Portugal is gradually establishing itself as one of Europe’s most attractive technology hubs for large organizations.
But behind this growing attractiveness lies a less visible reality: as IT projects multiply, collaboration and contracting models are reaching their limits.
The challenge is no longer just about accessing talent. It is now about structuring that access, in a market where cascading subcontracting and loss of visibility are weakening procurement governance.
A market that has changed scale in just a few years
With just over 10 million inhabitants, Portugal is not a volume market in the strict sense. Yet its integration into European value chains gives it a growing role within the IT ecosystems of large organizations.
The country combines several structural strengths: a limited time difference with Western Europe, excellent English proficiency, and a strong culture of working in international environments.
Long confined to execution roles, Portugal is now mobilized around high value-added IT, data, cloud, and cybersecurity expertise. This move up the value chain is profoundly changing the nature of client–supplier relationships and is making purely transactional sourcing models obsolete.
This evolution is reinforced by the growing presence of major international groups, which naturally drives the arrival of specialized consulting firms, independent experts, and freelancers. The market therefore operates as a virtuous circle.
Portugal is not a volume market, but a value market. For many European organizations, it has become a natural entry point for structuring IT projects.
Lisbon and Porto, drivers of a highly concentrated ecosystem
Portugal’s momentum is built on strong geographic concentration. Lisbon and Porto capture most of the professional services activity, leaving little room for secondary hubs. This polarization increases ecosystem density, facilitates connections, and accelerates the rationalization of expert communities.
Lisbon, in particular, benefits from strong institutional recognition. The Greater Lisbon region is ranked a “Strong Innovator” by the European Commission, with performance levels above the European average. A clear signal of the technological maturity reached by the local ecosystem.
Economic attractiveness shaping corporate decisions
One of the main drivers of Portugal’s attractiveness remains the economic differential. For many IT profiles, average daily rates are significantly lower than those observed in France, often up to twice as low depending on the profile, while offering a level of expertise considered comparable by clients.
For procurement departments, Portugal therefore represents an attractive balance point: access to qualified skills in a stable environment, without shifting toward offshore models that are more culturally and operationally distant.
Client feedback is very clear: the quality of expertise is there, with a cost differential that remains a structuring factor in decision-making.
Portugal as a natural nearshore option
Within this logic, Portugal fully fits into European nearshore strategies. It is often mobilized as an extension of existing teams, particularly for IT projects requiring strong interaction with business teams, cultural proximity, and smooth communication.
As such, Portugal is often perceived as a nearshore option that is easy to integrate into existing setups. But this apparent simplicity masks increasing governance complexity, especially as volumes grow and subcontracting chains multiply.
This team-extension logic is part of a broader approach to diversifying European hubs. Spain, for example, is experiencing strong momentum driven by the growth of its technology hubs and the arrival of many international talents, as analyzed in a dedicated article.
A less visible reality: cascading subcontracting
In the Portuguese market, cascading subcontracting is a common practice, whether visible to procurement departments or not. Behind a preferred supplier, several layers of intermediation may coexist, often managed outside formal contractual frameworks. While this model may function operationally, it durably weakens procurement governance: loss of visibility, diluted responsibilities, and stacked margins become the norm, without always being clearly identified as such.
In many cases, an organization could mobilize the same resource, with the same skills, for around 20% less, simply by removing these intermediary layers.
Cascading subcontracting is rarely visible from the client side because it works. But when flows, margins, and responsibilities are analyzed, the gaps are significant.
For procurement departments, this situation is not a supply issue, but a governance issue.
This reality is pushing more organizations to rationalize their supplier panels, not by closing them further, but by seeking models capable of providing direct access to expertise, without recreating new subcontracting chains.
Umbrella contracting as a structuring lever
It is precisely in this type of configuration that umbrella contracting takes on a strategic dimension. In a highly fragmented Portuguese professional services market, where international firms, specialized local players, and independent experts coexist, collaboration models can easily overlap, to the detriment of clarity and procurement governance.
When designed as a structuring tool, umbrella contracting allows procurement departments to work directly with the expertise mobilized, without multiplying preferred suppliers or accepting cascading setups. It replaces informal contractual chains with a single, compliant, and traceable contractual point, which clarifies responsibilities, secures relationships, and preserves the flexibility expected by business teams.
In this context, umbrella contracting helps secure access to skills without rigidifying supplier panels or recreating the subcontracting mechanisms it is specifically intended to eliminate.
Structuring access to talent in an accelerating market
In a Portuguese market that is accelerating, the challenge for procurement departments is no longer simply to access expertise, but to steer that access with visibility, cost control, and governance, at a European scale.
In this context, commercial contracting emerges as a structuring lever to secure nearshoring strategies and sustainably limit cascading subcontracting.
To structure your professional services in Portugal or explore more open and controlled models, our local teams are at your disposal.
