Why Should You Outsource to Eastern Europe in 2022? (Price, Pitfalls, and Mistakes)

1837 Updated 09.22.2022
Vasyl Polych

Founder & CEO at Northell

5/5

Table of contents

When looking for software development outsourcing, many questions arise. What are the most promising IT outsourcing destinations? Is the offshore business model suitable for effective cooperation? How to choose the right outsourcing destination? What are the benefits of IT outsourcing? Although finding the right IT outsourcing service provider is not easy, there is still a demand for one.

Significant talent shortages, rampant costs, and delayed releases force most Western companies to seek profitable proposals offshore. Companies ranging from private entrepreneurs to large enterprises choose IT outsourcing in Eastern Europe because of its value for both the business and the product.

In this article, we will discuss the perks of partnering with Eastern European outsourcing vendors and explore what makes this destination unique, what are the pitfalls of outsourcing, and how to prevent them.

Why do companies outsource IT development from Eastern Europe?

For many reasons, software outsourcing in Eastern Europe continues to be a hotspot for outsourcing. Let’s clarify them to help you quickly find a working solution that best suits your core business needs.

Deep tech talent pool

According to the latest State of European Tech report, there are 6.1 million developers in Europe. The massive talent pool of professional developers continues to grow in Eastern Europe.

This tendency allows Western businesses to choose software developers from a rich pool of tech-savvy professionals in Eastern Europe who use cutting-edge innovation to accelerate their business growth.

Technologies diversity

IT outsourcing companies from Eastern Europe are highly exposed to cutting-edge IT innovations.

Numerous international awards, popular IT products such as GitLab, Ring, Grammarly, People.ai, and positive customer reviews confirm competence in various technologies and leading industries.

Best cultural fit

IT outsourcing involves constant communication between the project headquarters and outsourcing staff.

So in case of cultural mismatch, this can become a problem. The good news is that Eastern Europe culture is similar to Western clients’ mentality. Thus, this means that the attitude towards management, conflict resolution, and teamwork allows for easy and effective collaboration.

Reasonable quality-to-cost ratio

The most apparent factor favoring software outsourcing for Eastern Europe is the reasonable quality-to-cost ratio. When outsourcing IT services to Eastern Europe, you can significantly reduce your capital investments by paying only for the service you need without any additional overhead. As such, tech competency diversity plus reasonable costs results in a well-balanced quality-to-cost ratio.

Suitable business environment

Western clients turn to IT outsourcing providers in Eastern Europe because of the suitable business environment. This means you can cooperate with your potential vendor through different collaboration models that benefit your business.

In addition, Eastern Europe countries are the most attractive outsourcing destinations due to the availability of technical staff, financial attractiveness, and a favorable business climate.

Government incentive for rapid digitalization

Having recognized the IT outsourcing cluster as a strategic industry, the countries of Eastern Europe are creating various programs to support rapid digitalization and attract potential investors.
Moreover, Ukrainian legislation provides attractive outsourcing opportunities, allowing IT companies to work with self-employed professionals who pay only 5% of their income and a monthly unified social tax.

Who needs outsourcing in Eastern Europe?

When discussing the reasons for the wide popularity of software outsourcing in Eastern Europe, there are specific reasons why companies of any size and capabilities prefer this particular direction.

Startups

It goes without saying any startup is limited in budget and resources. So, the main factor stimulating highly developed countries to look for alternative ways to build digital products is the possibility of decreasing project costs while minimizing risks of startup failure at the same time.

The lack of experience developing software for a specific business area also pushes startups to look for tech-savvy specialists across Eastern Europe. As the icing on the cake, the Eastern European software outsourcing market offers a wide range of services that can bring any idea from concept to launch with the best quality.

Mid-sized companies

In the case of mid-sized companies, outsourcing from Eastern Europe allows hiring qualified specialists for product deployment and maintenance. There are many projects requiring ongoing attention and support.

Thus, you can employ specific developers or an outsourcing company from Eastern Europe and provide quality software updates without overburdening other teams. In addition, you can outsource these tasks at any stage of the project while avoiding recruitment costs and lengthy employee onboarding.

Enterprise-level companies

Enterprise-level companies may often need to solve short-term tasks optimally. Otherwise, using internal resources to solve minor issues is not reasonable.

Besides, while the business grows, there is a need for an increase in efficiency for time-consuming functions. In some cases, liberating inner resources for a new purpose is another reason large companies outsource. Either way, delivering the same quality service and customer value is valuable to well-established brands.

Services you can outsource from Eastern European countries

One of the main advantages of IT outsourcing in Eastern Europe is choosing from a wide range of industry-specific services. So, when companies seek solutions that will fit their unique business needs, they would do well to look to Eastern Europe for assistance. Let’s highlight the most popular IT services.

Full-cycle software development services

When companies need to design and develop custom software solutions from scratch – full-cycle software development is the service they need. The outsourcing partner covers the entire software development lifecycle process, from ideation to successful deployment and post-release maintenance. This way, you achieve a full-staffed team with already set workflows, industry experience, and well-established techniques to build high-quality and unique products.

IOS app development

If you decide to create an iOS application, you can easily find these services in the Eastern European IT services market. Numerous software development companies provide their services across different business domains.

At Northell, we create IOS solutions for enterprise and consumer mobile applications on various devices, including iPhone, iPad, Apple Watch, and Apple TV. With a multi-industry experience in creating multiple IOS applications, we guarantee compliance with Apple’s guidelines, reliable cyber security, high performance, and quality.

Android app development

The Android platform is one of the most popular options for building mobile apps. From wearables to TVs, regardless of the size and shape of devices, there is an opportunity to make the most of your idea using the best management and development practices.

Cross-platform mobile app development

If you need an app compatible with IOS and Android environments, you can take advantage of cross-platform services based on the latest technology. Cross-platform apps follow Apple & Material design guidelines, deliver high performance, and are easy to update.

Web application development

The Northell team develops a web application that meets the highest web standards from discovery to final deployment. Extensive experience in developing web products in various industries allows us to provide ready-made web applications on time. Front-end and back-end are built with powerful tools to ensure SEO optimization, the best user experience, and high performance.

Product design

Focused on meeting business and customer needs, the best design solutions have attractive interfaces and provide a great user experience. With best design practices in mind, the top-rated companies create unique design systems to build any product.

By partnering with Northell, you can also deliver world-class products based on usability reports and custom UX tools.

Important criteria to follow when choosing an IT outsourcing destination in Eastern Europe

To understand how to choose a specific direction of IT outsourcing in Eastern Europe, we have compiled a list of important selection criteria.

Country Hourly rates  English skills rank Cultural fit HackerRank position Number of tech experts
Ukraine $25-60       40 Yes 11 200K+ 
Romania $31-51 15 Yes 20 139K+
Poland $40-56 16 Yes 3 295K+
Hungary $31-60 17 Yes 5 184K+
Czech Republic $34-53 27 Yes 9 150K+

Hourly rates

Eastern European countries have different hourly rates for software development services. You may prefer less or more affordable rates depending on your budget. However, this doesn’t mean you should judge by a single criterion. Make sure the specific company you choose has cases relevant to your project’s goals, an experienced team, and the necessary technology for your project.

English proficiency

When it comes to communication for smooth collaboration, English proficiency is a must. Knowledge of English among IT specialists is essential to improve constantly so that the outsourcer team can easily cooperate with foreign customers and build strong partnerships.

Time zone difference

When choosing IT outsourcing in Eastern Europe, do not forget to check the time zone differences. If the overlapping hours are more than 3 hours, ensure the outsourcer provides you with an optimized communication plan or suggests appropriate collaboration hours and work schedules.

Cultural fit

Similarities in culture and economic environment make nearshore and offshore outsourcing seamless. However, the countries of Eastern Europe are as close as possible to Western business rules, which facilitates the establishment of transparent and practical cooperation.

HackerRank score

The HackerRank score is another valuable criterion that you can use to filter your search for a potential partner. This platform ranks the country’s position with the best software developers based on test results in different programming domains for about 5 million IT specialists from 50 countries.

Number of tech experts

It’s important to note that tech specialists are your project’s primary workforce. This means that the more certified specialists, the wider the technology community and the opportunities to choose the best talents to create successful software solutions.

Popular technologies

Technological diversity will help you find the correct IT outsourcing country to create your product. The company’s technology expertise and associated product development experience will help you find the software services best suited to your business needs.

Top 5 destinations for Eastern Europe software outsourcing

Look through the most promising software development locations in Eastern Europe.

Ukraine

Ukraine

Ukraine

  • The biggest outsourcing hotspots: Kyiv, Kharkiv, Dnipro, and Lviv
  • Popular tech competencies: Front-end, QA, PHP,.NET, Java, DevOps, UI/UX Design, Python,Node.js, C++
  • Number of specialists: 200K+
  • Average rates: $25-60
  • Top-rated IT outsourcing companies (Clutch): Northell, Yalantis, IT Svit

The IT outsourcing industry in Ukraine creates a lot of competition in Eastern Europe for a large talent pool of quality developers, reasonable costs for IT services, and tech competency diversity.

According to HackerRank, Ukraine takes 11th position in the global ranking, far away from India and US. With the currently booming interest in the IT sector, Ukraine has achieved international recognition for high-quality specialists across numerous industries, such as in ecommerce, fintech, education, healthcare, etc.

Reasonable costs for IT services don’t compromise software quality. Ukrainian developers have exceptional technical skills and follow agile development to create successful and compatible products.

Another factor in the prosperity of the Ukrainian startup ecosystem is simplified legal and financial regulation of the Ukrainian IT outsourcing services export. This helps form a good investment client for foreign partners.

Romania

Romania

Romania

  • The biggest outsourcing hotspots: Bucharest, Cluj-Napoca, Timișoara, Craiova, Iași, Sibiu, Brașov, and Oradea
  • Popular tech competencies: Java, .NET, PHP, Python, JavaScript, Angular, React, iOS and Android technologies
  • Number of specialists: 200K+
  • Average rates: $31-51
  • Top-rated IT outsourcing companies (Clutch): MeshSoftware, Black Bullet, Qubiz

Romania is another prominent player in the Eastern Europe software outsourcing market. This country attracts global tech companies for clear and transparent procedures for registering property and paying taxes, fast adoption of emerging technologies, and high technical skills of Romanian developers.

According to HackerRank, Romania takes 20th position in the global ranking ahead of other European countries. Romania has in-depth expertise across different industries. Large corporations such as Microsoft, Huawei, and Oracle have chosen this direction for their activities.

Poland

Poland

Poland

  • The biggest outsourcing hotspots: Warsaw, Krakow, Wroclaw, Katowice, Poznań
  • Popular tech competencies: JavaScript, Java, Python, .NET, PHP, and DevOps
  • Number of specialists: 200K+
  • Average rates: $40-56
  • Top-rated IT outsourcing companies (Clutch): Stepwise, Future Processing, Skelia

One of the most attractive destinations for outsourcing in Eastern Europe is Poland. Even the position of HackerRank is the 3rd place among the best and most highly qualified developers in other countries. The Polish software market has a vast talent pool, including about 11,000 IT professionals who graduate and enter the IT workforce annually.

Polish engineers have broad tech expertise and strive for innovation. They are widely known for their expertise in various technologies. Despite higher average hourly rates for software development than Ukrainian ones, Polish developers provide good quality work and offer progressive product ideas.

Hungary

Hungary

Hungary

  • The biggest outsourcing hotspots: Budapest, Debrecen, Szeged
  • Popular tech competencies: PHP, JavaScript, HTML/CSS, Python, SQL, React
  • Number of specialists: 200K+
  • Average rates: $31-60
  • Top-rated IT outsourcing companies (Clutch): Moontek, Resolute Software, Electric

Hungary is one of the most dynamic IT outsourcing sectors in Eastern Europe. Hungary trains a vast pool of IT engineers and ranks 5th among the best software developers in the world, according to HackerRank.

Broad technical expertise and government incentives attract many leading companies to IT outsourcing. Hungarian developers are well versed in PHP, JavaScript, HTML/CSS, Python, SQL, and even the React framework. Companies like Siemens, Ericsson, Deloitte, and Nokia base their R&D centers there.

Czech Republic

Czech Republic

Czech Republic

  • The biggest outsourcing hotspots: Prague, Olomouc, Brno, and Saarbrücken
  • Popular tech competencies: Java, PHP, Ruby on Rails, Python, C#, and C++
  • Number of specialists: 200K+
  • Average rates: $34-53
  • Top-rated IT outsourcing companies (Clutch): Airdev, AllianceTek, Rootstrap

According to our sample, the Czech Republic is the popular IT outsourcing destination in Eastern Europe. This country stands out with the second largest talent pool among IT professionals. Czech developers are proficient in Java, PHP, Ruby on Rails, Python, C#, and C++.

The Czech Republic’s business environment is attractive to foreign investors for a good level of tech education, substantial talent pool, and in-depth tech competencies across different industries. According to HackerRank, this country is ranked 9th among the top software developers.

Why choose Northell as your IT partner in Eastern Europe software outsourcing?

Now that you’ve selected the outsourcing destination, you should also find the right outsourcing partner. There are factors you should consider before choosing your remote team. Our recent blog post about effective programming outsourcing reveals this topic in detail. In the meantime, let’s look at what we offer our customers.

Top Development & IT Companies Ukraine by Clutch

Northell is a team of highly skilled and tech-savvy professionals who design, develop and scale various technology solutions. We work with projects across industries such as fintech, education, e-commerce, healthcare, real estate, and more.

Having successfully completed over 160 projects in a couple of years, our team has been ranked among Clutch’s Top Development & IT Companies in Ukraine by Clutch, Top 3 Web Developers in Munich by Clutch, Top 1 Software Developers in UAE by Clutch, and Top 10 Design Agencies by the Manifest.

Modern tech stacks

One of the benefits of working with our team is the use of modern technology stacks. We are well versed in upfront technologies, which allows us to speed up and improve the overall design and development process.

Diverse collaboration models

Depending on your business needs, we offer several collaboration models to our clients. There are three options you can choose from: time and material (T&M), fixed price (FP), and dedicated team. Each of these options can complement your in-house development team or work with a project-based model. We provide several collaboration models according to your needs and financial resources.

High-level specialists

The release of successful and high-quality solutions is impossible without high-level specialists. Each team member is in charge of a particular scope of work in the software development life cycle. As an essential component of one single mechanism, our specialists are proactive and seasoned in building and delivering outstanding solutions.

Extensive portfolio

Thanks to our clients from various industries, our team has an extensive portfolio of successful digital solutions. Our team uses the latest tools and best practices to design, develop and scale your technology solution. Since we have worked with projects in different industries, it will be easier for you to understand how your potential team works and solves technical problems.

Transparent product development workflow

Transparency is one of Northell’s core values. We take this approach throughout the design and development process to make collaboration with our customers more efficient and precise.

In-house UX lab

The Northell team can discover and fix usability gaps in your web product through our in-house UX lab. We use the UX Eye Tracker tool to determine user behavior when interacting with your product and increase user conversion faster.

Challenges in to Eastern Europe software outsourcing

When outsourcing in Eastern Europe, there are several issues that you may encounter along the way. Consider effective solutions for each of them.

Communication gaps

Problem: It’s hard to expect seamless communication when you outsource IT development offshore. Possible disadvantages of outsourcing companies include inappropriate English proficiency and a lack of transparent communication plans.

Solution: Review the essential selection criteria for a leading IT outsourcing company in Eastern Europe discussed above. Plus, ensure that the team has a transparent approach to product development and English proficiency.

Time zone difference

Problem: When you outsource IT development offshore, the company will most likely be located in a different time zone.

Solution: To overcome this challenge, ensure the company you outsource your software project to has a communication plan to help you agree on a convenient time for both parties. Using popular collaboration tools will help you speed up and simplify communication anytime.

Complicated taxation

Problem: The tax system in Eastern Europe can often be confusing for companies looking to do business in the region. For example, in Ukraine, IT companies cooperate with local developers as private entrepreneurs. In turn, Ukrainian IT companies pay less tax.

Solution: Despite being legal, such tax systems can confuse foreign employers. However, this only means that you should carefully check the legal documents. Ask a potential IT services vendor questions if something seems unclear.

High competition in the recruitment market

Problem: Keeping a developer in a highly competitive IT market is not an easy task. High competition in the recruitment market stimulates software professionals to seek more favorable work conditions and other contract perks.

Solution: To avoid this, Eastern European businesses should offer software professionals benefits. For example, personal development plans to chart the employee’s path in the company and increase productivity.

Sensitive data leakage

Problem: Software code is vulnerable to confidential data leakage when outsourcing software projects. We cannot neglect software engineers that can unintentionally disclose some data.

Solution: Businesses who decide to outsource, Eastern Europe software outsourcing providers, and their employees must sign a non-disclosure agreement. They also should be aware of intellectual property rights and data protection laws.

How much does Eastern Europe software outsourcing cost?

All the above-discussed countries have more or less affordable hourly development rates.

Average hourly rate for IT outsourcing in Eastern Europe

Average hourly rate for IT outsourcing in Eastern Europe

These rates can vary from country to country and are determined by the economic situation and local competition. However, the final project cost depends on customer requirements, including such factors as:

  • Project complexity and duration
  • Required tech stack
  • Staff composition and their seniority
  • Product development schedule
  • Number of software reworks
  • Third-party integrations
  • Feature list
  • System adaptability

Northell offers such average development timeframes divided by project stage.

If you want to get an accurate project estimation, please contact our specialists.

Software Outsourcing to Eastern Europe: Conclusion

Software outsourcing in Eastern Europe is becoming an increasingly attractive choice for Western and European clients due to:

  • Rich software talent pool
  • Reasonable software quality/price ratio
  • Suitable business environment

It is a widespread business practice that allows customers worldwide to reduce development costs and increase expertise and product time-to-market.

At Northell, we provide our clients with high-level software experts, an agile and transparent development roadmap, and strong technical expertise. Get in touch with our team to build a reliable and efficient software solution for any of your needs.

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