Eastern Europe and Latin America are the two growing outsourcing destinations for building remote teams among tech businesses from North American and Western European countries. For those who are trying to find the most advantageous outsourcing destination, we recommend paying attention to such important factors as the size of the tech talent market, growth rate, employer competition, business culture, and knowledge of the English language. This article will help you make up your mind regarding your outsourcing destination. Read our informative side-by-side comparison of Eastern Europe and Latin America outsourcing markets.
A glance at the Eastern European IT outsourcing market
By the end of 2022, the revenue in the IT outsourcing segment in Eastern Europe is expected to reach $4.32 billion, according to Statista . With an annual growth rate of 8.59%, the market volume will reach $6.52 billion by 2027. Eastern European countries are popular among Germany, Denmark, Sweden, the Netherlands, the UK, and Israel, and generate the most revenue from the US – $144.80bn in 2022.
Country | Number of programmers | Revenue in the IT outsourcing segment | Number of tech companies on Clutch |
Ukraine | 212K | US$1.02bn | 870 |
Poland | 250K | US$2.29bn | 937 |
Romania | 100K | US$313.90m | 343 |
Czech Republic | 96K | US$1.56bn | 94 |
Among the most famous Eastern European companies, we see Grammarly, GitLab, MacPaw, Scalarr, PetCube in Ukraine, Avast, KiwiCom. SocialBakers in Czech Republic, Brainly, DocPlanner, Allegro in Poland.
Which Companies Outsource to Eastern Europe?
Seeing great market growth potential, large tech companies widen their presence in the region by opening their own R&D centers or hiring remote teams through IO outsourcing companies in Eastern Europe. Here is a shortlist of large tech companies and their R&D centers in Eastern European countries.
Country | Tech company |
Ukraine | Apple, Microsoft, Wargaming, Boeing, eBay, Samsung Electronics, Skype, Siemens, IBM |
Poland | Google, Motorola, Siemens, ABB, Delphi Automotive, McKinsey, Intel |
Romania | Microsoft, Oracle |
Czech Republic | Oracle, Microsoft, Google, Skype, CA, IBM |
Hungary | Deloitte, Nokia, Microsoft, TATA, Siemens |
Why do European and American businesses delegate outsourcing to Eastern Europe?
The ever-growing digitalization creates demand for tech specialists in advanced tech countries. In plain words, tech companies find it hard to staff their in-house teams because their local talent market is overheated: the salaries of tech experts are very high and small and middle-sized businesses can’t compete with the remunerations and benefits of large international tech companies.
Western European universities do not generate the right amount of junior specialists which slows the growth of the local tech talent pool. This is where Ukraine and Poland come to the rescue.
Thanks to a large number of technical higher educational institutions and initiatives of large and mid-sized IT outsourcing companies, the Ukrainian tech industry adds approximately 30,000 junior specialists every year. According to official data, there are around 212,000 programmers , quality assurance managers, business analysts, architects, UI/UX designers, and other tech specialists in Ukraine.
So the main aspects that stimulate overseas tech companies to keep outsourcing to Eastern Europe are the abundance and diversity of skills of the experts in Ukraine.
- Fast and efficient talent sourcing compared to the EU and the US. Such tech markets as Ukraine have a moderate presence of big international tech businesses which keeps the employer competition mild as compared to Western European countries. There are plenty of tech companies that specialize in building remote development teams. They have direct access to the talent market, know the specifics of the market, and have their own pool of candidates. While some of them can staff remote teams from existing specialists, others can also build a team according to specific needs of each client.
- Tech companies have experience in software outsourcing. A large share of IT outsourcing companies are specifically built to work with international clients. All their business processes and team structure is tuned up to manage remote collaboration. Traditionally, you’ll see that outsourcing companies in Eastern Europe have programmers, quality assurance, designers, project managers, business analysts, delivery managers, and many other experts who have deep knowledge of Scrum.
- Eastern Europe outsourcing leaders adhere to international cyber security standards. IT outsourcing companies in Eastern Europe hold ISO 9001:2015, ISO/IEC 27001:2013 – internationally acknowledged security certificates. These standards help companies ensure that client data is stored securely and that all programmers follow the security procedures. Besides security, many companies also have Microsoft , AWS , Google Cloud Platform, and many other certificates that confirm their ability to provide world-class services.
- Convenient time difference and follow the Sun principle. Ukraine and Poland, Romania, and the Czech Republic are located in close proximity and, hence, have an insignificant time difference with Western European countries. For instance, a programmer in Ukraine shares eight out of nine working hours with a programmer in Sweden, Germany, Denmark, or the Netherlands.
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Poland, Warsaw | Ukraine, Kyiv | Czech Republic, Prague | Romania, Bucharest | |
USA | ||||
Atlanta | -6 | -7 | -6 | -7 |
Austin | -7 | -8 | -7 | -8 |
San Francisco | -9 | -10 | -9 | -10 |
New York City | -6 | -7 | -6 | -7 |
San Diego | -9 | -10 | -9 | -10 |
Boston | -6 | -7 | -6 | -7 |
Portland | -9 | -10 | -9 | -10 |
Seattle | -9 | -10 | -9 | -10 |
Los Angeles | -9 | -10 | -9 | -10 |
Chicago | -7 | -8 | -7 | -8 |
Denver | -8 | -7 | -8 | -7 |
Dallas | -7 | -8 | -7 | -8 |
EU | ||||
UK | -1 | -2 | -1 | -2 |
Sweden | 0 | -1 | 0 | -1 |
Germany | 0 | -1 | 0 | -1 |
Denmark | 0 | -1 | 0 | -1 |
Netherlands | 0 | -1 | 0 | -1 |
Israel | +1 | 0 | +1 | 0 |
Outsourcing companies in Eastern Europe and US-based companies have a more significant time difference which is used to a benefit: Eastern European companies are great partners for implementing the “follow the Sun” principle. It is widely used by development teams that are spread across the world and need continuous service processes. In the end, it’s always daytime somewhere on the globe.
- Language proficiency and cultural similarity. Despite some slight differences, the experience of working with Ukrainian or Polish programmers is very similar to working with German or Dutch colleagues. From the early 90s, the tech industries in Eastern Europe were massively influenced by Western European and American clients. Many companies have a low hierarchy and apply the same business communication principles as their clients. The language barrier is becoming less of an issue since 48% of all Ukrainian programmers speak advanced-level English. The EF English Proficiency Index shows that the Eastern European countries have the following levels of English proficiency:
- Full working proficiency: Ukraine, Moldova.
- Advanced: Poland, Czech Republic, Romania, Hungary, Bulgaria, Hungary.
How to build a remote team with outsourcing companies in Eastern Europe?
When it comes to builing and managing remote software developers in Eastern Europe, there are several approaches you can take. You can do it through such open social media as LinkedIn or try finding them through freelance platforms.
However, if you’re new to this remote hiring process, it will be easier for you to work through reaching out to outsourcing companies in Eastern Europe. Why? Because they have direct access to the market, they have dedicated recruiters who will find and interview people according to your requirements, and they also have a good grip of the tech talent market.
Here are a couple of examples of outsourcing companies in Eastern Europe that can help you gather your own remote development team.
Binariks
About: Binariks is a tech partner and consultant that assists companies from all around the world undergo digital transformation on every stage of their journey. Headquartered in the US, the company has delivery centers in Central and Eastern European countries.
Binariks helps international clients build remote dedicated development teams and can organize teams from the existing in-house specialists.
Clients: Binariks has a rich portfolio of clients from edutech, fintech, and healthtech projects.
Services: AWS , GCP , dedicated development team , software product development , cloud development services , UI/UX design , web and mobile app development , QA , big data and analytics , and IoT development services .
Technologies: .Net, Java, iOS, Android, Angular, React, PHP, Node.js
Industries: Healthcare, fintech, delivery, education, insurance, automotive, fintech, and other.
Certificates: AWS Select Consulting Partner, Google Cloud Partner, Gold Microsoft Partner, ISO 9001:2015, ISO/IEC 27001:2013.
Binariks is the leading Ukrainian software development company according to Clutch’s findings in 2019, 2020, and 2021.
ScienceSoft
About: ScienceSoft is a tech company headquartered in the US. The company has a large internationally distributed team and collaborates with product and service tech companies as well as non-tech enterprises from all around the world.
Clients: Company has a robust portfolio of projects from edutech, fintech, insurance, logistics, manufacturing, hospitality, and other industries.
Services: Software development, testing and QA, application Services, UI/UX Design, Infrastructure Services, Data Analytics, managed IT services, IT outsourcing, consulting, and support, and cybersecurity.
Technologies: Java, .NET, Python, PHP, Golang, C++, Node.js, JavaScript, React Native
Industries: Healthcare, manufacturing services, banking and financial services, insurance, retail, transportation and logistics, telecommunications, oil & gas.
Certificates: AWS Partner, Oracle Silver Partner, Microsoft Partner, Salesforce Partner, IBM Silver Business Partner, PIM Core Silver Partner.
Itransition
About: Itransition is a tech company with more than 10 development centers scattered around the US and Europe. Company is known for their development, customization, and integration services. Itransition covers the full cycle of development and offers other added-value services as testing, design, and maintenance.
Clients: Automotive, banking & finance construction, healthcare, insurance, legal, logistics & transportation, manufacturing, media & entertainment, oil & gas, public sector, retail, real estate, and telecommunications
Services: IT consulting, software engineering, product development, managed it services, quality engineering & testing, DevOps, smart teams.
Technologies: Salesforce, SAP Commerce, Odoo, cloud, AI & ML, Atlassian, mobile, IoT, blockchain, Java, .NET, Python, React, Angular, PHP, Ruby on Rails.
Industries: Healthcare, finance, retail, automotive, telecommunications, software & hi-tech.
Certificates: ISO 9001:2015, ISO/IEC 27001:2013, ISO/IEC 15408:2009, ISO/IEC 9001:2008, PCI DSS, GDPR, OWASP.
An overview of the Latin America Software Outsourcing Market
Specialists predict a significant growth of the IT outsourcing industry in Latin America in the following years. For instance, in 2021, Argentina's IT outsourcing market was worth $1.9 billion and is expected to reach $6 billion in revenue by 2026. Additionally, Brazil's SaaS market grew by 26% compared to 2019 and peaked at $1.5 billion in 2020. Things got even better this year as Statista shows $5.92 billion worth of IT outsourcing in 2022. The US remain the largest investor of the IT outsourcing industry in Latin America. The US is prognosed to pay $144.80 billion for IT outsourcing services in 2022.
Country | Number of programmers | Revenue in the IT outsourcing segment | Number of tech companies on Clutch |
Brazil | 500,000 | $3.86 billion | 233 |
Mexico | 225,000 | $3.64 billion | 181 |
Argentina | 115,000 | $191.6 million | 328 |
Chile | 61,000 | US$484.4 million | 145 |
According to Statista, there are around 565 independent software vendors distributed around the biggest tech hubs of Latin America – Brazil, Uruguay, Argentina, Colombia, and Chile.
Why do tech companies delegate outsourcing services to Latin America?
- Time difference. Thanks to a small time difference between the North American and Latin American countries, companies share more regular business hours. And while it takes considerably less time to manage schedules, it's not that easy to apply the sun principle of continuous development which is easier done with companies in Eastern Europe.
- Tech talent market. The general number of software developers in Latin America reaches a high mark of 1 million specialists. Brazil, Mexico, and Argentina are among the largest tech hubs in Latin America housing 500,000, 225,000, and 115,000 experts respectively. The general number of programmers in Latin America (1 million) is slightly lower than in Eastern Europe (1.3 million) but in Latin America, there are countries that hugely overpower the competition with higher concentration of specialists.
- Culture fit. The communication style of large international companies in Latin America follows a more "low-context" communication that is also seen in the Netherlands, the UK, and the US. Meanwhile, mid-sized and small IT outsourcing companies in Latin America are more prone to "high-context" communication which is full of implicitly expressed ideas and requires more of a "reading between the lines" approach to communication. Traditionally, teams follow a hierarchical style of management where the leader or more senior specialists have an upper hand in the decision-making process.
- English proficiency level. Argentina and Chile are the countries with the highest English proficiency level while Mexico and Colombia were given pre-intermediate level by EF English Proficiency Index. The results go as follows:
- Advanced: Argentina, Chile
- Intermediate: Brazil
- Pre-intermediate: Mexico, Colombia
How to build a remote software development team in Latin America?
Just as in Eastern Europe, those new to software outsourcing in Latin America find it easier to assemble remote teams through IT outsourcing businesses. While the outsourcing companies in Latin America charge extra fees, they also cover many administrative aspects of collaboration, including hiring, interviewing, housing, and retaining programmers. Let's take a closer look at the IT outsourcing companies in Latin America that can help you build your first remote development team:
Gorilla Logic
About: Gorilla Logic is an IT outsourcing company that specializes in creating dedicated development teams in Latin America. As of now, Gorilla Logic has a 500+ team and 10+ years of experience of helping enterprises source talents.
Services: Mobile services , enterprise web services, back-end services, Agile services, QA & testing services, DevOps & cloud services, security services, data engineering services, IoT services, software architecture services, UI/UX design and UI development.
Industries: Company has a rich portfolio of projects from versatile industries.
Certificates: Silver Scale Agile Partner, ISTQB® Platinum Partner, ISO-27001, Amazon Web Services Consulting Partner, Microsoft Gold Partner.
BairesDev
About: BairesDev is an IT outstaffing company that has great expertise in delivering staff augmentation, dedicated team and software outsourcing services in Latin America.
Services: dedicated team, staff augmentation, and IT outsourcing.
Industries: Company has a rich portfolio of projects from versatile industries including digital marketing, EdTech, transportation & logistics, cybersecurity, and other.
Rootstack
About: Rootstack is a Latin American IT outstaffing company with 10+ years of delivering more than 300+ projects in 15+ industries. The company has six offices in Colombia, Panama, and the US.
Services: Project-Based Model Services, Managed Teams, IT Staff Augmentation
Technologies: IoT, Machine Learning, Web Development Services, Big Data & Business Intelligence, UX/UI Design, Cloud Computing, Software Consulting, DevOps.
Article wrapup
Building a remote development team, especially when you’re new to IT outsourcing, is a challenging task but it’s definitely rewarding in the long run. Whether you want to delegate outsourcing to Eastern Europe or Latin America, bear in mind that you will have to spend some time adjusting your communication and other internal processes to the newly built team irregardless of the maturity level of the programmers.
Just as we mentioned, the two IT outsourcing markets have cultural and time differences and various approaches to leading businesses. For instance, in Latin America, you may need to take more responsibility for delegating tasks among teams and tracking progress while in Eastern Europe, you can delegate important decisions to team members.
