to the Czech Republic. Romania was once dismissed as too small to matter. The Baltic states were once assumed to be peripheral. Today they lead Europe in specialized engineering, cybersecurity, and digital governance.

Serbia today is in the same position those countries once occupied. It may be smaller. It may have less international visibility. Its GDP may not match major neighbors. Yet its engineering capability, cost competitiveness, and upward trajectory tell a very different story.

Serbia is not the nearshore of yesterday. It is the nearshore of tomorrow. And companies that recognize this early will benefit from a market that combines technical excellence with long-term strategic value.

If the global engineering landscape is a David vs. Goliath story, Serbia is the David that is quietly preparing for its moment.

Carbon is the go-to staffing specialist for Eastern European and North African technical talent. Trusted by the biggest names in technology and venture capital, Carbon’s hyperlocal expertise makes entering new talent markets for value-seeking global companies possible.

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^References:

^{LinkedIn (2024). LinkedIn Workplace Trends Report 2024. [1]}

^{Eurostat (2023). Tertiary Education Statistics: ICT Graduates. [2]}

^{World Bank (2023). Serbia Country Data: ICT as % of GDP.}

^{International Olympiad in Informatics (IOI) Rankings.}

^{Statistical Office of the Republic of Serbia (2023). ICT Workforce Growth Data. [3]}

^{Vojvodina ICT Cluster. (2022).ICT in Serbia — At a Glance 2022. [4]}

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