Top 5 countries to outsource software development team

IT and software development outsourcing were often considered by many companies as a useful solution to optimize the costs and delivery time of IT operations. The global shortage of software developers, skills gap, and popularization of remote work has transformed this concept into something closer to “big opportunity” rather than simple financial motivation. The skilled and well-educated IT workforce in many countries has unexpectedly presented high-quality tech skills, business mindset, and work ethics making them much better R&D and company growth potential.

The different types of outsourcing

In the beginning, let’s talk a little bit about the different types of outsourcing services. The world is quite literally, just a global, remote village right now. There are plenty of outsourcing companies to choose from and the options available encompass various ways of working and different locations. The below list contains the main kinds of software development outsourcing that are being used in global business operations.

Homeshoring – this kind of software development outsourcing involves handing your software development project to a single developer or software team located in your country or city. This option allows regular personal meetings while working on a complex software development project but unfortunately is hard to sustain in some locations or just too expensive.

Offshoring – it simply means commissioning your software development work to distant countries such as China or India. Although it is (or it was) a very cost-effective solution, it often comes with many issues for a business like different time zones, language barriers, long transport times, and cultural and quality differences.

Nearshoring – the most popular and the most successful form of software development outsourcing. It involves setting up a development team or software development hub in a country that is in close proximity to your own (and with rich talent pools available for a good price).  As we mentioned nearshoring is successful as it solves all the issues with skill gaps, costs, cultural affinity, time zones, language barriers, and currency exchange.

The benefits of software development nearshoring

1) Global talent access: There is always a huge discussion whether outsourcing has benefits or is rather a necessity, whether it is a threat or rather a huge chance for an organization. The fact is that in the age of digital transformation, digital workspace, and globalization the physical location seems to lose importance. The first need for every vibrant organization is to secure the most precious IT talents to drive innovation and IT productivity for the next few years. The competition for the best software developers has risen to enormous problems in many local areas in US and western countries. This is how we come to a very important conclusion, that outsourcing is a chance to access new talent pools – but only if you do it the right way.
2) Cost-effectiveness. This is the oldest and the most obvious reason. In some areas of the world, you can hire software developers at a very attractive rate. Many organizations are differentiating support and maintenance from development and R&D and applying the cost strategies based on that.. However as we mentioned earlier, the price for talent is not a matter – the end-game is all about finding the right talent.

3) Risk management. The concept of global risk for companies has arisen together with the globalization process. Organizations can’t rely only on one region, country, or city to provide all human resources for the whole company. It is simply not achievable. If you scale you need to diversify the risks by creating more distributed, multifunctional teams not dependent on local circumstances like political events, climate disasters, demographic trends, etc. 

The top 5 countries for software development team outsourcing

This is the most asked question regarding the whole IT outsourcing industry. Let’s then analyze the most important factors to take into account in the decision process:
1) Skills potential: The fact is that the recent trends are very beneficial for nearshoring option – so it all depends on your company location. Assuming that your company is from Europe or the US – you should definitely consider the closest countries and IT skills potential. The table below presents the top 10 counties with the best developers ranked by average score across all HackerRank challenges. 

It seems pretty obvious that the top destinations for the US or Western Europe are CEE countries.

2) Time zones: Close proximity to your main headquarters matters a lot. Remote work requires at least 4 hours of simultaneous cooperation between the teams in different locations (the more hours the better). It’ll also be much easier to convince IT talents to work in typical working hours rather than night shifts or early mornings.

3) Similar work standards: This is something that many people miss in the decision process. This area covers very important aspects like quality of work, team effectiveness, avoiding conflicts, etc. It’ll be much easier to work with people with the same language skills, work ethics, and experience as you and your organization. This is another reason in favor of the nearshoring option.

4) Rates: This is something you should consider at the end of the process. Why? – Well in the IT industry the quality matters the most. The final goal is to find good quality for a good price. The table below shows average rates in a number of professions, according to Accelerance. It’s all about connecting the right dots. If we take a closer look at Poland rates – we realize they aren’t as low as expected in comparison to Ukraine. But we already know that Polish software engineers are among the top 3 worldwide…

The final conclusion

This simple analysis that we presented in this article covers the most important technical aspects of the outsourcing process. Before making any decisions there are also other factors to take into account like taxes, accountancy, political stability, currency risks, cultural differences.

If we cross all this data together for wider perspective we can definitely choose the countries as perfect locations for IT outsourcing. So here come the winners:

1) Poland: stable EU country, top-quality IT skills, large talent pools, attractive time zones, western working standards, average rates). Good choice for EU/US nearshoring..

2) Czech Republic, Slovakia, Hungary, Baltic States: stable EU countries, top-quality IT skills, attractive time zones, western working standards, average rates). Good choice for EU/US nearshoring.

3) Ukraine: emerging country, good quality IT skills, low rates – but there are still the risks of geopolitical nature.

4) Taiwan: top-quality IT skills, western working standards, medium rates. Good choice for Singapore/US/Japan/Korean companies.

5) China, Russia: wide talent pools, top-quality IT skills, and attractive rates. (There are severe risks of political and cultural nature.)

6) India, Brazil, Mexico: wide talent pools, very attractive rates, however, there is still room to grow the quality and work standards.

Starting your nearshore Software Team

After choosing the perfect location for your software development team or software hub there is a time to start the process. The IT industry is highly competitive which affects the hiring delivery time – so it is important not to be over-optimistic regarding the timeframes. Usually, it takes at least several months to find and hire a complete software team. Your strategy must also include a proper budget and goals for the years ahead.

The whole setup process can be done by your newly hired, local managers or by a local IT Partner. There are companies like ours (NxTide) – that help other companies to establish local Software Teams or larger Software Development Hubs in major cities in Poland. We take care of all recruitment and quality control processes making it faster and more cost-effective for you. Here is some more information about our expertise:

• Over 7 years experience in creating a variety of software development teams

• Over 60 teams and 300 engineers successfully hired and deployed

• Several dedicated HR and IT Project Management Teams acting on your behalf

We have created a dedicated and flexible offer to meet our client needs::

1) Software Development Teams: dedicated to clients looking to expand their software development teams or create small remote teams from scratch.

2) Software Development Center: dedicated to larger and permanent projects. We’ve implemented the innovative Build Operate Transfer model to make the whole process faster, more efficient, and transparent.

Please read more about us here: https://nxtide.com/about-us/