Software Development
Monika Krupa
Monika Krupa
Marketing Specialist
2022-03-31

Software Development in Germany: 3 Things You Need to Know

Germany – the home to some of the biggest, most advanced and globally known tech companies such as SAP, Lufthansa Systems, Soundcloud and Siemens.

With over 900,000 professional software engineers, the German software development market is booming, making it the leading software market with a huge potential in Europe.

Germany is commonly associated with high-quality products, so which automatically increases the demand and traction for German products and services, which also applies to the software development industry.

To gain a richer understanding of software development in Germany, here are 3 things you ought to know.

1. German IT market overview

Germany is known to be the largest and rapidly developing software market in Europe. A growing demand for information and communication technology (ICT) security, cloud computing services, big data as well as the increasing number of IT and software services providers are the core factors of such a market growth. With a promising forecast, the German IT market is estimated to achieve a value of $129 billion in 2025.

However, their promising future can be threatened by a talent pool shortage when it comes to skilled IT professionals. A large part of top talents who were trained in Germany often leave to continue their career in the US or Switzerland, seeking new challenges.

What is also worth knowing is that we can divide the German IT market into 3 categories – IT services, IT hardware, and IT software. The services play a major role in the German market as more and more organizations seek third-party tech experts to whom they could outsource their projects.

Furthermore, Germany is a real digital kingdom with over 8 impressive digital hubs. Depending on your industry, you might want to take a look at some of the top tech hubs and their specialties.

Germany digital hubs table

2. Most Common Challenges in Software Development in Germany

Lack of talent

Rapid digitalization, competitive market, and evolving customer needs are challenging the German tech market to fill an astonishing number of vacancies. In 2020, the number of job openings for IT professionals exceeded 120,000 offers.

By all means, software developers are still the most needed and popular profession in the tech market. According to a study carried out by digital association Bitkom, every third company where more than one IT position opened was looking for programming experts . The report also highlights that the number of job positions in the tech industry increased by 51% in just one year. Experts predict that the problem of talent shortage in Germany will not be averted in the near future and might actually worsen.

The Solution

To outsource or not to outsource? That is the ultimate question. Finding top developers for your project might be challenging considering high pay rates and, in some cases, very distant dates, hiring developers from other destinations can be the only choice. But it does not mean that it won’t be beneficial!

Let’s say that you are in urgent need of a Java software developer, but the proposed rates exceed your budget. With that in mind, you might want to start searching for some outsourcing options to dispel the crisis. Find some reference and rating b2b platforms, such as Clutch.co, and dive into all the proposed software partner options.

Bear in mind that the number of offers might be overwhelming at first, but there are a few aspects that will help you make the right decision. You definitely might want to check the time zones of preferred partner developers. If you are in Europe, for instance, you can check some of Germany's neighbors and look for some Polish software development companies or look for them in the Czech Republic.

High customer expectation

When we think about German companies, we often mention BMW, Mercedes, Bosch, Adidas, and so on. There is one common value embraced by the large majority of German businesses – taking care of high quality.

German companies are always associated with their top service, product excellence, and care of detail. For this reason, brands in the German market can only cooperate with software development companies that would be able to fulfill their high demand, offer high quality of their services, and strive for perfection.

The Solution

The quality of your services and products consists of dozens of condiments. The most crucial ones are surely the people you hire, their experience in the industry and their attitude towards development. Once your team consists of open-minded experts that focus on delivering results, you are on a good track to creating satisfying and high-quality projects.

Apart from including the best talents in your team, remember to take care of the communication with your client. Communication is a must to be able to understand their needs in the best way possible and thus meet the high customer expectations.

Competitive market

Germany is one of the strongest and best performing players in European markets. Just in 2019, Germany was home to over 94,267 software and IT services companies, making it a highly competitive environment for software development companies .

A lack of clients can be a major factor that kills your business. If your business is not appealing enough because of the quality and services you offer, then it is quite possible that finding reliable clients might become a daunting task.

Those are just a few major pitfalls that might occur during your venture. You might also want to check out our article about 3 common challenges of Software Product Development for Startups here

The Solution

Look for outside solutions. Perhaps it might be a better idea to first build your portfolio with some international clients from markets other than Germany and gain experience in that way for the first couple of years. By doing so, your business will gain more recognition and then be able to enter the German market with successful projects on your account.

3. Cost of Software Development in Germany

The cost of software development in Germany is on the more costly side compared to other countries. Naturally, the prices go along with the quality that experts offer. Have you wondered how much building your team in Germany can cost you?

Here is a comprehensive rundown of software development-related jobs and their hourly rates.

software development jobs rates

Some would focus on finding the best software development company to carry out their project. The prices of software development services in DACH countries are comparable. On the other hand, you might find some significantly lowered costs of software development in countries of Central Europe. Here are some hourly rates of software development companies per chosen country.

software development rates table

Conclusion

Factors such as demanding customers, IT skilled workforce shortage, and huge competition on the market create a challenging environment for ventures within software development. It does not change the fact that Germany still remains one of the biggest and most advanced IT markets in the world.

Sometimes you might want to look for skilled IT experts outside Germany to speed up the process of your software development project. Consider cooperating with external software development that will fuel your team with programming professionals. Germany’s neighbors such as Poland or the Czech Republic can be a great alternative to start with.

Digital product development consulting

Read more:

3 Common Challenges of Software Product Development for Startups

The Best Type of Projects for Java

7 Startups & Scaleups that Will Shake the Marketplace Scene in 2022