Leading IT Outsourcing Locations of Eastern Europe: Market Report – N-iX
< span class= "d-none d-md-inline text-primary px-3" > – April 17, 2018
Today’s technological revolution fundamentally changes the way we live, work, and communicate. It creates golden service opportunities and brings disruption to every sector of the economy.
The improvement is driven by a rapid boost in calculating power and growing amounts of information. AI, robotics, big information, blockchain, Web of Things, self-governing cars, 3D printing, VR and other technological advancements offer limitless possibilities to businesses.
The world’s data stock is doubling every 20 months, the variety of Internet-connected devices has reached 20 billion, and mobile payments will soon top the $1 trillion mark.
Companies are leveraging digital innovations to automate production, boost performance, penetrate brand-new markets, and please ever-changing customer requirements.
Digital abilities are ending up being the key to success of any company. Not surprising that the need for skilled tech specialists rises along with the frustrating requirement to embrace technological developments.
The modification is international. Yet the IT resources companies require today are spread out unevenly. That’s why, services often struggle to find the essential know-how in the U.S.A., the UK, the Nordic nations, India etc. This report intends to learn whether Eastern Europe can close this space.
About this report
The main purpose of this report is to provide a thorough summary of the Eastern European IT industry as one of the most productive sectors of the region’s economy. The scope of the report uncovers the current patterns in the industry and analyzes the present state of info innovation in Ukraine, Poland, Belarus, Hungary, România, Czech Republic, Bulgaria, Moldova and in the Baltic area. It aims to help organisations, financiers and decision-makers pick the most useful IT location for mutually beneficial cooperation.
N-iX has actually supplied a large array of software advancement services and worked together with worldwide clients for over a years. For that reason, we understand how difficult it is to browse a global IT market. In this report, we attempt to cover significant outsourcing patterns and present a detailed overview of the IT market characteristics in the Eastern European and Baltic nations. We have actually collected the data from numerous sources including reports and studies by PwC, Deloitte, Bloomberg, Tholons, A.T. Kearney, and more to notify you about the newest trends and challenges of the significant software application advancement locations in this region.
Business strategies in the digital age: how to access worldwide talent
Picking an efficient technique of accessing skills is among the most strategically crucial choices a business may come to. If companies are effective in this decision, they may let loose a whole world of new innovations and digital possibilities. With this in mind, companies weigh all the pros and cons of outsourcing and insourcing as the most widely-used cooperation techniques. Deloitte’s Worldwide outsourcing study, specifies that 2012 was marked by the significant shift towards insourcing while the 2014-2016 revealed a remarkable increase in outsourcing usage. This is represented by 3 major trends:
In what way is outsourcing bringing worth to services?
According to Stratistics MRC, Global IT Outsourcing Market is anticipated to reach $481 billion by 2022 growing at a CAGR of 6.2%.
How is technology reshaping the global outsourcing market?
The community of outsourcing is continuously changing hence stimulating provider to welcome brand-new and advanced trends to stay ahead of the curve. Market specialists approximate that by 2018, a minimum of 50% of software outsourcing business will utilize cloud-based technology. AI and maker learning will take a location at the forefront of the outsourcing procedure supplying its significant advantages like direct cost decrease, speed and the enhancement of running processes.
In the age of increased adoption of internet-connected devices, security and personal privacy stay the main concerns for outsourcing suppliers. According to IBM’s research study, 25% of all business applications undergo at least 700 security vulnerabilities due to misconfigurations. With this in mind, companies contracting out software advancement guarantee that vendors follow the very best security practices to alleviate threats of information breach.
A strong academic system that yields extremely skilled labor force, capability for innovation, favorable service climate, modern facilities, and moderate expenses of services are some of the prime considerations that influence the choice of an outsourcing service provider.
IT Market Summary: Eastern Europe
In today’s highly competitive and vibrant service environment, couple of choices are as vital to the success of an organization as selecting a trustworthy partner. The majority of entrepreneurs, at some point, think about contracting out to Eastern Europe to produce fresh momentum by accessing knowledgeable labor, minimizing costs and pursuing new development opportunities.
Eastern Europe stays among the most lively software application advancement locations due to constant development and development of its IT sector and a high level of digital technologies adoption. Countries like Ukraine, Poland, Hungary, Belarus, Romania have actually already defined IT as a significant catalyst for their sustainable growth and technological advancement.
Which nation has the greatest skill pool and the greatest technological know-how for providing jobs of any scope and complexity?
Ukraine has actually become among Europe’s leading and fastest growing locations for worldwide software advancement services. According to PricewaterhouseCoopers, the country’s software advancement sector grew by 15-20% in 2016 and is advancing steadily year by year.
The country uses a large array of advantages– from its huge IT skill swimming pool and substantial knowledge, to cost efficiency and strong technical education.
Over 1,000 business in Ukraine offer a myriad of IT-related services. More than 230,000 IT specialists have actually developed strong know-how in different verticals varying from fintech, health care to telecom, which helps the nation keep a competitive edge on the international IT market.
The country is home to more than 100 R&D subsidiaries of worldwide business from a range of markets including software, gaming, telecoms, and e-commerce. Global companies like Microsoft, Samsung Electronics, Apple, Wargaming, Boeing, Skype, eBay, Siemens, IBM opened their R&D centers in Ukraine.
In addition, Ukraine is putting on weight in regards to IT market recognition. The nation was consisted of in Gartner’s top 30 offshoring and outsourcing locations and acknowledged as top in Europe in the sector of IT-outsourcing in 2016 according to IT Outsourcing News. What’s more, 12 Ukrainian IT companies, consisting of N-iX, were featured in the list Worldwide Outsourcing 100 2017 by the International Association of Outsourcing Professionals (IAOP) as the very best outsourcing companies.
Poland
Poland is one of Eastern European fastest growing economies, that makes it an appealing software application development location for different companies overseas. The nation has the biggest working population in Central Europe, comprised mainly of people under 34 years old.
Over 140,000 Polish specialists are included in the IT sector in addition to 450 IT companies using software outsourcing services. Furthermore, around 15,000 IT graduates get in the Polish software application development market every year.
The nation’s IT services market is anticipated to reach USD 6,8 million by 2020 with a growth rate of 5.9% CAGR. Poland was ranked 9th in Tholons Top 100 Outsourcing Destinations 2016 with Krakow and Warsaw as the significant centers of the country’s IT advancement.
In addition, Polish R&D activities are ending up being increasingly funded by the personal sector thus promoting interest amongst global market gamers. Business like ABB, Google, Siemens, Motorola, Delphi Automotive, Intel, and McKinsey opened their R&D centers in Poland.
Czech Republic
The Czech Republic is one of Europe’s top areas for outsourcing of IT-related services with around 156,000 specialists used in details and interaction sector.
Every year roughly 9,000 technical graduates get in the marketplace from Czech universities, bringing new expertise in-house.
The country is experiencing 10% boost in IT outsourcing year over year. Czech IT industry growth is fueled by the strong inflow of high-value-added tasks of the regional IT business and interest of global financiers.
Such world-leading business as Google, Microsoft, Oracle, IBM, CA, RedHat, Microsoft, Skype, NetSuite, Tieto, and IBM selected the country for both direct investment and outsourcing. The investment in Czech IT R&D totaled up to EUR336 million in 2013. Worldwide acknowledged IT brand names like Avast, AVG and Socialbakers have their roots in the Czech Republic.
The IT industry in Romania utilizes over 95,000 IT experts and boasts 15% yearly development rate. The sector’s development is generally based upon service exports which reached EUR 2bn in 2015 with a boost of 31% and are expected to reach EUR 4 bn by 2019.
According to Romanian Software Application and Solutions Association, in 2016 the IT industry growth has actually sped up and included worth to Romania’s GDP EUR 3.6 bn, representing 5% GDP development.
After Romania joined the EU in 2007, its IT organisation has actually prospered and brought in international business like Hewlett-Packard, Huawei, Ericsson, and Gameloft. Local department of Microsoft in Romania runs two global business assistance centers in Bucharest and Timișoara and makes a considerable contribution to the advancement of country’s tech industry. Additionally, Oracle uses more than 3,000 Romanian specialists.
Romanian federal government actively supports IT industry development by excusing software designers from the 16% earnings tax and introducing a variety of incentives for regional IT companies.
The Hungarian software application development industry is one of the most dynamic sectors, representing about 6% of the country’s economy. The nation has a 25% share of outsourcing within the IT market in Eastern Europe with around 80,000 experts employed in the IT sector.
According to Hungary Infotech Report, IT services sales are anticipated to grow from USD 760 mln (in 2016) to USD 993 mln in 2020. Budapest remains the driving force behind the country’s development and is ranked 24th in Tholons Top 100 Outsourcing Destinations 2016.
In addition, the country has brought in a number of international companies such as Siemens, Microsoft, Deloitte, Ericsson, Nokia, TATA, etc. to establish their R&D. The Hungarian federal government has doubled the quantity of monetary assistance for R&D sector for the 2016-2020 duration and introduced a variety of incentives, offering quick access to technical understanding by methods of routine workshops, meetups, and conferences.
Belarus hosts around 1,000 IT business with over 35,000 staff members supplying hi-tech outsourcing services to international companies. The nation’s IT talent pool is continuously expanding with roughly 4,000 brand-new software application engineers graduating from 54 higher educational establishments every year.
The total production and sales revenue of the IT market in Belarus totaled up to USD 1,120 million in 2015. The exports of IT services in the nation have been steadily growing over the recent years at an annual speed of 10%.
What’s more, some of Belarusian IT companies were included in the Software application Magazine’s Software application 500 ranking of the world’s largest software application and company and were acknowledged by the International Association of Outsourcing Professionals (IAOP).
Bulgaria is ranked 8th on the planet for the total variety of IT experts and 53% of professionals are ICT certified. Bulgarian IT market capability consists of 400 companies utilizing around 24,000 of professionals and this number is expected to reach 30,000 by the end of 2017. The country also gains from the existence of the international IT giant– Hewlett-Packard, which utilizes more than 6,000 IT professionals.
Around 3,500 IT graduates enter the marketplace every year and more than 220 educational establishments use varied opportunities for technical students.
The country’s IT outsourcing sector produced USD 250M income to the state budget plan and has actually been revealing a double-digit earnings increase for the 4th consecutive year and reached 1.86% of the GDP.
Bulgaria has a rather high variety of R&D offices of multinational IT corporations such as HP, SAP, Johnson Controls, Oracle, VMware, CISCO, ProSyst, and Atos. In 2015, the nation was called “Offshoring Location of The Year” by the UK’s National Outsourcing Association (NOA). In general the BPO sector’s contribution to the nation’s economy amounts to 3%.
The Moldovan IT industry is among the most vibrant sectors of the country’s economy and stays the top priority area for development and growth for the Moldovan federal government. According to the Biroul Național de Statistică, the contribution of ICT to the nationwide GDP was 5,8% in 2015, which resulted in the development of high worth working places and enhancement of worker retention within the nation.
More than 21,000 professionals are involved in the IT sector with around 1,500 students graduating from Moldovan universities with degrees in computing or an associated field every year.
According to IDC, IT services market in Moldova is anticipated to grow at a 6.8% CAGR through 2018. The overall worth of offshoring/nearshoring services reached USD 56 million in 2013, and by 2018 it is expected to grow at a CAGR 14.5%. The ICT services exports reached more than 200 million USD in the same period and are likely to double in the upcoming years.
IT Market Introduction: Baltic Countries
The Baltic region is recognized as one of the most economically steady areas in Europe, boasting high levels of digital option adoption and effective legislation that ensures data security. The launch of e-programs, ease of operating, cyber security and low corruption rates foster IT industry advancement in the region.
The speed of software application advancement market growth and digital innovations adoption in Estonia, Latvia, Lithuania are still moderate compared to the Eastern European market leaders.
The ICT sector in Estonia employs around 23,000 specialists with roughly 1,150 individuals graduating with degrees in technical disciplines every year. It constitutes 5.5% of the nation’s GDP and increased by 1.6% compared to 2015 due to the value added in software advancement services.
IT is expected to end up being the leading sector of the economy and will make up 20% of the country’s overall exports. Two major cities contribute the most to the development of the Estonian IT industry– Tallinn taking the lead (67.5%) and Tartu as a runner-up (12.5%).
Estonia is called the birthplace of Skype and TransferWise together with such prominent startups as Pipedrive, Cloutex, Click & & Grow, Grabcad, Erply, Fortumo, Lingvist, and so on. The nation drew in such international market players as Microsoft, SAP, Acronis, Parallels to open their R&D centers.
According to Stats Estonia, 17% of regional enterprises have actually a formally specified ICT security policy and around 42% of them are taken part in the IT sector. This ICT security policy was developed generally to prevent the prospective danger of damage or corruption.
Latvia ICT sector uses more than 28,000 professionals in 5,000+ business. Around 5,900 computer technology students graduate every year from Latvian universities thus accelerating industry development.
According to the Bank of Latvia findings, in the very first half of 2016, the turnover of software development services increased by 20.8%. As an outcome, the info and communication technologies (ICT) sector has actually become the third biggest exporter in Latvia, following wood and food sectors.
The evolution of the Latvian IT market resulted in the birth of such large IT provider in the country such as Tieto, Development, Accenture Latvia, and Lattelecom Innovation. Worldwide business like IBM, PwC, Accenture, KPMG, Siemens, ABB, etc. have already opened their R&D centers in Latvia.
Around 27,900 professionals are used in the ICT market in Lithuania, with additional 1,700 future professionals finishing every year.
The country has recently drawn in the attention of Google, AIG, and Nasdaq which decided to set up their local development. Such international business as Uber, IBM, Wix, HP, Virtustream, Exadel, and Unity have already opened their R&D and IT development centers in Lithuania.
On the whole, IT business in Lithuania have received more than USD 100 million in investment over the past year, which promoted the growth and advancement of the IT industry within the nation.
In addition, 3 Lithuanian companies were consisted of in 2016 Deloitte Technology Quick 50 report which united the fastest growing tech business in Europe.
The collected data reflects dynamic development of the IT market across Eastern European nations. This area has ended up being a primary option for numerous global business searching for a software application development partner due to its solid skill pool, technological quality and excellent price-quality ratio.
Countries like Ukraine, Poland and Romania are taking the lead, using a myriad of cutting-edge technology-related services. Ukraine remains among the leading IT outsourcing locations in Europe, boasting the biggest talent swimming pool with around 230,000 IT specialists and estimated IT market development of 15-20% year by year. While Poland has more than 140,000 IT experts in its toolbox and Romania 95,000 accordingly. The Czech Republic and Hungary have likewise achieved a competitive position amongst top 5 Eastern European outsourcing locations in terms of IT market capability and annual market growth rate of 10-15%.
On the contrary, nations like Moldova, Bulgaria, and Belarus are falling back market leaders in regards to innovation adoption and total technological capability. However, they’ve introduced a variety of rewards to attract foreign investments and foster IT industry advancement. Meanwhile, Baltic countries introduced a variety of e-programs and developed a favourable organisation environment in the region.
Secret Takeaways
About N-iX
N-iX is among the leading Eastern European software advancement suppliers with development centers in Poland (Krakow) and Ukraine (Lviv, Kyiv), and offices in the USA (Florida) and Sweden (Malmo). With more than 15 years of experience and over 600 technical specialists, the business has actually established varied technological competence.
N-iX partners with technology leaders across a range of markets including Fintech, Telecom, Health Care, Insurtech, Automotive, Hospitality, Media & & Entertainment, Air travel and so on to help them successfully implement digital improvements.
N-iX provides a broad variety of services in various verticals such as big data analytics, data science, BI, AI, blockchain, cloud solutions, VR & & AR, enterprise movement, ingrained software, SAP and OpenText consulting, and far more.
The company has actually formed strategic partnerships with a variety of worldwide businesses consisting of Lebara (renown telecom brand), Currencycloud (international payments platform), Gogo (world’s leading in-flight connectivity service provider), among others. N-iX has actually cooperated with over 50 customers throughout the world such as OpenText, StreamServe, Novell, Anoto, RateSetter, HotSchedules and so on
. The collected competence allows N-iX to use innovative software services to its clients enabling them to reach their digital aspirations.
This content was originally published here.
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