Outsourcing software developers: How to make the most of it

Outsourcing software developers: How to make the most of it
N-iX
2020-09-11T18:24:40+00:00

The talent shortage problem in the USA is getting more pressing: 1M computer programming-related jobs in the USA are expected to be unfilled in 2020. According to TechRepublic's CIO Jury report, 83% of CIOs struggle to find tech professionals. The biggest organizational level skill gap is in the...

Outsourcing software developers: How to make the most of it
By Khrystyna Zabor September 11, 2020

The talent shortage problem in the USA is getting more pressing: 1M computer programming-related jobs in the USA are expected to be unfilled in 2020. According to TechRepublic's CIO Jury report, 83% of CIOs struggle to find tech professionals. The biggest organizational level skill gap is in the domain of Big Data, Analytics, and information managers.

To combat this problem, some big companies run internal training programs, offer considerable benefits to their professionals, or pay extra. However, others choose to attract talent from other locations, as this option offers a wide array of advantages. 

Also, as a result of the global pandemic, many businesses felt the urge to accelerate digital adoption as well as cut operational costs. All these factors make companies go for outsourcing developers. 

But, where to find the best professionals, what skills should they have, and how to partner with top-notch outsourced developers? Let’s find out.  

Benefits of outsourcing software developers

There are many reasons why you should opt for outsourcing developers but here are just some of them:

  1. You get access to the vast talent pool of outsourced developers around the world and are not limited by location;
  2. Implementation of new technologies gets easier if partnering with outsourcing developers, as vendors have all-around expertise and an internal pool of specialists;
  3. Your vendor tackles HR, administration, and infrastructure processes;
  4. You can build an outsourced software development team according to your business requirements and can scale it down or up in case you need it. Also, you can bring in an expert on a project basis without committing long term;
  5. You can choose different cooperation models (extended team, managed team, outsourced developers team) depending on the level of supervision you want to keep.

Where to find the best developers for IT outsourcing?

If we compare the outsourcing rates by country, we can see that Asia, Eastern Europe, and Latin America offer the lowest ones. However, this fact has no negative impact on the quality of work, as the cost of living in these regions is also lower.

But what about technology adoption and tech expertise of the outsourced developers from these locations? Let’s view it in more detail. 

Outsourcing developers in Eastern Europe

Eastern Europe is a region that unites countries such as Ukraine, Poland, Belarus, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Moldova, Romania, and others. Businesses choose this outsourcing destination due to reasonable pricing, a vast talent pool, a skilled workforce, and a high digital adoption level. 

  • Talent pool

The number of tech professionals in the region surpasses 1,051,000 people. What’s more, 50K ICT graduates enter the market every year. The three countries with the most significant number of developers are Ukraine, Poland, and Romania. 

find an outsourced development team in Eastern Europe

  • Number of tech companies

Ukraine has the largest number of outsourcing vendors in the region (1,600), followed by Poland (500+), Bulgaria (500), and Belarus (500). 

  • Education

The region also has a high level of digital adoption and boasts a well-educated workforce. The latter is proven by international university rankings. Times Higher Education World University ranking recognizes 65 excellent Eastern European universities that graduate potential outsourced developers each year. 

Also, according to the Organization for Economic Co-operation and Development (OECD), Eastern Europe outperforms other countries by an average of 11% in math and 10% in science.

To learn more about the education of Ukrainian outsourced developers - check out our article.

  • Tech skills

As mentioned earlier, outsourcing is a way to implement new technologies easier. Eastern Europe is a bright example of the destination that can help you with that. If we compare technologies offered in Eastern Europe and the rest of the world, we see that the region gravitates towards newer technologies, such as back-end JavaScript, IoT, Blockchain.

At the same time, the region continues to lean toward JavaScript, Ruby, and Python, which further feed the IT ecosystem. 

As far as top domains as Big Data and Cloud are concerned, LinkedIn lists over 50,000 Big Data professionals in Eastern Europe and 101,000 Cloud specialists. Concerning Cloud-related professionals, the region houses 42,000 AWS specialists, 34,000 Azure professionals, and 17,000 Google cloud specialists. Ukraine, Poland, and Romania are the countries that are home to over half of this figure in each domain. 

Technical skills of outsourced developers in Eastern Europe

  • Security

Security is of the utmost importance when cooperating with an outsourced development team: data protection, intellectual property rights, and other aspects have to be taken into account. 

We can view security both from the perspective of the country you outsource to and the vendor itself. 

The significant part of the countries of the region are the EU-members, thus have robust data-related regulation. Legislation of others, at the same time, is harmonized with the EU-law. For instance, Ukraine has the law “On Protection of Personal Data” that focuses on data protection in the private sector.

Concerning vendor-level data protection, pay attention to the security compliances of your potential outsourcing provider. 

Here are the most critical compliances your vendor should have:

Security compliances the vendor you hire outsourced software development team from should have

  • Salaries of outsourced developers

An average hourly rate in Eastern Europe is $39.00/hour, which is 18% higher than in Asia but still dramatically lower than in Western Europe, Northern America, or Oceania. 

In this case, a higher cost is not a disadvantage, though. Businesses that have chosen this destination to find an outsourced development team state that they get better ROI due to cooperation with outsourced developers from Eastern Europe. 

  • IT infrastructure

Eastern Europe has a reliable Internet, and electrical outages are a rare case. In terms of the Internet’s quality, the region is on par with Western Europe and North America. 

Outsourcing developers in Asia

Asia, as an outsourcing destination, combines countries such as India, China, the Philippines, Malaysia, and Singapore. However, we will view the three first ones in more detail. 

  • Talent pool

The region boasts an extensive talent pool of outsourced developers: it reached 4M in 2018. The most significant part resides in India - 2.75M of outsourced developers. China is home to 590K developers and the Philippines house 190K professionals. 

Talent pool of outsourcing developers in Asia

  • The number of tech companies

Crunchbase recognizes more than 1000 companies that provide IT outsourcing services in Asia. However, the virus outbreak has influenced their work fundamentally. Indian BPO suppliers and smaller IT players have faced major hurdles, thus having a negative impact on outsourcing in the region. 

  • Education

Times Higher Education World’s University ranking recognized 25 computer science universities in India, 60 in China, and just one in the Philippines. 

China boasts the best-educated talent that is also proven by the HackerRank ranking that puts Chinese outsourced developers in the 1st place across the globe.   

  • Tech skills

Asia offers primarily tried and tested technologies, including PHP/MySQL and WordPress. So, if you look for cutting-edge technologies outsourcing, you should consider other options for hiring an outsourced developers team. 

However, Asian outsourcing developers are pretty skilled in what they do: according to the TopCoder Rank, Chinese developers have made it to the top-3 best developers. 

As far as top domains as Big Data and Cloud are concerned, LinkedIn lists over 270,000 Big Data professionals as well as 630,000 Cloud specialists in Asia. The majority of these professionals reside in India. 

  • Salaries of outsourcing developers

Asian developers have the lowest hourly rate in the outsourcing market, as they get, on average, $24.62/hour. However, cost-effectiveness is a more important factor than a cost itself when we speak of cooperation with an outsourced software development team. 

  • IT infrastructure

IT infrastructure is a weak spot in Asia as an outsourcing destination. Yes, the Internet quality in India, for instance, is rather poor that influences the quality of services they provide

Outsourcing developers in Latin America

Brazil, Argentina, and Mexico are the countries with the most significant number of professional developers in Latin America. The overall tech talent pool in the region exceeds 500K and consists mostly of the outsourcing developers.

  • Talent pool

Brazil boasts the biggest talent pool in the region and exceeds other countries significantly, with 431,000 outsourced developers. The second-largest pool in Mexico with its 180,000 specialists. Argentina comes third with over 100,000 professionals. Colombia and Chile are also famous in terms of outsourcing developers, as these countries house 55,000 and 58,000 tech specialists, respectively.  

Talent pool of outsourcing developers in Latin America

  • Number of tech companies

Clutch.co lists 1,100 IT outsourcing companies in the region, however, not all of them have delivery centers there. 

  • Education

Times Higher Education World’s University ranking recognized 30 top computer science universities in the region that are significantly less than Eastern Europe and Asia. 

  • Tech skills

Lack of recognized educational institutions is reflected in the professional rankings. Chile has the best-skilled talent in the region, yet takes 27th position in the HackerRank ranking of developers. 

According to the SourceSeek report, the outsourcing developers from Latin America specialize in PHP/MySQL, along with .NET and Azure. 

  • Salaries of outsourcing developers

The outsourcing developers in Latin America have similar rates as their colleagues from Eastern Europe: with nearly $38.00/hour on average.

The talent pool, the number of companies you can hire an outsourced development team from, tech education, and skills are the important factors when choosing an outsourcing destination. However, there are some aspects you should consider while choosing a vendor itself. They are a robust knowledge transfer plan and a recruitment team of your vendor-to-be. Let’s view these factors in more detail.

How to choose a vendor to hire a team of outsourced developers?

A robust knowledge transfer plan

Knowledge transfer is of paramount importance when it comes to cooperating with an outsourced development team. 

It is possible to transfer knowledge either from a client to a vendor or from a previous vendor to a new vendor. No matter what option is yours - the plan consists of the same stages. They are a demo and the investigation at the beginning, setting up the environments, taking over business-as-usual, and the first successful release in the end. 

However, these stages are hardly possible if the vendor does not have a robust plan on what information assets to collect and how to organize the process itself. So, to ensure a smooth and safe knowledge transfer journey, hire an outsourced developers team from a vendor with a reliable knowledge transfer plan.

Recruitment capacities

A skilled recruitment team is a must when it comes to hiring an outsourced software development team. The key to successful recruitment is finding an individual approach to each candidate and attracting the best talent to the project.

Usually, the recruitment process comprises the following steps: 

  • role/job description elicitation;
  • candidates search;
  • screening;
  • technical internal interview;
  • customer interview;
  • job offer.

These stages ensure that only the best candidates that can suit all the requirements and selection criteria can get a job. 

Also, skilled recruiters make use of various channels of search that help to find top candidates. These channels are, for instance, Linkedin, Dou.ua, Djinny, work.ua, rabota.ua, particular communities (a game dev community, etc.), recommendations (both internal and external ones). 

What’s more, big companies normally gather an internal base of candidates. For instance, N-iX, one of the largest Eastern European software development providers, has been building up such a base since 2002, and now it comprises over 57,000 candidates. 

All in all, you should look for a company with a skilled recruitment team that will help you engage the best professionals for your project and gather a top-notch outsourced development team. 

To learn more about other selection criteria, such as business continuity plan, agility, DevOps practices, powerful employer brand, etc., check out our article on how to choose the best offshore software development company in 2020

And now, let’s proceed to the legal aspects of cooperation with outsourcing developers. Namely - what aspects you need to pay attention to while signing a contract with an outsourcing vendor.  

How to sign a win-win contract with an outsourcing vendor?

Here are the things that you should be keeping in mind when signing a contract with the outsourcing vendor:

  1. Outline the timeframes: the contract needs to clearly estimate the timeline that the contractor would be able to complete work;
  2. Milestone based payments: dividing the project into milestones and defining the payment schedule, according to the achievement of these milestones;
  3. Instilling code guarantees: the contract that you’re signing should specify that the code you receive is free of any malware and determine the acceptance testing period;
  4. Intellectual property rights: it will prevent the contractor from reusing the code for your application when working for a possible competitor in the future;
  5. Confidentiality agreement: a non-disclosure clause that ensures the secrecy of the information that you share with the contractors;
  6. Indemnity clauses: they address the risk responsibility distribution between you and the vendor you hire an outsourced developers team from;
  7. Termination clause: they clearly state the course of actions in case the project fails to reach completion;
  8. Data protection rules: (deidentification, reidentification, and anonymization of data);
  9. Agreeing on the governing law in case the contract is international.

Companies that benefited from cooperation with outsourced developers

  1. Lebara

Lebara is one of the biggest European mobile virtual network operators that functions in eight countries. The company partnered with N-iX for the full-cycle development of new products and their maintenance. N-iX has set up a development center for Lebara (100 + outsourcing developers), worked on its multiple products, and contributed to Lebara's successful Digital Transformation.

  1. Gogo

Gogo is a provider of in-flight connectivity that has over 20 years of experience. The company partnered with N-iX to support business functions and decisions with analyzed and prepared data. N-iX outsourcing developers have helped Gogo migrate on-premise data solutions to the cloud and built a unified AWS-based data platform that collects data from 20 different sources. 

  1. RateSetter

RateSetter is a leading peer-to-peer lending company in Britain and Australia. In 2016, RateSetter partnered with N-iX and started cooperating with an outsourced software development team of 16 people to modernize its product. Outsourcing developers has allowed RateSetter to migrate from monolithic architecture to microservices and improve the performance and flexibility of their platform.

  1. Currencycloud

Currencycloud is a platform that delivers cross-border payments as a service. The company has partnered with N-iX since 2013. This cooperation started with outsourcing developers and a team of four experts. Since 2018, N-iX specialists have been involved in transitioning to microservices and data migration to the fully-managed Kubernetes cluster. Our professionals are engaged in the development and maintenance of Currencycloud’s products, including Currencycloud Direct, Collections (support & audit of all funds flows), and Cash Manager.

Why choose N-iX for outsourcing software developers?

  1. The company has an internal talent pool of over 1,000 professionals, as well as offices in Poland, Belarus, Bulgaria, and other countries that will give you access to more than 500,000 professionals.
  2. The company has a team of over 30 top-notch recruiters that will help you find the most suitable candidates for your project.
  3. The company is compliant with international security standards, including ISO 27001:2013, PCI DSS, ISO 9001:2015, GDPR, and HIPAA.
  4. N-iX can build and manage an outsourced developers team from 5 to 50 experts, helping businesses to scale up and grow their business in the long-run.
  5. The company boasts many awards, such as Global Outsourcing 100 by IAOP, GSA UK 2019, and more.  

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By Khrystyna Zabor September 11, 2020

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About N-iX

N-iX is an Eastern European provider of software development services with 1000+ expert software engineers onboard that power innovative technology businesses. Since 2002 we have formed strategic partnerships with a variety of global industry leaders including OpenText, Novell, Lebara, Currencycloud and over 50 other medium and large-scale businesses. With delivery centers in Ukraine, Poland, Bulgaria, and Belarus, we deliver excellence in software engineering and deep expertise in a range of verticals including finance, healthcare, hospitality, telecom, energy and enterprise content management helping our clients to innovate and implement technology transformations.

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