OutsourcingDestinations
Flag of Ukraine
Key facts about Ukraine
Population: 45 million
Language: Ukrainian, although Russian is also widely spoken
Capital: Kiev
Key development centre: Kiev, Kharkiv
Ukraine is a relatively new offshore development location, but analysts identify it as a software development market with strong potential for growth. It has a large talent pool and its business processes and infrastructure are improving rapidly. (more…)
Key facts about the country:
Population: 23 million
Language: Romanian
Capital: Bucharest
Key development centres: Bucharest
Romania is the second largest country in the Central-Eastern European region. It has been involved in offshore software development for over 10 years and is a popular destination for French, German and Dutch companies. (more…)
Warsaw - Capitol of Poland
If you looking to save money, while not compromising on control or quality and want to develop a strong relationship with a flexible supplier, outsourcing your software development to Central or Eastern Europe could well be the answer for you. According to the Gartner Dataquest predictions, in the next four years Central and Eastern Europe is expected to outstrip the rest of the offshore development market concentrated mainly in `classical` locations like India. (more…)
Moscow - Capitol of Russia
Key facts about the country:
Population: 141 million
Language: Russian
Capital: Moscow
Key development centres: St. Petersburg, Moscow, Ekaterinburg, Kazan, Nizhny Novogorod, Samara
Like China, Russia has the potential to become an offshore development giant.
Russia has not been an outsourcing destination for as long as India and so is not yet as developed but the country will soon be able to exploit a large pool of high-tech and engineering talent.
While the distinct Russia business culture is not the same as that of Western Europe, the two do seem compatible and many Western European companies currently outsource their software development to Russia. Despite its distinct culture a large part of Russia also shares a European heritage with its neighbours.
Like other Central and Eastern European countries Russia has made a name for itself in technical expertise. A much higher percentage of graduates have technology, maths or engineering degrees than in Western European countries and Russian programmers have won several top coder awards. An IDC survey conducted in 2008 showed that skill was one of key reasons that companies had chosen to outsource development to Russia. And increasingly Russians are speaking English: whereas until recently companies did find there was a language barrier when outsourcing to Russia, this is now starting to change.
St. Petersburg - Offshore Development Center
The same IDC survey also showed price as the number one factor in decisions to outsource to Russia. Despite wage inflation, Russia remains competitive and offers similar prices to India and other Eastern European destinations. Many smaller outsourcers have emerged in the past two years and they are generally more cost effective than the larger Russian outsourcers.
Depending on where in Russia the outsourcer you choose is based, you could benefit from a very small time difference. Moscow and St. Petersburg the two main development centres are just a couple of hours ahead of the UK. Other Russian destinations, like Vladivostock might be a little cheaper but the time difference is much greater and therefore management is harder.
Employee churn among outsourcing development companies is relatively low in Russia. It is currently on a par with Poland and the Ukraine, however analysts say that the wage inflation Russia is currently experiencing could easily force employee turnover rates up in the next couple of years
One of the biggest concerns that executives outsourcing to Russia have is the protection of their intellectual property. The Russian anti-piracy campaign has made significant progress in the past few years and this in turn has positively influenced the Russian software market. Russia is now no longer on the list of the twenty countries with the highest piracy levels but does remain on the International Intellectual Property Alliance priority watch list.
Offshore development destinations
Flag of Poland
Key facts about the country
Population: 39 million
Language: Polish, but English is spoken by most business people
Capital: Warsaw
Key development centres: Warsaw, Krakow, Lodz, Gliwice and Wroclaw
According to IDC, Poland is not just an alternative offshore location, as its value-proposition is not only driven by scale and low-cost, but by “highly-motivated and educated staff, at prices comparable to other offshore destinations”.
Wawel Royal Castle - Cracow
Poland has been a member of the European Union for several years now and is very well integrated into Western Europe. Many Polish software developers have worked in other European countries for some time before returning home. Consequently Polish software development outsourcers offer a similar working culture and practices to most Western organisations, particularly in terms of communication. Polish software development houses are also noted for their flexibility and creativity in terms of approach.In addition, Poland is politically and economically stable, geographically central, and possesses a good communications infrastructure.
Warsaw - Capitol of Poland
Poland offers strong technical expertise. The country boasts 20 academic ICT centres with more than 2,500 students each and 150,000 IT, computer science and telecommunication students. Also, 80% of Polish university students speak English. Until recently Poland did not have graduates, only post graduates, hence the quality of software developers in Poland is extremely high compared to other destinations. In addition, Polish computer scientists consistently win the prestigious Top Coder ranking and have achieved high positions in the worldwide Google Code Jam Competition and the IBM Linux Scholars Challenge.
As a software development destination, Poland also offers extremely good value for money. According to Gartner, companies can save 40-60% on comparable work completed in the UK. Many companies are attracted to the country because of the quality of the work they receive, for a price similar to other outsourcing destinations, is much higher.
Market Square in Gliwice
While some offshore development destinations report staff turnover as high as 40% annually, Polish software development companies typically have a much lower churn rate. The average stay for a developer in a Polish outsourcer is between three and five years.
As a member of the European Union, Poland adheres to EU Intellectual Property law. This law is quite similar in scope, nature and rigour to US and the UK’s own IP law, protecting businesses that outsource work there.
A short time difference – Poland is just an hour ahead of the UK – means ease of management and many problems can even be resolved within a single working day.
Offshore development destinations
Flag of India
Key facts about the country
Population: 1.17 billion
Language: Hindi, English
Capital: New Delhi
Key development centres: Bangalore, Chennai, Pune, Mumbai
Still the largest offshore development destination, India is facing up to new challenges and competitors.
India has been an outsourcing software development hub since the mid-nineties. This heritage creates both advantages and disadvantages. However, for scale, India remains unbeaten. In addition the Indian software industry is no longer reliant upon work from abroad. India has a strong domestic market that uses outsourced development too.
While not an EU member and with its own distinct culture India does retain some affinity with other commonwealth members, particularly Britain. However, workplace culture is the area that India gets marked down for in software development.
The Indian education system places strong emphasis on maths and science, resulting in a large number of graduates in these two fields. Most of them also speak good English having been educated in it. India has the second largest English speaking workforce in the world, after the USA. India is also noted for its particularly strong telecoms development skills.
NASSCOM, the Indian IT software and services association runs a programme to encourage software companies to become accredited by a quality management standard. Nearly all the larger outsourcers have aligned their processes to standards including ISO and Six Sigma.
India is five hours ahead of the UK. This can mean a little juggling to ensure you have enough contact, but generally the outsourcer will be prepared to do most of the early mornings or late evenings themselves. In fact at some larger development companies, the employees work hours to match those of their clients.
Taj Mahal - India
India’s cost base has been rising due to the appreciation of the rupee and increases in wages. However it is still markedly cheaper that outsourcing within the UK, for example, and remains on a par with Eastern Europe.
Indian software developer churn is much lower than that of call centre agents or BPO workers. However it remains higher that in most other countries. On the other hand, like Poland, India is enjoying a reverse brain drain with many Indian residents who were working abroad returning home due to the booming economy.
As in China, in India there is a gap between the country’s intellectual property laws and the prosecution of offenders. Consequently some cases of IP theft still occur and in 2009 India remains on the International Intellectual Property Alliance Priority Watch List. Fortunately most Indian companies now have adopted strict measures to ensure IP rights and prevent data theft.
Offshore development destinations
Flag of China
Key facts about the country
Population: 1.3 billion
Language: Mandarin is the language of business
Capital: Beijing
Key development locations: Beijing, Dalian, Shanghai are the main ones, but Shenyang, Xian, Guanzhou, Chengdu and Chongqing are also important
Positive experiences of outsourcing in classical offshore destinations have made companies more willing to try newer destinations like China.
Although China is a newer outsourced software development destination it has the potential to rival India in terms of scale. According to analysts at Light Reading, prior to the financial crisis, China’s outsourcing development sector was growing 40% year on year. By 2012 the country’s software outsourcing market is predicted to exceed US$9 billion.
Great Wall in China
Application software development, system tests, software localisation and tailored embedded software development are expected to be the areas that see the biggest growth.
Like India, China’s rapid domestic IT growth is a key differentiator. 80% of the revenues from China’s software outsourcers comes from this domestic market – a figure which is much higher than that of other major offshore development locations. Continuing growth of the domestic IT market should lead, in a few years time, to much greater levels of expertise among Chinese developers, making China increasingly competitive as an offshore destination over the next decade.
Software development companies in China have access to an enormous pool of labour. The country currently has over 2 million IT professionals in the workforce and more than 10,000 more graduating each year from colleges and universities. However, unlike India or some European Union destinations these graduates are not all particularly proficient in English. This will change in the next few years, though, as more and more colleges now require all students to take an English course.
The time zones that Chinese development centres are in can prove to be a challenge for Western European companies. Fortunately the largest Chinese outsourcers post project managers abroad, primarily to North America to ensure smooth development timelines.
Shanghai
China’s base costs remain low and so it can easily rival other destinations on price. In fact some studies show it to be cheaper than Indian and European destinations.
Currently, it also boasts low staff churn rates and a work ethic of great company loyalty.
China’s relative newness as an outsourcer does mean that its industry is not mature and some customers have mentioned teething troubles in terms of senior management skills and working cultures.
China’s enforcement of IP rights lags behind its enactment of IP laws and Intelectual Property remains the main concern of executives when outsourcing to the country. In 2009 China remains on the International Intellectual Property Alliance Priority Watch List. However risks can be largely alleviated if companies follow some basic guidelines to manage the development environment, educate and manage staff and pursue breaches and illegal users.
Offshore development destinations
Taj Mahal - India
The principle of outsourcing software development is not a new one and over 70% of UK IT departments have outsourced in the past or are doing so at present. However, the sourcing industry has changed a lot recently.
This section of the website should provide you with some practical advice about outsourcing software development in key destinations around the world, based on first-hand experience of over one hundred outsourcers, developers, IT managers and directors.
Even just five years ago, pretty much the sole objective of outsourcing was to improve costs, hence the success of traditional offshore development centres. All the destinations covered by this site can usually save you at least 40% of the cost of the same software development in North America or Western Europe.
Warsaw - Capitol of Poland
These days, however, cost alone is not enough of a reason to outsource. While saving money remains important, especially in the current economic climate, outsourcing also needs to contribute to the achievement of your business’ strategic goals. Consequently, most companies looking to outsource software development today are looking for a mix of cost reduction, flexibility, long term relationships, skills, security and quality.
Over the past few years companies have been looking at an ever-widening range of destinations, not necessarily to replace their existing software outsourcing destination but to add to it provide a diversified offshore portfolio. This idea of risk diversification appeals to many outsourcing buyers, who are looking to offshore and also want to mitigate geopolitical risk.
In line with this the offshore software development industry has witnessed a surge in the number of locations. Global sourcing demand is estimated to increase ten-fold in the next few years and so it looks like this destination expansion will continue.