Nearshoring software development to Eastern Europe is becoming an extremely popular business model for companies facing shortages and looking for the best quality services at attractive prices. In this article, we will discuss who should outsource to Eastern Europe and which countries with the best European nearshore destinations.
With rising rates for custom software development and professional shortage in the technology industry, more and more Western European companies are choosing to outsource services to their Eastern neighbors. Lower rates, top development quality, a huge talent hub, excellent education, high English proficiency, and small time differences make Eastern European countries an ideal nearshoring destination.
According to ISG, as many as 92% of the top 2,000 global companies outsource IT services, and according to Deloitte, global spending on outsourcing will reach $731 billion in 2023. In today's market, entrepreneurs aren't asking themselves WHY to outsource services, but WHERE to do it. For Western European companies, the answer seems obvious – a huge hub of technological talent is waiting just across the border on the left side of the map. Why is Eastern Europe the best nearshore software development destination, which country is best to outsource to, and what trends in this market await us in 2023? Let’s investigate the European market.
When demand for IT services began to soar, many Western companies faced a shortage of specialists.
As a consequence, more and more international companies are choosing to hire developers from abroad to fill the gap. However, they do not want to outsource services to Asia or South America, where they would face the time difference, language barrier and questionable quality. Thus, nearshoring to Eastern Europe has become one of the most popular business models, developing the region at an incredible rate.
Polish programmers are considered among the best in the world. According to HackerRank, Poland ranks 3rd in terms of the best global programmers and 1st in terms of Java programmers.
Regarding ease of doing business, Poland ranks 40th globally, and according to The World Bank, 'Poland's well-diversified economy has proven to be one of the most resilient economies in the EU.' Moreover, Poland is the country with the lowest percentage of corruption in Central and Eastern Europe.
Poland ranks 13th in the world and 11th in Europe on the EF English Proficiency Index, while almost 100% of professionals in the IT market speak English (Statista, 2022). There are more than 400 universities in the country, and the current number of students is 1.2 million, including more than 30,000 Information Technology students.
The above factors make Poland the number one choice when nearshoring to Eastern Europe.
<span class="colorbox1" fs-test-element="box1"><p>Explore top custom software development companies from these locations.</p></span>
The Czech Republic boasts one of the lowest turnover rates in Europe (18%) (ICON). What's more, the notice period before leaving a project is at least 2 months, which greatly improves workflow.
The level of English proficiency in the Czech Republic is high - the country is ranked 23rd in the EF English Proficiency Index. The Czech Republic has 70 universities, and more than 16,000 computer science professionals graduate yearly.
Economically, the Czech Republic is in a stable position and ranks 41st in The World Bank's index assessing ease of doing business.
Ukraine ranks 35th globally in English proficiency, with nearly 800 higher education facilities training up to 20,000 software specialists per year.
In the ease of doing business ranking, Ukraine ranks 64th. Despite the ongoing war, Ukraine's IT market continues to grow, with 96% of contracts staying secured and maintained (IT Ukraine Association, 2022).
Attractive rates and a huge talent hub make Ukraine of enduring interest as a great nearshore software development destination in Eastern Europe.
Turnover in technology companies is very low (18%), and by adapting to remote work, Hungarian companies can reduce recruitment time by hiring specialists from all over the country. In The World Bank's ranking regarding ease of doing business, Hungary ranks 52nd in the world.
Hungary is characterized by high English language skills among Eastern European countries, ranking 18th globally. The country has 65 universities, with 12,000 technical graduates joining the pool of professionals each year.
The hourly rate in Romania is the lowest in Eastern Europe – $25-50, so if your priority is saving money, then this is a good direction. A side effect of the low price, however, is the inferior quality of services in general – Romania lags behind its competitors in the region, ranking only 20th on the list of the best programmers in the world.
Romania has close to 100 higher education institutions of learning, and nearly 7% of all students (about 25,000) apply to computer sciences each year. Romania ranks 17th in the world on the English Proficiency index and 55th in ease of doing business. It's a very promising market and a great choice for those whose priority in nearshoring in Europe is cost reduction and geographic proximity.
Revenue in the IT outsourcing segment in Europe is projected to reach $138.20 billion in 2023, up 12 billion from the previous year (Statista, 2022).
The shortage of skilled professionals in the technology segment will grow. Korn Ferry - a management consulting firm predicts that by 2030 there will be a shortage of 85 million tech workers worldwide.
Despite staffing shortages, due to the recession, more and more companies will choose to cut full-time positions in favor of outsourcing services (Institutional Investor, 2022).
While companies will look for savings, they don't want to do it at the expense of quality. Especially since, as we know, poor development does not pay off in the long run. Nearly 90% of Global Sourcing Association members believe that both buyers and providers will be signing outsourcing contracts focussed on outcomes and value.
In terms of quality of service and access to technology, there are virtually no differences between Eastern and Western Europe. So how do the two regions differ? The answer should be sought foremost in politics and the economy.
In this table, you will find a summary of key information about the best nearshore outsourcing destinations in Eastern Europe.
Explore details about top software development companies in Europe.
As you can see, nearshoring to Eastern Europe is an excellent opportunity to
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