The State of IT Outsourcing In Belarus

from the
State of CEE IT Outsourcing and Offshoring in 2021 Report

Belarus as a software development outsourcing destination - highlights

+80,000

IT professionals on the market

60%

of the Belarusian IT talent is being outsourced

$2 billion

was the value of the IT export in 2019

16,000

IT students graduates annually from 55 tech universities

IT Outsourcing and Offshoring in Belarus

 

Belarus — Key Facts

Size: 207,600 sq km, ranked 87th in the world by area (comparable to Kansas)

Population: 9.48 million, ranked 94th in the world by population

Time zone: (GMT+3)

Government: unitary presidential republic, although considered a dictatorship by many states; the US and EU do not recognize the current president as legitimate

Official languages: Belarusian, Russian

GDP per capita, PPP: $19,943 (2019 est.)

Human Development Index: 0.817 (ranked 50th | very high)

Currency: the new Belarusian ruble (BYN)

Economy: market socialism

Main industries: metallurgy, mechanical engineering, chemical and petrochemical, light industry, food industry

Major urban areas (over 500K people): Minsk, Gomel

Ease of doing business: ranked 49th, DB score - 74.3

Digital competitiveness index: not classified

Corruption perception index: #66 out of 198, with signs of improvement

The WE Forum Global Competitiveness Report: not classified

A.T. Kearney Global Services Location Index: not included

Universities: 42 universities, two listed by QS World University Rankings® 2020 (ranked 351 and >800)  

The largest IT companies: Itransition, Iflexion, ScienceSoft, N-iX, Wargaming.net

IT industry market share: 5.7% of GDP, 2.2% share in employment, 1,500 IT companies, ca. 54,200 IT specialists

EF English Proficiency Index: 52.39 *(below average)

International Olympiad in Informatics: 98 medals, 16 gold, 41 silver, 41 bronze

 

IT outsourcing in Belarus at a glance

 

Considering that 60% of its IT market is external or outsourced, Belarus has a strong reputation as a reliable IT outsourcing destination. Belarus's robust IT sector is believed to be growing four to five times faster than in other countries. Government-led initiatives such as public subsidies, tax incentives, and free economic zones for IT & tech companies encourage establishing private sector enterprises (see Deloitte report on Belarus for more details on this).

However, the domination of outsourcing in the IT services delivery is both boon and bane for the local IT market (and outsourcers). On the one hand, outsourcing skills in Belarus are readily available, allowing outsourcers for fast rollout and scaling of their software design, development, and testing teams. On the other, the overwhelming volume of outsourcing work may be at the expense of innovation. After all, most engineers in Belarus contribute to a third party's intellectual property.

Moreover, due to its compact size, Belarus may offer limited choice regarding experts well-versed in niche technologies (such as Go, TypeScript, or Rust) or combining varied skills (e.g., data analytics + programming). Instead, it has a vast pool of experienced, affordable IT professionals covering more popular languages and services.

IT outsourcing Belarus: average rates

      A Junior Software Developer earns ca. $900/month (gross) on average

      A Senior Software Developer typically gets $2,600+/month (gross)

      An average salary of a Development Lead is about $3,600+/month

      The rates in Belarus sit in the mid-range compared to other CEE countries

      They are slightly above the Ukrainian and draw nearer the Polish rates

[Source: IT Outsourcing Review]


The high level of entrepreneurship in Belarus and its remarkable success in IT offshoring may be somewhat surprising, considering its political unrest. Belarusian authorities take definite actions to stimulate market growth in the IT sector. Yet, the widespread control over entrepreneurs comes with its share of risks, especially if we consider Lukashenko’s inclinations towards dictatorship and his close ties with Moscow.

Belarusians are pursuing the opening towards the West. However, it seems unlikely that Russia will let go of its influences any time soon. After the heavily disputed results of the presidential election in 2020 (which haven’t been recognized by most global leaders, including the European Parliament), mass protests erupted throughout the country. Since then, government-imposed connectivity and cellular service outages have been periodically disrupting work for thousands of digital workers, affecting their workflows and impacting service delivery.

Reacting to these events, IT specialists joined grassroots movements, and thousands of them have even signed an open letter calling for re-elections. Following the country's alarming situation and a shattered business climate, analysts anticipate a mass exodus of Belarusian IT workers abroad unless anything changes in the next few months.

The transition is already happening, with a growing number of dev shops and tech enterprises threatening to halt their investment plans and move to other countries. In August 2020, the dev.by website informed about 12 IT companies transferring employees abroad, 59 pursuing partial relocation, and 112 considering their options. 

 

Investing in the Belarusian IT market

 

Software is the number one Belarusian export to the USA, comprising over one-third of its total exports. Its value in 2019 was estimated at ca. $2 billion.

According to the Ministry of Economy, about 15,000 Belarusian IT specialists are permanently involved in software export, carrying out projects for an international client base.

About 30% of Fortune Global companies have outsourced IT work to specialists located in the famous Hi-Tech Park, one of Europe's largest business incubators for IT and home to nearly 500 software & tech companies.

Major foreign investors

The diverse range of globally-recognized consumers of Belarusian software services includes Samsung, Whirlpool, British Telecom, T-Mobile Deutsche Bank, London Stock Exchange, and Deloitte PepsiCo, or Procter & Gamble, among other household names.

The local service companies are also quite successful in raising foreign investment and pursuing acquisitions, especially on the booming game development and mobile apps market:

However, when we look at foreign companies that decided to open their in-house centers in the country (some examples include Fitbit, Yandex, Netcracker, Viber, and Luware), the list gets remarkably shorter. The business is there, and the capital is flowing, but the country still struggles to convince global tech champions to roll out their local centers despite numerous tax incentives (see below).

The reasons may include the Belarusian IT outsourcing market's very nature, heavily prioritizing services export rather than attracting investors to launch regional offices. The state’s excessive (and unpredictable) interference with business, high level of corruption, and an ineffective judiciary don’t help, either.

Incentives to invest

  • Six economic zones with a special legal regime facilitating carrying out economic activity across specified industries, including tech:

- 0% corporate income tax for 5 years;

- 10% VAT;

  • Additionally, IT and tech companies can optimize costs and tax payments by setting up offices in the Hi-Tech Park, where preferential tax treatment also applies to the residents:

-  0% corporate income tax for 15 years;

-  0% VAT;

  • To attract capital to disadvantaged locations, the authorities have also introduced generous tax benefits for organizations operating in small cities and rural areas: 0% corporate income tax for 7 years and 0% VAT for 5 years.
  • The Belarusian government has also adopted a series of international agreements and state laws to regulate and secure foreign investors' rights in the country. These include, e.g., the freedom to repatriate profits outside of Belarus.

However, many of these incentives are only available to Belarusian legal entities and don't apply to a representative office. Therefore, the subsidiary is the most widespread legal form for foreign investors in Belarus.

More information about tax incentives and exemptions in Belarus and the legal requirements for setting up a business in the country is available in the official state information resources, Pravo.by and Belarus.by.

 

Higher education in Belarus

 

According to the State University website, the Belarusian higher education (HE) system currently comprises 42 state and 15 non-state HE institutions. Most of them are located in the capital, Minsk, with several Grodno, Brest, Vitebsk, Gomel, and Mogilev facilities.

  • With nearly 250,000 students, the country has one of the highest student-to-population ratios in Europe.
  • Belarus also claims one of the world's highest literacy levels, at the rate of 99.8% among the youngest generations (91% is the global average for this age group).
  • Public higher education is free for Belarusians, with grants and scholarships available for underprivileged and gifted students.
  • The courses usually take 4-6 years, with a breakdown into Bachelor's and Master's degrees. Third-level education is also available.
  • The country's first and most prominent university, Belarusian State University, was established in 1919 and opened two years later. It offers various subjects, including Computer Science, Mathematics & Statistics, and Electrical & Electronic Engineering.
  • Six Belarusian public universities are specifically dedicated to technical and technological subjects, including Belarusian National Technical University, Belarusian State Technological University, and Belarusian State University of Informatics and Radioelectronics.
  • Only two Belarusian universities made it to the QS World University Rankings® 2020 (ranked 351 and >800).
  • International students are allowed to study in Belarus, contingent on obtaining a student visa and paying the tuition fee, typically ranging between $1,000-3,500/year.
  • The majority of courses are taught in Russian and Belarusian, with rare English-taught courses, which are usually more expensive.  

Until recently, private HE institutions mainly offered education in humanitarian, social, and economic fields. This primarily resulted from the lack of sufficient budget to invest in adequate research facilities and equipment. Following the increasing demand for science and technology courses, they began expanding their curricula to account for the new trend and ensure a greater alignment between graduates’ skills and job market needs. 

 

Belarus' startup ecosystem

 

The Belarusian startup scene has been showing remarkable growth in recent years, largely spurred by the 2017 Decree on developing the digital economy. The document created advantageous conditions for product-based companies. It also provided for the further development of the famous Hi-Tech Park. The technology hub was established in 2005 to nurture the growth of local tech enterprises and woo foreign investors with tax exemptions and incentives.

The strategy has pulled off. Since the law’s establishment, entrepreneurial projects have been booming in the country, with brand new startups launching every minute. It's estimated that over the last five years, Belarusian startups raised nearly $250 billion from venture deals, with a record of $77 billion raised in 2018 alone.

However, following the stormy events of 2020, the local startup scene has been losing its momentum lately. Currently, Belarus ranks 63rd in 2020 Startup Blink's Global Startup Ecosystem Report, down by eight spots compared to 2019. Minsk occupies 63rd position in the cities ranking – a fall by 16 locations from 2019.

Key startup cities

Minsk, Brest, Gomel-Raton, Vitebsk, Mogilev

Startup ecosystem in numbers

  • 178 startups
  •  Hi-Tech Park, ca. 10 Special Economic Zones/Special Technology Parks
  •  Probably no more than ten local VCs, including Angels Band, Hackspace Capital, Quattro Capital, Zubr Capital, Haxus, and Bulba Ventures
  • Just a few incubator and accelerator programs
  •  50,000-100,000 IT specialists (data varies across resources)

Focus industries

AI/ML, AR/VR, Medtech, IoT, SaaS

Success stories

  • Wargaming – the world-renowned game developer behind "The World of Tanks" was born in Minsk in 1998. By now, it has exploded into a global enterprise with nearly 1,800 employees located in over 20 offices worldwide. Over the years, the company has completed four acquisitions, undergone ten rounds of investments, and moved its headquarters to Cyprus. The current valuation of the business stands at $1.5 billion.

  •  FriendlyData – a natural language search interface for business databases. After securing a series of funding from local investors, the startup was bought in 2018 by an American software vendor ServiceNow for an undisclosed amount.

  • Kino-mo (now HYPERVSN) – a breakthrough hardware-enabled technology platform enabling 3D holographic content creation obtained the total funding of $11.5 million in three rounds.
  • Flo – founded in 2015 in Belarus, Flo Health is a smart period tracker that became the most frequently downloaded female health app globally. The ingenious product brought its creators $25.5 million in four funding rounds.
  • Banuba – the company behind AR mobile experiences, raised $12 million from local and Russian investors reaching the valuation of $100 million after the second round.

Challenges

  • Immature startup ecosystem (nearly 60% of startups "aged" 1-3 years)
  • A low number of acceleration programs and limited access to mentoring
  • Unfavorable legal environment hindering cooperation with foreign investors

Pros of software development outsourcing in Belarus

  • Over 60% of Belarusian IT professionals involved in outsourcing
  • Government support for IT businesses and the private sector
  • The extraordinary growth of the IT services market
  • Competitive rates between $20-40/h, which is on the CEE’s low end
  • Ten of the top 30 IT outsourcing destinations in the world
  • A large presence of multinational IT companies
  • Plenty of special zones offering tremendous tax incentives for investors 

Cons of software development outsourcing in Belarus

  • Unstable political situation threatening international relations
  • Low English proficiency index core
  • Monopolist control of the state over the economy (75% of property owned by the state)
  • A relatively low number of IT specialists with niche and complex skills
  • Reoccurring (and random) internet and cellular communication shutdowns
  • Strong dependence on the Russian government
  • Intricate and less common legislative
Main banner CEE IT 2088x1252

Looking for more insights about software development outsourcing?

Read the full version of our State of CEE IT Outsourcing and Offshoring in 2021 Report.

Get the full report

Get your free copy of the report now.

The State of CEE IT Outsourcing and Offshoring 2021
Belarus • Poland • Romania • Ukraine

This field is required

IT outsourcing... reinvented!
Why work with developers from the CEE?

charles-deluvio-Lks7vei-eAg-unsplash

Best devs in the world

CEE countries are world-renowned for their software developers who are said to be one of the best on the globe.

Huge talent pool

There are over 1 million software developers in the CEE region, skilled in various technologies and experienced in every industry.

Competitive rates

Software developers' hiring rates in the CEE region can be 2-3x lower when compared to the US and Western Europe.

Cultural proximity

Great English skills and vast experience in working on international projects. CEE devs have been supporting startups worldwide for years now.

Looking for a trusted IT outsourcing partner? Hear from our partners and clients.

Considering hiring tech talent from the CEE region?

Ideamotive is a tech talent marketplace providing on-demand IT experts matched with client's technology, industry, and company culture.

Read more about other top IT outsourcing destinations from the CEE region: