27 October 2021
The so-called gig economy has reshaped the traditional understanding of work environments. In many cases, companies no longer need an in-house team for every business process. In fact, 36% of US workers are already part of such a model.
A gig economy is a working system when employees are not hired as full-time, in-house employees but invited to specific projects to solve particular tasks within certain deadlines. It includes various types of independent contractors: online platform workers, contract firm workers, on-call workers, and temporary workers.
One of the most popular directions of the gig economy is IT outsourcing. Delegating your tech tasks to trained and experienced professionals without the need to maintain your internal IT department has many undeniable advantages. Even the tech giant Google with a massive team of 89,000 full-time developers, outsources part of its tasks.
However, choosing a trustworthy company to outsource the important part of the company’s operations may seem challenging. Eastern Europe is a popular outsourcing destination for many companies in the West. As Poland, Ukraine, Belarus, and Romania export $13B of software development services, the region forms a large competing force in the CEE region. Rocketech specialists prepared an expert guide to IT outsourcing to Eastern Europe and its benefits.
Outsourcing Types
Depending on geographical location, there are three main types of outsourcing. Each type has its features and benefits. Knowing the difference can help decide which type would work for the project best.
- Onshoring is the outsourcing of business processes to another company located in the same country. This outsourcing type involves fewer risks and therefore remains the most expensive.
- Nearshoring is the outsourcing of business processes to third-party companies located in neighboring countries. This model is very popular in Western Europe, where companies can relatively easily choose Eastern European service providers.
- Offshoring is the outsourcing of business processes to a third party outside your country. Although this model is associated with some risks like language barriers, cultural differences, and different time zones, it’s the most popular outsourcing type as it helps reduce costs significantly.
Choosing the right outsourcing type depends on several factors, including your project’s budget, your company’s location, previous experience with business process delegation, and availability for remote communication.
Advantages of Outsourcing
Simply put, IT outsourcing is the direct alternative to hiring an in-house team of developers. An in-house team always implies having highly skilled professionals on salary, extra project management resources, bonuses, benefits, and effort to keep your IT crowd happy for a long time. Startups and small to mid-size companies rarely have the resources and capacity to create an extensive IT infrastructure.
Looking for freelancers may be another option for reducing development costs. However, managing separate freelancers from different time zones and backgrounds also requires time and resources. That’s when the outsourcing model shows its main advantages:
- Cost efficiency;
- Variety of talents and technologies;
- Scalability and flexibility;
- Improved performance;
- Significant time saving;
- Well-managed team.
However, theorizing the advantages of the model is not enough for making an informed decision. Our guide combines and structures the most important facts and points illustrating the model’s benefits for businesses that choose Eastern Europe as the outsourcing destination.
Why Should You Choose Eastern Europe?
There are a few major destinations to choose from if you consider hiring a dedicated team of software developers. For example, why would a mobile development company from Russia or Ukraine be a good choice?
Eastern Europe is famous for its skillful and experienced coders who have kept proving their solid reputation for the past few decades. For example, a Belarusian developer won Google Code Jam seven times in a row from 2014 to 2020. Notably, another programmer from Belarus won the coding competition in 2013 and took second prize in 2011.
The region offers a lot of talents. By the end of 2018, Moscow was among the five European cities with the largest number of software developers, according to London & Partners and the data from Stack Overflow.
| City | Total Number of Software Developers |
| London | 357,900 |
| Paris | 268,600 |
| Amsterdam | 216,800 |
| Cologne | 165,900 |
| Moscow | 160,900 |
| Frankfurt | 120,700 |
| Madrid | 111,800 |
| Manchester | 110,600 |
| Berlin | 99,400 |
| Zurich | 99,100 |
The outsourcing platform Lemon.io interviewed US employers who collaborate with freelancers and found out that 41% of respondents choose professionals from Eastern Europe. Let’s have a look at the reasons in more detail.
High-Expertise Talents
Seeing Eastern European countries in various tech-related rankings and lists is no longer a surprise. For example, HackerRank used its list of fifty countries with the most developers and ranked them according to the score index of the best developers. Here, Russia, Poland, the Czech Republic, Ukraine, and Romania made it to the best 20 countries in the world.
The scoring index in this rating is an average score for each country across all domains. HackerRank formalized the scores for each domain to make a reasonable comparison of separate scores and minimize the problem of different complexity levels for different domains.
Significant Cost-Cutting
If you hire an internal development team, you automatically sign up to pay for vacations, sick leaves, benefits, etc. In addition, you are liable for paying their taxes, renting a large enough room to accommodate the whole team, and providing snacks, coffee, and other perks of a modern working environment.
According to FullStack Labs, you can expect to pay $75 to $175 per hour for “small class” projects in the US. The rates for “mid-market class” projects already range from $125 to $175 an hour. And this is how the situation is different in Eastern Europe – the average hourly rate amounts to $30 – $70.
Offshore Development Rates per Hour in Central & Eastern Europe
| Country | Average Rates |
| Ukraine | $30-$60 |
| Romania | $31-$51 |
| Croatia | $32-$63 |
| Belarus | $33-$48 |
| Czech Republic | $39-$58 |
| Bulgaria | $39-$56 |
| Hungary | $44-$57 |
| Poland | $45-$69 |
Of course, it doesn’t mean that your chosen outsource team avoids paying taxes or doesn’t enjoy paid holidays. In this model, it’s simply delegated to the company providing the services. You, meanwhile, can focus fully on your company’s business objectives. In addition, the cost of living in other economic regions may significantly differ. It results in same-level of expertise employees having lower hourly rates.
English Proficiency and Smooth Communication
Possible obstacles in communication are a reasonable concern for many companies that consider hiring, for example, software developers from Russia or Ukraine. However, working knowledge of English is a must-have skill for most IT roles in Eastern Europe. Statista reports high levels of language proficiency among respondents in the CEE region.
The outsourcing model has another undeniable advantage. Your project is taken over by a well-organized team coordinated by an experienced project manager. Essentially, you don’t need to communicate with each developer or QA engineer – the PM ensures the smooth and agile working process, compliance with standards, and each team member’s wellbeing. With clear role delegation, providing the highest-quality services becomes the main objective of outsourcing companies.
Scalability and In-Demand Hard Skills
Eastern European specialists follow the latest tech trends and practices. The most popular programming languages and technologies are mostly the ones listed in the leading industry rankings like TIOBE Index or Stack Overflow Developer Survey.
The in-house development team has a major drawback: it does not scale. Well, in theory, it’s scalable, but hiring and firing full-time employees is physically, financially, and emotionally exhausting. Meanwhile, a dedicated development team has the flexibility to scale up and down.
You can speed up the development process at certain stages. For example, when a startup needs to complete the MVP faster, a team can bring in more developers to complete the project on time. In the same way, the team can be reduced when a delivered product needs support only in the final stages.
No Culture Gap
Certain differences in cultural code may significantly affect the working process and business communication. As the Eastern European market generally is open to Western investments, the local developers are well familiar with Western values, code of conduct, and work ethics.
Open culture is another advantage. Eastern European IT specialists are less likely to be shy about discussing requirements, sharing their expertise and practical experience, and suggesting improvements. This approach is often contrasted to a culture of consensus, which may appear attractive at first sight. However, most experts in agile software development emphasize the importance of open discussions for the best possible outcome.
Formal Technical Training
Although according to the research conducted by Glassdoor, the tech market giants like Google, IBM, or Apple no longer require a higher education diploma or a degree, the Eastern European mentality considers formal training an essential part of the professional path, especially for tech specialists.
Key Facts
- Poland
Number of software developers: 280K
Number of students/graduates (annually): 99.5K
- Ukraine
Number of software developers: 185K
Number of students/graduates (annually): 36K
- Romania
Number of software developers: 116K
Number of students/graduates (annually): 7K
- Czech Republic
Number of software developers: 96K
Number of students/graduates (annually): 6K
- Hungary
Number of software developers: 80K
Number of students/graduates (annually): 20K
- Bulgaria
Number of software developers: 55K
Number of students/graduates (annually): 11.5K
- Belarus
Number of software developers: 54K
Number of students/graduates (annually): 13K
- Croatia
Number of software developers: 29K
Number of students/graduates (annually): 4K
Certainly, many developers are self-made gems, and real-life experience is the most important requirement when looking for a reliable tech company. However, hiring specialists with university-level education means critical thinking skills, a good understanding of teamwork, and scientific background.
Final Thoughts
Russian mobile developers are famous for their hard skills, business communication standards, and high-quality products. However, Eastern Europe offers other attractive destinations for IT outsourcing. Finding a reliable tech partner connecting you with the best specialists from this region is a strategically beneficial step. The Rocketech Team would love to know about your project and consult you about rates, our experts, and services. Contact us for more information.