IT Salaries in EU vs UK and How to Hire Cost Effectively

Across Central & Eastern Europe, the difference in labor costs reflects real-world strategy potential for UK businesses. Eurostat reports that while the EU average/hourly labor cost stands at €33.5, countries like Bulgaria, Romania, and Hungary are at just €10.6 – €14.1 per hour.

What does this mean for UK SMEs facing rising wage inflation? It means that by building remote-supported teams or partnerships in these cost-effective regions, companies can achieve similar output without forcing salary hikes. That approach reflects why businesses are increasingly merging strategic workforce planning with offshore resources — not as a compromise on standards, but as a smart move to maintain growth under tighter budgets.

In this article, we'll explore how the average salary in Europe plays into these decisions — and how, in 2025, savvy recruiters are combining UK excellence with CEE cost advantages for smarter team planning.

Why Businesses Benchmark Salaries Regionally in 2025

As hiring grows more complex and candidate demands rise, smart employers rely on regional salary benchmarks to decide where and how to scale their tech teams sustainably. In 2025, the balance between local wage trends, global talent pools, and shifting living costs makes this exercise not just an HR checkbox, but a strategic necessity.

Here’s why salary benchmarking has become a must-have tool for UK companies:

• Understand Cost vs. Value: Align pay to productivity and role scarcity.

• Plan Hybrid Teams: Combine local UK talent with nearshore or offshore contributors.

• Support Pay Equity: Prevent internal pay gaps that fuel turnover.

• Forecast Budget Needs: Keep project bids realistic as wages shift quarterly.

Rising Wage Pressures in the UK

For UK employers, maintaining competitive compensation is essential. A recent Office for National Statistics report reveals that average weekly earnings (excluding bonuses) rose by 5.2%, translating to a median income of roughly £35,000.

A Guardian analysis shows the average London salary has more than a 60% difference compared to a lower-paid city like Burnley. While not all of that premium applies to tech roles, allowing for cost-of-living and market factors, it illustrates the high leash of competition UK-wide employers face when hiring in major hubs.

For SMEs and growing businesses, those top-tier salary demands — alongside sign-on bonuses, equity, and perks — come at a steep cost. That's why many are looking at alternative strategies beyond local hiring alone.

Ready to benchmark smarter and build a cost-effective, resilient team? Outstaff Your Team can tailor market data and hiring strategy for your exact needs.

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The CEE Alternative: High Skills, Lower Costs

Central and Eastern Europe remains a steady relief for companies squeezed by local wage inflation. According to Eurostat’s 2025 Wage Report, hourly employer costs in such countries as Serbia, Bosnia, and North Macedonia hover between €10–€14, far below the EU average of €33.5.

CEE Nearshoring Snapshot:

• Well-educated, EU-aligned engineers

• English proficiency common in IT

• Time zone overlap with the UK

• Typical savings: 30–50% per FTE compared to the UK

This practical combination explains why the conversation about IT salaries is no longer purely domestic. For UK companies needing to stay profitable, benchmarking costs regionally and tapping nearshore talent is now a mainstream strategy.

Curious how nearshoring could stretch your budget? Let’s map out a custom hiring plan that matches your product goals and cost targets.

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What’s Behind the UK–CEE Salary Gap?

Businesses weighing UK versus CEE hiring don’t just compare wages — they study skill supply, employer costs, and the reality of living standards. Let’s break down what really drives the pay difference and why this matters.

Demand for Specialized Tech Skills

The UK’s digital economy runs on a tight supply of highly specialized roles: think DevOps, Cloud infrastructure, and AI engineering. This scarcity pushes companies to pay well above the United Kingdom average salary just to compete for experienced talent.

Why demand inflates pay in the UK:

• Low graduate output: Too few STEM graduates to meet growth.

• High industry competition: Big tech and startups chase the same profiles.

• Urban talent clusters: London and major hubs drive up market rates for the best people.

Meanwhile, Central and Eastern Europe benefits from a long-term focus on technical education. Countries like Serbia and Romania have expanded ICT university programs, resulting in a steady flow of junior and mid-level developers, which keeps salaries more balanced.

CEE’s supply advantage:

• Strong local universities produce qualified engineers.

• Many tech professionals are fluent in English and used to remote work.

• Deep pools of freelance and contract developers are ready to scale teams.

This supply stabilizes pay bands and sustains a clear salary gap that UK employers now leverage when expanding development capacity.

Employer Tax and Social Costs

Employer-side social contributions are an often-overlooked factor behind the compensation gap between the UK and Central & Eastern Europe:

UK

• The 2025 Autumn Budget raised the main employer’s National Insurance rate to 15%, with a lower threshold — so businesses pay NI on more of each salary.

• Mandatory pension auto-enrollment adds another layer to payroll costs.

• Combined, these push the true cost of a tech hire well above the advertised salary — a reality that catches many SMEs off guard.

Central & Eastern Europe:

• Most countries keep employer taxes simple: flat rates for pension, health, and unemployment insurance.

• Overall, these statutory costs stay lighter than the UK’s combined National Insurance and pension burden.

• This means companies can pay fair local salaries without inflating their total spend per developer.

In short, even when base salaries look similar, the final payroll in the UK is heavier — making nearshore talent a smart lever for budget-conscious hiring.

Real Take-Home Pay vs. Cost of Living

Comparing salaries on paper only tells part of the story — what really counts is how much developers have after covering everyday essentials.

In the UK, high housing and living costs significantly reduce take-home pay, even when gross salaries look competitive.

By contrast, most Central and Eastern European locations offer a refreshing balance:

• Housing and utilities won’t drain the budget, so local pay stretches further month to month.

• Daily essentials — food, transport, services — eat up less of a paycheck than in most UK cities.

• Modern amenities and tight-knit communities make these regions a safe bet for remote hires and nearshore teams alike.

A recent Financial Times analysis highlights that Eastern European cities regularly appear among the most affordable city-break destinations for UK travelers — often costing 40–60% less than Western capitals. If medians hold up, it’s a clear signal: developers on standard CEE salaries enjoy better purchasing power than their UK counterparts on similar gross pay.

That’s why many hiring managers are asking how to negotiate developer’s salary in a way that reflects fair local compensation yet offers global competitiveness.

How Companies Are Rethinking Hiring

From lean startups to multinational corporations, UK companies are shifting away from relying solely on local hiring. Instead, many now use nearshore IT staffing to stay competitive without getting squeezed by markets offering the highest minimum wage in Europe.

Here’s how this looks in practice at different scales:

Small Companies: Freelance & Micro‑Teams in the Balkans

In our work with early-stage tech companies, we see a pattern: founders want experienced hands on deck but can’t justify full-time salaries while revenue’s still growing. For this reason, many start with small, highly skilled staffing groups in CEE. It’s a pragmatic way to test ideas, ship MVPs fast, and keep the payroll lean until they’re ready to scale a dedicated team.

Mid‑Sized Firms: Dedicated Nearshore Units

Mid-tier SaaS companies frequently build long-term nearshore teams in places like Skopje. It’s an effective way to scale while staying aligned with realistic tech salary levels in those markets — freeing up funds for product growth and marketing.

Large Enterprises: Shared Service Centers

For larger multinationals, Shared Service Centers across Central & Eastern Europe have become the norm. They centralize R&D, support operations, and take advantage of the region’s favorable salary vs cost of living ratio. This strategy helps companies avoid the cost pressures seen in markets, while meeting EU compliance standards.

Comparative Salary Table: UK vs. Central & Eastern Europe

Below is a snapshot from our latest internal research comparing IT salaries EU vs UK side by side. These figures highlight the real average IT salary bands across key tech roles — so you can benchmark, plan, and hire smarter in 2025.

In short, for the cost of one senior hire in the UK, you can often build a compact, well-rounded team in CEE — turning a single salary into a launch-ready development unit.

How to Use This Data to Build Better Hiring Strategies

Knowing what developers earn is one thing — using that insight wisely is what sets cost-effective teams apart. Here’s how to turn salary comparisons into smart hiring moves:

Benchmark Regularly & Locally

The market won’t stand still. Review the average IT salary in your chosen regions at least once a year, not just when opening a new role. This is especially true in Central & Eastern Europe, where rising demand means some cities catch up quickly. Cross-check local sources, tech community trends, and official data to compare salaries in Europe realistically, not just on paper.

Offer Total Packages, Not Just Salary

Developers — wherever they’re based — look at the whole offer. Make sure you balance the average salary in Europe with valuable extras: flexible hours, good remote tools, regular training, and a clear path for promotion. These perks help keep your offer attractive, especially when candidates weigh real income vs nominal income — what their pay buys them after rent and living costs.

Plan for Scalability

A smart nearshore strategy rarely goes from zero to 50 people overnight. Many successful UK firms start with a small pilot team. They test workflows, build trust, then grow step by step into a fully integrated hub. This phased model spreads cost and reduces risk — so you scale smoothly instead of firefighting later.

Final Thoughts: Think Beyond Salary, Focus on Value

A competitive average IT salary is just the starting point. In 2025, the smartest hiring strategies blend clear benchmarking with cultural fit, career growth, and retention from day one.

The right location and cost structure can stretch your budget, but it’s the way you build trust and local buy-in that turns a distributed team into a true asset.

If you’re planning to expand or rethink where your tech team works best, our team is here to help you design a salary and hiring plan that fits your roadmap — without hidden surprises.

FAQ

How do IT salaries in the UK compare to those in the EU?

UK IT salaries are generally higher than the EU average, especially for senior and niche tech roles. However, Western European hubs like Germany and Ireland can match or exceed UK rates for top talent.

Which European country has the highest minimum wage in 2025?

In 2025, Luxembourg has the highest minimum wage in Europe, followed by Ireland and the Netherlands. These countries maintain strong labor standards and high living costs.

How do salaries vary across different European countries?

Tech salaries vary widely across Europe. Western and Northern Europe pay the most, while Central and Eastern Europe offer skilled talent at lower rates, making them popular for nearshoring.