Belitsoft’s 2026 Forecast: Growth in Nearshoring Custom Startup Software Development in the UK

The Belitsoft bespoke software development company examines the primary reasons behind this trend and shares what to expect in the coming year. By 2026, employing local European teams to develop custom software will be a key component of a strategic plan to expand rapidly and steadily, not just a means for UK startups to save money. It is now a key component of a clever strategy for rapid and steady growth. By working with these specialized tech hubs, UK startups can effectively address major issues with high costs, hiring qualified personnel, and maintaining flexibility.

Geopolitical Trends

According to ContractorCalculator's analysis, Brexit has led to stricter labor laws in the UK. One prominent example is the IR35 rule, which increases taxes for contractors.

As a result, many companies are compelled to search for alternatives outside of the UK, like offshoring or nearshoring. According to recent studies, many UK startups and expanding businesses are now looking to hire people in nations like Portugal or Poland. The primary justifications are that these offshore resources are significantly less expensive and enable businesses to evade the IR35 tax regulations' financial burden.

Large corporations and the government have started to routinely collaborate with external partners for research and development. This is not a fleeting trend, but a substantial and permanent change. International teams are now frequently involved in even large-scale projects, such as the digital initiatives of the National Health Service (NHS).

Having Access to a Vast Talent Pool

The UK is currently facing a serious tech talent shortage, partly as a result of the departure of EU workers following Brexit. This gap is filled in part by nearshoring. About 1.8 million people work in IT in Central and Eastern Europe alone, and the region produces a lot more computer science graduates annually than the UK. These developers are very talented. Poland is known for its scientific and technological education and is among the top countries in the world for coding skills.

Economic Benefits

The average annual cost of hiring a developer in the UK is £57,500, which is 30–40% less than the cost of hiring one in Poland, Bulgaria, or Romania, which is about €43,000. Startups are able to expand their runway and increase their investments in other areas of growth because these cost reductions are achieved without sacrificing quality.Furthermore, employing tech workers in these regions often results in lower income taxes (some as low as 5% to 10%), and they are exempt from complex UK tax laws like IR35. As a result, employment costs are reduced. They are therefore easier and less expensive to hire as contractors than locals.

Good Alignment of Law and Regulation

Contract law and intellectual property (IP) protection are also robust. UK businesses can work with Eastern European vendors with confidence because EU-wide IP laws are consistent with UK laws, ensuring that patents, trade secrets, and copyrights are safeguarded.

Agile Teamwork and Velocity

Speed to market is crucial for startups. Collaborating is much simpler when you are working with a team that is just one or two hours ahead of or behind you. You can work on code together in real-time, hold daily check-in meetings, and promptly share feedback when both teams are at work because your workdays largely overlap. All of this speeds up project completion. This high level of integration is difficult to achieve with offshore teams in Asia, where a time difference of 5 to 8 hours can cause significant delays. Travel is also made easier by proximity. In just a few hours, a UK manager can take a plane to places like Tallinn, Lisbon, or Warsaw.

The Cultural and Linguistic Fit

Many developers in Portugal and Eastern Europe have received Western-style education and are skilled in contemporary agile development techniques. Professionals in these nations' tech industries speak English and are conversant in US and UK software standards. A significant advantage for startups is that, because they function and communicate similarly to British teams, there are fewer misunderstandings and projects can proceed more quickly.

To Sum up

Analysts predict that the trend of UK-based businesses outsourcing the development of custom startup software will only pick up steam in 2026. The business and technology insights firm Gartner's most recent forecast projects that global IT spending will reach $6.08 trillion in 2026, an increase of about 10% from 2025.

Nearly 40% of major European tech buyers specifically plan to adopt more nearshore (especially Eastern European) sourcing, according to the CBI's analysis. According to Gartner and others, the digital transformation and its "massive talent pool" at a lower cost will have fueled the rapid growth of the software industry in Eastern Europe by 2026.

In conclusion, it is generally anticipated that by 2026, nearshoring will be a common practice rather than a specialized cost-cutting tactic for European tech companies, including UK startups.