Software Outsourcing to Eastern Europe

Last updated: May 30, 2018

Reading time: 10 minutes

Why outsource to Eastern Europe?

Organizations are looking beyond age-old software development outsourcing standbys like India to augment their teams as shorter project timelines loom and pressures mount to develop more cost-effective end products. Those that do are discovering a pleasant surprise in Eastern Europe, a region that uniformly provides highly educated and skilled software engineers – and great budget benefits – a boon for companies who choose an outsourcing software development partner from the area.

The former Soviet Union and countries of Eastern Europe, particularly those behind the “Iron Curtain,” in decades past, placed a particular emphasis on educational programs rich in engineering and the sciences. Because of this, this region today has many highly skilled professionals in areas such as computer science, but at much lower labor costs than Western Europe and as low as India in some cases.

By cost, the market separates into two segments:

  • Ukraine, Belarus and Armenia (lower cost) and
  • Poland, Hungary, Bulgaria, Romania and the Balkans (higher cost).

All countries in the area have solid expertise in data, algorithms and embedded systems. Today, Eastern Europe leans towards a very Western European business culture, adopting Western institutions, rules and social norms.

Benefits of Outsourcing Software Development to Eastern Europe

Eastern Europe’s growing labor market, drastically lower employee attrition rates than India and China, and intellectual property (IP) protection that adheres to the European Union’s Data Protection Act are all benefits of outsourcing to this region. Eastern Europe is a refreshing outsourcing destination with a solid software outsourcing pedigree. Strong universities, proximity to Western Europe and a close cultural affinity with the West make it a favorite outsourcing destination. Culturally, the region is similar to North America, and except for the varied languages, Americans who travel there find the direct communication style familiar.

Eastern Europe holds a great deal of respect for American technical innovation. Many software engineers feel that their skills and knowledge are best used in the Western world and rather than immigrate to the United States, they make use of their talents by working in the outsourcing industry.

Newcomers to outsourcing in Eastern Europe are delighted to discover a deep talent pool and the availability of higher-end, innovation-oriented developers and are surprised at how fast they can establish a partnership and bring a new team up to speed.

Four subregions of Eastern Europe:

  • Far Eastern Europe (Armenia, Belarus, Moldova, Russia, Ukraine)
  • Central Europe (Czech Republic, Hungary, Poland, Slovakia)
  • The Baltics (Lithuania, Estonia, Latvia)
  • The Balkans (Serbia, Bosnia, Romania, Bulgaria, Slovenia)
 The 2018 Guide to Software Outsourcing in Eastern Europe

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The 2018 Guide to Software Outsourcing in Eastern Europe provides up-to-date insights for companies considering Eastern Europe as an outsourcing destination.

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Software Outsourcing in Far Eastern Europe

Russia. Ukraine. Armenia. Belarus. Moldova.

Much of Far Eastern Europe comprises former satellite states of the Soviet Union. Following the dissolution of the USSR, those satellite countries largely considered themselves to be European, though Belarus retains a strong kinship with Russia. A strong bond remains among these Eastern European countries as a result of Soviet rule.

The former Soviet Union placed emphasis on educational programs rich in engineering and the sciences. Because of this, the region today has many highly-skilled professionals in technology and computer science, but at much lower labor costs than Western Europe.

 

Which countries are best in Far Eastern Europe?

You’ll need to be selective. We’ve reviewed software outsourcing companies all over Far Eastern Europe and traveled to Russia, Belarus, Armenia, and Ukraine to conduct deep, on-site assessments of the top software companies.

Outsourcing readiness to serve Western clients is more than technical skills and ability. It’s a combination of factors that include: education, pricing, English skills and economic factors.

Outsourcing in Far Eastern Europe

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Software Outsourcing in Central Europe

Czech Republic. Poland. Hungary. Slovakia.

Long divided by the ambitions of warring empires and Cold War tension, Central Europe has been heavily influenced and affected by a violent past. Fortunately, we no longer see walls and barbed wire, but a thriving and bustling region nestled in the center of Europe. With lingering ties to the USSR, the education system puts exceptional emphasis on STEM (science, technology, engineering, mathematics) areas. This allows the IT services market to grow exponentially, thus providing a highly-skilled IT workforce available for outsourcing efforts. This region is a highly prized location to live, visit and even outsource to.

Central Europe is one of the most popular destinations for outsourcing software development. With three countries in the top 10 of the HackerRank (Poland, Hungary, and the Czech Republic), you can find top developers in this region. Combined with a high skill set and relatively low rates, Central Europe is a serious competitor for global outsourcing. Companies that opt to outsource to Central Europe find themselves at ease knowing their partners are technically skilled, easily accessible, due to timezone overlap, and fluent in multiple languages.

Is Central Europe Ready for Western Clients?

Accelerance has reviewed hundreds of software outsourcing companies in Central Europe to identify the best vendors you can trust to deliver. We’ve traveled to the Czech Republic, Hungary and Poland to conduct deep, on-site assessments of the companies that qualify for partnership in the Accelerance Global Network.

Outsourcing readiness to serve Western clients is more than technical skills and ability. It’s a combination of factors that include: education, pricing, English skills and economic factors. The following table shows the outsourcing readiness of Eastern Europe - which ranks high on our list of places to outsource software development.

Outsourcing in Central Europe

 The 2018 Guide to Software Outsourcing in Eastern Europe

Get the Guide

The 2018 Guide to Software Outsourcing in Eastern Europe provides up-to-date insights for companies considering Eastern Europe as an outsourcing destination.

Get the guide

Software Outsourcing in The Baltics

Estonia. Latvia. Lithuania.

Formed in 1918, The Baltics remained independent republics until their involuntary incorporation into the USSR in 1940. After five decades of Soviet rule, The Baltics regained their independence in 1991. Recognized as one of the most economically stable locations in Europe, with a climate conducive to European and American business styles, the Baltics are a well-educated and technically capable region. The Baltics house the Research and Development (R&D) centers for Microsoft, SAP, Acronis, Parallels, Google, AIG, Nasdaq, Uber, IBM, Wix, Siemens and HP.

Estonia was named ‘the most advanced digital society in the world’ by Wired Magazine in 2017. Estonians also built an efficient, secure and transparent ecosystem unlike any other and it seems as though this small post-Soviet nation found the way of the future. The “E Residency” program started in 2014 and gave global entrepreneurs access to online tools (management, signatures, identities, payments, etc.) This initiative attracted over 30,000 business from 139 countries. This is just a small taste of the skill set of Baltic IT professionals.

Despite their economic strengths, Latvia and Lithuania are still in the process of ramping up their software development teams. This results in a smaller and more select talent pool than other European countries.

Are the Baltics a Good Place to Outsource Software Development?

Accelerance has reviewed software outsourcing companies in The Baltics, but we don’t recommend the region due to a limited talent pool and high pricing.

Software Outsourcing in The Balkans

Serbia. Bosnia. Romania. Bulgaria. Albania.

Once dominated by the Soviet Union, The Balkans retained a STEM (science, technology, engineering, mathematics) focused education system. This education system allows for a highly creative and skilled workforce resulting in the production of customized software.

According to Kearney Global Services Location Index (2017), two Balkan countries are listed in the top 20: Bulgaria (#15) and Romania (#18). This indicates that their financial attractiveness, people skills/availability and their overall business environment is highly-favorable. Moreover, these countries are competitive in providing better cost locations, reasonable salaries, an experienced workforce and a vetted business environment. The combination of a Soviet influenced education system, a long history of outsourcing, and established connections allow The Balkans to be an active and thriving area for outsourcing efforts.

Which countries are best in the Balkans?

Accelerance has reviewed software outsourcing companies in the Balkans to identify highly qualified companies you can trust to deliver. We’ve traveled to Romania and Bulgaria to conduct deep, on-site assessments of top software companies.

Outsourcing readiness to serve Western clients is more than technical skills and ability. It’s a combination of factors that include: education, pricing, English skills and economic factors. The following table shows the outsourcing readiness of the Balkans - which ranks high on our list of places to outsource software development.

Eastern Europe May 18 balkans table

 The 2018 Guide to Software Outsourcing in Eastern Europe

Get the Guide

The 2018 Guide to Software Outsourcing in Eastern Europe provides up-to-date insights for companies considering Eastern Europe as an outsourcing destination.

Get the guide