More and more companies are choosing to outsource to Eastern Europe. The concept of outsourcing has been around for about 2 decades now, but Eastern Europe has only recently emerged as a suitable outsourcing destination. Outsourcing to Eastern Europe increasingly is popular for companies that find quality, not quantity, is top of mind.
Whether it's in Eastern Europe or anywhere else in the world, finding a reliable dedicated team for your company can be very stressful. This becomes even a bigger problem when it comes to hiring a dedicated software development team. Hiring internally might sound like the best solution at the first glance. Even if it is generally preferable, it can be very expensive, time-consumable, and unnecessary.
There are many outsourcing benefits or nearshoring that might be perfect for your business. Many people have already experienced struggles of finding a perfect outsourcing partner. Let us tell you, it can be extremely stressful. But, it really doesn't have to be that way! Outsourcing or nearshoring to Easter Europe is increasingly popular! This is especially important for companies that are looking for trust and quality in their outsourcing partner.
There are even statistics to back up outsourcing software development to Europe! According to Deloitte’s Global Outsourcing Survey 2016, 65% of companies outsource to Europe. 72% of work is related to software development outsourcing or software development nearshoring. Staff augmentation as an outsourcing strategy is also growing in popularity amongst West European and North American countries.
Why outsource to Eastern Europe?
Companies opt to outsource because they want to reduce costs, focus on their core business, and improve service quality. They outsource to Eastern Europe because it is proven to be beneficial in many ways. You can also notice this by the rapid growth of the IT industry, and a huge amount of working and educated IT specialists. This is all because of the availability of high-tech experts, and a well-balanced price over quality ratio.
Eastern Europe is a popular nearshoring destination for Western European countries. Around 66% of larger companies from Western Europe outsource some of their IT services. As an example, 77% of German companies prefer outsourcing within Europe over Africa or Asia. They usually outsource to Eastern Europe, to countries such as Serbia, Croatia, Poland, Ukraine, etc. They promise equal benefits in terms of quality and security for less money.
There are many relevant factors that make Eastern Europe a perfect outsourcing destination for North American (US, Canada) and West European countries (Switzerland, Netherlands...). The most important ones are:
- Cutting cost
- Rapidly growing talent pool
- High-quality electro-technical education
- Governmental support
- English proficiency
- Convenient Time Zones
- Cultural similarity
- Access to innovation
- Reasonable travel and stay cost
- Strong and active IT community
Eastern Europe has greatly developed the IT industry, high quality of work, and great achievements by software developers. Even with this, the economies of these countries are still behind and trying to catch up. This makes lower than average price rates for a well above average product quality. However, rational price rates are not the only benefit for business owners to hire developers in Eastern Europe.
Rapidly growing talent pool
There’s a lot of developers with a diverse set of skills. According to StackOverflow, the number of software developers in Europe reached 5.5 million in 2018. With unevenly distributed amounts across Europe, Eastern European countries have the highest growth rate. West-European and North American businesses can benefit from this through the extended team model. Hiring a dedicated developer or a whole team of developers is an option, but there is also staff augmentation model.
High-quality electro-technical education
A strong and quality IT industry wouldn’t be as great without quality education. Whether it’s a private or public university, the government is not the only supporter of higher IT education. Companies in Eastern Europe “fish” for young talented students and support their studies. This is because of the great demand for software developers. IT companies offer scholarships that guarantee and obligate students to work for them after graduation. IT companies invest in universities directly through financial, educational support, and donations.
For example, the Faculty of Technical Sciences of Novi Sad Serbia had a whopping number of 2920 submitted applications for Bachelor Studies. Where 1483 of them will be studying for free (paid by the government) and 1201 of them will be self-financing their studies.
Governments of Eastern European countries don't invest only in better education. They also offer loads of benefits for companies that are willing to invest in the IT sector of their countries. These come in forms of favorable taxes and simplified legal and financial regulations that control the IT services export.
Language is the core of communication, and we all know that communication is crucial. Many things can get lost in translation. Speaking the same language on an admirable level can greatly contribute to the success of the outsourcing collaboration. It is quite common to find a correlation between language proficiency and lower prices. So make sure to look for outsourcing partners that will offer a fluid workflow, and high-quality communication.
Eastern European countries have high to very high English proficiency rate, according to language training company Education First (EF)
Convenient Time Zones
Taking advantage of time zones is a great practice in outsourcing. This is especially true if you are a business owner from North America looking to outsource to Eastern Europe. When the workday is over in America, it is about to begin in Europe. In order to take advantage of this, communication management has to be on point. Although the time difference of 9-6 hours (depending on which US coast are we talking about) allows continuous workflow, travel time obviously takes longer.
On the other side, nearshoring to Eastern Europe from Western Europe offers efficient daily communication. This also allows faster and flexible traveling, but offers no day-night continuation benefit.
Vastly different cultures can sometimes also be a barrier in communication and work. Eastern European countries have a very similar culture and work ethic as West European or North American countries. They usually follow the international business code of conduct. This allows transparent and more efficient outsourcing or nearshoring collaboration.
Access to Innovation
Once again, according to Deloitte’s Global Outsourcing Survey from 2016, here are the innovation in outsourcing relations:
- Increases level of quality by 58%
- Lowers the cost of delivery by 44%
- Improves user experience by 33%
- Increases client revenue growth
- Increases provider revenue growth by 29%
- Decrease transaction time by 21%
- Delivers new capabilities by 20%
With big investments by governments and other IT companies in the IT workforce, the region of Eastern Europe is home to global IT development and research companies. That is why everyone nowadays wants to outsource to Eastern Europe.
Reasonable travel and cost stay
According to lonelyplanet.com, the daily budget needed to stay in Serbia or Croatia varies from 50$ (low-end) to 120$ (high-end). Eastern Europe is easily approachable by flight or ground transportation, with relatively lower prices.
Besides lower travel and stay cost, the culture of Eastern European countries is just enough different in order to enjoy new cuisine, music, or historical and popular touristic places.
Strong and active IT community
With more than a million IT engineers, there are many IT activities and events being organized by the community. Many different conferences and educational trainings are being held in order to promote innovation and experience exchange amongst the experts. Some of them are Word Camp Europe in Belgrade (Serbia), or Adriatic AWS Innovation Days in Opatija (Croatia).
Why would a global company outsource to Eastern Europe?
There are many different factors telling us why companies should outsource to Eastern Europe. Developing the ideal business plan and successfully scaling any business requires a lot of work.
Addria is a software development company from the Adriatic region with years of experience in outsourcing\nearshoring. We do software development and staff augmentation for many global companies. Our diverse, trained, and motivated employees have more than enough experience to provide quality cooperation on your next project.
Contact us right now and schedule a meeting! ?