It has now been two years since the pandemic struck. Covid-19 came without notice, bashing every form of harmony, growth, and development. As if not enough, Russia took it upon itself to invade Ukraine, which many leaders have boldly condemned. Despite all the war and unrest brought about by the Russian president’s heinous acts, Eastern Europe remains the hub for IT services. The region started appealing to investors looking to outsource IT services over two decades ago.
For many years, companies have been looking for an effective method for cutting costs and increasing their profits. IT outsourcing has been the right choice. Globalization, economic growth, and ever-changing market requirements affect the IT industry and its environment. The growing demand for skill-based service providers is today’s critical trend shaping IT outsourcing. Buyers are increasingly looking for specialized companies that can offer niche services. And because customers always have a choice, European IT companies are more willing to create customized solutions for their clients.
IT Outsourcing Destinations for Software Development
IT Outsourcing Destination is a service intended for professionals to outsource their IT related services. It is the destination where you can easily find the right service providers and suppliers to fulfil your outsourcing needs.
An IT outsourcing destination needs to offer a highly educated and competitive workforce; attractive cost structure; nearshoring, cultural and time-zone proximity; access to an emerging market through the EU; stable political and business environment; and high quality of life. All these attributes are found in Eastern Europe, a region that has emerged as one of the world’s most critical IT outsourcing destinations.
Eastern Europe as An Attractive Location for IT Outsourcing
The modern IT outsourcing market trends in Eastern Europe have become more convenient, affordable and faster. By outsourcing their software development to Eastern Europe, more and more business leaders can get the possibility to gain access to the Best Developers.
For some time, Eastern European countries like Russia, Poland, the Czech Republic, Ukraine, Hungary, Romania and Bulgaria are ideal for software development outsourcing. They have been consistently ranked among the top countries in the Global Services Location Index (GSLI), which measures global service location attractiveness based on the metrics spanning financial attractiveness, people skills and availability, business environment and government policy.
What are The Current IT Outsourcing Market Trends in Eastern Europe?
Eastern Europe has many advantages that make it an excellent destination for IT outsourcing. Eastern Europe IT outsourcing market trends continue to evolve in the right direction both on the demand and supply side. In addition to cost advantage, Eastern European countries have a highly educated workforce and robust political systems, making them very attractive to international markets and businesses looking to outsource their IT projects overseas. Many of these countries are also ideal locations for access to EU markets – they are just far enough away to offer cost savings but close enough to be easily accessible when necessary.
About 49% of companies in the UK and other European countries are increasingly re-insourcing their IT processes, resulting in more domestic jobs for IT professionals and better risk management. Countries in Eastern Europe are particularly attractive to outsourcing companies from western and southern Europe due to their proximity, reasonable costs, and high quality of service. Much of this re-insourcing can be attributed to the current trend of outsourcing to IT countries within Europe.
At the beginning of IT outsourcing, companies primarily used outsourcing to reduce costs. The main goal was to find a vendor who could do the job cheaper and sometimes even better. Today, it is different. Instead of simply reducing costs, companies are increasingly willing to invest in quality. The companies have realized the significance of quality as a factor in competitive markets. This is one reason why there is a trend towards nearshoring or onshore IT outsourcing. In many cases, European vendors can offer higher quality services than their offshore counterparts at similar prices or only slightly higher ones. This is especially true for complex projects or projects that require a lot of interaction with business analysts and stakeholders.
As the “as-a-Service” market expands, so do the opportunities and trends in Eastern Europe. The latest Meta Group report shows that IT Outsourcing Eastern Europe is expected to grow by 9.7% each year through 2022. Overall, the global IT market is undergoing significant changes. Even more, As-a-Service offerings and business models are gaining importance at the expense of traditional, rigidly structured service models. Cloud services are becoming ever more critical for large companies, who often opt for hybrid cloud solutions comprising on-premise, private, and public cloud services.
Although many people believe that the global financial crisis has hit the IT outsourcing industry hard, new data shows that this market has remained stable during the last year, a significant result for such an unstable time. The survey shows that more than 60% of companies have increased their spending on IT outsourcing services, and only 6.2% of companies have reduced their spending. Not surprisingly, most buying companies prefer long-term relationships with providers for work quality-oriented purposes. Partnerships are to add value to the IT processes and systems of both parties, and contract periods have become shorter to be more flexible.
Why Eastern Europe is The Hub for IT Outsourcing?
Several factors maintain the IT outsourcing market in Eastern Europe. They include but are not limited to:
- The IT education system has been developing for more than two decades. Hundreds of universities and engineering schools in Ukraine, Russia, Poland, and other countries annually prepare thousands of software engineers.
- There is an abundance of qualified developers in Eastern Europe. Along with the universities, there are dozens of IT schools that teach programming. Hundreds of thousands of people are employed in the IT industry full-time. Many more are doing freelance projects from home or working part-time for several companies simultaneously.
- Culture and language make integrating teams from Eastern Europe with western staff easier. Whether it is Russia, Ukraine or Poland, most developers speak fluent English. They have a similar cultural background to the western society. And because many of them had an opportunity to travel to the US or Western Europe for work or studies, they feel comfortable working with Americans or Germans daily. Also, time zones might be different but partially overlap, making cooperation easier.
- The fourth and probably most importantly is the cost factor. The median salary for software developers in Eastern Europe is €1400 per month, while it is €3000 on average in Western European countries where you can easily pay ten times more to hire someone for the same job here.
To Sum it Up
The IT outsourcing industry is the most dynamic and fastest developing in Eastern Europe. Outsourcing can be an excellent way to help businesses reduce their IT costs and access services that they would not be able to obtain on the open market. Many different services can be outsourced, including applications development, software implementation, database management, and desktop technical support. Eastern Europe has been at the forefront of providing bespoke IT services regardless of the ups and downs brought about by Coronavirus and now the NATO-Russia upheavals. The most obvious factors that make Eastern Europe an attractive destination are relatively favourable wage rates and favourable conditions for doing business.