Outsourcing software development, fully or partially, has come into business practice for many companies. In this respect, Eastern Europe gained excellent reputation as IT talent supplier. USA, Canada, Western Europe and other world countries largely rely on professionals coming from Eastern European IT hubs. Ukraine, Poland, Hungary, Belarus and other Eastern European countries have become the best spots for outsourcing software development.
Before we move to an overview of the biggest IT hubs in Eastern Europe, let us examine why outsourcing from Eastern Europe has become so popular.
Large talent pool. The biggest Eastern European IT hubs offer around 1 million of IT professionals. This number would be enough to fill the staffing gap for software development jobs in the USA for instance.
Qualified software engineers. Qualified software engineers appear to be one of the biggest assets in Eastern European IT hubs. This phenomenon is explained by harsh economic conditions in this part of the world that shaped up the people and turned them into achievers and best-in-class professionals.
Good value for money. Niche software engineers come at cost. Company managers not willing to jeopardise the quality of their products seek for the best IT professionals and prefer to establish long-term cooperation with the Eastern European suppliers rather than outsourcing from India or the Philippines.
Ambitious growth. On top of the existing number of IT professionals, Eastern Europe continuously develops educational programmes aimed at increasing the number of IT experts as well as enhancing their qualification level to comply with the global standards.
Business expertise. While Eastern Europe established itself as IT experts’ supplier a while ago, what it did lack was business experts who could contribute to the making of end-to-end business solutions. Luckily, this is no longer an issue, as today Eastern Europe is able to offer a number of professionals with substantial business expertise that can compete with Western European professionals.
Let us have a look at the top Eastern European countries that proved themselves as the best providers of IT development services.
Ukraine has won the title for exceptional quality technical hub. Even a couple of decades ago, it was hard to imagine that this country would recover from what was left behind after the collapse of the Soviet Union. Today, Ukraine is a home for over 200 thousand IT developers. Kyiv, the capital of Ukraine, is one of the top IT cities in Europe that offers friendly start-up environment. According to IAOP, 18 IT companies from Ukraine made it to the best world’s outsourcing suppliers. Kyiv has hosted R&D offices for 110 world biggest technology companies like Oracle, Samsung, Google and Microsoft and remains the largest pool for outsourcing IT talents.
According to Forbes, Poland was ranked at 34th position for doing business. It boasts the biggest talent pool of IT professionals and has the best IT competitiveness index for business climate and IT employment in the region. Unlike Ukraine, 80% of all IT experts in Poland are engaged in working for the largest global technology companies and only 20% are involved in IT outsourcing services. The fact that Poland hosted over 400 R&D centres speaks for itself and positions this country as one of the favourable spots for doing business. One thing that Poland needs to overcome though is the outflow of their IT professionals to other countries.
Estonia is known worldwide for Skype and for its impressive number of start-ups. The government of Estonia contributes to the development of IT sector by simplifying legal procedures and policies towards creating a more favourable environment for growth. With over 400 start-ups, Estonia holds the position of the second most favourable country in Eastern Europe for doing business. Compared to other Eastern European countries the living standards in Estonia, including salaries, are higher, yet this country remains high quality IT services provider.
Czech Republic has invested a lot of effort into the development of their IT sector. Combined with lower salary level it makes this country a great competitor among other destinations of the Eastern bloc. Although Czech Republic is known more for its automotive technical industry, the IT sector still contributes 2% to the country’s GDP annually and runs over 900 start-ups.
Hungary takes the fourth position in technical talent potential in Eastern Europe and continues to expand their talent pool by raising more IT graduates each year. Hungary contributes 10% to the country’s GDP annually through its IT sector. About 63% of revenue comes from R&D centres established by large international companies in Hungary. The remaining share makes Hungary one of the top countries for outsourcing IT services.
For the past 20 years, Romania has been demonstrating an impressive 15% growth of its IT sector. The STEM (Science-Technology-Engineering-Mathematics) education method created thousands of qualified graduates with good command of English. Combined with average prices for IT services, this makes Romania one of the best IT technology hubs.
Opening R&D centres for Microsoft, Siemens, Adobe etc. in Serbia is a proof that this country has sufficient number of qualified resources in its IT industry. Serbia has seen an increase of IT students in the past three years by 23% and can boast IT professionals with various business expertise. Serbia is largely known for its gaming and blockchain IT experts. Currently, there are about 2.5 thousand IT outsourcing companies making it the fastest IT sector growing country in Eastern Europe.
The number of IT professionals has almost tripled in Lithuania in the last five years. Today the number of start-ups exceeds 1000 making Lithuania the largest destination in the Baltic region. The country continues to develop the IT sector and facilitates processes, offers start-up visas and improves technical capabilities.
Lithuania is a world known destination of fintech solutions. As a proof, Vinted became the first unicorn company in Lithuania in 2019.
Small but ambitious Moldova exports around 80% of its IT services. Simplified tax policies introduced by the government contributed to the increased number of IT companies across the country. The steady 7% increase of IT services export is a good sign, but Moldova is yet to develop its full potential in IT services provision.
Talking numbers, as of 2021, of all the Eastern European countries the largest number of IT developers are concentrated in Poland (401 000), Ukraine (200 000), Romania (139 000), Czech Republic (130 000), Hungary (105 000), Lithuania (36 000), Estonia (35 000) and Moldova (30 000).
The best countries for technical start-up development are Estonia, Lithuania, Czech Republic, Poland and Ukraine.
The growth that these countries demonstrated over the past years clearly show the potential to continue developing IT services in the next years.
Of all Eastern European countries, there is no doubt that the greatest wealth of Eastern Europe lies within its talent pool. Profound education, qualified engineering talent, experience in providing outsourcing services and good value for money make Eastern Europe a sweet spot for outsourcing IT professionals.
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