India vs Eastern Europe: Where should you outsource IT?

Any customer or client, before purchasing a product/service, carefully examines several offers, comparing them in quality, price and other important characteristics. The IT sphere is no exception. Today, thanks to outsourcing, business owners can find suitable specialists who know the necessary technologies for an acceptable fee. Moreover, if earlier businesses massively went to India for workers, recently Eastern Europe has become the most popular direction of custom software development. Why do businesses choose European outsourcing software development companies more often?

The global IT support outsourcing market: facts and figures

According to Statista‘s calculations, in 2021, the software development outsourcing market was estimated at $ 413.7 billion. GrandViewResearch predicts that it will grow to $1,070.28 billion in four years. It’s no secret that companies want to dominate, so they strive to keep up with the pace of digitalization, turning to freelance specialists for help. There are a number of reasons for this: the search for more profitable partners, the lack of nanotechnology or a shortage of personnel.

There is a shortage of talented specialists in Sweden, Denmark, Norway and Finland, and the lack of specialists in Israel is compensated by Ukrainian professionals. According to the report “Software Development in Ukraine, Poland, Belarus and Romania”, Eastern Europe is becoming a more attractive option for the United States and Western countries in terms of providing custom software development services. Let’s see why the emphasis is shifting towards Europeans and what are the advantages of outsourcing IT support.

Why were Hindus more in demand?

Conventionally, the world is divided into five main regions according to the cost of providing software development services: Eastern Europe, Western Europe, Asia, North America and South America.

If the average hourly rate of a programmer in other countries ranges around $ 110, in India this figure is almost half as much – $ 60-70. Cheapness, in fact, caused a sharp interest in the Indian technology park. A special peak occurred in 2008-2009, when the revenue of the largest IT players in India (Tata Consulting Services, Wipro, HLC and Infosys technologies) more than doubled.

The demand for Indian developers skyrocketed, so more outsourcing software development companies were opening up. According to the latest estimates, it became known that about 4.8 million Indians work in the IT sector, and the contribution of the IT sector to India’s GDP is estimated at 7.7%.

Nevertheless, a huge selection of software development providers creates certain difficulties for customers. Finding a reliable partner with such a variety is like finding a needle in a haystack. Additional inconveniences – different time zones, cultures, language barriers – lead to the fact that business owners began to look towards Eastern Europe, which is no less attractive in terms of prices and technologies.

Why did businesses prefer European developers?

Qualified personnel

Eastern European countries such as Poland, Ukraine and Belarus are becoming the new stars of the IT industry. Europeans are striving to interact more actively with customers. The large-scale London-based company Addison Lee conducted a small experiment before ordering the outsourcing of development services. The managers sent the source code to both candidates (European and Indian), who underwent a kind of selection. Mistakes were made in the code on purpose and left room for improvement and debugging, as well as correcting bad logic.

The team from India quickly got involved to present the solution as soon as possible. But, as it turned out, all this was done without taking into account business values and logic, and the team missed the mistakes left and did not offer options for optimizing the product.

The European team took a different approach. Before starting work, the specialists studied the requirements and examined the source code. Then they clarified with the customer the points related to the functioning of the Addison Lee business, as well as customer expectations from the solution. The developers found the “pitfalls” in the source code and offered options for improving it.

Since the working rates and the cost of the services of these two outsourcing software development companies were almost the same, Addison Lee preferred the Europeans.

Time zones

A certain barrier to cooperation with the customer may be created by different geographical locations. Even Indian companies themselves are aware of this fact, so they are trying to open new European offices. By the way, the Indian IT services leader MphasiS has established a branch in Poland in order to have a coastal advantage and be close to a Western customer.

European outsourcing software development companies are also more often approached because they are culturally closer to customers, which makes it easier for them to interact with each other and achieve maximum mutual understanding.

Talent pool

Eastern European countries are able to provide qualified software engineers, which are not enough in Western Europe and the USA. For example, in America last year there were about 1.4 million free places in the field of computer technology. Moreover, the turnover of IT personnel in this country is the highest – 13.2%. The situation is aggravated by the fact that the pace of digitalization is growing and there are few graduates ready to make a career in the IT field.

Norway, despite the low unemployment rate, is experiencing a shortage of IT specialists. About a third of outsourcing software development companies need engineering personnel. Sweden will face a deficit of 70,000 digital roles next year. And even the country of rapidly developing startups – Israel – needs personnel assistance, because it lacks 15% of internal resources.

There are no problems with technical personnel in the countries of the former Soviet Union. Generations of technical specialists have grown since the Cold War, when the emphasis was on engineering education. Having received one diploma, capable specialists strive to realize themselves in the field of information technology by taking additional courses. Motivated by a good salary and career opportunities, people purposefully move into IT even from the most unusual and non-technology-related professions.

This situation has led to interesting statistics. For every 100,000 people living in Eastern Europe, there are 500 to 1,500 graduates of technical universities or colleges. Therefore, we can say that the EU countries have become a tasty morsel for their Western neighbors and the United States.

Reasonable price-quality ratio

To clearly see how European, Asian and American development differs, let’s compare the price-quality ratio offered by outsourcing software development companies.

The highest working rates tend to be in North America. This is a global technology center where average developers receive $50-200 per hour, depending on their rank and work experience. In Latin America, the work of a programmer is estimated to be twice, or even four times cheaper. This is due to the fact that southern developers are not famous in IT circles. In addition, there are language difficulties, because this is a Spanish-speaking country.

In Asia, the average programmer’s work hour is estimated at $ 60-70, rarely $150 per hour. Such a cheap offer generates a great demand for Indian specialists. But the client’s expectations do not always coincide with reality (remember the Addison Lee experiment).

Eastern Europe is the golden mean in terms of price and quality of services. Hourly pay ranges from about $20 per hour for a beginner to specialists and $170 for an advanced one. European developers are fully proficient in modern technologies, and the language barrier is not an obstacle for them: English is studied in all schools, universities and throughout their career.

A Deloitte survey for 2020 showed that about 70% of companies seek to reduce costs. Therefore, the cost of services becomes a determining factor, even more significant than the speed of product delivery.

How to find the best outsourcing software development company in Eastern Europe?

Choose a suitable country 

In total, about one million engineers and other IT specialists work in Eastern Europe and more than 3,000 software companies operate here.

This region is home to the world’s best programmers according to HackerRank and SkillValue ratings. The majority of IT specialists in Poland are engaged in outsourcing business processes, programmers are a minority here (32%). Romanian developers are the sphere of interests of French companies, because they are the first to know this language. German-speaking countries prefer to hire Hungarian specialists because of geographical proximity. Belarusian companies have proven themselves well due to the quality and competitive prices.

Decide on a cooperation model 

The next step is to understand what kind of cooperation model is needed: a dedicated, remote, mixed or distributed team.

Usually, the customer is not associated with software development and needs a separate team, allocated by an IT service provider, which will accompany the outsourcing project from start to finish.

The remote team is contacted when the customer does not have enough full-time employees. Therefore, some of the specialists from the IT service provider join the client’s team.

A mixed team is similar to a remote one, only a specialist needs to move to the customer’s city for a while (the so-called relocation). A distributed team can unite employees scattered around the world into one team using a network infrastructure.

Knowing which model is needed for the project, you can check whether a potential partner practices such work format.

Explore the company’s portfolio

The outsourcing software development companies portfolio is the best source of information about it. There you can learn about the implemented projects, the technologies used, the number of specialists, the speed of work and other valuable details.

It is important whether the IT firm has worked with similar projects. For example, if it has experience in creating software for the financial sector, it will be able to implement the project for the bank faster. It’s always easier to follow the beaten path than the new one.

Medium-sized IT service providers (about 500-1000 employees) usually have extensive experience and a portfolio of projects that can be studied on the company’s website or clarified during an interview.

It remains only to contact potential candidates from the list to understand which custom software company in Eastern Europe is most suitable. Usually, interviews clarify many important points about the business and the project.

Conclusion

Eastern Europe has approved the status of a popular global outsourcer. Western neighbors are attracted by the benefits of outsourcing IT support and the opportunity to have controlled, reliable and qualified partners. If the business needs and geographical location coincide with what Eastern European IT companies can offer, there is no need to look for an excellent software development partner in coastal territories. Just make sure you choose the right outsourcing software development company.