Top 3 software outsourcing countries in Eastern Europe
N-iX
2022-03-03T14:59:37+00:00

Two years into the pandemic, many companies still face similar challenges: automation of their processes, digitization of manual operations, scaling, and overall unpredictability and volatility of the market. With a dire need for new solutions, the technology sector demands reliable partners to scal...

Top 3 software outsourcing countries in Eastern Europe

Two years into the pandemic, many companies still face similar challenges: automation of their processes, digitization of manual operations, scaling, and overall unpredictability and volatility of the market. With a dire need for new solutions, the technology sector demands reliable partners to scale and delegate software development. According to the Gartner 2021 survey, IT leaders name talent shortage as the main blocker to adoption emerging technologies. But where can you find experienced tech specialists? Eastern Europe is a great choice if we speak about top software outsourcing countries. The region is home to around 1.3M well-educated IT experts employed across 6,000+ IT outsourcing vendors. More and more IT executives choose Eastern Europe as their outsourcing destination for the high quality of services, excellent STEM education, and lower competition for tech talent.

In this article, we take a look at the three best countries for outsourcing software development that top the Eastern European destination list in terms of the number of developers, tech university graduates, and IT companies. For your convenience, we analyzed the offshoring potential in Ukraine, Poland, and Romania in terms of IT market competitiveness, talent pool and their engineering expertise, tech education accessibility, and cross-cultural compatibility.

Contents

  1. Ukraine as your outsourcing partner
  2. Polish outsourcing potential
  3. Outsourcing software development to Romania

Top outsourcing countries: #1 Ukraine

Ukraine is well-recognized around the world as an outsourcing destination. The value of Ukrainian IT exports reached $5B in 2021. From the Ukrainian business climate to tech talent pool, we've got you covered with the latest industry data on one of the top software outsourcing countries.

IT market overview

The country is an Eastern European leader in terms of the number of software development vendors. The numbers speak for themselves: in 2021, the Ukrainian tech market housed 830+ companies. This figure covers businesses of all sizes, with more than a half of the vendors staffing up to 50 experts and 12 companies employing over 1,000 specialists. Ukrainian engineers provide excellent services for many industries that span financial services, medical, e-commerce, and many more.
According to the AT Kearney report, Ukraine closes the top 20 of the best countries to outsource, leaving a lot of European countries behind. 

The Ukrainian economy is steadily becoming a better place for investments. From 2012 to 2020, Ukraine went up by 88 positions in the the DoingBusiness report.

Ukraine in international business rankings

Tech talent pool in Ukraine

The country is home to 200,000 tech experts with hands-on expertise in various fields, including custom solution development, software testing, product support and maintenance, and many more. Ukraine is a well-known player among the top software outsourcing countries, with 167,000 specialists providing engineering services to clients from abroad. 

Ukrainian IT hubs map and employment structure chart

The lion's share of Ukraine's talent pool is concentrated in five IT hubs: Kyiv (44.2%), Lviv (12.8%), Kharkiv (14.5%), Dnipro (6.2%), and Odesa (5.2%). These are the cities where a lot of large vendors have their headquarters and many tech conferences and seminars take place.

The country is positioned high in many international rankings. Ukraine is listed 6 in the latest TopCoder report and 5 in the SkillValue ranking of best developers.

Ukraine takes the 40th position in the EF EPI English level ranking. According to the research, the English level of Ukrainians is moderate. Many IT employers help with language improvement, covering language course expenses for their employees. DOU research shows that 36.1% of the surveyed developers have Upper-intermediate level, while for 6.5% it is Advanced.

Computer science education 

The country’s tech educational potential is another significant advantage of outsourcing software development in Ukraine. The number of Ukrainian students that annually graduate from CS courses is 16,000. 

Four Ukrainian universities that qualify computer science specialists, namely, Lviv Polytechnic National University, Kyiv Polytechnic Institute, Taras Shevchenko National University of Kyiv, and the Karazin Kharkiv National University, were listed in the Times higher educational institution rankings. In addition to state universities, private institutions keep up with the industry innovations, with the Ukrainian Catholic University being a starting point for glittering tech careers. The university offers its students an opportunity to participate in international programs such as Google Inside Look.

Cultural compatibility

A crucial aspect in achieving common milestones is working ethics. Ukrainian software development vendors stand out among other top software outsourcing countries for their diligent and committed business approach. DOU research shows that 57.7% of Ukrainian IT specialists find their current projects interesting. Ukrainians chose careers because of their interest in the field rather than decent remuneration. This data is backed up by a Hofstede report that analyzes cultural peculiarities across the globe and their potential influences in cross-cultural business management. Compared to Poland and Romania, Ukraine has the lowest masculinity figure. In other words, Ukrainians rather find joy in working on something they are passionate about than engaging in jobs because of their status or competitive spirit.

Within Hofstede's framework, Ukraine earned 86 as for long-term orientation in contrast to Poland and Romania with 38 and 52 indexes, respectively. Therefore, you may be sure that Ukrainian specialists are going to be dedicated and reliable in terms of long-lasting projects.

All in all, it is unlikely that you will experience a communication barrier in Ukraine. Local IT employees adhere to American and European working ethics and corporate culture. Furthermore, most days off overlap due to joint religious background. 

Keep reading: Ukrainian software developers in cross-cultural communication

Top outsourcing countries: #2 Poland

After joining the EU in 2004, Polish economic potential started to grow. With its fast economic development and experienced tech talent, Poland made it to the list of the top outsourcing countries in the world. Compared to 2018, when Polish IT outsourcing market revenue comprised $4.6B, the forecasted figure to reach is $8.4B for 2025. With its robust economy and multi-domain experts, Poland should definitely be on your radar when searching for a potential outsourcing company. 

IT market in Poland

The Polish economic environment is transparent for doing business. Market security resulted in an increasing number of software development companies emerging across the country. According to Clutch, the Polish market counts 810+ IT vendors in total, over 580 of which are relatively small entrepreneurships staffing up to 50 specialists, 13 IT companies counting 1,000-9,999 employees, and 2 software development businesses with a talent pool of 10,000 experts.

Poland is listed 24 in the AT Kearney offshoring attractiveness ranking, making this investment destination worth considering. Comprising 8% of the Polish GDP, the tech industry consistently generates revenue and strengthens the local economy.

Despite the global pandemic, the Polish economic situation remains resilient and stable. Its position in DoingBusiness ranking of best countries for outsourcing software development is 40, ensuring seamless and successful business stories in the destination. A well-practiced outsourcing trend in Poland is delegating full-cycle development to local-based teams rather than core team scaling.

Poland in international business rankings

Polish talent pool

If we speak about the general workforce count, the country is an absolute leader in Eastern Europe — 330,000 skilled engineers reside in Poland. 45% of them (148,500) are experts who outsource IT services.

Polish IT hubs map and employment structure chartTop Polish cities for software developers are Krakow (23.7%), Warsaw (22%), Wroclaw (15.3%), Lodz (7.8%), and Poznan (5.1%). The Tri-city cluster formed by 3 neighboring cities: Gdansk, Gdynia, and Sopot, is home to 7.8% of Polish talent.  

Polish specialists are well-recognized in international rankings of top software outsourcing countries. With local developers having deep expertise in many technologies, Poland closes the top 3 of the SkillValue list. The country's ranking in the TopCoder report is 7 as of the moment of writing, confirming the competence of local engineers.

As for the knowledge of English, which is a must for all the best countries for outsourcing software development, Poland leaves Ukraine behind. It is only one position lower than Romania, ranked 16th in the EF EPI chart. The language barrier is no obstacle to Polish people since English is well-taught throughout all schooling stages.

Computer science education in Poland

Poland's IT education pool spans 400 higher educational institutions accessible to applicants from all walks of life because of the relatively low tuition fees. As stated in the Ideamotive report, Poland is home to 20 universities that offer STEM and CS programs. 

One of the striking peculiarities of Polish schooling life is that local top-notch education quality attracts a lot of foreign applicants. In 2020, the number of students from abroad, mainly Ukraine, Belarus, and India, hit 6.4%. Active competition and a profound level of knowledge have turned Polish universities into an alluring destination for prospective tech employers. The world-class players, such as UBS and P&G, offer internship programs for Polish students.

When business meets culture 

You cannot rely solely on intuition while choosing among the top countries for outsourcing. According to the Hofstede cultural report, Poland is a hierarchical society. As for most of the Eastern European countries, its power distance index is above 50, meaning employees tend to adhere to the project vision of managers. However, combined with a much higher score for individualism than  Ukraine and Romania, the Polish case is ambiguous and contradictory. To avoid misunderstanding, establish a customized communication model for your extended teams. At the same time, Polish employees will struggle without a sense of vertical management.

Out of the 3 top software outsourcing countries described, Poland is the least pragmatic. Despite difficulties in seeing the big picture, outsourcing in Poland is an option if you seek quick yet impressive business outcomes.

Keep reading: Software development in Poland

Top outsourcing destinations of Eastern Europe, N-iX report

Top outsourcing countries: #3 Romania

This outsourcing destination is a hidden gem of Eastern Europe and there are hardly any disadvantages of outsourcing software development there. The country’s tech market is annually growing by 15%. Romania combines high cultural compatibility with a quickly evolving IT ecosystem that consults the latest industry trends. Therefore, if you are searching for innovative development experiences, Romanian experts can guide you through that.

Tech market overview

Having rapidly grown over the last 20 years, the Romanian economy generated $7B of revenue in 2019. The efforts of the government to attract more foreign capital have paid off: as of 2021, the IT industry comprised 1.9% of the country's GDP. Among Romania's foreign partners, there are such notable names as Microsoft, Amazon, and Google. 

Romania is listed among the top outsourcing countries in the world for a reason — it has a proven record of successful cooperation with clients from Western Europe and North America and is earning its reputation among the top software outsourcing countries. Thanks to its lively entrepreneur environment, Romania takes the 28th position in the AT Kearney report, following Ukraine and Poland.

DoingBusiness ranking has estimated the country's business regulations as favorable and marked Romania as 55 on the list. The provided IT services from one of the best countries for outsourcing are attractive in terms of expenses-quality relation and ease of managing a business. 

Romania in international business rankings

Romanian IT experts

Romanians used an increased demand for offshoring services for their good and built a network of well-educated software engineers. The latest data points to 131,000 Romanian developers residing in the country, 29,000 of whom are delivering IT services to the external markets. Local tech specialists are ready to satisfy any of client cravings, especially when it comes to fintech, healthcare, e-commerce, and education domains.

Romanian IT hubs map and employment structure chartThe IT community thrives in the Romanian biggest cities: Bucharest (46%), Cluj (12%), Timișoara (9 %), and Iasi (6%). As you can see, the cities can merely compete with the country's capital in staffing. As a result, salary rates across the country sometimes differ drastically.

In the TopCoder 2022 ranking that includes top outsourcing countries in the world, Romania scored 16th position, losing to Ukraine and Poland. The destination is 23rd in the Skillvalue report. It is no wonder that these indexes are lower than Ukrainian and Polish since Romania's focus on IT advancement is relatively recent.

When we look at the level of English among Romanian experts, it is the closest to proficient of all the countries compared. The country is 15th on the EF English Proficiency list.

Educational potential of Romania

Tech education quality should come first if we speak about the best countries to outsource software development. With the purposeful input from local authorities, Romania boosted the education system. As for now, around 6,700 students graduate from CS programs annually. According to the 2022 Times Higher Education Ranking, the best universities for tech specialists are Babes-Bolyai University, Polytechnic University of Bucharest, and the Technical University of Cluj Napoca.

However, Romanian tech education faces a gap between demand and capacity. Since the remuneration for IT in Romanian services is much higher than teaching fees, there is a talent shortage in university staffing. The local government is already taking steps toward educational reforms to solve that. 

Mentality and business approach

If we rely on the Hofstede report, Romanian rates are a golden middle between Ukraine and Poland. Just like Ukrainians, the local society is feminine, meaning that people are focused on a healthy corporate environment. In this context, Romania is very similar to the Western communication approach based on equality, willingness to negotiate, and flexibility and therefore makes one of the best countries for outsourcing software development.

As for long-term orientation, Romania scores 52 out of 100. This destination is perfect for your team scaling if you need specialists with pragmatic vision and the ability to always keep up with sprint goals. Due to the high power distance index, Romanians tend to follow precise roadmaps, so you can be sure that they will regularly check in with your requirements.

Wrap-up

The top software outsourcing countries showcased in the article are similar in terms of achieving excellent measurable outcomes yet differ with regard to regional peculiarities. While choosing the country to outsource, consider your core product goals. For your project to live long and prosper, you should first formulate your expectations and analyze external markets to see where they overlap. 

Bulid your team with N-iX

Why choose N-iX as your software development partner?

  • N-iX is a trusted full-cycle software development company that has been on Eastern European and international markets for 20+ years;
  • Our talent pool consists of 1,700+ top-notch engineers with a multi-dimensional skill stack and expertise in telecom, healthcare, fintech, and other industries;
  • The company's partnership history spans close and long-term collaborations with leading global businesses such as Grainger, Lebara, Fluke, Gogo, and more;
  • N-iX is well-recognized in the industry, appearing on the top positions of Forbes, DOU, and IAOP rankings;
  • We keep industry updates under the radar by being a member of the IT Ukraine Association, EBA, and one of the founders of the Lviv IT Cluster.

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By Marta Khort March 03, 2022

About N-iX

N-iX is an Eastern European software development service company that helps businesses across the globe expand their engineering capabilities and develop successful software products. Founded in 2002, N-iX has formed strategic partnerships with a variety of global industry leaders and Fortune 500 companies, including OpenText, Fluke Corporation, AVL, Lebara, Currencycloud, TuneIn, and many others. With more than 1,800 professionals, N-iX offers expert solutions in software engineering, cloud-native services, data analytics, embedded software, IoT, machine learning, and other tech domains covering a wide variety of sectors, including finance, manufacturing, telecom, supply chain, to name a few.

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