Outsourcing Software Development to Eastern Europe in 2023

With the global IT outsourcing market valued at over $572.88 billion and will double by 2030, there’s clearly a lot of demand for such services. Many enterprises, from small-business owners to big corporations, find outsourcing more profitable than in-house development, not just because of cost-cutting. On the part of business owners, outsourcing opens up opportunities for successful digitalization and innovation. On the part of vendors, it creates a highly competitive environment for developing their technological edge.

While the advantages of outsourcing software development are pretty evident, choosing the right destination is still challenging. But don’t worry! We will not leave you in doubt. In this article, we propose comparing the Eastern Europe software outsourcing destinations and highlighting the opportunities each can promise.

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Key Advantages of Software Development Outsourcing to Eastern Europe

It may seem counterintuitive to discuss outsourcing when a potential recession looms and a wave of layoffs has swept the industry worldwide. However, the demand for software developers and engineers remains high, as innovation and development are proven ways to stay competitive and viable. And the outsourcing industry will likely benefit from this because it is often used as a cost-reduction strategy.

And here, companies are faced with a choice – turn to outsource companies from Eastern Europe or consider any other region. Asian countries seem cheap in IT outsourcing rates, but experienced clients understand that quality, a business-friendly environment, reliability, and proximity are much more essential.

Be sure that Eastern Europe’s destination and IT market remain more suitable for Western European countries and a good offshoring option for US or Canadian companies. Here are a few convincing arguments you should be aware of:

Top-quality technical education

Eastern Europe is famed for its education system – the mainstay of a thriving outsourcing industry. Students in the region receive proper education in mathematics and computer science, which helps them earn the technical degrees they need to outsource IT and software.

A big pool of tech professionals  

Eastern Europe has over a million developers, and this talent pool is constantly growing.  Many are very experienced specialists with technical degrees, which is why Eastern European programmers have been among the top ten developers in the world.

Cost-effective hiring

Outsourcing in Eastern Europe will cost you less, given the economic and socio-political conditions of the countries in this region. But it does not impact the quality. Here you can hire comparable talent for 40-50% cheaper than in the US or Western Europe.

Best cultural fit

In such a case, outsourcing software development to Eastern Europe has advantages too. East European culture is consistent with the mentality of Western clients. That means smooth collaboration due to a similar attitude toward management, dispute resolution, and teamwork.

Strong data security

Eastern European countries conform to the same norms as the rest of Europe. That means abiding by keeping non-disclosure agreements and copyright laws and applying policies like the General Data Protection Regulation (GDPR).

Proficiency in English

According to the EF Language Proficiency Index, Eastern European countries are in the top 30 countries with high English proficiency. Since this language is a means of international communication, it creates strong partnerships with clients from different regions.

Challenges of IT outsourcing in Eastern Europe

Although outsourcing in Eastern Europe has many advantages, it also comes with certain risks and problems. Businesses can establish reliable and fruitful outsourcing relationships in this area by being aware of these difficulties and taking measures to address them.

Various tax collection processes

Tax methods can vary from country to country. For example, Poland has no payroll tax for non-resident companies. But they must still follow other Polish tax laws, like individual income and sales tax. That’s why businesses opt for outsourcing agencies – a tech partner will take care of any documentation related to taxes.

Different time zones

The time difference can cause quite an inconvenience. Still, unlike in Asia, there is only a few hours’ difference between EET and outsourcers from countries like the UK. The difference in time zones with the US is greater, but there are still a few hours of overlap to sync between teams. However, this shortcoming can benefit US customers with 24/7 business coverage at a reasonable price.

Less visibility over the project

Whether a company outsources a single project or an entire department, it shouldn’t expect the same level of control as with an in-house team. But a reliable supplier will definitely offer the desired level of control over your project.

Data privacy and security concerns

With sensitive information being shared with an outsourcing team, companies must ensure their data is protected and secure. But sound outsourcing partners establish clear protocols for data protection and use secure communication channels to protect sensitive data.

As you can see, the above offshore problems and risks are solvable and should not encourage you to refuse outsourcing software development in Eastern Europe.

Top 5 Outsourcing Destinations in Eastern Europe

When choosing a location for IT outsourcing in Eastern Europe, it is important to consider factors like quality, capability, culture, and cost. We will apply these criteria to each country in our list to see how they fit.

Ukraine

According to a recent IT Association report, the IT industry contributed $7.3 billion to Ukrainian exports in 2022. The country has established itself as a reliable outsourcing destination due to highly qualified software engineers. 

Global recognition of technical specialists

Ukraine is known for its reputation for producing high-quality specialists and results in the tech industry. It is the birthplace of many renowned startups, such as Grammarly and Petcube.

Quality and quantity balance

Ukraine ranks 11th out of 30 European countries in terms of IT competitiveness. Developers from Ukraine have demonstrated their prowess in HackerRank coding challenges, coming in with an average score of 88.7%.

Affordable developer rates

Ukraine has the lowest tax rates and cost of living among all Eastern European countries. Therefore, hiring a senior software developer in Ukraine is also cheaper. According to Glassdoor, a Ukrainian developer earns an average of $4000 per month. Compare that to the $10,000 salary for a senior software developer in the US. As you can see, the difference is obvious.

Poland

Other countries in Eastern Europe will also suit your outsourcing needs, particularly Poland. In terms of outsourcing, that country can boast:

Large talent pool

In Poland, the IT industry has attracted significant public attention and interest. This has resulted in a large talent pool of 295,000 qualified professionals, including programmers (57%) and quality assurance specialists (15%).

Relatively low rates

The cost of outsourcing to Poland ranges from $40 to $90. This rate is definitely higher than that of Ukrainian developers, yet much lower than in the US.

Quality of work

Polish developers have substantial experience and a progressive viewpoint that allows them to provide good-quality work. In the World Digital Competitiveness Ranking 2022, Poland ranked 46th.

Bulgaria

As a member of the EU since 2007, Bulgaria has been a country with one of the most stable and fastest-growing economies. The government has been allocating huge budgetary funds to developing the Bulgarian IT sector and adopting the necessary regulations to make the country a true outsourcing and investment haven for international business.

Business climate

The government aims to improve Bulgaria’s business environment by offering a range of incentives for foreign investors. Foreign and local IT companies pay only 10% – the EU’s lowest corporate and personal income taxes.

Affordable rates

But it’s not only taxes that tech businesses can save on. The average rates of leading specialists in Bulgaria are about $38-80 per hour, which makes outsourcing quite affordable. That is why organizations like Cisco, Hewlett-Packard, IBM, Oracle, and SAP are already working with Bulgarian developers.

Quality of work

Bulgaria is a treasure trove of highly skilled software developers. Their technical competence is confirmed by authoritative rankings such as the SkillValue report and the HackerRank Best Developers list, where Bulgarians are ranked 12th.

Romania

Thanks to its highly desired geographical position, Romania has secured a place in the top five destinations for Eastern Europe software development outsourcing. Here are a few reasons why it may be worth outsourcing to Romania:

Proper skill and training

Romania focuses on STEM subjects and has implemented several methods to link IT industries with educational institutions. However, you may face a lack of qualified candidates. Romania has a lower talent pool compared to the countries mentioned above.

Acceptable prices

You can hire Romanian developers for $40-85 per hour. This also places the country at the lower price point of Eastern Europe software development outsourcing.

Technical prowess

Software development outsourcing to Romania is also a good idea because the country has scored 81.9 in the Coding Olympics and has secured the 20th position on the leaderboard.

Multilingual environment

Romanian developers are trained to be fluent in English and several other languages, like French, German, Italian, and so forth. Romania has an EPI score higher than its European counterparts.

Czech Republic

Tech specialists from the Czech Republic have gained an excellent reputation worldwide. Many business owners prefer to hire workers from there, and even large companies like Microsoft, Oracle, and IBM have offices in this country. Here are some reasons for the popularity of the Czech Republic for IT outsourcing:

A good level of education

The average number of people with tertiary education in the Czech Republic is 35%. Overall, the country’s technical universities produce over 16,700 IT specialists annually.

Reasonable prices

The salaries of Czech developers range from $35 to $85 per hour. This places the Czech Republic at the high end of rates in Eastern Europe.

Substantial tech pool

The country has 200k specialists in IT. Czech developers have gained a good reputation among their Eastern European counterparts. The Czech Republic ranked 9th in the World Programming Olympics and has better scores than advanced Western countries, like the US and UK.

English-speaking teams

Another justification for outsourcing to the Czech Republic is the country’s effective communication with foreign clients. Regarding English competence among European nations, the Czech Republic ranks at number 27.

The Czech Republic vs. Romania vs. Bulgaria vs. Poland vs. Ukraine: Which country is best for your outsourcing project?

The countries mentioned above have more or less affordable rates, big IT hubs with a wide talent pool, and people fluent in English and other languages. Therefore, choosing a country from these five could be tough. So, here is a comparison table, including all the information for a quick look.

Source: Future of IT report, 2022

As you can see, Ukraine provides far more than the other competitors:

• It has the second biggest talent pool among the five countries yet offers middle-of-the-range outsourcing rates.
• Ukraine’s laws and taxation systems make it a favorable environment for work. So, you can easily hire dedicated software workers at affordable prices.
• Much focus is put on software development in Ukraine. That is why developers are proficient in modern programming languages and technologies. 

With all these things in mind, Ukraine is the winner among these five countries and is the preferred destination for software development outsourcing to Eastern Europe.

How to Choose the Right IT Outsourcing Company

With that said, we hope your question is no longer whether you should hire Eastern European developers but how to do it correctly. Here are the factors to consider when choosing an outsourcing service provider:

Technology and infrastructure

There is no one-size-fits-all solution for product development, so looking for a “technology-agnostic” partner with technical expertise in multiple areas is useful. That includes platforms, web, mobile, databases, DevOps, ML/AI, and cloud computing. And, of course, ensure it has a suitable infrastructure (equipment and software) to perform the job.

Scalability

An outsourcing company must be able to adjust the team size according to your project needs. If you plan on forming a long-term deal, it is better to check whether the vendor has the resources to scale up—add more specialists to the team—or down in case your needs suddenly change.

Skilled and experienced teams

Your vendor is only as good as the talents it employs, which is especially true for IT outsoursing. To determine the competence of your potential vendor developers, you can either read other clients’ customer reviews or check their skills yourself.

Company portfolio

One of the best ways to choose a company is to look at its portfolio on a site or resource like Clutch. There you can learn about its projects, clients, and results. Better yet, find their real product online and test it out – whether it’s a website or an app they’ve made.

Reliability

It would be best if you choose a reliable provider that can provide uninterrupted services regardless of what happens on its side. You can check the reliability of companies by examining their portfolios for long-term relationships with previous clients.

Conclusion

With high literacy rates, location, time zone benefits, a big talent pool, and fluency in English, outsourcing software development to Eastern Europe, especially Ukraine, is undoubtedly worth the investment. While by choosing Relevant Software, you can combine these advantages with our company’s strengths:

• We have a successful track record of working with clients from various industries and demonstrate a wealth of expertise and a personalized approach to projects.
• Our experts apply their deep technical knowledge and skills to put customer ideas first, with growth in mind. The solutions we created will be competitive in the market for a long time.
• Our proven cooperation models (team augmentation, dedicated team) help clients to successfully realize their projects, filling up their teams with the necessary experts.
• One of our primary values is transparent communication at every project stage. Clients can control and influence the progress of projects and visit daily team meetings and sprint sessions.

With Relevant, you can count on exceptional service, a highly skilled team, and quality solutions at an affordable price. Contact us if you need a reliable outsourcing partner in Eastern Europe.

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