Chief Marketing Officer of Ideamotive. Travel addict and remote work advocate.
Due to the new reality that comes along with the COVID-19 pandemic, more and more companies and organizations come to employ technological transformations to overcome the new pandemic challenges and at the same time stand out among the competitors. Needless to say, that hiring offshore talents, various companies plan not only to fill the skills gap but also balance the shortfall of qualified workers, speed up time to market, and of course, boost their profitability.
We’ve recently held a webinar where COO of Ideamotive Kamil Osiecki has provided a detailed overview of the CEE IT outsourcing trends and challenges in 2021. In this article, we would provide a summary of the most important insights but, if you’re eager to discover even more about CEE outsourcing, feel free to watch the full webinar recording!
This article will go through the most effective and profitable ways of finding the top talents for boosting your products and enhancing your tech business. Additionally, we will cover the costs, profits, and great tips of IT outsourcing you can start implementing today.
So, let’s get it started!
Global & European IT Outsourcing Overview
According to Gartner, the Covid-19 pandemic has damaged the IT outsourcing market, with the overall IT 2020 growth seen as -3.2% compared to the previous years. On the other hand, the fact that it has brought the new workplace paradigm for outsourcing cannot be ignored.
For example, the State of CEE IT Outsourcing and Offshoring Report 2021 shows that over 45% of developers can now work even more hours than before the quarantine, which becomes a great opportunity for workflow optimization. Furthermore, the pandemic hit has resulted in a list of positive changes for IT outsourcing:
The massive shift to remote work has created a high demand for online tool implementation and increased the reliance on technology
The past few months have proven that the outsourced teams can easily deliver the services on time, on budget, and to specification, which is critical for any company’s performance and successful development nowadays
There is a clear profit for the organizations and their CEOs, with a more cost-effective usage of investments, and having no loss on the product or service quality
After having all these benefits of outsourcing IT processes analyzed, the main predictions say that we can expect a 6.2% increase in IT market spending, with a total of 3.9$ trillion in 2021. With this said, we can see the series of large companies have already captured the momentum and started playing that game: Amazon, Uber, Samsung, Microsoft, Facebook, and lots of others started implementing IT outsourcing for their various company’s optimizations:
With being specialized in one or two areas, these companies want to implement a narrow industry vertical for their further development in the marketplace.
Learn more about the state of the global and European IT outsourcing market in the webinar excerpt:
IT Outsourcing For Product Owners
To make the IT outsourcing hiring more clear and to realize the main benefits and challenges of this process, let’s cover how IT outsourcing for product owners should look like.
If you’re a product owner who looks for the devs to expand the team, considering the IT outsourcing services can bring you the following upsides:
Hiring one at the time. You don’t need to hire everybody at once, and can gradually expand the team.
Boosting the devs team. You can hire new talents for more productivity, that can quickly join the team and adjust to the product development.
Onboarding. That’s a nice solution that can quickly and effectively help to engage in the project developing process.
Thus, IT outsourcing services can become a nice opportunity for product owners to boost the team’s workflow and increase their productivity as well. However, along with the profitable benefits, there are some big challenges they will certainly face during the IT outsourcing implementation:
Finding a perfect “match”. It’s always challenging to find the person who completely fits your expectations and project needs.
High entry barrier. It usually takes some time to get a new employee onboarded and become a full-fledged team player, especially when it comes to very specific project development.
Complex team context. It implies a lot of communication and psychological interaction for accepting a new member to the existing team of developers.
During IT outsourcing various factors should be considered. First of all, that’s a deep understanding of the company’s dynamics, which means its goals, development, culture, workflow, tools, and more. Secondly, outsourcing vendors should cover these specific criteria and pick up the employees based on the company’s values. Lastly, IT outsourcing in this case implies fast onboarding, which means finding a new employee in less than 3 weeks to win on the time and investments.
Take a look at the webinar's excerpt to learn about IT outsourcing for product owners:
IT Outsourcing For CEOs
IT outsourcing includes a variety of benefits not only to the product owners who have the product for improvement but to the CEOs as well. In fact, if you have the product idea and want to assemble the team for your project from a scratch, there are some really nice profits for you:
Defined objectives. You know what to achieve, at what time, and what the final outcome should look like.
Well-known team context and integration. Everybody knows the project well and other team members, so the interaction between team players is smooth and effective.
Low entry barrier. A completely new team of remote developers needs less time to get engaged for the project, which means your company can win on project introduction as well as become more flexible with the tasks completion.
Along with that, IT outsourcing for CEOs also includes some critical aspects to consider before you get started with your new project. For instance, CEOs usually face the following challenges:
Timing. For sure, it’s much more difficult to assemble a new team than hire a developer to the existing one, as you have to consider front and back developers, QAs, project experts, and so on.
Skillset. You have to make sure the developers you’re hiring have the exact skills you need for your project, but if not - you will need to onboard more members.
Onboarding. It might not be obvious, but if you need to hire some more employees on the first steps of your new project - you can face the difficulties with introducing the project idea and details to new developers.
The most important factor to track for the CEOs in IT outsourcing is making sure the employees understand your product idea. Additionally, you should also analyze the technical and business proposals to define whether the hiring agencies offer the right solution for you. Last but not least is the kick of assistance: you should take control of your project on the very first stages after launching. As a rule, a skillful team of 4-5 members can be assembled in 6 weeks on average.
Review the webinar's excerpt to learn about IT outsourcing for CEOs:
IT Outsourcing Costs
Needless to say, Central and Eastern Europe (or CEE) offer a competitive IT outsourcing pool with skillful talents. Unlike the traditional outsourcing hubs, IT nearshoring and offshoring, such CEE countries as Poland, Belarus, and Ukraine provide the companies with a great quality workforce, service reliability, and cultural affinity, which is certainly another benefit for these companies.
But it’s still critical to understand that the main reason why companies choose CEE IT outsourcing services is cost-efficiency. Let’s now talk more in numbers: the hourly rate of the Junior Software Developer in the US will cost $40 to the company, in the UK the rate will be $5 cheaper, but in the CEE countries organizations pay only $30 per hour. The things are even more interesting with, for instance, the Senior Software Developer’s hourly rate, as it costs $150 per hour for the US, and only $60 for the CEE on average.
It might be not such a great deal at a glance, but as soon as you count at least the monthly salary for these positions, you will realize the main profit companies can find in CEE outsourcing. Furthermore, more experienced employees in IT outsourcing can also save up huge investments to their companies, as higher positions hourly rate in CEE can barely reach more than $60, which is up to 200% less than the average pay in the US.
To prove that, let’s analyze the average wages for developers in different locations. The average salary in Eastern Europe usually varies around $27.000, which is at least 3,5 times less than it is in North America.
With this said, the competitive rates of the CEE are mostly supported by these countries’ economic growth as well as the entrepreneurial environment, top research universities, and a highly-skilled workforce. Additionally, the high cultural compatibility in CEE IT outsourcing reduces the efforts and time needed to onboard the employees from Eastern Europe to the company’s workflow, which makes them the perfect candidates that are worth being hired.
Kamil Osiecki provides the details overview of the IT outsourcing costs in this webinar’s excerpt:
IT Outsourcing Market Insights and Protips
Market Insight #1
The Market Is Fragmented
The fragmentation goes way deeper, that is why we can see over 70% of the CEE companies are small companies that target really specific projects with up to only 10 people involved in its development. But in fact, the fragmentation is even more diversified and is implemented into the narrow industry verticals related to different areas: some of the software companies are good at the e-commerce soft, salesforce, or logistics, others are mostly focused on the insurance, auto, and transport or manufacturing technologies developing. But the really nice thing about it - you will get the top talents in the industry you need and can be certain about the great project outcome.
Make the trial period to check whether that’s the right company you want to develop your project with before starting long-term cooperation. Additionally, consider the partner’s ownership: if there is not a good match, the good agency should find other talented sources for the replacement. Last but not least, check not only the soft skills but the cultural adherence, as it can be a serious pitfall for setting up the production workflow.
Market Insight #2
All the Software Companies Look Almost the Same!
Make sure to look for the really specific things you need. For instance, you can google the “software houses” instead of the software companies while targeting the software employee providers in different regions. Or else, use the Clutch to blend the ideas and information about the different companies and get the true rate of the developer’s provider to find your perfect software developing company. Additionally, use the references to catch some real feedback about the workflow and get a real impression regarding the company’s efficiency and performance.
Ask if you can talk to their previous clients (some contact details), or try to reach out by yourself! Additionally, you can also check the case studies by defining its business model, technologies used, industry and project maturity to realize the level of experience of the company selected.
That’s a nice option for understanding the basic upsides and downsides of whether or not you should cooperate with the company.
Market Insight #3
Understand the Bench Paradox
The CEE tech talent market is like a bazaar. Thus, there are plenty of options to choose from, that is why making detailed research can greatly benefit to define the real potential of the agency’s performance. Agencies tend to borrow the talents from each other, which means you can end up with a completely different source than you were expected.
Give it a shot! Challenge the technologies before estimating the best technology for your project, not for an agency.
Watch this webinar’s excerpt for more actionable tips from Kamil Osiecki:
As you can see, the CEE IT outsourcing might be a little bit challenging. On the other hand the future of IT outsourcing is still bright and it’s still worth trying if you’ve decided to optimize your company’s workflow by onboarding the new talents or hiring a new team of developers for your next project. The market is high-fragmented, with many small agencies performing different tasks and containing various groups of developers. They’re all the same, but you still have to keep in mind their knowledge differs, so make a deep research before choosing the final company to cooperate with.
If you’re interested in getting more details about CEE outsourcing, feel free to watch the full webinar! Ideamotive has years of experience in IT outsourcing and we are happy to share our experience with you!
Do you consider hiring outsourced/offshore experts to build your digital product? Reach out to Ideamotive! Since 2014 we have helped dozens of clients develop innovative technical solutions that meet their business needs and help the companies stand out among the competitors. Having experience in various niches, we would assign you the dedicated team of software developers with the relevant expertise. We cover the full cycle of software development, so you can get expert assistance with market research, software development, QA testing, and more.
Michał is a digital marketing veteran with a growth hacking mindset and 10+ years of experience. His goal is building high-quality technological content, with particular emphasis on React and Ruby on Rails. Traveler, climber, remote work advocate.