Offshore Development – Eastern European Countries

I’ve been working with developers in Eastern Europe since about 2000.  Much of that experience has been in Ukraine, although I’ve had a chance to do a little work with a group in Belarus, and to benchmark software development options across Eastern Europe.  If you’re considering moving some software development offshore, here are some thoughts that might help you.

Central and Eastern Europe – Country Comparisons
(source: Central & Eastern European Outsourcing Association Report 2010)
Poland Hungary Czech Rep. Slovakia Romania Ukraine Belarus Bulgaria
Developer Rates (USD/hour)
Project Manager

40.45

37.62

36.67

34.1

38.24

32.02

29.14

32.95

Sr. Developer

37.19

37.62

36.67

34.1

31.7

27.71

26.05

28.11

Middle Developer

30.49

29.75

29

26.97

25.32

23.41

22.32

21.12

Jr. Developer

22.81

23.94

23.33

21.7

19.67

18.94

18.36

16.96

Blended Average

31.29

30.95

30.17

28.06

26.76

24.24

22.95

22.87

Number of Employees in IT Outsourcing

9,200

9,600

7,800

2,800

14,200

18,100

10,400

8,700

1 year growth in IT Outsourcing Staff

1,500

1,600

500

200

1,800

2,300

1,200

800

Take a look at this data, which you can find on the web site of the Central & Eastern European Outsourcing Association.  My experience is that this data is fairly accurate, which isn’t a given with secondary sources such as this.  It reveals a few interesting facts:

1)      The prices in the countries at the less expensive end of this table will look familiar to those of you who’ve done work in India.  Software development talent now exists in a global market, and it’s a pretty efficient market.  The Central and Eastern European countries that have their act together economically, for the most part, such as Poland and the Czech Republic are going to cost you more.  These countries are part of the EU now.  The costs are actually a bit higher than they look in those countries since you need to adhere to European labor rules and pay European-style payroll taxes.  But you get something for that, which is the relatively high stability of those countries and an improved ease of doing business vs. Ukraine or Belarus, for instance.   You also get court systems and IP protection closer to what you are used to getting at home.

2)      The highest concentration of talent is in Ukraine, Romania and Belarus.  The numbers of people in IT outsourcing strike me as too low (I think these numbers are probably just people working in offshoring shops, focused on the US and Western European markets, not captive centers run by US and European companies, or companies serving the local markets).  But they still provide a relative sense of which countries have developers and which ones are producing more each year.

3)      So assuming you want to be working in a country with a low cost and a high concentration of developers, and one which is producing more developers each year, you might want to look seriously at Romania, Ukraine, Belarus and Bulgaria.

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