IT Outsourcing to Eastern Europe: Belarus Reigns Supreme
The advantages of software outsourcing stretch far beyond cost reduction. 35% of enterprises surveyed by Deloitte have already measured innovation in their outsourcing partnerships. It is the access to new talent pools and expertise in crafting niche solutions that make customers explore new IT outsourcing destinations including Eastern Europe. And that’s why Belarus is trending, too.
Belarus: from Soviet Silicon Valley to one of top IT outsourcing countries
During the Soviet times the country was considered the USSR’s major tech hub. It is Belarusian engineers who built Minsk, the general purpose computer that powered R&D and computing centers across the enormous country. Famous mathematicians including Vladimir Platonov, Solomon Michlin and Regina Tyshkevich were born in Belarus. The scientists contributed to many mathematical theories including the graph, linear elasticity and integrals theories and numerical analysis and taught at EU and US universities.
After the Soviet Union collapsed, Belarusian engineers went into the software development business. The government soon acknowledged the country’s IT potential and provided ultimate benefits to IT entrepreneurs. In 2005 the Belarusian Hi-Tech Park was established; its residents are exempt from custom duties and corporate taxes.
Today there are over 1 thousand IT companies in Belarus. They employ 40 thousand software developers, QA engineers, designers and business analysts who get trained at the world’s leading training centers (including Microsoft, Oracle and IBM) and participate in various programming contests. Between 2013 and 2016, for example, Belarusian software engineers won Google Code Jam for four years in a row. By 2020, the annual revenue of the Belarusian top IT outsourcing companies is projected to reach $ 3-4 billion (or 4.5% of the country’s total GDP).
4 reasons to outsource software development to Belarus
- Recognition. According to the 2015 Global Creativity Survey, Belarus was ranked 8th on the talent index, leaving 131 other countries behind. In 2012, the country made it to Gartner’s Top 30 IT outsourcing countries list. Last year Belarus took the 31st place on the Information and Communications Technologies Development Index, thus outpacing all former USSR countries. Three companies that have been created by Belarusian developers or reside in in the country are listed among the world’s top 100 IT enterprises. Belarus’ software outsourcing potential is recognized by both IT opinion leaders (VentureBeat, StackOverflow) and EU/US companies, since 80% of the Hi-Tech Park production output is exported;
- Innovation and expertise. There are 14 universities that major in computer science, physics and mathematics in the country. As a result, its IT talent pool grows by 3.5 thousand graduates every year. Belarus is the place where Viber (a popular messaging app with 800 million users) and MSQRD (a face-swapping app that was acquired by Facebook) were built. Although Belarus has become a popular outsourcing destination largely due to reasonable rates ($ 30-35 per hour – compared to $ 40-50 per hour charged by Baltic companies), now the country’s outsourcing paradigm is shifting towards cutting-edge technologies including the Internet of Things and Artificial Intelligence. According to Pavel Shylenok, CTO at R-Style Lab (you can view his profile on our company web site), innovative software development projects can only be carried out by senior developers, team leads and system architects. Their hourly rates range from $ 265 (USA) to $ 40-50 (Eastern Europe) – and that makes Belarus a great place to outsource high-end software development projects to;
- Cultural compatibility. Our company was once contacted by a US tech entrepreneur who’d cut his teeth on software outsourcing and chose Belarus over Asia and Africa despite higher developer hourly rates. Here’s what he said: “Getting an hourly rate of 1/3 the cost of others is great except if it takes 4 times as long to get to the final version of quality project that is needed”. Why do software outsourcing projects often exceed budget and fail? 19% of the companies that took part in Deloitte’s 2014 Global Outsourcing Survey listed poor communication and “incompatible culture” among the key factors behind outsourcing failures. Although African and Asian vendors charge lower hourly fees and possess great expertise in software development, they tend to have a higher Power Distance Index and display reluctance to deliver bad news to customers (the Mum effect), thus making poor partners to Western businessmen. Belarus, on the contrary, is situated in the heart of Europe – both geographically and mentally. 70% of specialists employed by Belarus’ top IT and software outsourcing companies are aged 28 or under. They are well-educated, open-minded, eager to learn and usually possess a good command of English. Also, most Belarusian vendors are ISO-certified, have representative offices abroad (US, Western Europe) and implement software development and project management best practices;
- Positive changes. Things are looking good for Belarus. Between 2014 and 2016, the Belarusian government participated in peace negotiations between Russia and Ukraine and paid official visits to the USA and Western European countries. As a result, the European Union lifted the majority of its political and economic sanctions which had been posed after the 2006 presidential elections. Belarus went on to cancel visas for the citizens of over 80 states including all EU countries and USA. Belarus is willing to cooperate – and will most likely provide additional tax benefits to entrepreneurs who invest in its economy. The country’s investment potential was complimented by the participants of the latest Emerging Europe: Outlook on Belarus conference. If you partner with a Belarusian vendor, you can conduct frequent face-to-face meetings with your team, too, since the country is visa-free.
Why Belarus? R-Style Lab weighs in
“Previously driven by Russian-speaking markets, the Belarusian IT market is now seeking opportunities on the international arena with US and Europe topping the list. This in effect has spurred further growth of the sector and turned Belarus into a true Eastern European IT hub. Despite the lack of local investors, Belarusian product companies also show a steady growth. As to the benefits of outsourcing to Belarus, there are obvious advantages of financial attractiveness and abundance of highly skilled IT specialists, but it is the creation of the High-Tech Park (HTP) that paved the way to the formation of one of the largest IT clusters in Eastern Europe. The governmental support received by HTP is unprecedented when compared to other countries in Eastern Europe. These incentives, in turn, allow the Belarusian IT community to create very favorable business environment for its international clients and be very competitive not just in Eastern Europe but also on the global IT market.”
Max Lyashko, Senior Business Development Manager
“Over the last 20 years the quality of Belarusian IT outsourcing services has improved a lot. The country has established a strong IT educational base represented by higher education institutions, colleges and training courses. We’re good at project management and know how outsourcing works. There are over 1 thousand IT companies in Belarus; the market is really competitive. In order to outpace our rivals, we have to run as fast as we can – and even faster than that.”
Vera Vlasova, Head of Business Development Unit
“Belarusian vendors hold programming contests on a regular basis, thus giving IT students an opportunity to take on real-life projects and get valuable work experience while they study. As a Business Development Manager, I can’t help but complement our developers’ engagement, sense of responsibility and willingness to push their limits.”
Natalia Osipchik, Senior Business Development Manager
According to Drew Guff (Managing Director and Founding Partner of Siguler Guff & Company), you should go to India to do a job, to America to do a difficult job and to Belarus to do “an impossible job”. Belarus’ IT companies offer a wide range of services including Web, Android and iOS app development. There are Belarusian vendors who specialize in innovative and niche software solutions including machine learning, neural networks and IoT. The country has a favorable business climate and enormous IT potential – and it’s up to you to unlock it.