The age of outsourcing started in the middle of the 70s when successful businesses have concentrated on their core operations and outsourced minor tasks. This new strategy got its official name only in 1989. Still, we can state with confidence that outsourcing is around 50 years old and it has only started taking its real shape, especially in IT.
Outsourcing is all about delegating certain development tasks from in-house engineers to exterior vendors. By doing so, businesses make up for the in-house resources that they usually lack and enable their limited number of employees to focus on some core business tasks.
Software outsourcing models
What should businesses start with when they decide to outsource software development? They need to choose the outsourcing model to suit their requirements. There are three most effective options.
By choosing this model, companies fill in the gaps of their in-house development teams. This is how they support the development process at stages when it’s needed the most.
This model, however, has both pros and cons. On the one hand, businesses have full control over their staff, can leverage internal and external resources, and reduce the cost of acquiring skills when the budget is a concern. On the other hand, new staff members should be trained when they join the project. And this requires time and effort from the in-house team.
Outsourced product development is another name for this model. According to this model, a development company manages the entire process based on very detailed client’s specifications.
In this case, the business usually retails little control but remains in contact with the Project Manager. The business owner chooses the frequency of communication. The team remains highly dependent on requirements and documentation while developing. And the business owner stays in touch with their outsourcing partner.
In this case, a fully dedicated development team takes control of everything: staff, quality control, and team management. On their part, clients needn’t worry about anything project-related.
Still, the client can refuse from hiring a project manager as a part of the team. Some businesses choose to control the team and manage the development directly.
Top 7 reasons why outsourcing is cool
- Lower operating cost. Businesses basically get quality services but save on recruitment, training, and infrastructural development.
- Flexibility. Businesses can hire developers on a project-to-project basis or they can outsource their IT tasks when it is convenient for them.
- New talents. By outsourcing their tasks, businesses get access to software engineers from around the globe, thus streamlining most of their processes.
- Focus on what’s important. Outsourcing helps businesses delegate the most complicated tasks to a vendor while in-house employees are focusing on marketing and customer service.
- Time-saving. Most projects have a strict deadline. By introducing extra staff, businesses can keep all processes running within the required timeframe.
- No micromanagement. By choosing the right model, companies entrust their product to a team managed by a Project Manager who is there to track all aspects related to development and launch.
- Scalability. As the scope of the project grows or reduces, business owners can grow or reduce their external team at any point of development.
Where to outsource to in 2021: Eastern Europe and Baltic countries
Eastern Europe has become a favorable outsourcing destination in 2020. Offering a huge talent pool and a high level of proficiency, this region is likely to remain the best choice in 2021.
Ukraine has over 1,000 agencies providing IT-related services and a huge talent pool (around 130,000 software engineers). Ukrainian companies offer tech expertise to design and build software for the healthcare sector, restaurants, fintech, insurance, manufacturing, and gaming.
This is the 11th digital nation with 400+ software agencies and 140,000 skilled developers. Favorable political climate, strong and fast-developing economy, and highly qualified technical resources are the main reasons why to choose Poland.
With 1,000 IT agencies and 54,000 software engineers, Belarus has become another trendy outsourcing destination. All local companies are strongly supported by the national authorities and have specific tax rates. So prices for IT services are highly competitive.
Romania is another Eastern European location to outsource to. Their favorable tax conditions are shocking. Local 100,000 IT specialists from 20,000 agencies are currently strong technical support for big market players like Huawei, HP, Microsoft, as well as Ericsson.
The 2000s were a breaking period for the Baltics. By achieving the expected economic stability, the area entered the outsourcing niche. The countries of this area started attracting businesses from Western Europe. Today, Baltic IT engineers are proficient in the development of applications and games.
Lithuania offers numerous IT engineers with skills in different niches. The local outsourcing sector is valued at $ 60.000.000. Global businesses favor Lithuania as their main outsourcing destination (Swedbank, Fujitsu, Omnitel). However, when you decide to collaborate with local developers, keep in mind that this destination is more expensive than Ukraine or Belarus when it comes to specialists and their skills.
Authorities strongly sustain the software sector, which is why the Latvian IT market has seen significant growth over the past years. Today, the quantity of software specialists has grown to 26,000. Because of its geographical position, Latvia has become the area of consolidation of IT experts from Europe and other lands. The region has become a place for multilingual software development services. Local IT engineers develop custom applications for many European businesses.
Though the smallest of the Baltic region, Estonia has a rapidly growing IT outsourcing market. The number of Estonian software engineers has reached 20.000 employees and keeps growing. The client base of Estonian companies includes companies from 120 world locations. Estonian software engineers are favored for their excellent work with data analysis, databases, and cybersecurity.
How to hire a reliable vendor?
Indeed, the Baltic region and Eastern Europe stand out as the world’s most powerful workforce in terms of software development. But hiring the right partner is a tricky choice. To pick the right company, make sure you follow this guide:
- Explore different platforms for a vendor
- Check the candidate’s portfolio for experience in related niches
- Assess the candidate’s soft skills
- Investigate the candidate’s level of technical proficiency
- Ask for a quote
- Negotiate and then sign a contract
Here’s one more tip you’ll find useful. Conduct a series of interviews comparing different vendors and their offers before you make your final decision. By giving yourself time, you’ll be able to choose the best vendor for a long-term and fruitful partnership.
Slava Ponomarov I am the co-founder and managing director of software development company Steelkiwi. With over 10 years of experience, I know how to oversee business activities to ensure they produce the desired results. I am responsible for business development and maintenance of everyday company needs. I also assess risks and ensure their minimization.