Outsourcing Software Development to Eastern Europe: Why and How?

13 min read
Apr 30, 2021
Outsourcing Software Development to Eastern Europe: Why and How?
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Have you been considering outsourcing in Eastern Europe? You’re not alone. It’s a hot market out there for IT offshoring. And increasingly, top software development companies in Eastern Europe are taking the lead. Software developers in Eastern Europe are enjoying a thriving, tech communities filled with high-quality, tech-savvy graduates coming out of the region’s university system. It’s a perfect storm of opportunity for companies looking to cash in on the abundance of talent in a part of the world with a low cost of living.

best countries in eastern europe for outsourcing software projects

At ProCoders, we’ve made it our business to be an IT consulting firm that connects clients from all over the world with the best programming talent Ukraine has to offer. We’re based in Kharkiv, one of the country’s thriving tech centers, but we work hard to make sure our clients feel like we’re practically next door.

Want to know how we manage to keep a steady flow of talent available to clients? This report will break down the opportunities available to your company, right now. Let’s look at the facts about outsourcing companies in Eastern Europe.

Eastern Europe Facts and Statistics

A recent report from Grandview research estimates that the market for global IT services outsourcing will grow 7.7 percent, year over year from 2020 to 2027—taking the industry to more from $556 billion yearly revenue to more than $937 billion in just seven years. With more and more companies facing shortages of programming talent in their own countries, software development companies in Eastern Europe are well positioned to market their steady stream of high-quality IT graduates coming out of their university systems.

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Clients the world over are looking to software development companies in Eastern Europe as a key business partners for their software development. According to a recent GSA report, 69 percent of respondents predict that they’ll be using outsourced IT services, and they expect those consultants to serve as system integrators, and not just hired hands.

According to the Tholons Top 100 IT Outsourcing cities, clients are going to outsourcing companies in Eastern Europe more than any other region. In fact, Eastern Europe has more top 100 IT cities than any other global region, holding the #1 spot at 17 percent, followed by South America and South Asia close behind.

top outsourcing cities by region

Software developers in Eastern Europe are able to have such a commanding slice of the market because of the population of developers that’s growing every day in their countries. As a result, Eastern Europe software development companies has flourished.

Looking at all the Eastern European nations as identified by the statistical department of the United Nations, the number of consultancies doing IT Outsourcing in Eastern Europe is as follows:

Country# of IT outsourcing
companies
Poland658
Belarus225
Czech Republic74
Moldova49
Bulgaria156
Russia258
Ukraine1,001
Slovakia35
Romania249
Hungary71

Information taken from: Clutch.co

Ukraine is the clear leader in Eastern Europe software development outsourcing in terms of sheer numbers of consulting firms, with Poland its next clear rival in outsource development in Eastern Europe. The numbers don’t lie, if you’re looking to outsource your software development, more clients than ever are opting for top Eastern European IT consulting companies.

Here at ProCoders we can vouch for the energy and resources you’ll find in the Ukraine tech market. This report will show you why.

Main Benefits of Outsourcing Software Development to Eastern Europe

There’s more benefit to hiring an outsourced Eastern European software consultant than just getting top developers, quickly. Eastern Europe software development companies have evolved to function more like a true business partner, an outstaffed extension of your internal resources. There’s compelling reasons to outsource, including:

  • Drastically Lower Costs — It’s no secret that the top software development companies in Eastern Europe are cheaper than their counterparts in the United States. But did you know you can hire comparable talent in these countries for as much as 40 or 50 percent less than you would in North America or Western Europe?
    That’s the kind of savings that you can take to the bank — or reinvest in hiring a bigger team, with more software developers in Eastern Europe.
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  • Speed of recruiting, speed to market — In most cases, outsourced Eastern European software consultants can be hired quickly, allowing you to get top developers onboarded to your project within 3-5 days, generally. The amount of time this saves a company cannot be underestimated. There’s none of the hassles that come with recruiting for an internal hire, such as public job postings, sorting through dozens of resumes, lengthy vetting and interviewing, and administrative hassles of adding additional staffers to your internal team.

    In fact, outsourcing in Eastern Europe offers such a streamlined system, it could save your company about three months out of your development process. And when you’re trying to get a new app or product to market, this alone could be the difference between beating your competition to market, or not.
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  • Scalability/Available Talent — Eastern Europe software development outsourcing can offer your company tremendous capabilities that aren’t available in the tech shortage challenged countries of North America and Europe. Imagine being able to hire outsourcing companies in Eastern Europe at a moment’s notice.

    And those same companies would help you add and take away team members as your projects experience surge capacity needs. Simply hand over your expertise wish list, and most outsourcing companies in Eastern Europe will be able to hand you a short list of vetted candidates that fill your needs exactly. It’s one of the key advantages an Eastern Europe software development outsourcing company can offer.
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  • Fluent, English speaking developers — Developers who can speak your language is key to getting any project done. And this is one area where IT Outsourcing in Eastern Europe gives you distinct advantages over Asia and South America. University degrees in Eastern Europe often require several years of English, and workers in the tech sector are accustomed to English being the accepted language of business when working with clients.

    When you work with top software development companies in Eastern Europe, you can reasonably expect that the staff developers you bring on board will be able to read, write and speak English fluently. It’s something we require at ProCoders, and we suspect it is a requirement you will find at many other global firms, too.
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  • European Business Values — Software development companies in Eastern Europe understand the business culture and pressures that their clients in Western Europe and North America face. The importance of deadlines, transparent communication, and standardized billing are paramount, and most software development companies in Eastern Europe understand this. When you invest in Outsource development in Eastern Europe, you’re investing in consultants who understand your world of work. They’re working in it, too.

The List of Eastern Europe Countries for Outsourcing

Whether you’re looking at region wide numbers, or individual countries, Eastern Europe software outsourcing is booming. And that energy is infectious. Let’s explore how the top software development companies in Eastern Europe are making their mark on the region, with this country-by-country breakdown.

With an IT outsourcing industry that accounts for 3 percent of the economy, Ukraine’s more than 1000 IT consulting firms is proof that Eastern Europe software outsourcing is a major driver in its economy. With 15-20 percent yearly growth, how are they managing it? By having a nationwide emphasis on advanced STEM education. More than 130,000 citizens currently work in the sector, and 38,000 students graduate with IT degrees every year.

Ukraine has the highest number of outsourcing companies in eastern europe

Software developers in Eastern Europe are capitalizing on this boom. In fact, Eastern Europe software outsourcing is so big in Ukraine that it’s now home to affiliate research facilities for some of the world’s biggest companies. Top companies are outsourcing software development in Eastern Europe, and increasingly, their coming to Ukraine first.

Belarus:

Belarus may be small, but the country is still excelling in IT Outsourcing in Eastern Europe. Its IT market currently tops $4 billion. Approximately 35,000 tech Belarus professionals are employed at outsourcing companies in Eastern Europe.

Romania:

With 60,000 IT professionals specifically dedicated to providing Eastern Europe software outsourcing, Roman has a $4.2 billion plus IT industry, according to the Romanian Software and Services Association.

To help it keep up with other software development companies in Eastern Europe, Romania implemented a series of tax breaks designed to promote tech investments. The encouragement is working, and the country’s IT sector grows stronger every day. With its consistent ranking in the top in IT development internationally, Romania remains a force in Eastern Europe software development outsourcing.

Poland:

With more than 140,000 IT pros, 450 consulting firms, and 15,000 IT graduates coming out of their education system every year, Poland is a major force in outsourcing in Eastern Europe. As a member of the EU, the country’s economic outlook is strong. Because of this, clients may find that Poland’s prices for developers, both hourly and as an annual salary, are not as low as they might find in other Eastern Europe software development companies.

Bulgaria:

Bulgaria’s EU membership, central location, and high numbers of English-speaking developers make it a key destination for Outsourcing software development to Eastern Europe. But even with 24,000 IT professionals and 2,000 graduates a year, demand for developers outstrips supply. Regardless, it’s a hotbed of innovation in Eastern Europe software development outsourcing, especially in its capitol city, Sofia, where Hewlett Packard has a major operation.

Czech Republic:

This country is a good spot for IT Outsourcing in Eastern Europe, with 150,000 tech professionals, and 7,000 students entering the workforce every year. In fact, Prague, Brno, and Ostravia have become a popular choice for companies looking to outsource development in Eastern Europe, while enjoying the country’s low-cost of living/low hourly and project rates.

Hungary:

Hungary only has only about 10 million people living within its borders, but with 150,000 IT experts, it punches above its weight in Eastern Europe software outsourcing. Its universities graduate 6,000 IT majors yearly, helping it keep a faster pace than some of its other European counterparts. English mastery for most Hungarians is at a “moderate” level, and companies outsourcing in Eastern Europe will find this applies especially in Hungary’s IT industry.

Moldova:

Moldova is proof that even in a small nation, IT Outsourcing in Eastern Europe can be a big driver for a local economy. In fact, the country’s tech industry is expanding 15 percent annually. Here, approximately 11,000 citizens work in IT, with 3,000 new tech grads entering the workforce every year.

Russia:

While Eastern Europe software development companies have been growing overall, Russia’s tech boom has been tempered somewhat by politics. Even with those difficult headwinds, the sheer size of its tech sector make it a force to be reckoned with in outsource development in Eastern Europe, with 15,000 software consulting firms in Moscow alone.

A Russoft survey numbers its worker count at 470-480,000, with about 170,000 development experts dedicated specifically to IT consulting. Russian consultants work extensively for clients in Asia and Europe. Some companies in the United States are cutting ties with their Russian software developers in Eastern Europe.

be nice to russian developers mem

However, the Russoft survey shows that 70 percent plan to continue their consulting relationships. However, the same survey showed Russia’s market share of outsourcing software development to Eastern Europe declined from 55 percent to 46 percent, and its share of R&D centers dropped from 15 percent to 7 percent.

Top Software Development Companies in Eastern Europe

We’ve discussed how IT outsourcing is growing in the nations of Eastern Europe, so let’s talk about the top software development companies that are part of making this boom a reality. As we’ve mentioned, many firms are in Eastern Europe software development outsourcing. This table is just a sampling of some of the top-ranked software development companies in Eastern Europe.

Software company/LocationClutch.co rankGood Firms RankHourly Rate
XB Software/Belarus4.9/55/5$25-$49
SumatoSoft/Belarus4.8/55/5$29-$49
CleverRoad/Ukraine5/54.95/5$25-$49
N-iX/Ukraine4.8/55/5$25-$49
STX Next/Poland4.8/55/5$25-$49
Intelligent Bee/Romania4.5/54.8/5$25-$49
Pulilab/Hungary4.7/54.45/5$50-$99
Attrecto/Hungary4.7/54.45/5$50-$99
ScaleFocus/Bulgaria5/55/5$50-$99
UpNetix JSC/Bulgaria4.9/55/5$50-$99

Does Ukraine’s IT Industry Compare Favorably with Other Software Developers in Eastern Europe?

The simple answer to this question is yes. When it comes to Eastern European software outsourcing, Ukraine can offer your company top-quality, English speaking developers for less. Whether you run a startup or a large enterprise, companies looking to outsource development in Eastern Europe would do well to give Ukraine a close look.

Why? Because companies wanting Eastern Europe software outsourcing can find real, tangible benefits to working with Ukraine, whose firms are among the top software development companies in Eastern Europe, and can easily provide IT outsourcing to rival developers in Western Europe or North America. Let’s take a look at the facts.

CountryScore Index
Slovakia100%
Mexico94,67%
Poland93,38%
Hungary93,21%
Ukraine93,17%
Czech Republic93,07%
Spain92,45%
Austria92,05%
Switzerland91,69%
Germany90,46%

Skillvalue ranked the individual programming skills of thousands of developers on its platform, and were able to create a list of countries with the most technically proficient developers globally. Not surprisingly, software development companies in Eastern Europe did very well here, with Poland at #3, Hungary at #4, and Ukraine at #5. But of the outsourcing companies in Eastern Europe, Ukraine comes out ahead. Let’s look at why.

  • Cost — Sure, there’s a marginal difference of less than a percentage point in Hungary and Poland’s favor. But when you are outsourcing in Eastern Europe you’ll pay double the hourly rates in Poland and Hungary as you do Ukraine. (A difference of $25-$49 in Ukraine, vs. $50-to $99 in Hungary and Poland.)
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  • Fast Growing Talent Pool — Successfully outsourcing software development to Eastern Europe is all about market size, and the number of highly qualified developers IT consulting firms will be able to get for you. This is one area where Ukraine really shines over many other Eastern Europe software development companies. The numbers of software developers in Ukraine is growing exponentially, with the number of IT developers in the country expected to top 242,000 by 2025 — one of the largest tech markets in Europe.
  • Large Base of IT consulting firms — With more than 1,000 IT consulting firms, Ukraine has an enormous amount of options for companies who are looking for outsourcing companies in Eastern Europe.
  • 100+ Fortune 500 companies chose Ukraine — More than 100 members of the Fortune 500, some of the world’s largest companies, have chosen Ukraine’s IT consulting firms over other Eastern Europe software development companies. And that means that no matter what your company challenge, chances are good that you’ll find some of the top software developers in Eastern Europe in Ukraine, all with world-class experience in not just your technical wish list, but in your industry vertical, too.

What Should You Pay Attention to When Choosing a Contractor?

Outsourcing in Eastern Europe may be easier and cheaper to do than in North America or Western Europe. But that still doesn’t mean you shouldn’t be thoroughly researching your consulting firm shortlist. Even though the firms you choose will be far from home, it’s still possible to do due diligence for your enterprise. When you’re looking for a partner in Eastern Europe software development outsourcing, here’s what we recommend:

  • Check technical expertise — Have a list of programming languages, platforms, and libraries you need your developers to know, and be sure to bring that to any firm interviews you conduct. If the firm you’re speaking with can’t produce developers with the right CV in a timely fashion, that will do a lot to weed out the field.
  • Check reviews and ratings — There are several online resources for not just finding Eastern Europe software outsourcing providers, but reading detailed customer reviews and rankings. Check out Clutch.co, Glassdoor and others.
Procoders on clutch
  • Speed of Onboarding — How fast an outsourcing firm can produce qualified, vetted candidates will tell you volumes about the type of organization they are. The best will have plenty of available staffers that can be onboarded quickly. The worst are little more than a concierge service, sifting through online boards and presenting you with a list of developers they don’t know and have never worked with.

    A good firm offering outsourcing software development to Eastern Europe should be able to present vetting candidates for you to interview in less than a week — two weeks at most. At ProCoders, we can usually secure talent for our new clients within three to four days.
  • Billing practices — Can they provide you with a detailed estimate? Do they have they have the knowhow to accurately project the hours they will need to complete your tasks? Will you be billed a monthly retainer, or will you be on the hook for bills which could vary widely each month? The time to ask those questions is before the contract is signed.
  • Management style — The key to successful IT Outsourcing in Eastern Europe is finding the right solutions for your IT organization. Do you have a CTO leader on staff, and your own IT staffers to back this leader up? Then you might benefit from an outsourcing firm that allows you to work with your consulting developers directly, so they can integrate fully with your team. If you’re a start up, you may prefer an account executive or senior developer to serve as your project manager, handling all the day-to-day management, project gates, and scheduling.

Conclusion

The decision to outsource development in Eastern Europe can be an exciting one for your company, allowing you to cut your budget in half, speed up your development team’s time by as much as 30 percent, and extend your capabilities to meet your dreams. With the right project planning and research, Eastern European software development could be the key to unlocking your company’s software development potential, and ensuring your company always comes out on top.

As a IT outsourcing company in Ukraine, ProCoders would love to help you take your development to the next level. Fill out the form below, and schedule a free consultation, today!

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