The Ultimate Guide To IT Outsourcing Companies in Central Eastern Europe.
A Close Look at What the Oasis of Prosperity IT Outsourcing in CEE Means for the Local and International Business Economy
Ask anyone in Central Eastern Europe (and pretty much everywhere else in the world) what they think of IT Outsourcing and they will automatically refer to it an oasis of prosperity, creativity, and cutting-edge innovation.
What is the IT Outsourcing landscape in CEE actually like, and what are some of the key elements that paint an accurate picture of what it means to “work in IT” in countries like Poland, Romania, and Ukraine?
What Is IT Outsourcing?
IT outsourcing is an agreement between a company that needs to purchase IT services and a company that sells the aforementioned services. Most often, the company the services are outsourced to is located in cheaper countries, either offshore (e.g. across the Ocean) or nearshore (e.g. on the same continent).
How Does IT Outsourcing Work?
IT outsourcing is based on a simple principle: buying IT services from a company that offers a good price/quality ratio, regardless of where they are located from a geographical point of view.
It is important to note that what is generally referred to as “IT Outsourcing” may be understood at different levels. For most people, “ IT Outsourcing ” is consisted of the purchase of Software Development services.
In a broader sense, according to Gartner, “ IT Outsourcing ” is a far more spacious term that includes not only Software Development per se, but also Software as a Service business, Utility services, and Cloud-Enabled services.
Moreover, there are three levels of “geographical vicinity” for IT Outsourcing: offshore outsourcing (when businesses outsource IT services to another company, located at a large geographical distance - i.e. American businesses outsourcing their IT needs in CEE).
Nearshoring (when businesses outsource IT services to another company located usually on the same continent - i.e. UK businesses outsourcing their IT needs in CEE), and onshoring (when businesses outsource IT services to a company in the same geographical area or allow their employees to work remotely).
Taking it from the micro to the macro level, the bigger umbrella of it all is the business process outsourcing, which is one of the gems of globalization.
What Are the Benefits of IT Outsourcing?
- Cheaper it outsourcing services (as compared to acquiring the same services in your home country)
- Access to a wider and better pool of talent
- Access to the most recent innovations, regardless of your geographical location
- Time zone-related benefits (e.g. providing support 24/7)
- Being able to focus on specific areas of development and technology
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What You'll Learn
The guide at hand is meant to give investors and businesses looking to outsource their IT needs a comprehensive, complete view of the Central Eastern European IT landscape.
Obviously, as Central Eastern Europeans ourselves, we do take pride in these successes - but this guide is not meant to be subjective.
On the contrary, our goal with this guide is to help you, our reader, understand what makes this entire landscape so important so resourceful, and so profitable both at a local and at a global level as well.
As always, we are more than open to discussions based on the topic - so if you have anything to add to our guide, of any nature, we encourage you to drop us an email at hello[at]man[dot]digital.
The Landscape and Trends: In terms of landscape, most countries in CEE possess the “natural” environment suitable for the development of strong IT talent. They all have a heavy history in teaching engineering and informatics in governmental institutions and the schools here are (still) providing students with quality information and skills that are useful on the IT.
Furthermore, most of the countries in Central Eastern Europe support IT businesses through tax exemptions and funds, promoting their growth and their sustainability.
In terms of trends and what is about to change, it will be interesting to see how many of these IT outsourcing businesses move towards engineering their own IT products and services and how many remain in the outsourcing stage.
Furthermore, it will be also quite interesting to see what will happen now, that Germany’s labor market door is open to Ukrainians.
On the one hand, we might see a surge in talent in Ukraine (long considered one of the best places to outsource IT services to). On the other hand, we might also see a surge in talent in Poland, which has been welcoming Ukrainians for some time now.
The Marketing and Sales: Being mostly outsourcing-based, the vast majority of these companies do not have a very solid inbound marketing strategy in place.
They do marketing, but, as you will see throughout the guide, most of their marketing efforts seem to be more outbound-focused, rather than inbound (a conclusion we have drawn based on the “signs” of outbound marketing noticeable in some of the most well-ranked IT outsourcing companies around the world and in CEE).
The Recruitment of Talents: Employer branding is a strong component in almost all of the companies we took as an example - and it is quite easy to understand why.
Despite the fact that there are tens of thousands of new IT professionals coming out of CEE’s IT schools every year, the IT market is growing at such a fast pace that not even these huge numbers of IT specialists can cover for everything the market needs.
Add this to the fact that a booming IT market has somewhat promoted job-hopping among IT pros, and it is clear why the best companies fight for the attraction and retention of the best employees: the competition is fierce.
The Technologies and Verticals: We will look at the technologies served in the CEE region and the top verticals
The Community: We will show you top conferences and communities where the IT Outsourcing scene is hanging out and what do they want to learn about and how they grow.
Why Is IT Outsourcing Booming in Central Eastern Europe?
There is a variety of factors that have led Central Eastern European countries (like Poland, Ukraine, and even Romania) to grow their IT Outsourcing sector at a rapid, almost staggering pace.
The first (and probably the most relevant) factor to consider here is the economic environment of these countries. Providing IT services is a business with a relatively low initial investment - it mostly relies on good equipment and excellent manpower.
And when it comes to manpower, countries in CEE don’t lack the talent. Not only are the technical universities here rooted in a (maybe dated, but still functional) deep history of success and ambition, but IT specialists themselves are always keen on achieving international certifications and perfecting their talent.
Just as an example, there are more than 100,000 Microsoft-certified IT professionals in Ukraine alone - and the country plans to double this number by 2020.
It could be argued that the IT landscape in Central Eastern Europe is booming for lack of a better alternative - but our guide here will focus on the positive outcomes of a fruitful IT sector in this area of Europe.
To understand the almost incredible rise of the major IT companies in Eastern Europe, we must first look at the biggest global IT outsourcing companies as well and see where they come from, what context made them so popular, and what are the keys to their success.
More specifically, we will inquire into the following aspects:
The Landscape and Trends: As globally acknowledged as it may be, for a long time, most of the major IT happened in the United States (and other Western countries). Then, after the fall of the Communist Bloc and after a general technologization of countries like China, India, and those in the Central Eastern European region, the entire IT industry boomed under the auspices of change.
Marketing and Sales: Looking at some of the most popular non-CEE outsourcing companies, it is quite clear that most of these businesses do not emphasize their marketing too much. They do some kind of inbound marketing (some do it more than others, but most don’t do it fully), and they might be doing outbound marketing as well - but, as a general trend, companies in the IT outsourcing business don’t actually market themselves too heavily.
The Recruitment of Talent: While sales and marketing might not be a focus for a lot of IT outsourcing companies, recruitment is - and this seems to be a rule that’s just as valid in CEE as it is in Asian countries, or even in South America. Employment branding is present everywhere, jobs are always posted on the site (and quite visibly in most cases), and some companies even write their blogs with IT professionals as a target audience.
The Technologies and Verticals: Globally, IT outsourcing deal with everything under the IT Sun. In fact, this is one of the major advantages of outsourcing itself: easy and inexpensive access to IT talent in all niches, technologies, and verticals, regardless of where on the Globe your own business might be located.
The Community: Globally, it is easy to see there is a true community centered on IT and all the adjacent niches. From international events (e.g. the Outsourcing Summit & Expo) to small educational and networking communities in most IT-centered cities around the world, there is a truly colorful landscape IT professionals can adhere to. Why does this matter? Because these events (the large ones and the small ones alike) make IT specialists better at what they do - making the entire industry better, and more likely to turn towards creating their own products.
Despite having lived in a closed economic system for decades, IT talent abounds in Eastern Europe - and so does the tech-partnership spirit and the desire to succeed by providing the world with quality IT services.
What is it that makes Eastern Europe such a great spot for the IT market? How is it that, despite the odds, the IT companies here have managed to more than just strive and make it actually big internationally?
The Landscape and Trends: Cheaper than Western Europe, but with plenty of talent and governments that encourage IT business growth, Central Eastern Europe is a competitive player on the IT outsourcing market at a global level. Although pricier than other IT outsourcing hives around the world, the quality of the services, as well as the easier communication make CEE a true power in the field.
The Marketing and Sales: As most of the IT Outsourcing companies are focused on service delivery, marketing and sales lack a lot in the area. As you will see later on in our guide, most of the IT Outsourcing companies rarely do inbound marketing to attract clients - and when they do, it is a sign that they want to grow (either within the same IT outsourcing niche, or to move towards creating and selling their own product).
The Recruitment and Talent: As it happens globally, the competition for the best (and most stable) IT specialists is fierce. There are tens of thousands of new IT specialists coming out of CEE’s universities every year - but the job market is so fierce that they are almost instantly assimilated. For this reason, most of the big IT outsourcing companies in this space invest in employer marketing (their Social Media strategy is focused on this, they frequently post paid job announcements, their websites, and sometimes, even their blogs are built to attract employees, rather than clients).
The Community: The Central Eastern European IT outsourcing sector is supported by a very strong community ready to share knowledge in the field. Multiple European summits (e.g. Shared Services and Outsourcing Week in Poland), CEE-based events (CyberCentral Summit in Poland, MobOS Conference in Romania), and local meet-ups (hundreds of them held in all of the Central Eastern European countries, in multiple cities, multiple times/ year) - they all contribute to the general welfare of the IT community in the region.
There is an old Polish proverb that is roughly translated as “misery comes in pairs”.
Poland proves the opposite is just as valid: prosperity comes in pairs too. The more successful companies rise to stardom on Polish grounds, the better the country’s economy is.
In 2018, Poland showed the world that yes, you can come from a former Communist Bloc economy and rise above your status to impose yourself as a growing and thriving country.
This chapter is meant to draw a bridge between Poland’s IT Outsourcing market and the country’s booming economy. What is Poland doing right?
How is it that they have reached so far as an economy in a relatively short amount of time? What is the role of IT companies in all of this?
The Landscape and Trends: Poland is, perhaps, one of the most surprising rising stars in the European Union. As a former communist country itself, Poland has made incremental, steady steps towards a healthy capitalist economy - and they made it. As of 2018, the Polish economy is the 8th largest in EU.
More relevant for our guide is that the Polish economy supports local IT businesses with a variety of tax incentives that make it attractive for entrepreneurs to open a business in this sector.
The Marketing and Sales: As it happens in most CEE (and, as mentioned above, in most cases with IT outsourcing businesses), marketing is not the main focus for most Polish IT outsourcing companies.
There are signs of steady movement towards advanced marketing, but a lot of what’s happening in terms of outbound marketing is still vague, poorly contoured and frequently unfocused.
The Recruitment and Talent: A quick look on Glassdoor shows nearly 6,800 job posts in the IT field in Poland. Even more, the same search on LinkedIn reveals more than 20,000 jobs in IT in Poland. That is, of course, just scratching the surface of just how many IT jobs there are in Poland (given that these are paid job posts).
With most of the IT outsourcing companies investing in employer branding, it is quite clear that the competition on the job market is quite strong for companies in this sector.
The Community: Poland’s IT thrives for a million reasons - and the strong community built around the Polish hives of innovation (e.g. Krakow, Warsaw, Wroclaw, Poznan, Gdansk) are a very strong factor. Multiple regional IT events are held in Poland and IT meetups are so frequent here that it feels nearly impossible not to find at least one to suit your specific learning and networking needs.
Romania is known for many things - and its capacity to deliver excellent IT services has grown to be one of them. Although deprived of the technical innovations of the Western world before 1989, starting with the mid-90s and specifically the 2000s, though, Romania’s private sector started to finally gain some sort of direction.
Unsurprisingly, one of the sectors Romania chose to lay its main objectives on was IT.
What are the top IT outsourcing businesses in Romania, how did they develop, and what were the major factors to decide their success?
The Landscape and Trends: Although less popular than Poland (and maybe less popular than Ukraine as well), Romania is an interesting choice. According to IT Market in Eastern Europe:
Full Overview of Top Software Development Destinations, Romania’s IT was generating more than $2.2 billion in 2015 (and most of the IT sector was focused on outsourcing services). At the moment, Romania’s government supports heavy tax incentives for IT employees and companies, which, combined with EU funds, has contributed massively to an entrepreneurial boom in the IT sector.
The Marketing and Sales: Same as in the case of Poland, most of the Romanian IT outsourcing companies we have analyzed don’t do much outbound marketing. Their efforts might be focused on outbound marketing - or no marketing at all. Same as in most IT outsourcing cases, though, employer branding is a genuine focus here.
The Recruitment and Talent: According to the same aforementioned source, in 2015, there were nearly 95,000 IT professionals in Romania - and the market was expected to increase by 15% annually. It is thus fair to assume there are way more than 100,000 people employed in the IT industry in Romania. Even so, talent recruitment and talent retention is an issue in the industry, the same as in the case of Poland or other global IT outsourcing companies.
The Community: National and regional events, recurrent courses and seminars, tech meetups - they are just as present in Romania as they are in any other IT hive in Europe or around the Globe.
There is an active and growing community ready to invest time and passion in their peers - and chances are that this will have a big impact in the future.
Last, but definitely not least, we’ll look at Ukraine, whose rise to tech stardom is actually spectacular.
One of the very few countries in CEE that’s still not included in the European Union, Ukraine found a path of its own - and IT Outsourcing played a big part in this.
What are the key secrets of the outsourcing companies in Ukraine and their advances?
The Landscape and Trends: In 2017, Ukraine saw the boom of no less than 3,000 IT outsourcing companies - one-third of which focus on actual software development. With governmental tax exemptions and intellectual property legislation going strong in Ukraine, the country is likely to continue on its path to growth.
The Marketing and Sales: Inbound marketing seems even less present in Ukraine than in other CEE countries. Most of the top IT outsourcing companies here do have a website and you will find them on Social Media, but most of the times, it’s all done for the purpose of attracting and retaining talent.
The Recruitment and Talent: Same as in the case of Poland and Romania, most of the IT outsourcing companies do a lot of employer branding in Ukraine.
There seems to be a less financial investment in attracting new employees (only about 4,000 jobs in IT posted on LinkedIn as of this date).
According to IT Market in Eastern Europe: Full Overview of Top Software Development Destinations, there are more than 1,000 IT-service related companies in Ukraine, employing more than 230,000 IT professionals - and 15,000 more IT specialists are expected to come out of Ukraine’s mathematical and engineering-based Universities every single year.
The Community: The Kyiv Outsourcing Forum is one of the largest IT events in Ukraine. Although international, most of its speakers are Ukrainian themselves - and this might be related to the fact that Ukraine is a little more difficult to access (as opposed to other IT outsourcing locations in CEE, which are already part of EU).
Aside from this, there are multiple other events supporting the IT community - including local meetups on various IT niches.