Eastern Europe is now rapidly becoming the most attractive location for offshore software development. Software companies in the United States, the United Kingdom, and Western Europe preferred outsourcing development services to India or the Philippines some time ago.
The only benefit that they could get were lower prices while the quality of the services was poor. Outsourcing to Eastern Europe has brought affordable prices, high-quality services, wide talent pools, convenient time zones, and good communication. A.T. Kearney and Tholons consulting companies highly rate the Eastern European countries as preferable outsourcing destinations.
Offshore Software Development in Eastern Europe: Pros
To summarize the given information about the three major outsourcing destinations, here are the key advantages of outsourcing software development services to Eastern Europe:
Advanced skills at favorable prices. Software engineers in Eastern Europe charge more than developers in India or the Philippines. But their rates are almost two times lower than those in the US. Low rates do not impact the quality of work.
Convenient time zones. You can have a few hours of overlap between a head office in the US with the offshore team in Ukraine. As a result, it may seem that the work is done 24 hours a clock.
Large talent pool. Unlike the citizens of other countries, Eastern Europeans are passionate about IT, and gaining a degree in information technology is becoming more and more popular each year. A big number of young people want to stay up to date with the current trends in the world of technology and innovation.
Location and culture. Let’s take Ukraine as an example. Kyiv, Lviv and Odesa have international airports and it takes a few hours to get from the EU countries and about 8 hours to get to Ukraine from the East Coast of the US. Project management is much easier when you have a chance to communicate with the team face-to-face.
Laws and regulations. There’s a law about Intellectual Protection in Ukraine that protects the copyright for the databases and computer programs. It means that no pieces of the code can ever be transferred to the third parties.
Offshore Software Development in Eastern Europe: Cons
Like anything else, outsourcing to Eastern Europe poses certain risks, which are as follows:
Obscure taxation. The taxation system in some countries of Eastern Europe may confuse the offshore clients. We recommend checking the business entity to which you issue the payments. If we take Ukraine, we’ll see one of the lowest taxe rates in Europe.
Developers leaving the project. Highly competitive offshore software development market in Eastern Europe and the local software agencies that fail to retain the developers result in losses for the team.
Lack of communication. In many cases, collaboration with a local software development agency may involve communication only via a project manager, so the client has no direct access to the team.
Leaks of sensitive information. It may happen that contracts are signed in a hurry without an NDA. Some developers may include pieces of the code in their GitHub portfolios because they did not know that it was not allowed.
Lack of flexibility. Project objectives may change at any stage of SDLC and it’s not always possible to predict them and change the stack or add more people to the team on time.
Outsourcing to Eastern Europe: Which Country to Choose?
The outsourcing conditions offered by developers in Eastern Europe may vary from country to country.
With the fastest growing economy in the European Union, Poland has quickly reached economic stability, and this growth has also influenced the IT industry in the country. Here are some key facts about Poland:
- The country’s talent pool is more than 140,000 developers working in about 450 offshore companies.
- The skills of Polish software engineers are ranked 4th by TopCoder and 3rd by HackerRank.
- The rates of software developers in Poland start at $50/hour.
- The country’s tech universities have over 15,000 graduates.
The country has already demonstrated excellent results in terms of tech innovation and offshore software development. Some successful global startups such as Grammarly or Petcube were established and built in Ukraine. Here are some other interesting facts about the country’s tech industry:
- Ukraine is the “Outsourcing Destination of the Year” as of 2017, according to the Global Sourcing Association (GSA).
- The skills of Ukrainian software developers are ranked 6th by TopCoder and 11th by HackerRank.
- HackerRank has ranked Ukraine as a country with the best software engineers in the security domain.
- The country’s talent pool is nearly 116,000 developers working at over 1,000 tech companies.
- An average cost of software development services in Ukraine is about $37 per hour.
Being a member of the EU since 2007, Romania is now among the top 5 EU countries with the fastest growth of the economy. Romanian offshore software development companies focus mostly on the fintech industry.
This is because the bank commissions in the country are among the largest in the region, so the fintech startups offer cheaper alternatives. According to Saxo Bank analysis, Romania is a perfect place for fintech revolution. Other facts about the country’s IT industry are as follows:
- There are over 100,000 software engineers in Romania.
- The skills of Romanian developers are ranked 16th by TopCoder and 20th by HackerRank.
- In 2017, the tech industry in Romania had grown up to $4.2 billion and generated 5% of the GDP.
- Java and PHP are the core technologies that the Romanian software engineers specialize in.
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The Bottom Line
Eastern Europe is now in the process of becoming the most attractive offshore software development location. Countries such as Poland, Ukraine, Romania are highly rated by A.T. Kearney and Tholons consulting companies as preferable outsourcing destinations because of the following benefits:
- Advanced skills at favorable prices.
- Convenient time zones.
- Large talent pool.
- Good communication.
To prevent all of the above risks, you need to carefully choose the outsourcing vendor and ensure complete transparency of each agreement and transaction between the two companies. Diceus is named to be the industry leader in 2019 by Clutch. Positive reputation of the company, a big number of reviews, the ease of ordering software development services in Ukraine makes it the most attractive destination.