To outsource or not the outsource? While the answer to this question it is pretty obvious for most US-based and Central Eastern Europe based companies that want to save costs and optimize production, the one to the next question isn’t that obvious. Where to outsource? At a quick sight, Asia and Latin America are very attractive due to the lowest developer rates, while Eastern Europe seems more trustworthy, but with higher costs. It is clear that it is worth investigating and highlighting, which are the advantages and the drawbacks of each Country/ Region? Our partners from Accelerance published two very useful guides, one about global outsourcing rates and one which is focused on software outsourcing in Eastern Europe. Will be selecting some highlights which we think are pretty relevant to the realm of software outsourcing in Eastern Europe in general, and in particular in the Balkans and Romania. Reading this blog article you’ll end up surprised of how many reasons backed up by stats & facts are to hire Romanian developers.
The attractiveness of outsourcing
If we talk about the US offshore and nearshore typically provide the best hourly rates which makes them the most cost-efficient. Outsourcing is so attractive while it eliminates employee overhead costs like employee benefits, taxes, training, and retention, providing at the same time the possibility to scale teams according to their punctual needs. While and estimate cost per ten in-house developers would reach around a minimum of $1.6 Million, for ten nearshore or offshore developers the costs would drop to $700K +/- travel. This is quite a huge difference, isn’t it? It would save a company more than 50% of the development costs. An important factor in outsourcing is the retention rate, which could facilitate additional saving. We dwelled thoroughly on this topic, in this article.
Never go for the cheapest offer
Ok, outsourcing is the big thing when it comes to saving money, but where to outsource? The first impulse would be going for the cheapest offer, but there are a few reasons why not to do it. In the table below we’ve got an overview of the outsourcing rates all around the world.
2018 Global Outsourcing Rates – Accelerance
But first, we need to understand from where the price differences come from. There are some major factors that influence outsourcing rates: location, tech stack, seniority/ work experience, team size, and length of engagement.
Accelerance has an important statement as a recommendation for those who need to choose their outsourcing partner:
Based on our experience and global outsourcing relationships with top development firms in more than 30 countries, Accelerance recommends that you tread cautiously with services offered below $25/hr. – Accelerance
They further explain that regardless of country or region, less than $25/hr (blended average for a team) is a red flag that the provider may be (a) under-investing in his company or (b) will be cutting corners in technical quality and delivery requirements.
So, if you look again at the table with rates we can eliminate the lowest cost providers, which are located in Asia and most commonly in India. Unfortunately, there were a lot of companies that came to us for project rescue, while Indian developers weren’t able to deliver quality services.
Organizations are looking beyond age-old software development outsourcing standbys like India to augment their teams as shorter project timelines loom and pressures mount to develop more cost-effective end products. – Accelerance
So, it would be left to choose between Latin America and Eastern Europe. There’s not a very big difference in terms of rates, but let’s see where all advantages stand.
The advantages of outsourcing in Eastern Europe
Eastern Europe offers a pleasant surprise to all the companies that choose to outsource there. This region uniformly provides highly educated and skilled software engineers – which is crucial for the success and overall quality of the software project and also great budget benefits. This is due to the fact the former Soviet Union and countries of Eastern Europe, have had placed a particular emphasis on educational programs rich in engineering and the sciences in the past.
Because of this, this region today has many highly skilled professionals in areas such as computer science, but at much lower labor costs than Western Europe and as low as India in some cases. – Accelerance
Another thing worth mentioning is that, nowadays, Eastern Europe thrives towards a very Western European business culture, adopting Western institutions, rules, and social norms. It has a constantly growing and developing labor market, drastically lower employee friction rates than India and China, and intellectual property (IP) protection that adheres to the European Union’s Data Protection Act. These are all benefits of outsourcing to this region. Eastern Europe also has a solid software outsourcing pedigree, while this kind of business has been undergoing and improving in the last 20 years.
Other bonuses are:
- strong, competent universities
- proximity to Western Europe and cultural affinity to the West
- culturally similarities to North America like the familiar, direct style of communication
- Eastern Europeans have a great admiration and respect for American culture and technical innovation
- developers’ affinity for Western World – they feel like their skills are used better when working with Americans or Western Europeans
So, newbies outsourcing to Eastern Europe and the Balkans will be pleasantly surprised to find a big talent pool with innovation-oriented developers with the propensity for working on a high-end project. Eastern Europeans are communicative, hardworking and you’ll be surprised how easy and fast you’ll build a partnership with them.
Why Outsourcing in Romania is the big thing
When outsourcing in Eastern Europe you should be selective too. For example, Accelerance doesn’t recommend the Baltics region, due to a limited talent pool and high pricing. However, they recommend the Balkans, stating that in 2015, companies from Western Europe who outsourced to the Balkans were able to cut costs by 50%. They traveled to Romania and Bulgaria conducting deep, on-site assessments of top software companies. As it concerns Romania, it scores the highest in outsourcing readiness, English proficiency, and higher education training. Also, it has a large pool of developers due to the high population number and a good score on technological readiness. You can check more facts in the table below.
Outsourcing in the Balkans – Key Numbers – Accelerance 2018
Romania is only one-hour time zone ahead of Western Europe and just a 3-hour flight from London (UK). Member of the European Union, in the latest years, it has become a thriving technology center, having one of the largest populations of IT professionals in Europe. With an annual growth rate of the outsourcing sector between 15 and 20%, Romania is being the fastest growing market in the European Union in terms of IT outsourcing services. The country’s continuous development has largely been supported by outsourcing companies. Some have even nicknamed Romania Transylvania’s own Silicon Valley, possessing a deep talent pool of IT professionals that rank the country in the global top 10 of certified IT specialists. This is why many famous multinational companies like Microsoft, IBM, Oracle, Amazon, and several other Western companies have employed thousands of IT specialists in Romania.
According to 2106 A.T. Kearney’s Service Location Index quoted by Telus, Romania ranks 1st in Europe and 6th in the world, in terms of the number of certified IT specialists with a pool of about 100,000 people in various IT-oriented profiles. Romania was ranked as the 3rd most attractive country for software outsourcing in the world, which is a number that speaks for itself.
Although Romania doesn’t offer the lowest prices, its services are still less expensive than those offered in Western Europe or the U.S. Plus, if you take into account the high level of technical skills, Romania is highly competitive. – Accelerance
According to an IT study performed by ANIS Romania (Employers’ Association Of The Software and the Services Industry) in 2018, the turnover for the IT sector in Romania has increased with over 11% in the last year. The driving force for this growth was the outsourcing sector contributing with 75,6% to the value of the entire IT sector. From the entire export of software products and services, 75% goes to the European market, 22% to the US market and the rest in redirects towards other markets. Also, as we can see from the chart below the prospects for 2021 depict a stable and growing environment.
Outsourcing volumes in Romania by location – ANIS 2018
Also, the technical staff employed full-time has reached 89.850 specialists, with a growth of 7,5%, compared to last year. And it is prospected to grow even bigger in the next years.
From all the big cities with activity in the IT industry, Romania’s capital Bucharest is the largest outsourcing hub of the country, which likely has the largest and most diverse software development services talent pool. Romanian developers are highly skilled in technologies like PHP, JavaScript, .NET, also being highly interested in the in-vogue technologies and frameworks like AngularJS, ReactJS, Node.js. They have proficiency in English since they have studied this language from an early age as a second native. They are willing and prepared to work on both mid and large-scale project and be dedicated. If you are outsourcing from the US, you don’t need to be concerned about the time gap, most of the Romanian software companies offer their employees a flexible work schedule.
Hire Romanian Developers
There are a lot of good reasons to hire Romanian developers and to outsource in Romania. It may be more expensive than hiring Indians but it is far cheaper than hiring in-house developers in the US or in Western Europe. It is safe, you won’t face quality or communication issues and still save up to 50% of your development costs. We know that the pool of companies and developers that offer outsourcing services is big, but Clarisoft Technologies is one of the most experienced in the area. Check our Outsourcing in Romania dedicated page and contact us if you want to hire some of the best Romanian developers.