Andrew
Burak
CEO at Relevant

Outsourcing Software Development to Serbia: Your 2021 Guide

Outsourcing

In today’s globalized economy, developing IT projects with an in-house team has become much less common. The outsourcing choices are so numerous and accessible that if you were to close your eyes and point to a spot on the map, you’d have a pretty good chance of landing in a country full of opportunities for your nearshore or offshore projects. Outsourcing to Serbia is one of such options in Eastern Europe.

This article aims to help you choose an outsourcing partner with your eyes wide open, avoiding some of the most common software outsourcing challenges. You should then have enough information to determine whether outsourcing software development to Serbia is a viable option for your business. 

But before we zoom in on Serbia, let’s see how it fares in comparison with other popular outsourcing meccas.

Five countries to look at for software outsourcing 

When comparing IT outsourcing landscapes at a country level, these are the five options that stand out. 

India

India has spent the last 25 years earning its place in the global outsourcing arena. Offering low hourly rates (starting at $7-$8) for their services, Indian IT professionals are usually ready to take up projects of any complexity and speak reasonably good English. The country’s main IT hubs—Bangalore, Mumbai, Hyderabad, Chennai, Kolkata, and others—are home to thousands of outsourcing companies, with about 2000 of them registered on Clutch. Most of these companies offer flexible working hours to ensure maximum time zone overlap. 

However, with so many available choices, you have to take extra care when looking for a reputable partner in India. While the pricing is competitive, the quality of service isn’t always up to the mark. Unfortunately, many software engineers in India lack the training and experience necessary for more challenging projects, which often results in costly rework. We recommend scrutinizing your prospective contractor’s reputation and their previously completed projects before making your final decision.

The Philippines

In the Philippines, English is the country’s official second language, and most Filipinos speak it with a relatively neutral accent. The booming IT sector provides sufficient compensation for overtime work, so the time difference is rarely a problem. With more than several hundred software firms to choose from and hourly rates comparable to those in India, the Philippines is a preferred choice for outsourcing web and mobile development for many US and European companies.

However, there are a few things for European and US clients to keep in mind when committing to work with outsourcing firms in the Philippines. First, the country celebrates 20 official holidays a year, which could be a problem for more demanding projects. Second, the strict labor laws oblige employers to pay a mandatory 13th and 14th-month salary to all workers—something to include in your budget calculations. 

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Hungary

Located in Central Europe, in the GMT+2 time zone, Hungary is a convenient nearshoring destination for software development and design outsourcing for most European clients. As estimated by Eurostat, the country boasts a workforce of about 170,000 IСT specialists. Hungary also benefits from high standards of technical education and has a low voluntary attrition rate of 18%

However, the software development rates are a bit higher, often reaching the $60/hour mark and above, making it one of the more expensive options in the region—compared to neighboring Ukraine. 

Ukraine

Many consider Ukraine one of the best countries to outsource software development since it combines moderate hourly rates ($26-$43) and high client satisfaction ratings. With over 130,000 engineering graduates (including about 16,000 in IT disciplines) annually, the country’s IT sector has no shortage of young professionals. 

According to a 2021 market overview, there are up to 5,000 software companies in Ukraine, with a total talent pool of more than 200,000 specialists. In total, 13 Ukrainian IT firms made it to the prestigious 2020 Global Outsourcing 100 list, and successful startups like Grammarly and Ring have gained world recognition. Another advantage: 85% of IT specialists in Ukraine speak and write in English at a proficiency level of intermediate or above.

Serbia

The International Trade Administration reports that Serbia now generates 10% of its GDP from the ICT sector, which employs more than 28,000 professionals. World-famous tech giants like Microsoft, IBM, and Intel have set up satellite offices here, and many others outsource software development to Serbia. The country is an attractive option because Serbian programmers deliver quality output while keeping their rates reasonably low, in the $25-$49/hour range. 

Now, let’s take a closer look at the IT sector in Serbia, including Serbian software development companies and the country’s IT climate.

An overview of the Serbian IT sector

The Republic of Serbia has a population of almost 7 million and is located in the central Balkans. With a high literacy rate of 98% among people aged 15 and older and an education system that continues to focus on STEM (Science, Technology, Engineering, and Math), the country’s IT industry is expanding.

Back in 2019, the country was already 20,000 IT specialists short of meeting the ever-growing demand, as Serbia’s IT sector was nearing a volume of 580 million euros. DIS, the Information Technology Association of Serbia, urged the government to take measures and increase the output of higher education institutions. The state responded by investing 70 million euros into the IT infrastructure, with another 65 million euros to come, which has been designated for schools. Making programming classes mandatory starting from elementary school is another recent initiative.

Most IT activity is concentrated in two outsourcing centers in Serbia— its capital, Belgrade, and its second largest city, Novi Sad—with the slightly smaller city of Nis occupying third position. Besides offices of many global brands, some of the best IT companies in Serbia, according to Clutch, include Rare Crew, TNation, SuperAdmins, EXLRT, and TMS. 

With the selection of IT outsourcing companies in Serbia becoming larger every year, the country is already a serious contender in the European IT arena. In the next section, we’ll provide a brief overview of the main reasons why businesses choose Serbia for their IT projects.

IT sector in Serbia overview

Five reasons to outsource software development to Serbia

As global demand for high-quality, reasonably priced IT services is growing, clients from all over the world are turning their eyes to offshore and nearshore outsourcing in European countries like Ukraine, Serbia, Romania, Poland, and others. What makes Serbia special? A combination of historical strengths, cultural qualities, and current tendencies that, when fused together, transform into immediate benefits.

Cost efficiency

Keeping budgets in check is naturally one of the first deciding factors when it comes to managing software development. With lengthy, complex projects, the difference in the rates of IT professionals in the US, Australia, or the UK, and those in Eastern Europe can amount to millions of dollars. Businesses willing to hire software developers from Serbia are in luck—the country’s average pricing is one of the most moderate in the region.  

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A well-educated and highly skilled workforce

Lower costs don’t mean much unless you can trust the quality of the service you’re paying for. When outsourcing software development to Serbia, customers can be reassured that quality is not a concern. Thanks to the education system oriented towards the sciences, Serbian IT professionals receive a head start and quickly progress in acquiring relevant work experience.

Employee loyalty

Serbs historically value loyalty to employers. This attitude guarantees customers a high level of confidence that they’ll be working with the same team without having to worry about major hiccups or interruptions through the course of the project.

A perfect nearshoring destination for EU and UK clients

While not yet part of the European Union, Serbia is working rigorously to align its laws with EU regulations and to ensure seamless cooperation with the member states and the post-Brexit UK. The country’s central location also simplifies the communication process with the neighboring time zones. 

Multilingualism and cultural values

The work ethic and values ingrained in Serbian culture are shared by most Europeans and Westerners in general. Having a common cultural base to rely on is a significant advantage in business interactions. The high level of English that the standard education in Serbia ensures is also a definite plus.

Even though outsourcing software development to Serbia is overall a wise choice, it’s not the only option to consider in Eastern Europe. Ukraine is another booming IT market just a time zone away, with similar competitive advantages, such as an attractive pricing range and a huge talent pool. To understand the full picture, it’s worth comparing what the two countries have to offer. 

Why outsource software development to Serbia

Serbia vs Ukraine: which country serves your outsourcing needs better?

Although the market of software development in Serbia is very lucrative and dynamic, it does face certain challenges. The annual growth rate of Serbia’s IT sector over a 5-year period is estimated at 6.5%. It’s not an impressive figure by today’s standards. For example, the Ukrainian IT sector has been growing at an annual rate of around 20%. Experts attribute the slow progress of the Serbian software development market to a few inhibiting factors:

  • The government’s relatively low involvement with the affairs of the local IT market
  • A high demand from outsourcing companies to hire developers in Serbia that outpaces the capacity of educational institutions
  • The somewhat sluggish growth of the country’s economy

Also, there are a few hurdles businesses might experience when working with Serbian IT partners. Those include:

  • The strong influence of trade unions—this can potentially impact certain HR aspects in business operations  
  • Strict regulation on labor—it’s a good idea for a company’s legal department to have a look at Serbian labor laws to avoid surprises later
  • A relatively young IT market—vendor’s employees may simply lack the necessary experience

Conversely, the strong government support of the IT industry is one of the reasons why outsourcing to Ukraine is becoming increasingly popular. The flexible policies and tax breaks the sector enjoys are unparalleled among the EU countries. 

Ukraine is very similar to Serbia in regards to the high standards of technical education. The country has more than 150 academic institutions with IT specialties and enjoys a 75.3% tertiary education enrolment ratio. 

As we mentioned earlier, English language proficiency in the Ukrainian IT industry is rated at 85% for the intermediate level, which also puts it in a competitive position against Serbia. 

As for the market size, the thriving Ukrainian IT sector reached $2.43 billion of IT export value in 2019, exceeding Serbia’s DIS projection of $1.4 billion for the same year.

Although the two countries seem quite comparable in terms of IT outsourcing readiness, Ukrainian development teams win in several categories: a larger pool of talent with more all-round experience, slightly lower rates, and a better average command of English. 

Wrapping up

When it comes to hiring developers, you aren’t just choosing a country on the map—you’re entering into a partnership, even if it’s for one project only. That’s when borders lose their meaning, and things like real-life experience and client satisfaction become important. Focusing on the value your prospective software vendor can add to the partnership can be helpful as well.  

Relevant Software has successfully completed numerous projects for over 200 clients. We deliver work of the highest quality, always within deadlines. So, whether you’re looking for an offshore outsourcing partner or are interested in nearshoring, our dedicated software development teams are here to help.

Let’s get in touch and figure out the details.

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Written by
Andrew Burak
CEO at Relevant
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