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Andrew
Burak
CEO at Relevant

Is Singapore Ready to Join the Global IT Outsourcing League?

Outsourcing

Over the past few years, we have seen exponential growth in Singapore’s IT sector. Undoubtedly one of the most booming economies, the country is considered an ideal outsourcing destination by many. 

Being one of the key outsourcing industry players, Singapore looks to offer high-quality software at reasonable prices. The 19 billion dollar budget for its research and innovation 2020 plan is enough proof that the government is focused on creating an innovation-driven economy.

Singapore's Investments in Tech and Innovation: Timeline
Source: National Research Foundation of Singapore

So, is Singapore a new tech hub?

Singapore is an IT dynamo. Its outstanding success in software outsourcing has made it an attractive tech hub on a global scale. In 2019, the Singapore government gave over $29 million to facilitate 5G research and transform the country into one of the world’s leading innovation centers for 5G technology.

Before going into much detail on Singapore, let’s take a detour and look at other Asia countries that could also compete against Singapore. The goal is to help you make an informed decision.

Outsourcing to Asia: what’s in it for you?

Whether you want to increase your profit margins or grow your business into an international powerhouse, Asia offers some of the best countries to outsource software development and other IT services.

Here are a few of the perks that come with outsourcing to Asia

Cost-effectiveness

Outsourcing to Asia gives companies from developed economies access to cheaper labor. With the cost of living in Asia significantly lower than in the USA or UK, you can expect to pay affordable salaries for local talent.

Additionally, outsourcing to Asia eliminates what would have been a fixed cost with in-house software developers. By turning fixed into variable costs, the company is left with extra finances to invest in other mission-critical business processes.

Skilled IT professionals

There is a vast talent pool and hundreds of IT companies in the region. These companies  create a conducive tech environment and employ highly-trained tech specialists from reputable local and international universities. 

Considering that Asian countries teach IT from an early stage, you will find that even the average programmers have the relevant experience to handle the most complex development tasks. 

This is why most western tech companies choose to outsource software development to Singapore and Asia at large.

Large market potential

For business owners looking to expand their service offerings into new markets or grow their customer base, Asia remains fertile ground as demand for products and services is high. With a sound strategy, start-ups can break even fast.

3 countries to consider when outsourcing to Asia

Singapore is one of the countries that has been growing in popularity as an IT outsourcing destination, particularly in deep tech.

Singapore’s government strongly supported IT innovations in the country by investing $300 million to boost deep tech startups in 2020. As illustrated below, IT is Singapore’s fastest-growing segment, and this is the main reason Singapore is a top outsourcing hub.

Singapore's government strongly supported IT innovations in the country by investing $300 million to boost deep tech startups in 2020.

Even if you regularly outsource IT services to Singapore, you can still find other ideal Asian countries to fulfill your outsourcing needs.

These include:

1. India

IT services are an important part of the Indian economy. The country hosts some of ITs most prominent players, including Accenture, Sun Microsystems, Cognizant, and IBM.

With more than 500 IT outsourcing companies in India, the country is among the top destinations for IT outsourcing in Asia. Here is what to expect when outsourcing to India:

Good infrastructure

The country’s cities are conducive with well-planned roads across various cities, all touted as IT outsourcing hubs. The cities include Chennai, Pune, Hyderabad, Chandigarh, and Kolkata.

Pricing flexibility

High salaries and wages can limit the growth of a company. India’s IT personnel are open to salary negotiation, with the minimum rates as low as $15 per hour, compared to the US, where hourly rates range from $50-$80.

English-speaking workforce

More and more IT specialists develop their English skills as  India’s popularity as an outsourcing destination is growing.  Therefore, many of them can seamlessly communicate with clients and minimize project challenges that result from language barriers. 

Friendly government policies 

The Indian government has also implemented policies to make it easy for companies of all sizes to accomplish their IT outsourcing goals.

2. The Philippines

The Philippines is another popular destination for IT outsourcing in Asia.

With more than 1000 IT outsourcing companies, finding a company with the skills and expertise to handle any software development project is a walk in the park.

Here is what to expect when outsourcing to the Philippines:

Excellent English education standards

Thanks to their excellent education system, the Philippines is home to many skilled developers with high English proficiency skills. As a result,  communication is almost always a seamless affair.

Wide range of IT services

One of the most significant advantages of outsourcing talent to the Philippines is the country offers a wide array of IT services, including but not limited to software development and technical support. 

Government support

Another big one: the government is very willing to support and help IT companies. Political stability provides a conducive environment for outsourcing. In addition, Filipinos have a great attitude towards startups.

3. Vietnam

The country has over 95 million people and is currently one of the fastest-growing economies in all of Asia. Unfortunately, only around 50% of its workforce speak English despite having impeccable IT skills. 

Here is what to expect when outsourcing to Vietnam:

Cost-effectiveness

Software outsourcing to Vietnam is cheaper than most outsourcing destinations. With such cost-effectiveness, companies operating on a shoe-string budget can afford to outsource their software development projects.

Skilled population

Vietnam has hundreds of institutions offering tech training to the youth. Also, the country has access to dedicated software development teams with a vast pool of fresh talent for outsourcing.

Political goodwill

Apart from a government that provides friendly policies, Vietnam is a peaceful country, making it a conducive hub for business.

You can also consider outsourcing to China, but in this article, let’s go deeper into Singapore and uncover why it is considered a rising tech hub and what to expect if you outsource your IT project to this country.

Singapore: A rising outsourcing hub?

Singapore is a highly industrialized country that offers competitive rates for outsourced IT jobs. With a favorable location, supportive legislation, and low-cost labor rates, many companies are seeking IT outsourcing services in Singapore. 

Advantages of outsourcing to Singapore

Here are the main reasons why IT outsourcing to Singapore stands out:

  • Excellent location
    The country boasts the world’s third-busiest port and ranks in the top ten of the most vibrant places to live in. As most of the world’s goods pass through Singapore’s port, the country is an excellent startup hub.
  • IT-friendly government policies and laws
    From the favorable government policies in place, it is clear that the Singaporean government is determined to make the country a hub of IT outsourcing.
  • Good tax environment
    Many times, investors have referred to Singapore as a tax haven. It is one of the very few countries that do not impose a capital gains tax. Singapore’s investors enjoy tax breaks and friendly corporate tax rates.
  • High level of English proficiency
    A good percentage of the skilled workforce in Singapore are English speakers, so communication is not a problem.

Overview of the Singapore IT Market

The IT industry in Singapore is growing at an incredible rate. With over 220,000 people employed in the sector, it has become a significant contributor to the economy.

Singapore’s IT contributes 6% of the GDP. The big players, including Hewlett-Packard (HP), IBM, and Electronics Manufacturing Services (EMS), have significant operations in the country. Also, industry giants such as Facebook and Google based their high-value data centers in Singapore.

At present, the country’s IT stocks are among the world’s best performing, registering attractive and sustainable dividends of c. 4%. Over the years, many western countries have outsourced IT support to Singapore. Here are the most vibrant tech fields in the country.

  • Digital marketing services
    Digital marketing roles are in high demand in Singapore as companies leverage the internet for brand awareness. Digital marketing specialists earn between $3000 and $ 7000 monthly, which makes digital marketing an attractive field for talented specialists.
  • Robotics
    Automation looks promising in Singapore, and automation engineers and robotics technicians earn $17000-$84000 annually. Companies like PATEC Group and Polybee are a few of the industry giants that advertised such offerings.
  • Full-stack engineering
    This is one of the best paying IT jobs with salaries ranging from $3000-$8000 monthly. Full-stack developers’ positions have been in demand, with companies like Transferwise and Nexlabs leading the pack.
  • Backend development
    Backend developer jobs in the country offer excellent rates from beginner to professional levels. Monthly salaries range from $2000-$8000. Examples of companies that seek these positions include Shell Infotech, and Qavar.
  • AI 
    AI engineers and AI developers earn good money, with salaries averaging $58,000 annually. In addition, AI’s continued growth and demand worldwide means AI specialists have good prospects. Companies with AI positions include Samsung, Accenture, and Pencil.
  • Cybersecurity 
    With surging cybercrime and a need to guarantee online safety, cybersecurity specialists are in demand in Singapore, with salaries ranging from $4000-$5000 monthly. Volt and Singtel are some of the firms that have filled such positions before.
  • Data science
    As more firms emphasize data analytics, data scientists are some of the best-paid professionals in the IT sector. Annual salaries for data scientists range from $90000 to S$200000 in companies such as KPMG and HP.

Top 5 IT companies in Singapore

It’s hard to pick which IT company is the best when outsourcing to Singapore. There are a lot of great companies offering top-notch IT services. Here are a few;

1. Accenture

Accenture is an outsourcing company in Singapore that specializes in consulting and technology services. Some of the services it offers include automation, Artificial Intelligence, Data & Analytics, and Business Process Outsourcing. 

The company has operated in Singapore for over 45 years now and is a force to reckon with.

In Southeast Asia, the company employs over 10,000 people from diverse backgrounds. Accenture is notable for helping businesses achieve customer experience excellence. The company recently made it to LinkedIn’s Top 2021 companies.

Accenture prides itself in providing intelligent operations assistance to ensure clients achieve high levels of efficiency and profitability.

2. Titansoft

Titansoft is a digital agency that specializes in IT services. The company operates from Singapore, Malaysia, and Indonesia with possible future expansion plans.

The main focus of Titansoft is building web-based solutions for clients. The company primarily focuses on mobile commerce and developing websites with an excellent user experience and tailored tech solutions.

One of the company’s most impressive attributes is its emphasis on clean code. The company ensures perfect coding services for clients, including pair programming and code reviews.

3. Shell Infotech

Shell Infotech is one of many IT outsourcing companies in Singapore to consider for your project. Its presence in Singapore after several years of operations in India is enough proof to show that Singapore is an excellent destination for global expansion and outsourcing.

The firm specializes mainly in outsourcing web development. However, it also provides offshore software testing, website design outsourcing, and mobile app development services.

4. Dynatrace

Dynatrace has operations in various countries, including Singapore. The company specializes in IT Operations and Application Performance Management, with a focus on the Asia-Pacific region.

The company provides business intelligence on complex server environments so that clients can make better decisions for their businesses. Dynatrace is headquartered in Switzerland but operates across all major regions, including Europe, United States, Asia, and Australia.

The company is committed to delivering the best support in IT Operations Management across all industries through rapid response times, proactive monitoring, and 24/365 availability. Clients can outsource their IT operations management needs to Dynatrace without having to relocate or transfer employees abroad.

5. Virtual electronics

This Singapore-based organization is an IT hardware and electronics design, engineering, manufacturing, and distribution company. The company can also outsource mobile development, Cloud solutions, and Big data & Analytics.

Virtual Electronics focuses on providing world-class customer service through a combination of in-depth industry knowledge, extensive experience in the field and relentless pursuit for perfection.

The tech company has successfully implemented projects for businesses from all over the Asia Pacific region, including New Zealand, saving clients time and money.

Challenges of Outsourcing to Singapore

While outsourcing saves time and money, there are a few drawbacks that could make you reconsider your investment. Just like any other destination, you can expect to face a few challenges when outsourcing to Singapore. 

Let us dive into details.

Tech talent shortage

The most commonly cited challenge of outsourcing to Singapore is the lack of tech talent. This is particularly the case in artificial intelligence, cloud infrastructure, blockchain technology, collaboration, and communication tools. 

Software outsourcing challenges are also a drawback. As a result, Singapore’s government and the private sector combine efforts to train the current workforce and bridge the gaps.

Time zone differences

Another challenge facing the Singapore outsourcing industry is the time zone difference. UK, for example, is a couple of hours behind Singapore. 

This can lead to misunderstandings and a lack of responsiveness if employees in Singapore are not open to work during the wee hours of the night, or do not have direct access to your customer support team. 

In such situations, immediate response to queries might be a challenge and can result in bottlenecks.

Prevalence of cyber-crime

The prevalence of cyber-crime is another challenge facing the Singapore outsourcing industry. According to the World Economic Forum, Singapore is one of the most vulnerable countries in Asia in terms of cyberattacks. 

According to Statista, cybercrime made up 25% of all of Singapore’s criminal activities. Therefore, this threat remains a significant hurdle for investors.

Source: Statista

These three factors force many companies to reconsider outsourcing to Singapore. If you are one such client and would like to scale faster, consider outsourcing to Ukraine as an alternative.

Singapore vs. Ukraine: Which one is best for your outsourcing development project?

Singapore and Ukraine are both excellent outsourcing destinations. As such, it is not surprising that you may be indecisive as to which destination is your best suit. To hasten your decision-making process, here is a Ukraine vs Asia comparison to see which is the better option.

Tech expertise

Ukraine is a larger outsourcing hub of IT services than Singapore. The country holds the top position in Europe when it comes to IT expertise. The Global Sourcing Association recognized Ukraine as 2017’s Offshore Destination.

Cultural compatibility

Unlike Singapore, Ukraine shares cultural similarities with the USA and Europe. Ukrainians do not have a solid cultural background as compared to Singaporeans. This limits the need for making cultural adjustments when outsourcing to Ukraine.

As a result, you can expect fewer disruptions to observe cultural holidays during the work calendar with Ukraine compared to East Asian countries like Singapore.

English proficiency

According to the English proficiency test, Ukrainian teenagers rank second in EFL (English as a foreign language). It means that communication with Ukraine’s software development teams will be smoother and easier than with teams from many Asian countries.

Looking at both countries, Ukraine has the upper hand. You will save big and access a workforce that shares more similarities than differences with the USA and UK.

Time difference

While Ukraine is ahead of the USA by 7 hours, the situation is works for Singapore — it’s ahead by more than 12hours, stretching past 24 hours in some states. Therefore, it will be easier to coordinate with a smaller time difference when outsourcing.

Considering Ukraine churns some of the best IT talents and has worked on multiple major projects like Bitcoin, it is evident that the country is a much better IT outsourcing destination than Singapore. 

Ukraine also boasts one of the best quality-price ratios in the world of IT outsourcing. You will get top-quality results without breaking the bank. 

Wrapping Up

Perhaps you are wondering why companies choose to outsource IT services, even when they have the best in-house personnel. Internal hiring has its limitations and may not be the best option for expanding your business globally. Here is a side by side comparison of both options:

If you’re looking for an IT outsourcing provider, look no further than Relevant Software—Relevant Software is a top IT outsourcing company in Ukraine. 

We offer various web and mobile development services, outsourcing projects of any complexity, and offshore back-office solutions for businesses.

When it comes to IT outsourcing in Ukraine or offshore software testing services anywhere, Relevant Software is your trusted partner with years of experience helping businesses succeed on the global market. 

Contact us today for custom solutions that take into account all aspects of your business model.

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Tags: outsourcing
Written by
Andrew Burak
CEO at Relevant
My company has helped hundreds of companies scale engineering teams and build software products from scratch. Let's connect.

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