Eastern Europe is quickly emerging as an attractive destination for software development outsourcing. Many large IT firms have already set up their offices in the region, while others from the US, UK, and also the western European countries like Germany and France are outsourcing their development to the local vendors. Five of the top 20 countries on AT Kearney’s Global Services Location Index are now from the region.
Ukraine Is a Leading Destination for Software Development
Ukraine is a favorite destination because the country has more than 200,000 software engineers, good English skills, and a priority for software education. Ukraine’s IT industry is already valued at more than $5 billion, which is 8.3 percent of the country’s exports.
The developers in the country are influenced by cultures from the western world. Many entrepreneurs from these countries have set up their businesses in Ukraine. So, when you are working with a Ukrainian vendor, you will find very few cultural differences. There won’t be language barriers as well because most Ukrainians can speak English fluently.
In recent years, Ukraine’s reputation has gone up even more. The country has achieved the top position in Outsourcing Journal’s Eastern European Index. But not just Ukraine, the other countries from the region like Belarus, Poland, Romania, Latvia, and Czechia are growing too.
True, Eastern Europe does not offer the cost benefits like China or India. But they are still considerably less than the US and the UK. There are many other reasons as well why many businesses now prefer to outsource their software development to the region. Let us find out.
Top Reasons Why Eastern Europe Is Becoming an IT Hub
Here are some of the top reasons why Eastern Europe software outsourcing is booming.
- Reasonable Costs
Yes, the wages here are higher than in Southeast Asia or South Asian countries like the Philippines and India but they are still significantly lower than in Western European countries, which offers significant savings for businesses from the US and Western European countries. In Belarus, for example, the average monthly salary is USD 903.8. In Switzerland, on the other hand, it is USD 11,131.3 every month.
- Huge Talent Pool
In the west, there is often a shortage of skilled software developers. This is completely different in Eastern Europe. There is a huge, highly-skilled talent pool that knows the latest technologies. In fact, the region has more than a million techies. In 2021, the US had more than 900,000 software development vacancies. Eastern Europe’s talent pool is growing constantly, which means the future looks even brighter.
- Very Good Technical Education
The region has an advanced education system, which works as the backbone for its thriving software outsourcing industry. The literacy rate is a high 98.99 percent. A lot of people can both write and speak English very well. Students here get a formal education in math, science, and languages, which helps them, get technical degrees later. This is the reason why many top companies like Morgan Stanley and IBM outsource many of their key services to the countries here.
- Convenient Time Zones And Location
Eastern Europe is not too far from the west. So, clients can travel easily and visit their vendors in just a few hours. Real-time online communication is also easy because of the favorable time zone differences. This helps in project management. The difference is not that much even with the United States. For example, Ukraine’s time zone aligns partially with the US.
- Cultural Similarities
Unlike India, China, and other Asian countries, the cultural differences are also not that great. Many people from the region grow up in western culture, which helps them in later life, especially when dealing with IT clients from overseas. Business etiquette is also similar often. Clients from the west can interact and work with their vendors more easily because of these cultural similarities. The companies from the region also know about the western laws and regulations, which further helps them.
- Growing Software Community
In 2021, the region has recorded more than 3500 software development businesses. There are almost 1.5 million developers too and these numbers are going up every year. The many western businesses outsourcing to east Europe have also spurred this growth surely. There are not just many qualified vendors and skilled professionals, but the business environment is also favorable for companies and startups. Many governments are offering tax incentives to help businesses grow.
Expertise, lower costs, good education, cultural similarities, and a favorable business climate are the key reasons why the IT industry, especially software outsourcing is growing in Eastern Europe. Ukraine, Poland, and Romania are the leading outsourcing destinations. Many other countries in the region are trying to catch up.