The part of the software for NASA operations and US Navy submarines was developed in Central and Eastern Europe (CEE). According to the survey, 59% of tech leaders feel a shortage of tech skills. This is where outsourcing steps into the game. Many companies look for the top outsourcing countries with low-cost development center.
Global IT outsourcing countries market will grow at $481 billion by 2022, according to Statistics MRC. Last year, it was 88.9 billion U.S. dollars. The worldwide revenue of the outsourced services was 76.9 billion U.S. dollars in 2016. The biggest share of revenue came from Eastern Europe and the Middle East.
Here’s the software development outsourcing country ranking for 2019:
Besides the IT industry, there are other outsourcing segments: energy, healthcare, business services, pharmaceuticals, travel, retail, and transport. That’s why a ranking is very subjective and everything depends on the metrics that take into account and involvement of each country to analyze its IT market. We decide not to use software development country ranking. Instead, we will just describe the biggest software outsourcing countries.
Read on to find out what are the best countries to outsource software development? Where can you find the best vendor? What kind of projects can you outsource?
Are you about to start outsourcing?
Ukraine might become your destination!
Outsourcing Basics for IT
Key Reasons to Outsource Your Development
It’s clear that not all enterprises need to outsource their projects. However, there are three precise reasons that will surely mean it’s time to find an outsourcing offshoring or nearshoring partners.
Reason #1. Lack of Talents
It’s a very common situation if you don’t have an office in a megapolis. Looking for a talented person that will have enough expertise and desire to perform all the tasks with high quality is a hard task. And the process of finding may take a few months.
Outsourcing may rescue the whole project especially if you need a new team player in a few days. A great benefit of hiring a remote coder is no need to train him/her and spend costs on maintaining the working place.
Reason #2. Lack of Money
When you have a budget for a new project, you try to create a team that will not blow it up. If you have an in-house team, you may face a problem that you cannot afford having a full team. In this case, it’s a viable option to help your department using outsourcing.
Outsourcing doesn’t always mean cheap pricing. But it leads to cost and time efficiency. However, there’s a common belief that outsourcing to Asia is much cheaper than to Europe. You can look through different variants of the cost and choose the right vendor.
Reason #3. Lack of Time
If you have an idea in mind that will help you enter a new market niche or leave your current competitors somewhere behind you, time matters. The earlier you release a new project the better profit you will get.
Outsourcing will let you get a full team of developers that are ready to start when you need. You won’t spend time on training new people in your team or time on improving their qualification. All you need is to talk with a business analyst and plan your work.
Main Benefits of Outsourcing
When you know why you need an outsourcing partner, it’s time to take a closer look at real benefits that you get from mutual cooperation. There are a few important advantages that a team can get after outsourcing its development:
- Focus on core objectives. While partners handle generic tasks, your employees can think about more important business needs.
- Receive wide opportunities. External partners come with great experience and skills. Thus, you’re free to choose the features you really need.
- Release the product quickly. By outsourcing, you can enhance the overall project’s speed and deliver products/services to customers quicker.
- Save on expenses. As we’ve mentioned, outsourcing helps to reduce costs by sending the tasks to areas with lower rates.
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Top 10 Best Countries to Outsource Software Development
What do we mean by saying the best software development outsourcing countries? How do they differ from hundreds of other countries in the world? How do people pick up the top outsourcing countries? It’s obvious that there are some criteria for making such a choice and we will share this information with you.
The factors that define the country’s level include education, communication, location, and marketing efforts. Ideally, you want to find a partner in the country with top results by all these parameters. We mean qualified IT experts, easy-to-communicate workers, close location, and valuable insights about the markets.
It’s barely possible to meet all the requirements. But the list below includes top areas that show great results.
Mindfield Consulting believes that Ukraine is one of the leading and promising countries for outsourcing. This outsourcing country has a lot of bright tech talents and engineering expertise. Moreover, Ukraine outsourcing rates are available, there is no significant cultural difference. Time overlaps seem like not a big deal because many companies find a good fit in cooperating this way.
Diceus has offices in Ukraine, too!
China offers strong tech services. PWC’s report found out that the top fastest-growing IT companies are located in China. Besides, customers may choose multiple languages for the business partnership. It has low-cost rates but higher than in CEE.
Canada is a nearshore country for the USA with a very comfortable timezone for US clients. This is a home for the startups and very strong in AI country. The main reason why this country is interested in outsourcing is a chance to work with flexible work hours. IT professionals wanted to have an agile schedule to have work/life balance.
It attracts customers with predictable quality, culture and language similarities. Because of lower currency exchange, they have cheaper prices than the US IT market.
Outsourcing to India is a controversial issue. That companies who worked with this country know its pros and cons, possible risks. The main disadvantage is that you can’t predict what quality of services you will get. Their IT companies are so different, so you may get a brilliant unicorn or very unprofessional developers. Sometimes, clients need to re-order services to make the products better.
On the other hand, an average hourly rate for software developer India is extremely low. That’s why some tech leaders are willing to invest in this country. Moreover, India’s urban population is highly educated and have good experience in delivering IT services.
Experts predict that BPO in Malaysia will reach $1,4 billion by 2021. It gained popularity because of customer-oriented services, development of great applications and innovative business processes.
Last year, this outsourcing empire was estimated at $23 billion. Furthermore, it offers employees with high-level of English proficiency and cheap labor.
In 2016, Manila kept second place for the biggest outsourcing city globally. According to the Information and Communications Office, the Philippines saw a 30% increase over the past decade. The main advantage of this outsourcing country is young demographic, good education system and language neutrality. English is the official language there that makes it easy to understand each other.
It has a good location to place delivery centers (mostly around São Paulo) to maintain global customers in Latin and North America. The Brazilian IT labor will fit for call center support, ADM (particularly Oracle and SAP ERP), infrastructure management services. For instance, a French provider recently used an alliance-to-acquisition approach to cooperate with Brazilian outsourcing team.
Last year, Brazil’s government provided modernization of the labor laws to make outsourcing services more attractive for global customers.
This is an important player in the international market for outsourcing software development and BPO. According to the 2016 A.T. Kearney Global Services Location Index, this country holds the 6th place among other countries.
It has the potential for further development as an outsourcing destination with 100,000+ IT professionals. The labor market is young: most of them are under the age of 30.
Indonesia presents one of Southeast Asia’s biggest economies. It is a financially attractive country with a good business environment and the fourth-largest workforce in the world. On the other hand, it has a small pool of IT talents and a limited set of software development services.
Nevertheless, the Indonesian government is working on economic policies to maintain its outsourcing industry. Nowadays, it has large-scale operations of the main ITO suppliers, such as IBM, PT Sigma Unify, Accenture, Samsung SDS, Cipta Caraka, PT Visionet, etc.
Romania IT outsourcing may surprise international clients with a large talent pool and qualified professionals. Bucharest is one of the quickest fast-growing cities in Europe and a popular location for the startups.
More Features to Compare
Time gap can be a problem if you cooperate with inexperienced employees. But the biggest software outsourcing countries and companies have huge experience to provide a smooth process. Moreover, many IT service providers are ready to shift their schedule to fit your timezone and set good cooperation.
An innovation-driven environment is must-have for the competitive business environment. That’s why worldwide tech brands look for IT companies from innovation-friendly economies. The indexes in the table are based on Bloomberg’s research.
Let’s briefly consider the level of innovation for the key software development outsourcing countries from our list:
- Ukraine. The country has a growing ICT sector that was worth $2.5 billion in exports in 2015. Ukraine hosts well-known startups such as PetCube, Looksery, which was purchased by Snapchat for $150 million, etc.
- China. In sectors like IT and e-commerce, China thrives in developing an attractive ecosystem to boost innovation. That’s why they don’t need to search for international markets because there is a big potential in China to satisfy business needs.
- Canada. Based on the Global Economy’s research, the average value was 55.86 points with a maximum of 57.6 points in 2013 and a minimum of 53.7 points last year.
Programmer skills are an important factor as you will collaborate with IT professionals and it’s valuable for you to know their level. Feel free to explore our table to hire skilled programmers. All the numbers are based on the HackerRank.
|Country||Average $ per hour for middles|
Billing factor is not the most important category but it helps you to plan your budget and be aware of the existing rates. Many companies look for top outsourcing countries in order to cut costs. In this case, cooperation with Ukraine, Romania or Indonesia can save you 30–50% of the price of a local hire. Keep in mind that leading IT countries such as Ukraine, China, and Canada offer specialists that work fast and can perform tasks quicker that will help you to reduce the cost as well.
How to Deal with Culture Differences and Communication Issues
At Diceus, we do our best to meet the specific needs of each customer. Actually, it is not a challenge for us because we have employees from the biggest software outsourcing countries with various backgrounds. Moreover, 86% of our employees have an advanced level of English language. And our specialists always work on their language skills with English native teachers. Diceus’ team can visit a client’s office as well for better communication and to learn the specification of the business.
We are open for collaboration with customers from the USA, Latin America, the UAE or any other outsourcing country. Our company will be glad to cooperate with you, give you professional consultation or deliver complex IT solution for your business.
Outsourcing to Eastern Europe: Value-Added Solution
IT outsourcing countries help to reduce talent gaps. Programmers from Central and Eastern Europe (CEE) are highly appreciated in the world, including top brands like VentureBeat, Gartner, and Stack Overflow. Their machine learning, IoT, Artificial Intelligence have captured global attention in recent years. Paired with fast speed of work and Western mindset, CEE will soon become the next Silicon Valley.
Focus on stats:
- According to the EF English Proficiency Index 2017, Hungary, Czech Republic, Poland, Romania have a high level of English skills.
- Ease of Doing Business 2018 rating emphasizes that Eastern European countries show significant growth in the last few years. Poland has grown from 74th place to 27th place in 2018 and Ukraine – from 132th to 76th.
- HackerRank believes that the best developers by Domain challenge are based in Eastern European countries with these leading positions: Ukraine in Security, Poland in Java, Hungary in Tutorials, the Czech Republic in Shell.
- Ukraine, Lithuania, Estonia, Poland, Hungary, the Czech Republic, Romania, Bulgaria, and Latvia are ranked highly in the top 50 of Bloomberg Innovation Index 2018.
- Ukraine, Romania, Poland, Bulgaria, Estonia, Czech Republic are recounted in the top 10 countries in software industry according to the A.T. Kearney 2017 Global Services Location Index.
If taking into account financial issues, this is an offshore software development pricing guide.
Weforum noticed that outsourcing to Eastern Europe is becoming more like outstaring. It means that Eastern European developers are equal remote partners with deep experience in handling complex IT tasks. So, such cooperation is more than hiring someone who will blindly program. Outsourcing service providers may be treated as remote CTO with an ability to propose the best tech solutions and strategy to develop needed products.
Outsharing partnership is built on transparency and trust with the opportunity to align this collaboration with the company’s culture and values. Moreover, it’s about innovation and increases the quality and speed of software development. For instance, the code for the world flight search engine Kayak was written in CEE. They made software applied by 25% of the global heavyweight vessels. The largest peer-to-peer lending marketplaces and biggest aviation parts marketplace in the world were created by the Eastern European developers as well. Finally, such developers are relocated to the best tech companies involving Facebook and Google.
Get familiar with these 10 Outsourcing Companies in Europe if you need more examples.
The Bottom Line – Good and Bad Countries
There are many concerns around outsourcing but the truth is that there is no awful country for the IT offshoring. Global companies order some services from the dedicated team because it makes sense for them. Especially in IT, many countries are willing to pay overseas executor instead of developing complex software systems. Some countries don’t have a pool of needed IT developers. But it doesn’t mean that they’re worst software outsourcing countries. They just don’t have such services accessible and these countries may be strong in other industries.
Outsourcing is a viable option and it will remain those in 2020. You can find talented people that will deliver a new project in a short time and focus more on your business. Eastern Europe includes the best countries to outsource software development thanks to a large number of talents. Diceus is one of the leading outsourcing partners in Ukraine with solid experience in the successful release of various projects.
We are a team that cares about the reputation and success of our partners. We do our best to do something more than code delivery. We are a reliable partner that can help you reach your business goals. Let us know more about your project and we will offer you top-notch solutions.