Outsourcing In Europe: 6 Things US Companies Need to Know About Eastern European Software Development Services
If you’re on the fence about kickstarting a project with a software development company from Eastern Europe, that’s probably because of a few concerns you might have:
- Will a language barrier or time zone difference make communication difficult?
- How will I monitor progress and ensure the quality of my project from thousands of miles away?
- How will payments be handled? How will I secure my intellectual property?
For a US-based company looking to cooperate with or delegate to a remote team, these are all important questions. In this article, we’ll try to help you understand delegation to Eastern Europe better by answering these questions and addressing the major concerns Western companies have when dealing with Eastern Europe-based companies. You might be surprised to learn that Eastern Europe may be the best location to look for cost-effective remote development teams, and we’ll be making a case for it here.
1. The Nature of Competition and Ease of Talent Acquisition
Cutting down on overhead costs is, more often than not, the primary motivator when a company decides to outsource software development. As of August 2021, the annual average income of a software engineer based in the United States was $101,781.
As demand for high-quality development services rises far quicker than the number of available qualified developers in the United States, outsourcing to a more affordable location with access to a large, educated talent pool of developers becomes the ideal solution. And one of the best candidates that fulfill these criteria is Eastern Europe.
The cost of living in Eastern Europe is far lower than in the US, and the software development sector is a growing and maturing competitive sector in various IT hubs in Eastern Europe like Poland and Romania. As such, wages are significantly lower and top talent is less expensive to hire, making development services in these countries more cost-effective.
And saving money isn’t the only factor when you’re choosing the location of your outsourcing partner. Choosing the right location may, in fact, prove to be influential in other ways. For example, before you delegate a project, it is important to research the nature of the job market and available talent in the regions you’re interested in.
Countries in Eastern Europe – particularly Poland, Romania, Ukraine, and Bulgaria – have ranked within the top 30 destinations for IT outsourcing worldwide consistently for almost a decade now. This is due to the strong educational focus on science and engineering in these countries. They host some of the most talented software developers and engineers in the world. In Eastern Europe, the software development market is reliable, growing, and competitive; thus, the region is home to some excellent software development agencies with a proven track record of success. This makes it easier to find reliable and highly skilled developers that will work efficiently to meet and exceed the standards of your company and deliver excellent results.
2. Cultural Similarities and US Influence
Eastern Europe falls within the Western sphere of influence. It is a place where entrepreneurship is encouraged and Western business etiquette is not only prevalent but expected. This makes cooperation, communication, and business deals smooth and straightforward. When outsourcing to Eastern Europe, you’ll find that not only are there minimal cultural barriers to doing business with many Eastern European countries, but neither are language barriers an issue. In major cities where most remote teams are located, many professionals speak English in their day-to-day lives. English is one of the main focuses in the education system in Eastern Europe, with English being taught in school from a very early age. Dealing with foreign countries is one of the primary sources of business and economic activity, and this is primarily done in English in the EU.
Poles, in particular, share a deep love for the United States. In a famous 2019 PEW poll, 79% of Poles viewed the US favorably, the highest rating for any European country. According to the United States Department of State, healthy and deep political ties and strong economic growth in the country are primary reasons why many US companies choose to do business with Polish companies.
In a 2020 report created by The American Chamber of Commerce in Poland and KPMG in Poland, we find that the cumulative value of American investments in Poland nears $62.7 billion, which has resulted in the creation of more than a quarter-million jobs in the country. The strong relations, cultural similarities, and tax incentives between the United States and Poland make it the ideal Eastern European country to hire a remote development team in.
3. EU Membership
A great draw toward subcontracting software development to Eastern Europe is that many countries – such as Poland, Romania, and Slovakia – are members of the European Union. Doing business with a company that’s located in an EU member country provides many benefits as the EU aims to be a competitive agreement and economic alliance that is open for international business:
- Cooperation with other major economies (especially the US) on IP protection and enforcement: Government agencies from both the EU and the US work constantly in tandem to ensure that the legal rights of businesses are protected in the EU. All members within the block have a great track record protecting the business interests of US companies.
- Both the EU and the US have continuously worked for more than two decades on making it easier to sign contracts, make agreements, and avoid legal issues when outsourcing by standardizing procedures, eliminating paperwork, and reducing trade barriers between the two economic zones.
- The EU is a block with a population of more than 400 million with no barriers in front of trade or work between member states. This means EU-based software development agencies have a much larger pool of talent to select from.
Regarding the protection of intellectual property, the EU has worked to standardize, unify, and strengthen IP laws across all member states. On November 29th, 2017, the European Union passed measures to further enforce intellectual property rights and to prevent counterfeiting and other illegal activities within the EU. These efforts focused on how to enforce IP laws as well as how to make IP laws more effective in specific industries.
When outsourcing the development of proprietary software, it is reasonable to be concerned for the security of your intangible assets. By doing business with a company located in an EU country, the property rights and established laws and norms will protect what is rightfully yours. This reality is recognized by the US Chamber of Commerce, as it gives glowing reviews to EU countries when it comes to IP protection.
4. Business-Friendly Governments and Favorable Regulatory Frameworks
It isn’t only the European Union that pays particular attention to business needs, many Eastern European countries like Poland, Romania, and Bulgaria have paid particular attention to business needs since their transformation to market economies just three decades ago.
These countries rely significantly on revenues from the IT sector as a tax base, and they recognize the importance outsourcing has for the sector. This is why they’ve gone above and beyond to create an environment where IT agencies thrive with tax breaks, simplified regulations, and more.
Not only that, these nations all have strong relations with the United States and significant economic exchanges, which act as heavy incentives to keep US business interests in mind when crafting legislation.
All these factors combine to make the institutional environment really favorable for US businesses. Your interactions when outsourcing to Eastern Europe are bound to be far smoother and institutional.
5. Time Zones and Travel
Unlike most of Asia, Eastern Europe is located within more convenient time zones – just several hours ahead of New York City’s Eastern Standard Time. This is favorable because you can easily be in constant communication and contact with your business partners during standard working hours. Moreover, a lot of agencies based in the EU that work with a lot of American clients have no problem adjusting their timetables a bit to accommodate their US partners.
What’s more, should you need to visit your remote partners in their home country, you will quickly find out that travel and accommodation in countries like Poland, the Czech Republic, or any of the Baltic States are easily available, less expensive, and reliable. Food, transportation, and lodging are widely available and convenient. All this should make visiting a software development team in Eastern Europe far simpler and more convenient than India or East Asia.
Both of these factors make it far more convenient and reliable to deal with companies in Europe. They make business dealings simpler, minimize miscommunication, and allow for a smoother exchange between you and the outsourcing software development company.
6. Many Eastern European Development Teams Have Extensive Experience Working with US Clients
Apart from all the general similarities and institutional benefits you get from working with an Eastern European company, you can easily find a company that already has experience cooperating with US-based companies.
Since certain countries in Eastern Europe are such popular outsourcing destinations for US firms, some software development firms in these countries have US firms as a substantial portion of their clientele. This has many advantages that your company can capitalize on:
- Extensive experience with US businesses allows these development firms to get familiar with US laws and customs. This is especially important when developing certain types of software programs such as fintech apps or accounting products, which must comply with standard US laws and regulations as well as established systems in the United States.
- It doesn’t stop at familiarities with laws either, experience with US teams allows these agencies to mold their structures and workplace environments to complement US businesses. This means that they’ll be familiar with US Silicon Valley culture. This minimizes miscommunications and reduces onboarding time.
- Working with US agencies for a long period has prompted many of these agencies to develop tools and techniques that allow for smoother cooperation and communication over the Atlantic. This means that you won’t face many of the issues endemic to outsourcing to other regions. These include poor communication, misunderstandings, lackluster progress reports, and more.
Conclusion: Do Not Underestimate the Value of Software Developers from Eastern Europe
Eastern Europe is a cost-effective, high-skill outsourcing destination that, for US clients, does not have any cultural or language barriers. Choosing to work with a development firm based in Eastern Europe gives you the talent, flexibility, and cost-savings required to develop a superior product and get a competitive edge, all without sacrificing security, quality or convenience
There are many reasons why remote teams based in Eastern Europe are, perhaps, the best choice for US companies:
- The common values and business culture prevalent in countries such as Poland are an excellent foundation that can act as the basis for a long-term working relationship.
- Rigorous education systems and an excellent pay-to-quality ratio give you access to some of the best developers in the world at very affordable prices, which allow you to achieve the ROI you’re looking for.
- Lastly, the protection and convenience offered by the European Union create favorable international business and legal environments that you can truly rely on.
By relying on Eastern European agencies for your software development needs, you can better focus your business efforts and development goals making strategic decisions with greater flexibility. With access to top talent in Eastern Europe, you won’t just save money and time, but you will also have the resources necessary to release a better product.