Software development outsourcing to Romania and Ukraine has seen a great leap forward in recent years. These Eastern European countries are well-recognized in the global outsourcing market thanks to the quality to price ratio and growing talent pools. Apart from cost-saving, many US and European companies choose Ukrainian and Romanian developers for their skills, experience, and ability to work well in cross-cultural teams.
In this article, we will discuss the following aspects of offshore outsourcing to Romania and Ukraine:
- The number of IT outsourcing companies and tech specialists;
- Major IT hubs in both countries;
- Tech education;
- Location and infrastructure;
- IT industry dynamics;
- Culture and politics.
Romania enters the top 3 countries in Eastern Europe with the most significant number of software developers. Software development companies employ 119,100 professionals. Clutch.co, the platform that ranks the best tech companies in different categories, lists the top 300+ software development companies in Romania.
The talent pool in Ukraine surpassed 192,000 tech specialists in 2019. Software development outsourcing companies constitute the lion’s share of the Ukrainian IT service market. According to Clutch there are over 850 IT service vendors in Ukraine, so the country takes the lead in Eastern Europe, followed by Poland (750+), Belarus (250+), and Bulgaria (150+).
What concerns the domain expertise, according to the study by SourceSeek, Romanian software development outsourcing companies have strong expertise in banking, healthcare, and security industries. Clutch confirms these findings and also highlights the eCommerce expertise.
Ukrainian IT outsourcing companies have similar industry expertise, but also can boast their domain expertise in advertising and marketing, real estate, retail , education, and supply chain.
R&D centers in Romania and Ukraine
Such global companies as Hewlett-Packard, Huawei, Ericsson, and Gameloft have opted for IT outsourcing to Romania after it joined the EU in 2007. However, the presence of such industry giants may lead to intense competition for the talent, as these companies allure the best employees.
Although the number of startups (over 2,000) and R&D centers (over 100) in Ukraine is increasing, IT outsourcing companies employ more than 60% of all Ukrainian tech specialists. Сompanies such as Microsoft, Samsung Electronics, Wargaming, Skype, eBay, Siemens, IBM opened their R&D centers in Ukraine.
As the capital, Bucharest is the major hub for software development outsourcing in Romania and the city with the most tech universities and graduates. The cities of Cluj-Napoca, Timișoara, and Iasi also offer developed technology infrastructures that are a perfect fit for software outsourcing to Romania. The first one, in fact, has seen almost a 300% growth in startups from 2011 to 2016. There are other smaller IT and BPO outsourcing hubs in Sibiu, Targu Mures, Brasov, and Constanta.
DOU states that the vast majority of Ukrainian IT specialists (67%) live in Kyiv, Kharkiv, and Lviv. Kyiv is one of the fastest-growing cities in the country, so no wonder that world enterprises, such as Samsung, Huawei, Ericsson, NetCracker, and others, have R&D centres in the city. Software outsourcing is well-developed in Kharkiv. The city is home to over 25,000 tech specialists and around 450 active tech companies. Lviv houses 325+ IT companies that employ over 20,000 tech specialists. Most of them provide outsourcing services to clients from the USA, Western Europe, the UK, and other locations.
There are 41 Technical Universities in Romania that graduate more than 7,500 engineers and computer science specialists each year. Five hundred thousand students enroll annually, including 27,000 international students. Such a number of students ensures constant talent inflow, thus is beneficial for outsourcing software development to Romania.
According to the Times Higher Education world university ranking, seven Romanian universities are included in the world's best computer science institutions, which also gives a boost to software development in Romania. The most significant educational institutions in the country are Babes-Bolyai University in Cluj-Napoca, the University of Bucharest, and the Polytechnic University of Bucharest. ICT students represent 6.8% of the total students.
Most Romanian software developers start working even before graduation, as many software development companies offer yearly internships. So, even though the students are actually working in software development companies in Romania, they don’t yet have a technical degree.
As the demand for IT specialists grows, Ukrainian universities graduate more students with computer science degrees. About 23,000 engineering and 16,000 Computer Science graduates annually ensure constant talent inflow to the Ukrainian IT market. Times Higher Education world university ranking lists six best Ukrainian computer science institutions, including Lviv Polytechnic National University, Ivan Franko National University of Lviv, National Technical University Kharkiv Polytechnic Institute, Sumy State University, Taras Shevchenko National University of Kyiv, and V.N. Karazin Kharkiv National University. Learn more about tech education in Ukraine here.
One of the reasons for industry development is the support of local vendors. IT outsourcing companies in Ukraine collaborate with the government on launching innovative labs and tech programs at education institutions. For instance, N-iX cooperates closely with schools and universities, promotes the IT profession among youth, and supports professional training. The company grants scholarships to support the best students at the Computer Science Program of the Ukrainian Catholic University.
DOU states that 81% of the Ukrainian IT professionals have an intermediate and higher level of English. Top management, Project Managers, and Business Analysts are the most fluent among specialists engaged in the industry.
Romania is a country in Eastern Europe that houses 19.6M people. The country is ranked 28th, according to A.T. Kearney Global Services Location Index that recognizes the most attractive offshore destinations. Software development outsourcing to Romania is recognized for its financial attractiveness and people’s skills. The country is a European Union member since 2007, the 12th largest country in the EU, and the 18th largest economy by nominal GDP.
Ukraine has a population of 42.5M people and a huge workforce of around 20M people. A.T. Kearney Global Services Location Index ranks the country 20th among the most alluring outsourcing destinations in the world. What’s more, the country (2.9) has better financial attractiveness than India (2.82), China (1.88), Poland (2.05), according to this index.
Also, 13 Ukrainian companies, including N-iX, one of the largest software development providers in Eastern Europe, have made it to the list of the best outsourcing companies in the world.
The tech industry and software development outsourcing in Romania boast a 15% annual growth rate. In 2018 the tech branch growth had accelerated and reached $4.5B, with 13.4% CAGR of this industry. Also, the export of software and IT services makes 1.9% of Romanian GDP. So, software outsourcing to Romania contributes to the country’s economy significantly.
Romania is a startup-friendly location: the country is home to 353 startups, according to the Evozon report. What’s more, one of them - UiPath has become a billion-dollar startup and has made it to New York, London, Singapore, and Tokyo.
Ukraine has the same volume of IT services export as Romania. There are over 2,000 startups and over 100 international R&D centers. The IT industry has become the 3rd largest export service industry, amounting to more than 20% of all Ukrainian service exports. The USA and Western Europe remain the largest export markets of the Ukrainian outsourcing providers. Ukrainian vendors cooperate with large and small businesses worldwide. As for the key industries, software development services providers primarily specialize in data management, telecommunications, cloud, gaming, e-commerce, media, fintech, healthcare, and others, according to the report by Ukraine Digital News.
Romanian culture, values, and lifestyles are very similar to the USA and Western Europe's culture, values, and lifestyle. Thus, software development in Romania is a decent option for these countries. Most of the Romanian software developers have experience working for global firms. Also, ITC professionals from Romania often work with clients from Germany, Austria, and Switzerland, Nordic or other Western European countries, and the United States. In fact, the CEE report 2019 states that 74% of clients of software development companies in Romania come from Europe and 22% from the USA. So, the culture and values of the software developers are shaped by western influence.
The cultural compatibility of Ukrainian software engineers with Western clients is one more reason for such rapid growth of the IT outsourcing industry in Ukraine. Despite the remnants of the Soviet Union, Ukrainians have a European mindset. They are open, tolerant, inquisitive, and decisive. Ukrainian tech professionals are known for their positive and flexible attitude, high responsibility, and a good sense of teamwork. Ukrainian software developers have experience in communicating with foreign clients, mostly from the US, the UK, and Western Europe. Many of these professionals have international education or experience working abroad.
To know more about the cultural compatibility of Ukrainian software developers - read the article.
In terms of IT outsourcing, Romania and Ukraine are alluring destinations that offer quality and cost-effective IT services. So first of all, you need to decide what factors are the most important for your business. We hope this infographic will help you make the conclusion and choose the right spot for setting up a software development team.
Why choose N-iX as your software development partner in Eastern Europe?
- N-iX has offices in multiple locations, including Ukraine, Poland, Sweden, Bulgaria, the USA, and Malta, so that you will have access to the vast talent pool;
- The company is recognized by many industry rankings, such as Inc. 5000 Europe, Software 500, top 100 Global Outsourcing Companies by IAOP, GSA, Clutch, and many others;
- N-iX has over 1000 top-notch professionals on board that ensure delivering quality solutions to our 30 enterprise clients, including Fortune 500 companies.