Eastern Europe IT Outsourcing in 2023: Forecast and Research

The Eastern Europe IT outsourcing market is expected to increase despite multiple challenges. As evidence, the IT outsourcing market will grow to $578.30 billion by 2027. So many companies now take advantage of Eastern Europe to fulfill their software development outsourcing requirements. The region’s competent and well-educated workers, as well as its competitive cost of labor, are driving this trend.

In this article, we’ll determine the best destination countries for outsourcing your software development, highlight the advantages, and discuss three of the most prominent trends in outsourcing to Eastern Europe to show you why it’s a good idea to have your software developed there.

Why Outsourcing to the Eastern European Market Is a Good Idea

Outsourcing your software development to Eastern Europe is an excellent option for businesses to save money without sacrificing quality.

Eastern European nations are regarded as the finest places to outsource software development because they provide benefits, including:

• Many highly educated individuals with advanced IT abilities. This makes locating skilled workers easier for business process outsourcing (BPO) firms.
• Due to the lower cost of living in Eastern Europe, incomes are also lower than in Western countries.
• A high level of English facilitates and expedites communication between international workers and employers.
• An attractive business environment with governments taking effective measures to enhance their outsourcing ecosystem.

Countries in Eastern Europe for Outsourcing Custom Software Development

The war that russia started in Ukraine changed how the region’s driving factors were set up. The environment for outsourcing in Eastern Europe has changed, but it has continued to resist challenges.

Due to the full-scale invasion of russia on the territory of Ukraine and the destructive political course of belarus, these countries have lost their potential as destinations for Eastern European outsourcing, although they were quite popular until 2022. Western companies are returning to work with Ukrainian companies because they see how everyone is working despite the difficulties and losses. Western nations, such as the U.S., Canada, and Israel, continue to have a significant need for software developers in the Eastern area.

Ukraine, Poland, Romania, the Czech Republic, and Estonia are the five popular IT hubs for outsourcing software development. We examine these nations in-depth:

Ukraine

The Ukrainian IT outsourcing market intensifies competition in Eastern Europe for a huge talent pool of qualified developers, affordable IT service pricing, and a range of technical skill sets.

Ukraine is ranked 11th in the world by HackerRank, much behind both India and the United States. Ukraine has attained a worldwide reputation for high-quality expertise across several areas, including e-commerce, fintech, education, healthcare, etc., thanks to the present development in the IT industry.

Economical IT service expenses do not impact software quality. Ukrainian programmers have top-notch technical chops and use the Agile development methodology to create products that work well together.

Simplified legal and financial regulation of the export of Ukrainian IT outsourcing services is another key to the success of the Ukrainian startup ecosystem. This makes for a solid customer base from which international investors may profit.

Poland

Poland is an attractive Eastern European nation with a strong reputation for IT outsourcing. The Polish software business has a significant talent pool, including over 11,000 graduates who join the IT sector each year. In addition to its cheap expenses and good quality of life, Poland’s popularity as a location for IT outsourcing is also attributable to its high standards of living and lower prices.

Also, the Polish government has worked hard to offer incentives and help to international investors and business owners, which has made the country a better place to do business.

This contains corporate tax exemptions. It also provides research and development subsidies to small and medium-sized businesses.

Romania

Romania is also one of the top nations for outsourcing software development. It provides good incomes, a decent cost of living, and a robust infrastructure.

As compared to other European nations, Romania ranks higher in HackerRank at number 20 in the world. Romania has extensive knowledge in a variety of areas. Major companies like Microsoft, Huawei, and Oracle have all decided to focus their efforts in this direction. Foreign investments, which have increased significantly over the previous ten years, propelled Romania’s economic expansion.

The Czech Republic

Due to its convenient location, English proficiency, and Western-oriented culture, the Czech Republic is a popular outsourcing destination for many IT businesses around the world. Nowadays, there are over 100,000 IT experts in the Czech Republic, and the graduate population is increasing by 4,000 each year.

The Czech Republic joined the EU in 2004 and has a legal system that is stable and offers good business conditions. Leading international tech companies including Microsoft, Google, Oracle, Skype, and IBM have chosen the nation for both direct investment and outsourcing due to these advantages.

In 2021, Deloitte included 13 software development companies from the Czech Republic on its Technology Fast 50 Central Europe list, which recognizes the most innovative businesses in the region. Yet it is more costly to outsource software development to the Czech Republic than, say, Ukraine or Romania.

Estonia

Estonia has been a popular location for businesses seeking to profit from the European IT outsourcing market. Estonia was one of the first European nations to offer e-Residency, allowing non-citizens to establish businesses in the country. The entire procedure may be accomplished online with a digital ID.

Hundreds of companies have benefited from this program. The quality of Estonia’s educational system, especially in software development and technology, is another selling point for the country as an outsourcing hub. Even though Estonia isn’t a very big country, it’s clear that the government is working hard to be innovative.

3 Major Market Trends in IT Outsourcing

Here are three major trends in outsourcing software development in the 2023 year.

1. Cybersecurity

During the COVID-19 outbreak, cybercrime instances soared by more than 600%, according to Purplesec. Since cyber dangers continue to increase, the problem of cybersecurity and personal data protection has become the top priority for enterprises worldwide. Moreover, security capabilities drive the implementation of innovative technologies in the current industry. Thus, businesses increasingly turn to external software development firms for sophisticated cybersecurity solutions.

2. Artificial Intelligence

Soon, new heights will be reached by the AI industry, which has developed substantially over the last several years. Consider the year 2022, when ChatGPT and other strong artificial intelligence technologies have taken the globe by storm with their creative potential. The introduction of such technologies has shown great potential for automating machines to accomplish diverse tasks faster and more efficiently than ever before.

It is not surprising that businesses are investing extensively in AI technology to manage and analyze huge volumes of data to enhance customer experiences, streamline operations, and save costs. In addition, AI technology may provide organizations with more control over their data and procedures, allowing for the seamless integration of all areas of their operations.

Creating AI solutions and techniques may involve considerable time and resources. This is the primary reason why so many businesses outsource this role to specialized third-party software providers.

3. Business Process Outsourcing (BPO)

Business process outsourcing companies are searching for innovative methods to give value to customers that extend beyond their core competencies. Banks and insurance firms were among the first market participants to respond to this change. In certain situations, the spectrum of outsourced value-creation procedures expands to include key company functions such as financing. When picking providers, the authentication of end users is seen as an extremely appealing aspect.

As vendors expand their products and expertise, sourcing teams inside client organizations must widen their viewpoints. Determining how service providers may provide value to the organization is now the top concern. In 2023, more sourcing teams will adopt an outcome-oriented mentality, which will enable them to determine what service and process support they need to achieve their business objectives.

Outlook For the Future

The popularity of Eastern Europe as a location for IT outsourcing is expected to continue in 2023. With its qualified workforce, advantageous time zone, and cost-effective services, the area is a suitable outsourcing location for IT enterprises. Eastern European IT outsourcing is predicted to continue growing, making it an appealing alternative for businesses seeking to cut costs without sacrificing quality.

Outsourcing software development is a great way to improve the quality and efficiency of your project, and choosing a reliable software outsourcing company can help you achieve these goals. Without compromising quality, you may access a pool of specialized expertise, decrease costs, streamline processes, and increase scalability with the proper team in place.

If you are still hesitant to work with Eastern Europe or have questions about the outsourcing process, the Agiliway team is happy to help you and answer all your questions. So don’t hesitate to leave a request on the website and one of our experts will contact you.

READ ALSO: OUTSOURCING CHALLENGES: STRATEGIES FOR MITIGATING RISKS AND IMPROVING OUTCOMES