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.
IT is one of the most fast-growing and developing spheres of business nowadays. In many countries, however, people choose the profession of a software developer not because it is a creative and rewarding job, but simply because for some of them it is a chance to get a decent salary and lead a normal life.
With such a high demand for IT development, there are more and more offices around the world which provide it. Both small and big companies are looking for ways of cost-saving and boosting the production speed. This is where IT outsourcing services come into play.
The first option that pops into your head when you think about outsourcing is India. No wonder, as this country offers an enormous number of IT developers for a low cost, who in addition speak English with no great difficulty. On the other hand, prices in India are going up and competition for qualified engineers there has increased. Not to mention time zone difficulties, the risk of getting poor quality as well as differences in mentality and culture. That's why many leading companies start to re-evaluate their choice of outsourcing destination.
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.
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, Belarus and Romania. You can see for yourself what's so special about them and draw your own conclusions.
- 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.
- Inspite of the current geopolitical situation this year's report on Global Services Location Index showed that Ukraine has improved its image as an offshore destination by 17 positions and is now 24th due to an upturn in the competitiveness of its tax and regulatory costs;
- 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, Ecoisme, Concepter, 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 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".
- Belarus has a government controlled economy, however, IT has remained independent. As a result, in spite of a recent decline in Belarusian economy (by 4%), the IT sector increased by 20%;
- As this country is located at the crossroads of European trade routes, it shares common values both in culture and ways of doing business, which makes the communication more efficient and clear;
- Cost efficiency. Software vendors and other IT-related companies that join the Hi-Tech Park initiative are free from custom duties, value-added, corporate and profit taxes;
- Knowing a foreign language is one of the key factors for modern international businesses, so it is no wonder that fluent English is a must for Belarusian IT specialists, which is taught here starting from kindergarten;
- Overlapping working hours with Europe and the US;
- Favorable quality/price balance. Software developer rates are among the lowest in Europe;
- The presence of developing IT companies is also worth mentioning when it comes to choosing an outsourcing destination. EPAM, for example, is listed on the New York Stock Exchange, has branches in North America, Europe and Central Asia, and includes more than 9,000 programmers. It was ranked #6 on Forbes 2013 list of the 25 Fastest-Growing Tech Companies;
- Strong educational system. Also, every year there are 3,900 graduates who specialize in IT–related spheres;
- The possibility for IT and business specialists to build strong skills in software development and acquire new technical knowledge thanks to training centers such as IBA Institute;
- According to the 2015 Global Creativity Index (GCI), Belarusian nation is the 8th in the world in terms of creativity;
- Talented and gifted work pool. Belarusians have been successfully participating in international IT competitions. They are famous for winning Google Hash Code 2016, VK CUP 2016 and Google Code Jam in 2015, 2014 and 2013;
- Here are some noteworthy examples of software created by Belarusian IT specialists. Popular instant messaging app Viber, that was developed by a Belarusian-Israeli startup, currently has over 750 million users. On March 9, 2016 a Belarusian company Masquerade was bought by Facebook. And of course famous World of Tanks, a multiplayer online game popular on both sides of the Atlantic, was created by Belarusians as well. Such success stories didn't happen by chance. They show great talent, a wish to innovate and a potential for growth. Isn't it a good reason to outsource to Belarus?
- 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.