To outsource, or not to outsource, that is the question. Only if Prince Hamlet was the corporate type, he might ponder to outsource, but where? instead.
Outsourcing is, nowadays, a common business practice. Companies the world over seek to source talent to address the requirements for the business to grow and strengthen, and this talent is often found abroad.
But as Neo quite rightly pointed out while talking with The Architect, the problem is choice. The world is a big place, with plentiful outsourcing locations. So which is the best? Which country offers the best opportunities for cost-effective tech skills?
In this article, we take a look at seven nations that have emerged as prime outsourcing locations.
The number 7 has long had great historical significance. God supposedly rested on the seventh day, after toiling hard for the previous six creating the world. (This would become the basis for the 7-day week that persists to this day.) In 1956, George Armitage Miller, a prominent psychologist, determined that the average individual can hold seven items (plus/minus 2) in their short term memory. (Miller's The Magical Number 7 is one of psychology's most quoted papers. The formula 7 plus minus 2 has come to be known as Miller's Law.) And one of baseballs' greatest players, Oklahoma-born Mickey Mantle bore the number 7 on his jersey. (The New York Yankees, Mantle's team during his 17-year tenure in the Major League Baseball, retired the number in 1969.)
Throughout 2021, several nations stood out as software development outsourcing locations, and a few others are well on course to join the ranks in 2022.
Let's take a look at these seven wonders of the outsourcing world.
But first, a quick memorandum. Software development outsourcing is a business practice whereby a company engages with a contractor (an individual, a group, or an agency) to carry out software programming projects on the company's behalf. Many companies use outsourcing as a way to save costs and acquire the right talent for the right project.
Many countries in eastern Europe boast strong academic policies, ideal timezones, and affordable costs. All this has not gone unnoticed, and a great deal of corporations in western Europe and the United States have software development hubs in the region.
Ukraine, though a relatively late arrival to the IT industry, has managed to establish itself as a prime location for software development outsourcing. While other economic sectors took a massive hit in the wake of the pandemic, the IT industry bucked the trend. Exports rose over 20% in 2020, for example, to beyond $5bn.
The reasons are clear. Ukraine offers more than 200k skilled programmers arising from a range of universities featuring many technical courses. The cities of Kyiv, Lviv, Kharkiv, and Dnipro stand out as educational, cultural, and business hubs. Overall, 39 technical universities produce an average of 30,000 specialists per year. And the international market has taken heed. Software giants like Oracle and Google have set up outsourcing bases in Ukraine.
When one thinks of Egypt, software development outsourcing is likely not one of the first things that come to mind. The Great Pyramid of Giza (which, incidentally, is one of the Seven Wonders of the Ancient World), the Nile (longest river in Africa), and bustling bazaars in downtown Cairo, perhaps.
But be that as it may, Egypt has a strong footprint in the global outsourcing stage. The country has a relatively young workforce that is well-educated, tech-savvy, and very importantly, multilingual in English. (Up to 90,000 people graduate every year having studied the language.) These factors coalesce into a strong location for software services, fueling an industry whose worth rose from $3.3bn in 2017 to $4.7bn in 2020.
Vampire lore has long been one of Romania's tourist attractions. The region of Transylvania, in central Romania, will forever be associated with the legend of Count Dracula, that timeless character born out of the mind of Irish writer Bram Stoker.
Software teams care little about such myths, however. Today's Romania is a sought-after outsourcing location for several reasons. It has one of the lowest cost bases in Europe, for example. But more importantly, Romania just happens to be located in an ideal geographical spot, just a couple of hours flight away from most places on the continent. Romania's capital, Bucharest, has emerged as a major technological hub. Global corporations like Gameloft, Hewlett-Packard, Ericsson, and Huawei have established outsourcing locations in the country.
Sometimes referred to as The Land of Fields (the country's Polish name, Polska, translates as such), Poland, due to its peculiar geographical situation, has historically been a country of both western and eastern influences. Poland is strategically located, and within very easy reach of most major European capitals. It's a place where business booms, and it shows. With over 430,000 well-educated, English-speaking IT specialists available, Poland routinely ranks in the top 3 countries with the best programmers.
Poland offers additional advantages that support its privileged offshoring position. A favorable taxation framework that incentivizes businesses and a relatively stable economy and political system. Because of this positive environment, many international companies have chosen Poland as their offshoring location. Amazon, IBM, Nokia, and Cisco, to name but a few, have established R&D centers in the country.
India earned itself a bit of a bad reputation in the early years of outsourcing. The expression 'jobs have been Bangalored' entered the popular lexicon in the 90s. It meant that a company was outsourcing its IT jobs to a low-cost country, often India (hence, Bangalore). Back then, this expression had rather negative -almost pejorative- connotations.
The city of Bangalore is two things: it is the capital of India's southern Karnataka state, and the epicenter of India's high-tech industry. Microsoft, Google, IBM, and a vast amount of startups have found a home in this city of about 8.5m people.
Bangalore (and India as a whole) offer a seemingly endless supply of skilled talent for all aspects of the IT industry. This, together with a high level of English proficiency and a well-established outsourcing infrastructure, puts India firmly on the global outsourcing map.
Soccer, coffee, and Christ the Redeemer are probably three of the best-known aspects of Brazil. The largest country in South America by far, Brazil's sheer size makes it an ideal location to serve international business partners. The country is a perfect onshoring destination for the United States, for example, as the time difference between the US's east coast and Brazil is just one hour.
A relatively low cost base also plays a major role in attracting international business, which enables the maximization of operating costs. But low cost would mean nothing without a strong and well-educated workforce. The University of Sao Paulo ranks first in the Best Global Universities in Latin America and the 122nd globally. This year, Brazil's IT market is expected to grow by 11%, according to the International Data Corporation (IDC Brasil) and the Brazilian Association of Software Companies (ABES).
Much like Brazil, Colombia is well known for its coffee exports. (Arabica beans grow exclusively in Colombian soil.) But apart from being a coffee lovers paradise, Colombia is also a prime location for nearshoring, as the country's timezone is close to many areas in the United States, for example, so working hours are quite similar. (Medellin is just a four-hour flight away from Miami.)
Because of this high proficiency in English, Colombia is perfectly positioned as a location to open customer tech support centers. These facilities can offer support as stand-alone facilities, or as part of a network of strategically positioned sites across the world so the client can enjoy round-the-clock support.
AllSTARSIT recently opened its LATAM HQ in Bogotá, Colombia.
AllSTARSIT's core values are growth, integrity, and synergy. And with these values comes the ability to provide a set of services that are superior to a traditional outsourcing model.
The company offers fast recruiting (hiring is up to 50% quicker when compared with similar local companies), a cost-efficient process that saves the client up to 30%, high retention rates, and full GDPR compliance.
But one of the key elements of AllSTARSIT's offering is the company's ability to give clients better control over the project. This is achieved through dedicated specialist staff and a series of meetings that enable the client to maintain its influence over the project, with easy access to the team at all times.
This enhanced control is an inherent trait of the outstaffing model, which also brings additional benefits such as optimization of the development cost, faster time to market, and a more thorough recruitment process.