Today I’m going to wrap up this series on the “best” countries for offshore software development by giving you my list of top countries. Yep, I’ve given you a lot of detail on how to arrive at your own short list of countries, but today I’m finally going to just give you my list!
I started this series by looking at Gartner’s top 30 list of countries for offshore services. We looked at the criteria Gartner used to come up with the list, critiqued those criteria, and modified the criteria to ensure they were useful for evaluating countries for software development, as opposed to more generalized offshore services, which might include help desk support, or Business Process Outsourcing (BPO) tasks. OK, so if we apply my criteria, what is the list of countries we might come up with—the “best” ones for software development? We could do this at a granular level, by assigning each country scores on a scale from 1 to 5, as Gartner does, and weighting these factors to come up with total scores for each country. I think it’s worth doing as part of your analysis since it forces you to think through all of the criteria, and their importance to you. For our purposes today, though, it’s simpler and quicker to start with Gartner’s list, and just knock off several countries that don’t fit my criteria: cost, labor pool, educational system, language and cultural compatibility, proximity to your business, political and economic environment and global and legal maturity (I combined a couple of Gartner’s criteria, here).
Most of the countries on Gartner’s list just don’t have a critical mass of strong development talent. I’m sure you still could make a go of it in many of these places (e.g., I know someone who does a fair amount of work in Sri Lanka, so I know for a fact you can make it work there, but I’m don’t think it quite makes my list of “top” countries). So I’m going to knock out Costa Rica, Panama, Peru, Bangladesh, Indonesia, Malaysia, Philippines, Sri Lanka, Thailand, Vietnam, Czech Republic, Egypt, Hungary, Mauritius, Morocco, Poland, Slovakia, South Africa, and Turkey (for more detail on the Eastern European countries—you might wonder why I knocked out Poland, for instance–look at this analysis to see why some countries don’t quite make my list). Chile is a bit small compared to the others (the population is only about 16 million), and it seems that the talent pool there is a bit thin (if you talk to offshore development firms in Chile, they tend to be smaller than in other major offshoring destinations, and sometimes Chilean firms might outsource some of your work to, say, an Argentine firm because they tend to have more resources than a Chilean firm). However, I think you could be successful in Chile if you’re not trying to build a very large team. So I’ll leave Chile on the list, especially since it has some other good qualities such as stability, a good political and legal environment, and a good cultural fit with North American or Western European businesses.
Some of the countries are getting expensive—Russia is an example—so I’m going to knock them off the list too. And the business environment in Russia is discouraging to most Western business-people, so I’ll also knock them off the list for that reason–most Western businesses just don’t want to invest there unless they are involved with oil and gas. Brazil is also getting more expensive. Sao Paulo recently made a top ten list of most expensive cities to do business. They’ve found offshore oil, and as one of the BRIC countries, large companies feel they need to have a presence in Brazil, so those factors are heating up the market for the rest of us. I’m tempted to leave Brazil off the list for this reason, but if cost is not your primary driver, or you have other good reasons to be in Brazil (e.g., you are targeting the Brazilian market with your products) maybe you should consider it.
I feel that Mexico should be an interesting alternative for US and Canadian firms, but it’s hard to make a case that it’s among the best places in the world to do business these days, due to the drumbeat of crime stories we hear from Mexico each week. So I’m knocking Mexico off the list. Colombia is an interesting one. I haven’t been there, myself, but I keep hearing good things about the talent pool there. And there is a good-sized population there (46 million). I just spoke to an old friend of mine who lives in Colombia, and while he likes some aspects of the place, he didn’t rave about the business culture and the ease of doing business there. Apparently Colombia is much safer than it used to be, but like Mexico, it might be hard to make a case to your board of directors that you’ve found the perfect place for a foreign investment, and it’s called…. Colombia?!?!? So I’m going to leave it off my list, but it might be worth considering if you are aggressive and want to get in early on a place that’s on the upswing, or if you have some special insight into the country (which I don’t have).
So if we knock those countries off of Gartner’s list, our list looks something like this.
- Americas: Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama and Peru.
- Asia/Pacific: Bangladesh, China, India, Indonesia, Malaysia, the Philippines, Sri Lanka, Thailand and Vietnam.
- Europe, the Middle East and Africa (EMEA): Bulgaria, the Czech Republic, Egypt, Hungary, Mauritius, Morocco, Poland, Romania, Russia, Slovakia, South Africa, Turkey and Ukraine.
In Asia, I’m left with the two giants, India and China. The talent in these countries is undeniable, and they scale well—you can find people in quantity, and the costs are reasonable. The language skills in China are better than they used to be, but based on my visit there a little over a year ago I’d still rate them as “poor”. You might arguably rank India and China below the countries in Eastern Europe or South America in terms of cultural compatibility (it’s a subjective criteria, so you can judge for yourself) and proximity to your business, and these days there is a lot of interest in “nearshoring”—offshoring a bit closer to home or in time-zones that are closer to your own in order to improve collaboration. But India is still the global leader in offshoring and will continue to be for some time in the future.
I’m going to add Belarus to the list. Gartner doesn’t consider them one of their top 30 countries for offshore services, but if we’re talking about software development, in particular, I think it makes the list. As I showed in my prior analysis of Eastern European countries, it’s a place with a good population of strong developers and a relatively small internal IT market, so they are very export oriented when it comes to software development. On the other hand, the politics there are a real worry and it’s not a place to go if you don’t have some risk tolerance.
So the revised list might look something like this:
- Americas: Argentina, Brazil, Chile
- Asia/Pacific: China, India
- Europe, the Middle East and Africa (EMEA): Belarus, Romania, Ukraine
These countries fit my criteria—they have populations that are large enough to have a “deep” talent pool (with the possible exception of Chile), with education systems that are good enough to produce software developers in sufficient quantities, the business risks are manageable (although they vary pretty widely), and the costs are reasonable vs. the US and Canada, and Western Europe. If you’re looking for a “wild card”, you might also consider Colombia, or perhaps Bulgaria, where there is a small population, but a decent number of developers relative to that population. I’m probably going to get some complaints from some of you that I left your favorite country off the list. By no means am I saying that you can’t do development in countries such Vietnam or the Philippines, particularly if you only need a small team (e.g., 2-12 people). But if you want to do software development at scale (i.e., 12-100 developers), I think you’d be better off in the countries that I’ve listed.