The IT outsourcing market is poised for significant growth. It is expected to reach US$460.10 billion in 2023, with an annual growth rate (CAGR 2023-2028) of 11.07%. By 2028, the market volume is projected to soar to US$777.70 billion. Over three-quarters of all executives expressed their intent to outsource IT functions in 2022. Cybersecurity took the lead as the most outsourced IT function, followed closely by app and software development, and IT infrastructure services.
In recent years, Eastern Europe has emerged as one of the most favorable destinations for outsourcing software development. With leading tech companies like Apple, Google, IBM, and Microsoft establishing software development centers in countries like Ukraine, Poland, and Romania, it's clear that Eastern Europe has become a mainstream outsourcing location for IT services. In this comprehensive analysis, we'll explore the top countries for outsourcing software development in Eastern Europe, the differences between developers in these countries, and the reasons why Eastern European developers are highly sought after.
Top Countries for Software Development Outsourcing in Eastern Europe
When it comes to software development outsourcing in Eastern Europe, Ukraine, Poland, and Romania have established themselves as the top destinations. These countries offer a combination of technical expertise, a large talent pool, and favorable cost-to-quality ratios. Let's take a closer look at each country:
Ukraine has experienced a significant boost in investments in its IT industry since 2014, resulting in the establishment of over 1,500 software development companies and employing around 200,000 IT professionals. The country's IT hubs in Kyiv, Lviv, and Kharkiv attract both startups and established companies looking for custom software development services. With a growing number of tech graduates each year, Ukraine is poised to continue its growth as a leading outsourcing destination.
- Since 2021, over 126 Ukrainian startups have successfully secured venture capital funding, with notable examples like Preply and Grammarly originating from Ukraine.
- Gartner recognizes Ukraine as one of the top 30 countries for offshore services, attesting to its growing prominence in the global IT landscape.
As a member of the European Union with a rapidly growing economy, Poland offers favorable conditions for companies looking to outsource software development. The country is home to over 400 software companies and more than 401,000 skilled professionals. With a steady annual growth rate of 5%-10%, Poland remains at the forefront of offshore software development in Eastern Europe.
- Polish developers hold an impressive 4th place worldwide in terms of skills on the Top Coder ranking.
- Poland ranks an impressive 3rd globally for producing the best developers, based on the scores from HackerRank challenges.
- In 2021, Poland was recognized among the top 20 best offshore countries in the world, showcasing its growing reputation as a tech destination of choice.
Romania has created a favorable business environment for software development companies, attracting global tech giants like Microsoft, Ericsson, HP, and Huawei. The country boasts nearly 140,000 IT professionals working in almost 20,000 companies, with an annual increment of 7,000 tech graduates. Romania's strengths lie in its financial attractiveness, excellent tech skills, and availability, making it an attractive option for outsourcing software development.
- HackerRank Recognition: Romania proudly claims the 20th spot worldwide for developers, earning well-deserved recognition for their skills and expertise.
- Thanks to its favorable business environment, financial attractiveness, and excellent tech talent availability, Romania secured a commendable 28th place in A.T. Kearney’s 2019 Global Services Location Index.
- In 2022, Romania demonstrated its digital prowess by ranking 49th in the prestigious World Digital Competitiveness Ranking 2022.
These three countries are the top choices for outsourcing software development in Eastern Europe, but there are also other runner-up countries like Serbia, Macedonia, Bulgaria, Hungary, and Georgia that offer compelling advantages for companies seeking IT services.
Differences Among Eastern European Developers
While Eastern European developers share many similarities, there are also distinct differences among developers from Ukraine, Poland, and Romania. Understanding these differences can help businesses make informed decisions when outsourcing software development. Here are some key criteria to consider:
English proficiency is crucial for successful collaboration with remote developers. Developers in all three countries have a good grasp of English, with a moderate to high level of proficiency. This proficiency is essential as most developers work with international companies where English is the primary language of communication. Some developers in Poland also have proficiency in German, while French is relatively widespread in Romania.
Technical Skills and Expertise
Eastern European developers are highly skilled and have expertise in various programming languages and niches. They are proficient in mobile app development, web development, and quality assurance testing. The technical stack varies among the countries, with PHP, Python, Java, and .Net being commonly used in Ukraine, Poland, and Romania. Each country has its own areas of specialization, such as Ukraine excelling in security and mathematics, Polish developers ranking highly in Java and algorithms, and Romanian developers known for their engagement in fintech.
When it comes to offshore software development rates, Eastern European countries offer competitive prices compared to their Western counterparts. While rates may vary slightly between countries, software development in Eastern Europe is generally two to three times less expensive than in the US. Poland has the highest rates among the reviewed countries, followed by Ukraine and Romania. Moldova offers the lowest rates, making it an attractive option for midsize projects.
Cultural Value Set
Despite the shared communist past, Eastern European developers have a western and progressive culture. Most developer communities consist of young people with an open mindset. However, there may be slight differences in mentality and personality among developers from different countries. For example, Romanians and Moldavians tend to be more risk-averse, while Ukrainian and Polish developers have more experience working with global technology companies.
Convenient Location and Time Zone
Eastern European countries are geographically close to Western Europe, making them easily accessible for collaboration. The time zone difference, ranging from two to seven hours ahead of the US, allows for a significant overlap of working hours. This makes it possible to schedule important meetings and discussions with both in-house and outsourced team members.
Talent Pool Size
The size of the talent pool is a crucial factor when choosing an outsourcing location. While it is challenging to estimate the exact number of software developers in each country, Poland, Romania, Ukraine, and Moldova have a significant number of IT professionals. These countries have a combined talent pool of over 800,000, with approximately half being software developers. Each country offers unique expertise and strengths in different areas of software development.
Reasons to Outsource Software Development to Eastern Europe
There are several compelling reasons why businesses choose to outsource software development to Eastern Europe. Here are some key factors that make Eastern European developers highly sought after:
Eastern European developers have a strong technical skill set and expertise in various programming languages and niches. They can handle projects ranging from mobile app development to web development and quality assurance testing. With years of experience and a focus on continuous learning, Eastern European developers stay up-to-date with new technologies and can deliver high-quality software solutions.
English proficiency is essential for successful collaboration with remote developers. Eastern European developers have a good command of English, making communication smooth and efficient. This proficiency allows them to work seamlessly with international clients and understand project requirements effectively.
Eastern European software engineers receive comprehensive education in computer science, telecommunications, artificial intelligence, and software engineering. Universities in Ukraine, Poland, and Romania offer top-notch computer science programs, producing highly skilled graduates. Developers in Eastern Europe also actively pursue advanced training opportunities to stay updated with the latest technologies.
Eastern European countries offer competitive development rates compared to their Western counterparts. Companies can save significantly on development costs without compromising on quality. The cost-to-quality ratio in Eastern Europe is excellent, making it an attractive option for businesses looking to outsource software development.
Cultural Value Set
Eastern European developers have a western and progressive culture, making them a good fit for international clients. They are known for their professionalism, dedication, and open mindset. This cultural alignment ensures smooth collaboration and effective communication between developers and clients.
Convenient Location and Time Zone
Eastern European countries are geographically close to Western Europe, making them easily accessible for collaboration. The time zone difference allows for overlapping working hours, facilitating real-time communication and collaboration between in-house and outsourced team members.
Talent Pool Size
Eastern Europe has a large talent pool of skilled IT professionals, ensuring a wide range of expertise and specialization. Whether it's startups, enterprise solutions, fintech, or midsize projects, Eastern European developers can cater to diverse business needs.
How and Where to Find a Software Development Company
Finding the right software development company in Eastern Europe requires careful consideration and research. Here are some steps you can take to find a reliable partner for your project:
- Research and Review Software Agencies: Begin by looking up profiles and reading reviews of software agencies on platforms like Clutch, LinkedIn, and Upwork. These platforms provide valuable insights into the reputation and capabilities of different agencies.
- Consult with Local Recruiters: Local recruiters can assist you in finding the right developers from their curated talent pool. They have in-depth knowledge of the local market and can help you identify the most suitable candidates for your project.
- Establish an Offshore Development Center: Consider opening an offshore development center in an Eastern European country with the assistance of a local software agency. This approach allows for direct control and management of your development team while leveraging the benefits of outsourcing.
- Engage with IT Communities: Reach out to local IT communities that connect clients with the best outsourcing companies in Europe. These communities provide a platform for networking and finding reliable partners for your software development needs.
Eastern Europe has become a powerhouse for software development outsourcing, offering a combination of technical expertise, competitive rates, and a large talent pool. Countries like Ukraine, Poland, and Romania have established themselves as top destinations for outsourcing software development. With their strong technical skills, language proficiency, and cultural alignment with Western values, Eastern European developers are highly sought after by businesses around the world. Whether it's the technical stack, language proficiency, or cost-to-quality ratio, Eastern European developers offer a compelling value proposition for companies looking to outsource their software development needs.
By understanding the differences among Eastern European developers and considering factors like technical expertise, language proficiency, and cultural alignment, businesses can make informed decisions when choosing an outsourcing partner. With the right software development company, businesses can leverage the benefits of Eastern European developers and achieve successful outcomes for their projects.
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