With 75% of employers having trouble finding qualified tech workers and Germany alone lacking 573,000 skilled workers, Europe’s startup ecosystem is facing an unprecedented crisis. Hiring from Eastern Europe, the conventional nearshoring solution, is no longer adequate. The data shows why the strategic shift of European founders toward India is accelerating in 2024–2025.
The data clearly illustrates the lack of talent in Europe’s main startup hubs.
Lack of Tech Talent in Europe by Nation (2025)
The Netherlands reports a 70% talent shortage with 180,000 open positions, while Germany leads with a 75% shortage and 573,000 unfilled positions. There is a 68% shortage in the UK (420,000 positions), 65% in Ireland (120,000), and 62% in France (350,000). Poland, a popular destination for nearshoring, reports a 55% shortage with 220,000 open positions.
By 2027, the EU’s tech talent shortage may number between 1.4 and 3.9 million, endangering $8.5 trillion in lost revenue by 2030. This is not a short-term decline; rather, it is a structural crisis brought on by rapidly changing digital landscapes, aging populations, and a skills gap between industry demands and educational attainment.
Eastern Europe was Europe’s nearshoring solution for a long time. However, the terrain has changed significantly.
Currently, 62% of Eastern European businesses say that their largest growth obstacle is a lack of talent, and the region only produces 80,000 STEM graduates a year, which is not enough to keep up with the rapidly increasing demand. With local startups and tech giants vying for the same talent, Poland’s 650K developers, Romania’s 250K, and Ukraine’s 302K represent fixed, shrinking pools.
The cost advantage is rapidly disappearing. In 2026, senior developer salaries in Eastern Europe are predicted to rise by 3-8%, with higher growth anticipated for roles in cloud, AI, and cybersecurity. While offering much smaller talent pools than India, Poland’s hourly rates are now between $40 and $55, Ukraine’s $30 to $50, and Romania’s $25 to $45, closing the gap with Western Europe.
Risk is increased by geopolitical instability. Thousands of projects were interrupted by the conflict in Ukraine, which compelled businesses to diversify beyond reliance on a single region.
India has a strong and increasingly convincing financial case against nearshoring.
Hourly Rates for Developers in India, Eastern Europe, and Western Europe (2025)
Even when compared to Eastern Europe, Indian mid-level developers are 30–50% less expensive at $35 per hour than those in Poland, Romania, and Ukraine, which are $50, $40, and $45 per hour, respectively. India offers a 56–65% cost reduction compared to Germany ($80/hour), the UK ($97/hour), and the Netherlands ($79/hour).
At the team level, these hourly variations significantly compound. In India, a mid-level team of 15 people costs $1.31 million a year, compared to $1.87 million in Poland, $1.5 million in Romania, and $3 million in Germany. This represents a savings of $560K to $1.69 million annually.
However, European founders say the true value goes beyond base rates, with payback periods of 4-6 months and total cost savings of 60-70% when accounting for infrastructure, operational overhead, and recruitment.
Eastern Europe cannot compete with the scale of India’s developer ecosystem.
Nearly 19 times as many engineering graduates are produced in India each year as in Poland, with an annual production of 1.5 million. The nation’s 5.8 million IT workers outnumber the 650K developers in Poland and the 250K in Romania.
India’s developer population is expected to surpass all of Eastern Europe, with 15.4 million developers by 2024 and 25 million by 2027, according to GitHub. Finding specialized experts in cutting-edge technologies (AI/ML, blockchain, and cloud-native) takes weeks rather than months, thanks to this depth.
Since English fluency varies greatly by nation and seniority level, the 97% English proficiency among Indian developers removes the language barrier that occasionally makes interactions with Eastern Europeans more difficult.
The trend is clear: European startups are using their hiring budgets as a vote.
Trends in European Startup Hiring: Nearshoring vs. India (2020-2025)
By 2025, 68% of European startups will have hired from India, up from just 12% in 2020. This represents a 467% increase in just five years. During the same time period, nearshoring to Eastern Europe decreased from 65% to 48%.
While yearly savings rose from $75K to $310K, the average size of an Indian team for EU startups increased from 3 to 14 developers. This isn’t an experiment; rather than merely outsourcing ancillary tasks, European founders are expanding core product teams in India.
Germany, the Netherlands, and the UK are leading this change, with London fintech companies establishing sizable engineering operations in Bangalore, Pune, and Hyderabad; Berlin-based AI startups; and Amsterdam healthtech founders.
India’s strategic advantages and the few areas where nearshoring continues to have an advantage are revealed by a thorough comparison.
Strategic Decision Factors in India vs. Eastern Europe (2025)
In terms of cost effectiveness (9.5 vs. 7.0), talent pool size (10.0 vs. 6.5), scalability (10.0 vs. 6.0), depth of tech skills (9.5 vs. 8.0), and government support (9.0 vs. 7.0), India leads the field. Only Eastern Europe is ahead in terms of cultural alignment (9.0 vs. 8.5) and time zone overlap (9.5 vs. 7.5).
A “follow-the-sun” development advantage is actually produced by the time zone difference between India and Western Europe, which is between 3.5 and 4.5 hours. Indian teams work overnight, European teams turn over work at 6 PM CET, and by 9 AM, European founders can expect progress. Delivery cycles are accelerated by 30–40% as a result of this asynchronous productivity.
Concerns about cultural alignment turn out to be exaggerated in reality. Due to their decades of experience working with Fortune 500 clients, Indian developers who collaborate with European startups report a deep familiarity with Agile, Jira, Slack, GitLab, and Western business communication styles.
Following their engagement with Indian development teams, European startups report significant performance improvements.
Performance of European Startups Before and After Hiring Indian Teams (2025)
While team scaling speeds up from 12 weeks to 4 weeks (a 66.7% improvement), MVP development time decreases from 8 months to 5 months (a 37.5% faster time). For startups rushing to validate business models, the time to product-market fit has been shortened from 14 months to 9 months.
Beyond hourly rates, the financial impact is significant: a 58.3% runway extension, or the difference between reaching Series A milestones and going bankrupt, is the result of 58% annual development cost savings. Faster experimentation and market responsiveness are made possible by an 85% increase in feature velocity.
The core banking platform of a fintech startup based in Berlin was built with a 12-person Indian team for $420K per year, compared to $1.1M for a similar local team. The savings of $680K were then used to acquire new customers and comply with regulations.
In high-growth verticals, the shift to Indian talent is especially prevalent among European startup sectors.
Indian developers are most frequently hired by European sectors (2025)
Using India’s extensive knowledge of computer vision, natural language processing, and machine learning, AI/ML startups are leading the way with a 75% adoption rate. At 72%, FinTech is developing regulatory technology, neo-banking platforms, and payment infrastructure with Indian teams.
Indian developers are primarily used in the fields of e-commerce (65%), health technology (68%), and edtech (70%). Indian talent is now used for IoT, data engineering, and cloud architecture, even in industries that historically relied on local engineers, such as GreenTech (62%) and Logistics/Supply Chain (60%).
While AI/ML startups maintain smaller teams of eight developers devoted to specialized deep learning and model deployment work, SaaS/enterprise startups employ the largest Indian teams, with an average of eighteen developers.
The time difference between India and Europe initially alarmed the founders. It turns out to be a strategic advantage.
Founders in the UK benefit from a 4.5-hour overlap with Indian Standard Time, compared to 3.5 hours in Germany, the Netherlands, and France. This allows for code reviews, sprint planning, and real-time standups on European afternoons.
24/7 development cycles are unlocked by the remaining non-overlap hours. DevOps manages deployments during slow European evenings, QA teams test features developed during European nights, and European teams evaluate pull requests that Indian teams submit overnight every morning.
When teams use AI-powered project management tools, thorough documentation, and async-first communication, collaboration efficiency scores of 80–85% outperform nearshoring results.
The benefits of India’s ecosystem go beyond individual developers to include structural support networks.
Special Economic Zones (SEZs) provide top-notch infrastructure, simplified compliance, and tax incentives. While Uttar Pradesh reimburses 50% of rent for R&D partnerships, Karnataka’s GCC Policy seeks to double the number of tech centers by 2029.
By removing the complicated incorporation requirements that impede hiring in Eastern Europe, EOR (Employer of Record) services allow European startups to lawfully hire Indian developers in two to three weeks without creating local entities.
38% of US companies currently hire from India due to the country’s decades of experience with global delivery models, demonstrating the effectiveness of the operational playbooks, legal frameworks, and cultural bridges.
Instead of picking between nearshoring and India, progressive European startups are developing hybrid strategies that combine the two.
Smaller nearshore teams in Eastern Europe concentrate on customer-facing features that necessitate real-time European collaboration, while core product teams in India manage platform engineering, backend development, and data infrastructure. Compared to pure nearshoring, this well-balanced approach saves 40–50% of costs while preserving cultural proximity for strategic work.
Compared to an all-European team, a Dutch SaaS startup saves $780,000 annually by using a 4-person Romanian team for front-end and customer integrations and a 14-person Indian team to develop core platform capabilities. The team maintains 90% time zone overlap for customer work.
Major corporations and mid-sized businesses have established development centers in Bangalore and Pune as part of Germany’s investment in India’s tech sector. Dutch companies are increasingly forming long-term partnerships with Indian developers in response to local talent shortages and regulatory complexities.
Faster onboarding, higher retention, and better technical quality than anticipated are reported by UK companies actively hiring Indian graduates. Many Indian developers prefer working remotely for European startups while still in India, even though international companies hiring from India offer quicker visas, higher salaries, and remote-first roles.
Except for time zone overlap, European founders are increasingly choosing India over nearshoring in the majority of crucial dimensions.
Measurable competitive advantages are produced by cost effectiveness, scalability, government support, and a deep talent pool. These advantages include stronger profit margins, longer runways, faster MVPs, and higher feature velocity.
Over-reliance on nearshoring is becoming more risky due to the lack of talent in Eastern Europe (62% of firms are constrained), growing costs (3–8% annual increases), and geopolitical risks.
While nearshoring still serves specific, time-sensitive, customer-facing work, astute European startups are expanding their talent pools, creating hybrid models, and forming strategic alliances with India.
The evidence is clear in 2025: European startups that choose Indian tech talent are not making compromises; rather, they are concurrently optimizing for speed, cost, quality, and scale. Nearshoring isn’t going away, but European entrepreneurs starting multinational corporations aren’t using it as their go-to solution anymore.
