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Published On: March 29th, 2024|Tags: , , |12.4 min read|

Destination Overview: Portugal

Situated in southwestern Europe, Portugal is a prominent BPO destination for diverse global companies seeking efficient and effective outsourcing solutions, especially in contact or call centres, content moderation, customer support or software development. The country’s favourable business climate, modern infrastructure, excellent talent pool, cultural similarities to the rest of the Western world, and competitive living costs guarantee a superior edge and success of any nearshoring or offshoring undertaking. Portugal’s stable political and economic environment and strategic location away from global conflict zones further enhance its appeal as a reliable and secure place for BPO operations.

As a result, many enterprises choose Portugal for outsourcing, and this trend is evident in various statistical data. For instance, Statista projected that the Portuguese BPO market would reach a revenue of 0.61 billion EUR by 2024, representing stable growth – over 4 per cent higher than the revenue in 2023. They expect it to grow annually by 3.50 per cent, reaching 0.70 billion EUR by 2028. Delving into the details, the country excels as a hub for external call centre services, ranking 5th in Europe. According to data provided by the global research company IBIS World:

The revenue of Portugal’s call centre industry in 2024 is 952.5 million EUR.
The segment has experienced an average annual growth rate of 7.5 per cent from 2019 to 2024.
As of 2024, there are 26,026 people employed in Portugal’s call centres.

All in all, this exciting country of explorers offers much more than just business opportunities. Behind the Portuguese BPO scene stands a rich cultural heritage, lively cities, stunning coastline, plenty of sunshine, fantastic cuisine, and a vibrant social life. This helps citizens recharge their batteries, fostering a healthy work-life balance, ultimately positively impacting work productivity and proving advantageous for expats or contemporary employees spending time in Portugal’s territory. These elements and the economic factors create an environment ripe for innovation, collaboration, and success in the global outsourcing landscape.

Portugal as a Leading BPO Location: Competitive Advantage

1. Talent pool

Portugal’s BPO sector thrives on its diverse and skilled workforce, fostered by a cross-cultural environment. The national talents are well-educated, open, flexible and multilingual, adapting effectively to the demands of the present-day knowledge-oriented economy. Among over 10,2 million inhabitants, approximately 64.4 per cent constitute the working-age population, as reported by sources such as the Organisation for Economic Cooperation and Development. What is also essential is that Portugal is home to several prestigious universities, which produce tens of thousands of graduates each year across various fields of study, thereby providing a rich pool of professionals on the market. Ultimately, Portugal holds a 27th position in the Global Talent Competitiveness Index 2023 ranking, which assesses the ability of countries to compete for skilled individuals by evaluating various factors related to talent attraction, development, and retention.

Portuguese talent pool.

2. Multilingualism

Portugal prides itself on its highly multilingual workforce, proficient in English, Spanish, Catalan, and French. This linguistic diversity facilitates seamless communication and fosters cultural understanding and collaboration with clients and partners from various regions. As a result, companies outsourcing to Portugal can effectively cater to a wide range of international markets, leveraging the country’s rich tapestry of languages and cultures. The national’s strong multilingual capabilities, particularly in English, are further underscored by its 8th position in the 2023 EF English Proficiency Index (EF EPI), reflecting Portugal’s commitment to language education and proficiency on a global scale.

3. Strategic Location

Portugal’s strategic location enables proximity to other European countries, significantly facilitating nearshoring initiatives with minimal time-zone differences. This advantageous positioning also allows for swift travel between Portugal and the rest of Europe, ensuring seamless communication and minimal disruptions in project timelines, even in real-time scenarios. Moreover, being the westernmost country on the Old Continent, Portugal is a great outsourcing choice for overseas businesses, especially when providing support services for clients from the United States or Canada. Lastly, the country’s ability to accommodate the demands of companies from more diverse time zones enhances its appeal as an outsourcing destination, ensuring flexibility and responsiveness to clients worldwide.

Portugal shares its time zone with the United Kingdom and Ireland and is only one hour behind most European countries. Furthermore, in terms of time difference with the United States, it typically ranges from four to five hours behind the East Coast and seven to eight hours behind the West Coast. Similarly, Portugal generally maintains a time difference of one to two hours ahead of most Western African countries.

4. Cost-efficiency

Portugal offers an affordable business environment and attractive living costs compared to many other European destinations. Despite the escalating salary and pricing pressure, the country remains a value-driven labour market, providing favourable conditions for cost-efficient operations. This allows for specific savings without compromising work quality or productivity levels.

For instance, according to the Average Salary Survey, Portugal’s typical annual gross salary in 2024 is 38,700 EUR. In contrast, it is 70,239 EUR in Germany, 63,519 EUR in France, and 56,590 EUR in Italy.
Regarding the Numbeo Cost of Living Index, Portugal is ranked 29th among 43 European countries, scoring 45.3. Germany is ranked 15th, France 9th, and Italy 18th. It is worth noting that the higher the ranking, the more expensive the cost of living.
5. Cultural Compatibility

Portuguese people are renowned for their warmth, hospitality, and adaptability. These qualities contribute to exceptional and amicable business relationships and seamless integration with various clients’ organisational cultures and values. Furthermore, the country’s cultural affinity with Western Europe and the Americas is a critical asset, particularly in the contact centre or content moderation sector, where the ability to provide nuanced and culturally sensitive services is key.

6. Economy & Business

Portugal is a member of the European Union and the Eurozone, which serve as higher guarantees of economic resilience, currency stability, and support while enabling access to the EU funding programs, trade benefits, and stability measures. Exports, tourism, renewable energy, foreign investment and technology drive its competitiveness. The country has made significant strides in innovation, focusing on research and development and digital transformation. Initiatives like the Startup Portugal program and investments in technology hubs like the ‘Lisbon Tech’ are tangible evidence of Portugal’s dedication to fostering progress and entrepreneurship.

7. Legal considerations

The EU membership aligns Portuguese law with European regulatory frameworks while facilitating seamless trade, cooperation with other member states, and more effortless workforce flow. Portugal is ranked 28th in the WJP Rule of Law Index 2023 out of 142 countries, demonstrating its commitment to upholding the principles of the rule of law, contributing to its strong position globally. In addition, national organisations typically adhere to essential international standards such as ISO certifications and data privacy regulations, which reflect a dedication to quality, safety, knowledgeability, and high labour standards.

8. Infrastructure capability

Portugal’s infrastructure is crucial for businesses expanding their operations across different sectors. The country boasts a comprehensive transportation network that includes modern highways, efficient railways, and well-equipped airports, facilitating seamless mobility and connectivity between regions. As a member of the Schengen Area, Portugal allows for passport-free travel among its fellow member states, streamlining cross-border movement and fostering economic integration. Furthermore, Portugal offers modern office spaces with state-of-the-art facilities, providing an optimal working environment for businesses. Its cutting-edge digital infrastructure, characterised by high-speed internet connectivity and a thriving tech ecosystem, supports innovation and digital transformation initiatives. This robust IT and telecommunication infrastructure enhances efficient business processes and facilitates the delivery of seamless contact centre support, boosting customer service experiences.

According to the International Trade Administration, Portugal’s ICT sector is marked by innovation and dynamism, contributing nearly 10% to the country’s GDP and employing over 80,000 highly qualified professionals. With Lisbon emerging as Europe’s Silicon Valley, the country offers an ideal environment for businesses seeking to capitalise on digital innovation and talent.

9. Government Support

The Portuguese government plays a pivotal role in fostering the growth of the outsourcing industry. It provides comprehensive support to companies seeking to establish or expand their operations in the country, including various investment incentives, grants, subsidies, and tax benefits. The national authorities are also committed to continuously developing the country’s infrastructure to enhance its attractiveness while ensuring access to the necessary resources and connectivity to thrive in Portugal. Furthermore, the government implements business-friendly policies and regulations to create a conducive environment for outsourcing. By streamlining administrative processes, reducing bureaucratic barriers, and promoting entrepreneurship, Portugal aims to facilitate the establishment and operation of BPO companies within its borders. Ultimately, the Portuguese authority actively promotes the country as an outsourcing destination through various marketing initiatives and industry partnerships.

10. Rich Cultural Heritage and Historical Significance

Portugal’s vibrant cultural heritage offers distinct advantages for businesses seeking a BPO destination. The country provides a culturally enriching environment for employees with its rich tapestry of UNESCO World Heritage sites, extraordinary museums, colourful festivals, and vibrant music and literary traditions. This diverse cultural landscape fosters creativity, inspiration, and a strong sense of identity among workers, making it an attractive choice for businesses looking to create a dynamic and engaging workplace.

Key outsourcing hubs

With its firmly established outsourcing services in Lisbon to emerging hubs like Porto, Braga, and Aveiro, Portugal’s BPO landscape offers diverse opportunities and advantages for organisations looking to delegate their operations to external partners.

Pictures of the Portugal cities - key outsourcing hubs, like Lisbon, Porto, Braga and Aveiro.
In addition to the critical business aspects, these locations offer a rich cultural tapestry that enhances residents’ daily lives. Each city boasts a unique charm reflecting the nation’s rich heritage, from historic landmarks and picturesque landscapes to vibrant cultural events and festivals. Moreover, Portugal’s mild climate and stunning beaches provide ample outdoor recreation and relaxation opportunities, contributing to a balanced and fulfilling lifestyle.

LISBON Lisbon, Portugal’s capital, stands out with its exceptional business infrastructure, skilled workforce, and flourishing technology sector. Renowned for multiculturalism and linguistic diversity, the city attracts talents from prestigious universities, fostering a rich pool of experts and innovators. Consistently ranked among the world’s most attractive towns, Lisbon offers a vibrant cultural scene and a high quality of life, further enhancing its appeal to professionals and businesses alike. It has also emerged as an AI hub actively involved in developing cutting-edge technologies with the potential to reshape industries in the future.
PORTO Porto in Northern Portugal is crucial in the country’s outsourcing scene. The city’s convenient location, stunning beauty, excellent universities and flourishing culture attract young talents and skilled professionals. In addition, local authorities take care of the business environment, promoting collaboration through co-working spaces and innovation hubs, which aim to attract startups and outsourcing companies and make them thrive. Porto’s closeness to Spain makes it easy to work together and reach markets in the Iberian Peninsula.
BRAGA Braga is emerging as a significant BPO destination. Although smaller, its appeal lies in its access to a skilled workforce and more cost-effective living standards compared to larger cities like Lisbon and Porto. Braga is growing its reputation as a technology and innovation hub, supported by local universities and research institutions, which serve as sources of cutting-edge expertise and resources. Additionally, the town is renowned for its attractive location, convenient transportation, and historic charm.
AVEIRO Aveiro, recognised as the ‘Portuguese Venice,’ is becoming a significant IT and customer support outsourcing centre. It is famous for its top-notch education, affordability, and involvement in initiatives like the Urban Innovative Actions (UIA) program. With the lively university atmosphere, charming canals, and colourful local culture, Aveiro attracts professionals and businesses looking for a great place to work, live, and grow.

A Short History of the Portuguese Outsourcing Journey

Portugal’s outsourcing journey began in the 1990s with call centres and customer support services, driven by its low wages and multilingual workforce. As Western companies embraced ‘nearshoring,’ Portugal emerged as a leader in European outsourcing. Over time, it expanded into IT services, finance, and more, leveraging its strategic location and supportive business environment. Portugal’s continued investment in infrastructure and technology cements its position as a global BPO hub, offering growth and opportunities despite economic challenges. Consequently, the country serves as a strategic partner for many businesses worldwide, often regarded as a reliable and versatile destination with tailored solutions that meet the evolving needs of companies across various sectors. These include banking and finance, travel and hospitality, e-commerce, technological businesses, gaming, healthcare or social media.

Portugal in Brief

Portugal is the westernmost country in mainland Europe, with a rich history dating back to prehistoric times and a diverse cultural heritage influenced by its exploration, trade, and colonisation legacy. It was once a powerful maritime and colonial empire during the Age of Discovery, with explorers like Vasco da Gama and Ferdinand Magellan paving the way for European expeditions to distant lands, including parts of Africa, Asia, and the Americas. Portugal is also known for its beautiful landscapes, encompassing sandy beaches along the Algarve coast, lush vineyards in the Douro Valley, and historic towns and villages dotted throughout the countryside. The economy of Portugal is diversified, with key industries like tourism, agriculture, manufacturing, and services. Nowadays, the country is increasingly becoming known for its innovation and technology sector, supported by initiatives like Web Summit, one of the largest tech conferences in the world.

Images of Portugal: vibrant city, rocky seaside and Douro Valley.

FAQ Section

1. Why is Portugal considered a strategic BPO partner for businesses worldwide? 

Portugal is a strategic BPO partner due to its skilled workforce, modern infrastructure, cost-effectiveness, convenient time zone, cultural alignment, stable political and economic environment, various government incentives and focus on technological progress.  

2. What are the key advantages of outsourcing to Portugal? 

Outsourcing to Portugal provides tangible benefits such as cost optimisation, high-quality services, and access to emerging technologies supporting business growth and enhancement.

3. What are the most popular outsourcing hubs in Portugal? 

Portugal’s most popular outsourcing hubs include Lisbon, Porto, Braga, and Aveiro. These cities offer a combination of skilled workforce, modern infrastructure, strategic connectivity, and favourable living standards, making them attractive destinations for outsourcing operations. 

4. How does Portugal’s infrastructure support outsourcing? 

Portugal boasts a comprehensive transportation network, modern office spaces, and cutting-edge digital infrastructure, facilitating seamless mobility, connectivity, and efficient business processes.  

5. What government support and incentives are available for outsourcing companies in Portugal? 

The Portuguese government support includes investment incentives such as grants, subsidies, tax benefits, and business-friendly policies and regulations to create a conducive environment for BPO.  

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