Outsourcing to Europe: Where to Start?

The other day I got really tired after working at my desktop computer so I promised myself to spend the weekend without any gadgets or screens. Guess what? I couldn’t live a full life. I had problems paying for my flat, ordering a taxi, getting in touch with friends, making an appointment with my doctor for the next week, reading and simply checking the time. I’m not talking about setting alarms or watching a film online. I’m quite sure that this list will be more or less the same for many people around the globe. Undoubtedly, technology has deeply penetrated into our day-to-day life and has stopped being a luxury, but is rather a necessity now.

A bandwagon

The IT industry is one of the fastest-growing and most dynamic areas of business in the world today. Despite the fact that a career in software development can be highly creative and rewarding, many people in some countries choose it simply because it provides a decent salary and a stable lifestyle.

With such a high demand for IT development, there are many companies around the world providing these services. Both small and large businesses are seeking ways to reduce costs and accelerate production, and this is where IT outsourcing comes into play.

When thinking of outsourcing, the first option that comes to mind is often India, which offers a vast pool of IT developers at a low cost and who can speak English fluently. However, prices in India are rising, and competition for qualified engineers has become intense. Additionally, there are challenges such as time zone differences, the risk of receiving low-quality work, and cultural and mental differences. As a result, many leading companies are reassessing their outsourcing destination choices.

A breath of fresh air

Europe is gaining popularity as an outsourcing hub due to a number of reasons. This region is a source of highly educated and skilled software engineers as well as significant budget benefits. Also Europe’s growing labor market and intellectual property (IP) protection that adheres to the European Union’s Data Protection Act are all benefits of outsourcing software projects to this region. And one more thing. In case you decide to visit your outsourced team, it won’t be as tiresome as flying to China or the Philippines from the US. And if you want to locate part of your distributed team there, it won’t be a problem as European countries are considered to have the best and safest cities to live in, which can’t be said about Asia or Africa.

European diversity

So why is it so that companies tend to look for offshore development teams from China or India rather than Europe. It can simply be a desire to take the easiest decision and follow the beaten path; or they just don’t want to check other options (we do hope that you’re not one of those lazy ones). So in order to help you choose among a large number of European countries (there are approximately 50 of them), I’ve analyzed the facts and would like to highlight some of the options which are worth your consideration.

The main countries which are definitely gaining more and more popularity in the IT outsourcing business are Poland, Ukraine, Bulgaria, and Romania. You can see for yourself what’s so special about Central and Eastern Europe Software Development Companies and draw your own conclusions.

Poland

• According to this year’s Global Services Location Index (GSLI) that analyzes countries in terms of financial attractiveness, human resources, skills availability and business environment, Poland occupies the 10th place and is the top European country on this list;
• Economic and political stability. Throughout the slowdown of the global economy in 2009-2010, only Poland had a growth of GDP among other European countries. Also after joining the EU in 2004 it managed to hold onto its currency rather than adopting the Euro;
• IT and software development services have become Poland’s biggest employment sector. Big IT companies (IBM, Intel, Google and Motorola) have already set operations there;
• According to Tholon’s Top 100 Outsourcing Destinations issued this January, Polish city Krakow occupies the ninth place, again being the first European representative on the top list;
• Competitive pricing and relatively low labour costs and rents;
• Good education. 39% of people aged between 25 and 34 have university degrees or the equivalent. In addition, many universities reshape their curriculum to produce specialists with the skills that would meet the requirements of world’s largest outsourcing companies;
• Polish IT professionals successfully take part in such competitions as Microsoft Imagine Cup, Google Code Jam and even became Coding World Champions in 2014;
• 1 hour time difference with the UK as well as enough overlapping hours with the US;
• The Polish share European values and have a smaller culture gap if compared to Asia;
• Language compatibility. English is widely used throughout the country, software developers there are not an exception and possess good language skills.

Ukraine

• Ukraine powers up more than a hundred of research and development centers of different international tech companies, such as Cisco, Dell, Microsoft, Bloomberg, Ericsson, Boeing, Oracle, Siemens;
• Apart from a mature IT market, the prevailing startup spirit is one of the reasons why many companies choose Ukraine as an outsourcing partner. Here are a few of recent inventions that Ukrainian developers deserve credit for: Petcube, Looksery (recently acquired by Snapchat), Viewdle software (acquired by Google), UGears, eBookingServices, STAV online to name a few;
• When you choose to outsource to this country, Ukrainian legislation guarantees intellectual property rights. “Informational technologies of Ukraine” makes sure that the created software coincides with international standards. Moreover, 75% of software development companies focus on outsourcing specifically;
• Safe money transfer will undoubtedly be a key factor for any business;
• Ukraine won ITO Destination of The Year Award 2011 thanks to its strong scientific legacy coupled with cost-benefits and a double-digit growth of the Informational Technology sector. Also, it was the world’s fifth IT services exporter worldwide with the biggest labor pool in CEE region. Current work pool is nearly 90.000 IT professionals and over 4000 software companies;
• The location of Ukraine makes it extremely convenient for Western European clients to communicate with their outsourced teams. As for the US, there are only a few overlapping hours but it is possible to get the job done while the employer is asleep;
• Thanks to its geographical position, Ukraine has a west-oriented mentality, which results in business and cultural values shared by both European and American nations;
• Low accommodation and living costs;
• Strong educational system: 87% of school leavers choose to get a higher education and 35% of them study in IT related spheres;
• English language proficiency is a must for any IT professional in Ukraine;
• When you outsource to Ukraine you also get a good price/value balance.

Bulgaria

• Bulgaria was Offshoring Destination of the Year 2015 at the NOA Awards thanks to “its strong position as a global services delivery center for both Information Technology and Business Process Services”;
• This year’s GSLI showed that in spite dropping out of the top 10 (due to minor increases in tax and regulatory costs), Bulgaria still holds a high 12th position on the list. “Bulgaria has been a destination for European nearshoring software operations for many years and is deepening its skills and experience in the industry”;
• The EU membership (since 2007) that resulted in reforms (including economic ones) benefited its business environment;
• Bulgaria is among the three countries that have the smallest debt in the EU which is about 27.0% of GDP;
• Its geographical position helps to cope with time zone issues efficiently;
• Compared to other European countries, Bulgaria has a bigger share of U.S.-headquartered companies;
• Bulgaria is chosen for its language diversity as well, which is one of the key factors of outsourcing. 98% of secondary school students learn a foreign language, about 73% of them study more than one;
• A combination of high skills, fairly low labour costs and good production quality helps Bulgaria to be one of the convenient outsourcing destinations in Europe;
• According to Outsourcing Destination Guide, “The city (Sofia) is reported to have the highest percentage of graduates holding technical degrees in IT and engineering across the whole CEE region”.

Romania

• The EU membership (since 2007) helps to reduce legal and financial concerns and ensure political and economic stability;
• Salaries are generally lower than in the majority of European countries like the UK, Germany, Poland or the Czech Republic, thus you have more chances of getting reasonable prices for the provided quality service;
• A highly skilled labor pool;
• According to this year’s A.T. Kearney Global Services Location, Romania has risen 5 positions and is now 13th among the most attractive European outsourcing locations. “About 50,000 Romanians work in the outsourcing industry, and the country has a deep pool of skilled IT workers to draw on”;
• In 2015 Romania’s high-speed broadband internet was ranked 10th worldwide (and first among European countries), which makes outsourcing to Romania convenient and smooth;
• Flexible time zones. Romanian devs are able to work during daytime with worldwide clients;
• Good intercultural and communication skills due to the fact that Romanians often study or work in other European countries, which really helps to do business with the English speaking part of the world;
• Romania has about 50 offshore centres owned by large international IT vendors, 30% of which are IT services-related.

It’s up to you to decide

In my view, many companies are still in two minds about choosing Europe as their outsourcing destination because they know little about its countries. Let’s not forget that very often programming teams are left behind the scenes - nobody knows who really did the hard part. Here’s just a few examples of how it feels to work with a dedicated and professional Europe-based team.

Nowadays Europe is fighting hard to create a positive image of an outsourcing destination and that’s great because as an entrepreneur you get higher chances of receiving quality service. So if you’re not just looking for lower app development costs but need a good price/quality balance, you might give Europe a chance to prove it has enough worthy, reliable and skilled IT specialists, working with whom will be not only more convenient but rewarding as well.