The Ultimate Guide to IT Outsourcing: Eastern Europe vs Asia
It’s hard to deny that software outsourcing is one of the main trends in the current IT market. However, many companies struggle with the same issue — whether to choose Asia vs Europe as their outsourcing destination.
Both regions boast impressive numbers of developers and high competency, but there are many differences in terms of culture, mentality, and approach to doing business. Therefore, picking a destination is significant for the companies because it affects their further development and ability to stand out among the competitors.
To make choosing easier for you, Qubit Labs came up with a research-based analysis of Eastern Europe vs Asia outsourcing, comparing the main points, like salaries, tech stack, and business environment.
Asia vs Europe: Comparing Top Outsourcing Destinations
Let’s start with a few words about IT outsourcing.
First off, it allows companies of all sizes to facilitate their development processes, cut costs, focus on core business goals, and make their projects skyrocket. Software outsourcing is about improving service quality, accessing global talent, and increasing chances for an efficient business transformation.
Since Western companies are rapidly advancing and require more talents, software developers worldwide take this opportunity and get recognized as superb software outsourcing services providers. The most notable is Asia IT outsourcing and its main competitor — Eastern Europe.
When deciding between Eastern Europe or Asia, the companies choose between the primary benefits these regions offer. For countries like India, the Philippines, Turkey and China, the main advantage is the inexpensive labor. Meanwhile, Eastern Europe, including Ukraine, Poland, Georgia and Romania, stands out thanks to higher quality, reliability, and data protection.
Let’s take a closer look at Asian IT outsourcing first.
The Characteristics of Asia IT Outsourcing
The best software development in Asia helps the country keep its position on the global scene. The region has the largest quantity of software developers and includes the highest number of popular outsourcing development countries.
There are three destinations of IT outsourcing to Asia that stand out among the others due to their advanced infrastructure, impressive software development experience, and the availability of different-skilled talent India, Philippines and China.
IT Outsourcing to India
IT industry overview
The country has attracted almost half of the Fortune 500 companies, and its IT industry accounts for $150 billion in export revenue in 2020. Its developer population is expected to overtake the US by 2023. Also, the country stands out due to having the highest percentage of female developers and software engineers.
The country is experiencing a constant digital transformation that increases the number of tech initiatives and offers more opportunities to the local IT specialists. The government has launched several digital initiatives, namely Digital India and India Stack.
Also, India holds around 55% of the global IT outsourcing share, being considered the best software development in Asia countries for a reason.
The average rate of developers in India is around $18–$40 per hour. Meanwhile, the average annual salary of a software developer is between $6,000–$9,000. Such low rates, especially in comparison with those in the US, make India one of the cheapest Asia IT outsourcing destinations.
Nevertheless, despite the affordable rates, India faces some challenges associated with the adoption of digital technologies.
India boasts a government-funded incubator for startups — Startup Warehouse, which aims to push India beyond the service sector and help it establish local software development culture. More and more students opt for STEM degrees, resulting in over 2,6 million graduates in this field each year.
Nevertheless, despite working for many years with Western customers and assimilating to the Western approach to work, Indian developers still have their own methodologies. It’s often when foreign clients can’t find a common language with Indian software development teams. The latter rarely opt for direct negotiations, making it hard to introduce the required changes to the project.
IT Outsourcing to the Philippines
IT industry overview
Such global giants as Amazon, Google, IBM, and Accenture have established their offices in the country, offering new jobs for local candidates. Most of the developers are fluent in English and understand the Western approach to doing business.
The average Filipino developer earns around $13 per hour. As for the monthly developer salary in the Philippines, it varies between $7,200 and $8,500.
The Philippines has a wide pool of talents and enterprises, and local developers boast high work ethics and reliability. They uphold professionalism and have an excellent knowledge of Java, API development, and .NET, to name a few. You can also find programmers skilled in trending technologies, including Data Science, AR/VR, and Blockchain.
As for the main challenge of working with Filipino developers, the large number of holidays impact the speed of project development. Also, weather conditions might hinder finishing the tasks under deadline because tropical storms sometimes cause inconveniences for local specialists.
IT Outsourcing to China
IT industry overview
There are around 7 million IT specialists in China, including software developers, data scientists, and AI trainers. As for the local software and IT service industry, it’s currently booming, having reached revenues of $682.86 billion during the first half of 2021.
The local government introduces changes to the policies, striving to make it easier for both local and foreign companies to do business in the country. Due to the efforts put into advancing the Chinese IT sector, it boasts the best software development in Asia.
The mid-level software developer in China is paid around $34,755–$38,176 on average per year. As for the hourly rates of Chinese programmers, they vary between $8 and $30.
When it comes to Asian IT outsourcing, Chinese developers boast high working ethics, and you can rely on challenging projects. Since there’s a significant focus on science and mathematics in local educational institutions, you can enjoy working with skilled IT professionals. Besides, the demand for local software developers is growing because you can easily scale up your team due to the vastness of the Chinese talent pool.
Nevertheless, the main downside of Chinese IT outsourcing is the risk of IP leakage and data security threats. Many international companies treat this as a major bottleneck for outsourcing to China but still give it a chance.
Here is a comparison table of the main tech hubs in Asia IT outsourcing:
Outsourcing in Europe: Main Things to Know
As mentioned, outsourcing Eastern Europe is one of the main competitors of Asia. Companies from the US, the UK, and Western Europe opt for the developers from this region due to the affordable prices, convenient time zones, and a vast talent pool.
Although outsourcing in Europe costs higher than in Asia, it’s still several times lower than in the US. Besides, you get access to the vetted developers who cooperated with an abundance of global tech giants. Also, with developers in Eastern Europe, you can avoid downtime due to a few hours of overlap between the head office and the remote one.
As per Tholons Top 100 outsourcing cities, the highest number of cities included in the list are located in Eastern Europe.
There is a handful of countries you can choose from when outsourcing Eastern Europe, but we’ll cover notable facts about the most rapidly advancing ones: Ukraine, Poland, and Romania.
IT Outsourcing to Ukraine
IT industry overview
Ukraine is known as one of the biggest talent pools in Eastern Europe, having approximately 212,547 IT specialists. The local tech industry is advancing by leaps and bounds, and the local IT sector’s annual export has reached $5 billion in 2020, which is a record so far.
The country stays on the same page with the emerging tech trends, being the number one artificial intelligence provider in Eastern Europe with 150 recognized providers.
Ukraine boasts a variety of tech innovation parks and is home to 22 IT clusters, which are the main drivers of the local IT industry development.
Since the software development industry is one of the fastest-growing in the country, there are 36,000+ tech graduates per annum. Young people want to enter the IT market and try to put their efforts into developing products able to make a breakthrough in the industry. Most of them don’t stop learning after graduating, constantly improving their skills by visiting numerous tech events happening in the country.
The startup ecosystem in Ukraine is booming, introducing unicorns that are now known all over the world.
Ukraine boasts favorable taxation, and the rates of local developers are several times lower compared to other options of outsourcing in Europe. Ukrainian IT outsourcing costs range between $25 and $50 per hour. Meanwhile, the average monthly salary among software developers is $1,800–$3,700 (net salary). Also, offshore rates for software development are affordable.
The Ukrainian government is working towards attracting foreign companies to the country and creating laws and regulations that can facilitate establishing a business in the country. Ukraine is an attractive destination for outsourcing in Europe due to the large numbers of tech establishments. There are 1,500+ tech companies, 2,000 startups, and 110+ international R&D centers (including Microsoft, Apple, and IBM).
IT Outsourcing to Poland
IT industry overview
Poland boasts over 430,000 IT specialists, being an attractive destination for a number of foreign organizations and having a fast-growing economy. The local tech market constantly grows by 5–10% each year.
Several tech giants have established their R&D centers in the country, including Google, IBM, and Motorola, to name a few. As for other tech organizations, Poland has over 60,000 IT companies, 3000+ startups, and 130+ VC’s.
When outsourcing in Europe, salaries mean a lot because they show the market’s state. In Poland, a mid-level developer is paid around $2,400–$3,700 per month or $40-$56 per hour.
Poland is a business-friendly country, and the high positions in different rankings allow it to make data transfer easy and safe. The estimated worth of the local IT sector is $12.4 billion. Also, when outsourcing Eastern Europe, business owners often point out the number of local tech graduates — 63,000 each year.
IT Outsourcing to Romania
IT industry overview
When outsourcing Eastern Europe, business owners often consider Romania a potential destination because it has a significant number of IT specialists — 120,000. The annual export of the local IT sector has reached $4,5 billion as per the latest research conducted in 2019.
However, the number of tech graduates in the country isn’t that high, especially compared to Ukraine and Poland, and is 6,750+ per annum.
The average salary for a programmer in Romania is $1,800–$2,500 per month. Meanwhile, the average software development rates range between $62 and $45 per hour.
The government is introducing policies to attract foreign businesses that consider outsourcing in Europe. Around 70% of the Romanian market is controlled by foreign investors, which positively impacts industry growth. Although the number of tech graduates barely reaches 7k per year, it’s still good enough, considering the population density.
Here is a comparison table of the leading tech hubs for outsourcing in Europe:
Europe vs Asia: What to Choose for Software Outsourcing?
On the whole, when comparing Asia vs Europe, you can see that they keep their positions on the global market, offering unique advantages to the clients.
As for the current preferences of foreign companies, Asia is being preferred for its affordable salaries and a vast talent pool. Meanwhile, Eastern Europe has several destinations, such as Ukraine, that offer high service quality, reliable developers, and advanced skills.
Besides, European culture is more similar to Western, so it’s easier to find common ground with the local developers. You can count on them and not be worried about the inability to introduce changes into the project or miscommunications.
The region offers a great price to quality ratio and attracts foreign companies with rapidly advancing IT infrastructure and readiness to complete projects of any complexity.
Take a look at our comparison table of Asia vs Europe in terms of significant factors for software outsourcing:
|Average developer salary||$25,958–$41,170||$6,918–$38,177|
|Tech expertise (place in the ranking by HackerRank)||#11 (Ukraine)
|Culture||The approach to work is Westernized, so there won’t by any misunderstandings because local developers have a vast experience of cooperating with global customers||Local cultural background has its impact on the working culture. Indian programmers have a contrasting understanding of a good organization of work processes|
|Overlapping working hours||4–5||0–0.5|
Here you go, a comparison of software outsourcing in Asia vs Europe. As you can see, everything comes down to your requirements, preferences, and budget.
Outsourcing Eastern Europe offers the best price-quality ratio and access to a large talent pool with high-skilled developers. This destination is increasing its popularity each year, attracting foreign companies and making them compete with each other to attract vetted developers. The supply of IT talent is high, and so is the demand for it.
In case you have questions about outsourcing Eastern Europe, Qubit Labs is ready to help you address them. Feel free to contact us to find skilled developers for your project while they’re still available.