Outsourcing IT to Eastern Europe: Why Choose Belarus?
In 2013, the global spending on IT outsourcing reached $ 288 billion. By 2019, the market is expected to grow by 5.84%. Outsourcing brings huge profit; it’s no wonder Eastern European governments take ultimate measures to create investor-friendly environment. And Belarus is no exception. What are the benefits of outsourcing to Eastern Europe & how to make your partnership a success? Read on to find out!
Why list Belarus among the top IT outsourcing countries?
- Worldwide recognition. In 2012, Belarus became one of the 30 biggest software outsourcing providers in the world. Its computer services export has reached $ 60 per capita (surpassing those of India and the USA). The country’s potential is recognized by VentureBeat, Stack Overflow and Gartner. The latter, for example, favors Belarus among other software development Eastern Europe destinations, complementing the government support for IT business, 0% corporate tax rates for the Hi-Tech Park residents and skilled IT workforce (that has been growing 35% per year since 2006);
- Expertise. During the USSR times Belarus was considered the Soviet Silicon Valley. Minsk, the general purpose computer designed & built by Belarusian engineers 50 years ago, used to power many computing centers and laboratories across the huge country. After the fall of the Soviet Union Belarusian engineers started multiple software development companies (with little to no interference from the government). Today there are over 800 IT companies in the country. They employ 30 thousand software developers, designers, testers and experienced project managers. Although the country’s population is only 9.4 million people, its IT talent pool grows by approximately 3.9 thousand graduates every year. 70% of Belarusian IT specialists are aged 28 and under. They are forward-thinking & tech-savvy individuals who follow software dev trends, are eager to learn or be relocated if required;
- Cost efficiency. In order to drive innovation and economic growth, the Belarusian government provided ultimate tax benefits to software vendors and other IT-related companies. Enterprises that join the Hi-Tech Park initiative are free from custom duties, as well as value-added, corporate and profit taxes. And that’s why these companies can hire experienced staff and offer reasonable hourly rates. If you look for a vendor who would write tons of code for $ 7 per hour, Belarus is not the right place. Software development companies from Eastern Europe are known for high-quality coding, and great developers don’t come cheap. However, Belarusian vendors do charge less than their US colleagues and some other European vendors;
- European mindset. According to Hofstede’s cultural dimensions theory, Belarusians’ PDI (Power Distance Index) is similar to that of Western European nations (and considerably lower than in Asia). How does it impact your outsourcing experience? Well, employees from a country with lower PDI set clear goals & are way more realistic about project forecasts. Also, Belarus’ software development specialists are highly valued by customers & colleagues from European countries who describe them as hard-working, honest and scrupulous;
- Favorable geographical location. Belarus is situated in the very center of Europe. It has a well-developed transport system; the flight time from London to Minsk is only 3 hours. Belarus borders such EU countries as Poland, Lithuania and Latvia. If you hire a dedicated software development team from Belarus, you can easily hold face-to-face meetings to be more hands-on the project;
- Belarus is the place where Viber and MSQRD began. Viber, the popular messaging service that has over 400 million active users, was developed by a Belarusian-Israeli startup of the same name. In 2014, the service was acquired by Rakuten for $ 900 million. A more recent success story comes from MSQRD, a face-swapping mobile application developed by Masquerade Technologies. The Minsk-based company stole headlines a few days prior to the 88th Academy Awards ceremony when Jimmy Kimmel promoted the app on his show. A few weeks later MSQRD was acquired by Facebook. And yes, there’s World of Tanks, one of the most popular video games on both sides of the Atlantic, which was also created in Belarus;
- The market continues to grow. Unlike other industries of the Belarusian economy that are largely controlled by the government, IT has always been quite independent. Last year the country’s economy declined by 4%. The IT sector, on the contrary, grew by 20%. Currently Belarusian high-tech companies make 1.5% of the country’s GDP (that’s $ 700 million). In less than 3 years the market is expected to grow by 17.78%.
Outsourcing software development to Belarus: challenges & ways to overcome them
- IT market in the midst of rapid development. In 2016, the Hi-tech Park services export will surpass $ 1 billion (up 20% from last year). However, the Belarusian IT market is not at its prime yet. It’s still affected by inflation and other external and internal economic factors. If you consider outsourcing technical support or software development to Belarus, you should find a company with headquarters in the USA or EU and make sure your vendor applies best software development & project management practices;
- Complex tax system. Although Belarus is the 9th best country for starting a new business, local entrepreneurs often struggle to pay rent and complain about the ever-changing tax legislation. That’s why you should address a software development company that belongs to the Hi-Tech Park community;
- Business risks associated with the loosely defined property rights. Again, make sure to partner with a foreign capital company, so that your contract is governed by the international commercial law. And yes, signing an NDA is a must.
Back in 2012, the Belarusian Hi-Tech Park enterprises earned their first billion. In less than four years the country’s top IT service providers and outsourcing companies will be making $ 3-4 billion annually. Belarus’ economic future surely lies in software development. Provided you address a reliable vendor, your acquaintance with the country will be more than pleasant.