Technology powers modern business, changing the way we think about it. From transportation to banking, from shopping to agriculture, tech solutions are changing the world. And the more companies rely on tech solutions, the fiercer the battle for tech talent gets. Staffing locally and in-house recruitment are no longer an option, especially when you need to access a large number of experts or dip into new expertise. So the question is where to outsource software development.
This article discusses three main outsourcing destinations such as Eastern Europe (EE), Latin America (LatAm), and Asia in terms of:
- Their market size and the number of professional developers;
- Average rates for a software engineer at each location;
- Cultural compatibility and English proficiency;
- Time zone difference.
Market size and the number of professional developers
Eastern European countries have a combined tech talent pool of over 1.5M professional developers with over 50K ICT graduates entering the IT market every year. Ukraine, Poland, and Romania have the most significant number of ICT professionals (between 191K and 491K).
Other countries with a high number of professional developers are Hungary (175K+), Czech Republic (199K), and Bulgaria (101K).
On top of that, Eastern Europe is also known for a high level of qualifications and engineering skills of software developers.
The Asian tech talent pool reached over 4.7M in 2021. The top countries with the largest number of professional developers are India (2.7M), China (1.4M), Vietnam (300K), and the Philippines (200K).
Among the Latin American countries, the best outsourcing countries by the number of professional developers are Brazil, Colombia, and Mexico.
Education and qualification of the offshore software developers
Apart from the availability of tech talent, it is essential to pay attention to their qualifications, tech education, and overall programming skills.
The 2020 ranking shows that among the three discussed regions, Eastern Europe has the greatest number of top-notch universities. Thus, the access to education (and tech education in particular) is better in EE countries.
Also, Eastern Europe has an average 99.65% literacy rate, whereas in Latin America this score reaches 95.7% and in Asia - 90.6% (primarily because of India).
This ranking shows that China scored the honourable 1st place, while Eastern European countries took positions 3 through 20. On the contrary, Latin American countries reached as high as the 27th position (Chile) all the way to 45th (Colombia).
In this ranking, we can see that among the Asian countries, only Chinese developers have reached significant results. Eastern European countries have great results that vary between 5th and 26th position. Brazil, Argentina, and Chile have more modest results but still made it to the list.
So, while choosing where to outsource software development, it might be helpful to consider the educational background of developers from this country/region.
Tech and industry specialization of the top outsourcing destinations in the world
Every outsourcing region is famous for its expertise in a specific technology or tech stack. For example, Central Asia and India in particular, are known for the prevailing number of PHP developers. As a result, many companies outsource web development there. East Asian countries have substantial expertise in mobile app development. China, as the country with the largest population in the region and closed tech ecosystem, requires the development of their own apps and systems like WeChat, RenRen, Weibo, and even their own search engine (Baidu). LatAm countries are known for their expertise in .NET/Azure and WordPress.
Eastern European countries work with companies in security, automotive, as well as the hospitality and travel industries, whereas Asia has great expertise in real estate and education.
Offshore software development costs
Considering the competition for tech talent and its overall shortage across the US, Western Europe, and the UK, many companies face a similar problem—they don’t know where to outsource software development to get the job done for the money on hand.
Outsourcing is about finding a vendor that can deliver a tech solution for the price that fits your budget.
This chart presents the average hourly rates in some of the best IT outsourcing regions. The lowest figures are in Central Asia (particularly in India), where developer rates per hour reach $20. A bit higher compensation is in East Asia (e.g. in China) with an average hourly rate around $25. Eastern Europe and Latin American developers get around $36-38 per hour.
Cultural compatibility and English proficiency
Cross-cultural communication is complicated. It is even more complicated in the work environment, especially in outsourcing, when the teams are divided by different cultures and diverse business approaches, as well as languages and unique traditions. To ensure that all team members are on the same page, everyone needs to put in extra effort into it. There are two basic things you could do to minimize culture-related risks in outsourcing:
- Before you choose a vendor, look for an outsourcing country that is a great cultural fit for your business;
- After you choose the vendor, let your teams learn more about each other’s culture to help them adapt faster.
Typically, there are countries that are considered an excellent cultural fit for clients from the US and the UK. In the table below, you can find the results of the Gartner research on cultural compatibility as well as English proficiency score.
If we are answering the question of where to outsource from a cultural perspective, it is vital to find the culture and the software development partner that match your expectations. Should it be a lengthy project? Look for an IT outsourcing country with a high long-term orientation and uncertainty avoidance score. If you are looking for a single developer who will be flying solo, look for locations with high masculinity and individualism rates. Find out more in a PDF file below.
Where to outsource: Cross-cultural perspective
You may also be interested in Ukrainian software developers in cross-cultural communication.
Time zone difference
Working with a nearshore or an offshore vendor, some companies experience troubles aligning working schedules or setting up meetings. Understanding how many overlapping working hours your teams will have can help you choose the best IT outsourcing country.
However, having a team that is a couple of hours ahead or behind, can actually be beneficial for maintenance and tech support. Below, you can find more detailed information about how the time zones overlap between EST/UTC and some of the best IT outsourcing countries.
Read more: Nearshoring vs offshoring: a comparative summary
Where to outsource?
Before we provide you with any recommendations, let us point out that all three outsourcing destinations can fulfill your needs, deliver great quality products and offer a variety of vendors to choose from.
Seven out of the top 10 best IT outsourcing countries in 2019 AT Kearney GSLI are from Asia. This region has strong expertise in developing products from scratch. It also has a decent technical education, solid expertise across many domains and a vast labor pool.
Find more about the benefits of outsourcing to Asia.
Best IT outsourcing countries in Asia
While talking about the best It outsourcing countries in Asia, the top contestants are:
- India (due to the number of developers),
- The Philippines.
All these destinations have a proven record of successful software development outsourcing. However, this region has a number of precautions you need to understand before deciding to outsource your software development there:
- Indian IT market might be huge, but finding developers with proper qualification and technical expertise might be challenging.
- Chinese IT market experiences the lack of tech talent, as the most talented developers are mainly working for the government or in-state companies. Can they also fill the gap for other countries?
Mexico and Central American countries are known for nearshore development services for countries from the US. The overall tech talent pool in the region exceeds 1M, mostly consisting of the nearshore developers.
Best IT outsourcing countries in Latin America
The top three IT outsourcing destinations in the region are:
Due to the geographic proximity and convenient overlap of the working hours, LatAm countries can be a favorable location for companies looking to nearshore their software development. And while Mexico and Brazil are well-known locations for IT outsourcing and already experience some talent hunger, Colombia is a promising destination with an abundant tech talent pool and infrastructure.
You may also be interested in Top 50 IT outsourcing companies in the world.
For the last 20 years, Eastern European countries have changed a lot. Apart from infrastructure development and significant improvement of tech education, Eastern European countries adopted new technologies and created a thriving market of software development and IT outsourcing services.
This region is also known for fostering start-up culture. Four cities made it into the European Digital City Index as start-ups friendly destinations: Tallinn (18 in the top 60), Budapest (33), Prague (37), Warsaw (38) and Bratislava (41).
Moreover, Google and Financial Times even initiated the New Europe 100 award that recognises entrepreneurs, visionaries, and rising tech talents in Central and Eastern Europe.
Best IT outsourcing countries in Eastern Europe
Typically, when we talk about outsourcing to Eastern Europe, we think about countries with the largest number of professional developers: Poland, Ukraine, Romania, Czech Republic, Hungary, and Bulgaria.
These countries have hundreds of IT outsourcing companies that can work with small start-ups, mid-size businesses, enterprises, or even unicorns. Several of these countries received the title of best IT outsourcing destinations throughout the years. Many companies from Eastern Europe have development facilities in several Eastern European countries, as well as global offices and made it to the Global Outsourcing 100 list repeatedly.
Discover the top IT outsourcing countries of Eastern Europe in our market report.
This article will help you answer the question ‘where to outsource’ in terms of the tech talent pool, tech expertise, and cultural compatibility, as well as shortlist the best IT outsourcing countries.