Why the West Opts for Eastern Europe Software Development Outsourcing in 2022

May 31, 2022
14 min

Eastern Europe software development outsourcing has become a popular solution for hundreds of leading tech companies such as Apple, Google, and Intel suffering from rampant costs and an increasing shortage of qualified resources back in the West. As a whole, more than 65% of companies who outsource do so in Europe, according to Deloitte’s research.

So, if you’re looking to optimize your ROI or improve the quality of your development, finding the right outsourcing company in Eastern Europe with reasonable rates and qualified talent might be the right choice.

Benefits of Outsourcing Software Development to Eastern Europe for the West

Convenient time zone

Sooner or later, everyone has to admit that a time overlap is, unavoidably, one of the most vital factors to consider in the selection of a software development outsourcing company. In this regard, any of the Eastern European countries is well-suited for business cooperation with North America, Western Europe, and even Australia.

Just to illustrate, our offices in the US and Europe have 3-4 hours of business time overlap, allowing us to efficiently interact and tackle daily challenges in real time. Undoubtedly, a convenient time zone was one of the reasons why we chose Ukraine as our software development outsourcing destination.

 

Cultural similarity & extensive cooperation with the US

A great draw toward outsourcing software development to Eastern Europe is the cultural proximity largely defined by the US influence over the region. Western business etiquette is predominant here, making cooperation, interaction, and business deals smooth and straightforward.

When setting up your software outsourcing office in Poland, for example, you are likely to find that Poles have a favorable overall opinion of the US, a median of 79% now hold this view.

Apart from this, software development outsourcing companies in Europe often have extensive experience working with US clients. Your provider is most likely to be familiar with US laws and customs. This is especially beneficial for the US proptech or fintech businesses whose apps and services must comply with the US regulations and established system.

 

Language proficiency

Without a doubt, good command of English is one of the predominant factors defining IT providers’ competitiveness in the software outsourcing market. According to English Proficiency Index, most Eastern European countries including Ukraine, Poland, Belarus, and Romania, have moderate to high English proficiency levels.

Furthermore, the grasp of English among IT professionals in Europe is usually higher than the country’s average. Just to illustrate, no less than 80% of software developers in Ukraine have an Intermediate level of English, while language proficiency among the top software companies can reach Upper-Intermediate or Advanced levels.

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Top-notch IT resources

One of the major reasons why Western Businesses tend to outsource their software development to Eastern Europe is the rich tech talent pool of 1,3M developers and the broad spectrum of technical and industry specializations available in the region.

More than that, as opposed to the US where the number of quality developers has considerably shrunk over the past few years, the Eastern European development talent pool is constantly growing, offering years of experience in various niches and services, such as Custom Software Development, Big Data Architecture, Cloud Migration.

 

Reasonable development costs

While pricing offered by European IT providers has never been the region’s strong point compared to their overseas counterparts in China and India, software development to Eastern Europe may still be a good cost-saving initiative for US-based businesses (and may not always be such for Western Europe).

As a rule, software development in Eastern Europe will cost you about two times less than in the US. Poland has the highest development rates among all reviewed countries — $38-$75/hour, which is still lower than in Western Europe and especially in the US.

Ukraine, Romania, and Belarus offer medium rates starting at $28 and going up to $60 charged by top vendors.

 

Robust critical thinking

Based on our own outsourcing story which once took us to 5 different locations, we learned that some kind of assertiveness and robust critical thinking is rooted in the “Slavic culture.” This results in the feel of unprecedented strategic cooperation rather than an “order taker” experience.

Pair this up with the high-quality tech education in this region, and you’ll not only significantly cut your operation costs but also fuel your business with alternative ideas and fresh perspectives.

 

The Most Attractive Countries in Eastern Europe for Software Outsourcing

According to Statista, the Eastern European software outsourcing market size is steadily growing exceeding $103,9 bln in 2021 compared to $93,1 bln in 2016.

These numbers demonstrate that Europe is becoming a top-tier software development outsourcing location for diverse industry-based companies around the world.

However, with outsourcing IT companies popping up here and there in Europe, narrowing down the list of well-suited destinations and providers might become a challenging and time-consuming task.

That is why we compiled a comprehensive guide on Eastern Europe software development outsourcing, where we reveal the most attractive IT providers worth every cent, their hourly rates, cultural peculiarities, and key numbers to help you make a data-driven decision on what IT outsourcing companies to opt for in Europe.

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Ukraine

Ukraine has become one of the leading Eastern Europe software development outsourcing locations for the last decade providing top-tier software solutions for the US (>50% of clients of Ukrainian outsourcing companies are from the United States), Great Britain (>30% of clients), and many Western European countries including Netherlands, Luxembourg, Switzerland, Austria, Belgium, Norway, Sweden, Denmark, and others.

The key outsourcing statistics on Ukraine are quite inspiring: the IT industry in Ukraine has grown by nearly 46 times over the last 17 years from $110 million in 2003 to approximately $6 billion in 2022. This number is projected to reach $8.4 billion by 2025.

Here is the outline of the 5-year Ukrainian IT market growth based on the number of tech specialists and market value.

 

Ukrainian Software Outsourcing Market

Ukrainian Software Outsourcing Market

 

Among the core benefits of IT outsourcing to Ukraine are the ever-growing number of technical specialists and tech graduates yearly.

Beetroot’s ‘Ukraine: The Home of Great Devs. 2021 Tech Market Report’ states that Ukraine has overpassed the level of 200,000 tech specialists and 36,000 tech graduates in 2021, making it the 2nd biggest IT hub in Europe, right after Poland with 275,000 specialists. Just compare, there are just 55,000 IT professionals in Belarus and 120,000 in Romania.

Not only is there a vast talent pool, but Ukrainian professionals also rank 7th in the level of technical knowledge in the world, according to Coursera Global Skills report for 2021.

These two benefits alone mean you will never fail to find a highly proficient team of software engineers with the quality technical background needed to transform your ideas into a first-class software product.

Check the key statistics on software development outsourcing to Ukraine below.

 

Statistics on Software Development Outsourcing to Ukraine | Ascendix Tech

Statistics on Software Development Outsourcing to Ukraine | Ascendix Tech

 

As for pricing, Ukrainian development rates are reasonable for the US market (but not always for Western Europe).

Just to compare, the average Ukraine outsourcing rates are $28-$60 while American companies charge $60-$150+ for the same technical expertise and background. Here are the complete development rates in Ukraine based on seniority level:

  • Junior: 22K/year
  • Middle: 35K/year
  • Senior: 52K/year.

 

Besides, Ukraine has an advanced IT infrastructure with many IT hubs like Kyiv, Kharkiv, Odesa, Lviv, Dnepr, and others attracting the world’s top tech moguls, including Gameloft, Huawei, Siemens, Samsung, eBay, Upwork, Grammarly, and Plarium.

 

Global Famous Companies with R&D-Offices in Ukraine | Ascendix Tech

Global Famous Companies with R&D-Offices in Ukraine | Ascendix Tech

 

Apart from the world-class companies outsourcing software development to Ukraine, the country is also home to a flock of globally recognized startups and product-first companies. Among them, GitLab, Grammarly, People.ai, Reface, and Restream raised the biggest funding amounts during the last several years.

 

Top Ukraine-Based Successful Tech Startups | Ascendix Tech

Top Ukraine-Based Successful Tech Startups | Ascendix Tech

Poland

Poland is one of the fastest-growing Eastern Europe software development outsourcing locations with over 430,000 tech specialists and the overall IT market size valued at about $13 bln in 2021.

Surprisingly, only 34% of IT experts work for Poland-based IT companies while the other 66% are employed by foreign agencies.

Polish development rates are the highest in Eastern Europe. According to Salary Expert, the median IT salary by seniority level in Poland is as follows:

  • Junior: $33K/year
  • Middle: $45K/year
  • Senior: $60K/year.

 

Software Outsourcing to Poland | Ascendix Tech

Software Outsourcing to Poland | Ascendix Tech

 

The highest-paid Polish IT segments are Business Intelligence, Big Data Analytics, and Data Science. Support managers and UX designers are usually paid less.

There are quite a few world’s leading companies that chose Poland to set up their software development outsourcing office:

  • Dell EMC
  • HP Inc
  • Lenovo
  • Microsoft
  • IBM Polska
  • Intel
  • Apple
  • Cisco
  • Oracle
  • Google.

 

Besides, many top-tier corporations have invested significant funds into the Polish IT market over the last several years:

 

Top Poland-based product-first companies and tech startups include DocPlanner, Brainly, Booksy, Kontakt.io, SALESmanago, and Synerise. Here is a more detailed overview of their investment activities over the past few years:

  • DocPlanner: founded in 2011, acquired $140 mln of raised funds through 7 investment rounds with a $300-$500 mln market company value in 2021
  • Brainly: founded in 2009, secured over $80 mln in 2020, currently valued at $100-$200 mln with offices in >40 countries
  • Booksy: founded in 2014, raised over $70M in 2021, processing over 3 million bookings per month, currently valued at $100-$200 mln
  • Kontakt.io: founded in 2013, raised over $7.7 mln investment funds, currently valued at $20-$30 mln.

 

Romania

Romania is an emerging dark horse among the Eastern Europe software development outsourcing locations with a steadily growing IT services market valued at $7 bln in 2020.

Setting up an R&D office in Romania can become a wise decision for those looking for a high quality of education, strong communication skills, reasonable rates, and a fast-growing IT ecosystem.

At the same time, the region is suffering from a tech talent shortage. Based on the Software Development Academy estimate, the gap in software developers and testers reached about 50,000 professionals in 2020. This means that it might be challenging to hire the right tech team in Romania especially when you need to kick off your project fast.

As for pricing, 1 hour of software development will cost you $28-$55/h, while the top Romanian software outsourcing vendors might charge you over $55/h.

 

Romanian IT Market Overlook | Ascendix Tech

Romanian IT Market Overlook | Ascendix Tech

 

The IT Outsourcing Review provides the following data on the Romanian median IT salary based on seniority level:

  • Junior: approx. $22K/year
  • Middle: approx. $30K/year
  • Senior: approx. $39K/year.

 

Despite the fact that the Romanian IT market is still unable to compete with Ukraine and Poland in the number of tech specialists, the multilingual nature of the Romanian IT market can become a solid draw toward setting up a software development outsourcing office in the country.

Specifically, 17% of IT specialists have an upper-intermediate proficiency level of English, over 10% speak Hungarian and French fluently, approximately 5% have strong skills in Italian, and about 3% know German.

Another reason for prioritizing software outsourcing to Romania over other Eastern European destinations is its business-friendly legal regulations:

  • No profit tax for reinvested profit in new technological equipment
  • No income tax for employees working as software developers and hired in R&D labs
  • No income tax for R&D companies during the first 10 years.

 

According to the startup ecosystem, Romania is ranked #45 in the Global Startup Rankings and is now home to:

  • >1,500 startups, VCs, and business angels
  • >100 accelerators and incubators
  • >100 active investors network.

 

Here is a brief overview of Romania-based tech startups and their funding:

  • 123FormBuilder: founded in 2008, secured over $1 mln investment funds, announced VC 212 to become a stakeholder
  • FintechOS: founded in 2017, sustained $16 mln in 2020, currently expanding to the US, European, and Asian markets
  • Elrond: founded in 2017, accumulated $1.9 mln funding
  • UiPath: Romanian first unicorn, founded in 2005, acquired mind-boggling $1.2 bln from 25 investors, currently valued at $10 billion.

 

All in all, software development outsourcing in Romania may become a great option if you want to leverage the benefits of the solid technical background and multilingual nature of the region. At the same time, be ready to deal with broken deadlines and cost overruns due to the tech talent shortage.

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Belarus

Belarus is a long-held Eastern Europe software development outsourcing location with the overall IT market valued at $3.1 in 2019. However, the tech pool in Belarus is as small as 55,000 tech specialists within >300 IT companies across the country.

Nevertheless, the country has attracted such top tech companies as Viber, Fitbit, IHS, Playtika, Yandex, and WorkFusion, yearly pouring billions into the Belarussian IT market in the hope of capitalizing through the complex projects and technologies crafted by Belarusian IT enthusiasts.

The biggest advantage attracting overseas companies to outsource to Belarus over the last decade was the price per development. However, as the Belarussian IT market is flourishing, the development rates are also unavoidably increasing. Here are the latest updates on Belarussian development hourly rates (based on Salary Expert):

  • Junior: $19K/year
  • Middle: $30K/year
  • Senior: $37K/year.

 

Belarussian IT Market Overlook | Ascendix Tech

Belarussian IT Market Overlook | Ascendix Tech

 

Notably, Belarus has one of the world’s highest literacy levels with a 91% global average among the youngest generations by UNICEF. Furthermore, 2 Belarussian universities were included in the QS World University Rankings 2020.

This means that most software engineers and tech specialists from Belarus are highly educated.

Another strong point of Belarus as an offshore office location is the country’s unstoppable growth of startup infrastructure, namely the emergence of various product-first startups:

  • Wargaming.net: founded in 1998, over 20 offices worldwide, raised approx. $250 mln, currently valuated at $1.5 bln
  • FriendlyData: founded in 2016, raised over $500K over 4 rounds, acquired by ServiceNow in 2018
  • HYPERVSN: founded in 2016, secured $11.5 mln after 3 rounds, initially named Kino-mo
  • Banuba: founded in 2016, accumulated $100 mln after 2 rounds, currently valued at $250 mln.

 

Besides, many world-class companies have been actively investing in the Belarus IT market by acquiring local Belarus-based startups:

 

It’s worth mentioning that the political situation in 2020 forced over 2,000 software developers and over 50 IT companies to relocate to Ukraine and continue their activity there due to the Internet connection restrictions and poor investment environment.

Top Outsourcing Companies in Eastern Europe

The list below outlines software companies in Europe providing top-notch offshore development services that will be worth your every cent. We pulled the key statistics from Clutch.co and crafted this handy guide to help you compare, view, and choose the most suitable partner for your project.

 

1. Ascendix Tech

Ascendix Tech is a US custom software development company with over 10 years of experience in building tailor-made technology solutions for multiple industries like insurance, financial, travel & transportation, Commercial Real Estate, and PropTech sectors. Originally based in Dallas, Texas, the company has opened offices in Kharkiv, Ukraine, and Portu, Portugal.

Ascendix is trusted globally by such renowned moguls as JLL, Colliers, Calson Properties, and others.

For example, Ascendix has helped Flibco.com – one of the leading bus ticket booking systems in Europe with a passenger turnover of 1.9 million/year.

Specifically, Flibco.com asked Ascendix to help them build a powerful bus ticket reservation software providing the following services:

  • Shuttle bus ticket software management
  • Multi-payment system
  • Advanced analytics tools
  • Cloud migration to an enhanced bus seat booking system software
  • Google Maps and TomTom integration
  • And many others.

Here is what Alex Tregubov, Product Owner at Flibco.com, said about Eastern Europe development outsourcing with Ascendix:

In early 2019 we were looking for outsourcing companies in Eastern Europe to help us build a mobile application. We were blessed to find Ascendix! A number of other initiatives followed after the mobile app delivery, including a unique system to manage our Door2Gate product and a complete overall revival of our IT infrastructure. Our partners at Ascendix have been phenomenal all the way, showing an exceptional level of efficiency, transparency, expertise, and quality. It’s no doubt that all of our future initiatives are with Ascendix Technologies.

- Alex Tregubov, Product Owner at Flibco.com

Furthermore, Ascendix Tech has helped Colliers International Indiana – one of the biggest and leading world-class real estate services providers. The task was to build a custom listing platform.

Ascendix has delivered the following features and solutions:

  • Multi-channel real estate system
  • Powerful search and filtering tools
  • Automatic sync with a CRM
  • The intuitive report generation tool
  • Safe and conversion-boosting deal and collaboration rooms
  • Advanced map search and view solutions
  • Many others.

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Here is what Saimir Qalliu, Chief Financial Officer and Managing Director, said about Eastern Europe software outsourcing with Ascendix:

We wanted to make better use of our data and present it in a format that our professionals and clients would find attractive and easy to access. This required a new digital solution, hence the engagement with Ascendix on this latest project. The idea of presenting data in an easily accessible and pleasing way to the consumer was not new. We just wanted to have our ability to execute it within our space, with our own data, for our professionals and clients.

- Saimir Qalliu, Chief Financial Officer and Managing Director

2. Intellias

Intellias is a trusted software outsourcing company in Eastern Europe with over 19 years of experience in software development. The agency is operating in Ukraine, Poland, Germany, and Saudi Arabia.

This software development company has delivered multiple solutions for the world’s leading companies such as Siemens, Here, Nokia, Roche, Brainstorm, and others.

The agency is featured by Forbes, Clutch, IAOP (The Association with Collaboration as Its Core), Dou, and Global Sourcing Association.

 

3. Yalantis

Yalantis is one of the leading IT outsourcing companies in Europe with over 12 years of experience in building technology solutions for multiple industries.

The company is based in Kyiv and Dnepr, Ukraine, and many other locations and has more than 400 in-house software engineers, facilitating 70+ projects annually.

Yalantis has helped such world-class agencies as KPMG, Healthfully, Medical PACS, ConnectHome, Zillow, and others.

Ultimately, this outsourcing company is certified by Amazon Web Services, IIBA, PMI, Scrum Alliance, The Open Group, and other sources.

 

4. Andersen Lab

Andersen Lab is among the well-trusted outsourcing companies in Eastern Europe company with over 14 years of experience in software development. The agency is operating in Ukraine and has offices in Kyiv, Kharkiv, Odesa, and other tech hubs.

The company is trusted by such giants as Samsung, TUI, MediaMarkt, Tinkoff, KICKICO, Mercedes Benz, and others.

Andersen Lab provides an extensive range of services that Andersen Lan provides, including mobile, app, web development, UI/UX design, and more.

 

5. Itransition

The Belarus-based Itransition is one of the top IT outsourcing companies in Europe with over 25 years of successful experience in delivering advanced software solutions locally and overseas.

The agency has over 2,200 software engineers, 5 R&D labs, and has helped such world-class companies as eBay, BundleTech, Life, Philips, Expedia, and others.

Itransition has multiple awards from Inc. 500, Gartner, Zinnov Zones, Forrester, and other trusted industry reporters.

 

6. AgileEngine

AgileEngine is a top-tier software development innovator and one of the top software companies in Europe with over 11 years of experience in developing smart solutions. The agency is based in Ukraine, DC, and Argentina and has 400+ in-house tech specialists.

Groupon, Bloomberg, Estee Lauder, Delivery Hero, and Funny or Die are among the biggest companies outsourcing software development to Eastern Europe with AgileEngine.

The company is globally recognized by Inc. 500, ISTQB, Clutch.co, Forbes, Financial Times, and Facebook.

 

7. KitRum

KitRum is a software outsourcing company in Eastern Europe based in Ukraine, Poland, Israel, Florida, and Guadalajara.

With 250+ tech specialists on board, the agency helps financial, healthcare, automotive, gaming, real estate, and education companies build advanced technology solutions.

Airbnb, Fiverr, Pick Watch, Citrix, and Online Rewards are the top-tier companies that benefited from outsourcing software development to Eastern Europe with KitRum.

Glassdoor, DesignRush, Wadline, Clutch, GoodFirms, ITFirms, and other sources recognize KitRum as a competitive Eastern Europe software outsourcing market player with solid tech expertise in React, Vue.js, Angular, Ruby, PHP, Java, and other technologies.

 

8. JustCoded

JustCoded is one of the IT outsourcing companies in Europe focused on FinTech and InvestTech technology solutions established in 2007 and based in Kharkiv, Ukraine.

Forus, Charm Impact, Luxury Shares, GSMA, and Invest My Community are the most well-known startups and companies that trusted JustCoded to help them with outsourcing software development to Eastern Europe.

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Final Words

Eastern Europe software development outsourcing is gaining more and more steam at a mind-boggling pace.

Such benefits as reasonable rates, high education and English proficiency level, solid technical background, and a wide talent pool stimulate more world-class companies from the US, Great Britain, and other countries to invest in software development outsourcing.

We hope our Eastern Europe overview will help you find the perfect conditions for your business and our list of top software companies will help you choose the right software outsourcing company in Eastern Europe.

If you want to leverage the benefits of outsourcing software development to Eastern Europe, Ascendix Tech is here to discuss your project idea and transform it into a jaw-dropping technology solution that meets market demands and your specific requirements.

So, check our case studies and contact us to get a ball-park estimate for your project and start building a software product that rocks.

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