Why outsource in CEE and the benefits of it

November 12 10 min read
why outsource CEE benefits 2

The demand for contract IT talent will increase as more businesses take advantage of outsourcing instead of hiring specialists in-house.

As the gig economy grows, more and more businesses will look to hire independent contractors for their IT and software development needs. For software developers and businesses, understanding the future trends in the IT outsourcing is important for succeeding in the industry.

Here are a couple of reasons to consider when looking for an outsourcing partner:

Skilled talent pool

The university system in CEE is robust, affordable and specializes in skills such as engineering and science. The quality of education is confirmed by the region’s performance in IT.
The result is a growing labor force that’s highly skilled in the areas of IT and software development.

Cultural similarities

A cultural affinity, shared language, and direct style of communication make it easier to reach an initial understanding and drive results. Starting with the first steps in school, the students are introduced to different foreign languages like english, german, french or spanish where they have the opportunity to study the language and culture for eight years or more.

Cost cutting

The average salary in CEE is low compared with the western alternatives and the quality of work is higher.
The length of engagement and technology stack can also impact the price.
When comparing an in house vs outsource team you will notice a consistent difference of costs in the following areas:

  • the inhouse developers salary will be higher compared with the rate you pay;
  • benefits and payroll taxes you need to offer for onsite team vs travel & communication tools in order to be close to your outsourced team;
  • office space, networking, administration in order to ensure a proper working environment vs the time spent for management & oversight required;
  • the total cost required to retain the in-house developers vs you mitigate these risks and costs to your software services supplier.

Outsource vs. freelancers

There is a well-established product development process in place. A company has completed many projects similar to yours in the past. During these experiences they have developed good practices for communication, product design process and making sure that the outcomes of the project meets the clients needs.

There is an integrated team of people working on the project. Every aspect of the product life-cycle is being taken care of an expert in the required field. Therefore, for every problem which appears, solutions from different angles can be identified, proposed and the best one implemented.

Product delivery is reliable. A good partner has back-up developers ready to respond to unforeseen scenarios. If one of the employees is falling sick, decides to choose another career path or a decision to scale up the development team in a short period of time is taken, there is going to be an experienced developer ready to ramp-up the team.

Outsourcing is maturing

Back when software development outsourcing first became popular, it was made possible by the rapid globalization of the economy and the proliferation of technologies that made remote cooperation possible and easy. But, let’s face it, it was based on a very primitive premise: outsourcing is a great way to save money. It took many failed projects to come to the realization that low upfront rates do not tell the whole story, and poor communication and quality can negate any savings.

Nearshoring – the new offshoring?

For businesses from countries that tend to outsource most of their development work, such as the U.K., Germany, France or the U.S., the CEE region tends to be the closest alternative. It provides the benefits of a close time zone, culture and business environment, which correlate strongly with the overall satisfaction from outsourcing services. As evidenced by the English Proficiency Index, developers from the CEE region also tend to speak English really well compared to those from other destinations – an important communication factor that can make or break complex outsourcing projects.

Top IT Outsourcing Business in Romania - Wonder-Child

Romania is known for many things - and its capacity to deliver excellent IT services has grown to be one of them. Although deprived of the technical innovations of the Western world before 1989, starting with the mid-90s and specifically the 2000s, though, Romania’s private sector started to finally gain some sort of direction.

Unsurprisingly, one of the sectors Romania chose to lay its main objectives on was IT.

Full Overview of Top Software Development Destinations, Romania’s IT was generating more than $2.2 billion in 2015 (and most of the IT sector was focused on outsourcing services). At the moment, Romania’s government supports heavy tax incentives for IT employees and companies, which, combined with EU funds, has contributed massively to an entrepreneurial boom in the IT sector.

Most of the Romanian IT outsourcing companies we have analyzed don’t do much outbound marketing and that’s why sometimes it might be hard to get in contact with them. Their efforts might be focused on outbound marketing - or no marketing at all. Same as in most IT outsourcing cases, though, employer branding is a genuine focus here.

The Recruitment and Talent: According to the same aforementioned source, in 2015, there were nearly 95,000 IT professionals in Romania - and the market was expected to increase by 15% annually. It is thus fair to assume there are way more than 100,000 people employed in the IT industry in Romania.

There is an active and growing community ready to invest time and passion in their peers - and chances are that this will have a big impact in the future.

All in all, Romania is ideal nearshore and offshore software outsourcing destination. The skills of its software professionals, as well as the business climate, lead to the development of successful software projects.