Outsourcing is nothing new. The concept has been around since the 1950s, when a very narrow range of jobs under very limited circumstances would be shipped elsewhere.
Outsourcing at a large scale began in the 1980s. The trend continued throughout the 90s and 2000s, with various degrees of success. Today, outsourcing is still a reality for many businesses.
Hiring remote development teams is a rising trend, particularly post-pandemic. Outsourcing and outstaffing have matured and evolved quite a lot since the early decades, and enterprises seek to build their remote teams in worldwide locations that might offer more advantageous conditions than those at home.
Choosing the right country to build your remote team in thus becomes a crucial decision. These article delves into the intricacies of outsourcing, focusing on two popular locations: Eastern Europe and Latin America.
Countries like Ukraine, Poland, the Czech Republic, and Romania are among the most sought-after outsourcing locations on that side of the world. There are powerful reasons for this. Each of these countries offers a sizeable amount of talented developers, these locations are easily reachable by air and other means of transportation, and the cost base -and often, the taxation system- can be very attractive and supporting for businesses.
The figures often a clear indication of how significant the IT business is for these nations. According to Statista, the IT outsourcing industry will reach upwards of $4.32bn this year. The projection is for the market to reach $6.52bn in five years' time.
In terms of which countries tend to choose Eastern Europe as outsourcing destination, Sweden, Denmark, Germany, and the Netherlands, among others. But by far, business from the United States generates the largest amount of outsourcing income: almost $145bn so far in 2022 alone.
There are a growing number of companies choosing Eastern Europe as their outsourcing destination of choice.
These include tech giants like Apple, Microsoft, or IBM opening Research & Development (R&D) centers in Ukraine, for example, joining Boeing, Siemens, and many others.
In Poland, we can find R&D centers for Google, Intel, Siemens, among others.
Microsoft also has a presence in Romania, along with Oracle.
In the Czech Republic, some of the companies that chose to build remote teams there are Microsoft, Google, IBM, Skype, Oracle, and many more.
And in Hungary, Siemens and Microsoft also have R&D centers, along with Nokia, among others.
While the process of recruiting talent in the CEE Region is simple and effective enough, several challenges can arise.
This particular problem can occur while searching local job boards that may be oriented to the local markets. Some of these boards may not have an English version. This issue can be avoided by engaging with a specialized service provider such as AllSTARSIT.
In certain cases, service providers may not use online platforms at all, rather relying on personal recommendations and local contacts. This might hinder international clients that might not have access or visibility to the same local networks.
Hiring talent abroad can become a hard path to navigate, since knowledge of the local market and professional environment can be lacking. Finding the right channel can be difficult. Engagement with specialized service providers can overcome this problem though.
The choice of country as outsourcing or outstaffing partner rather depends on a multitude of factors, including
There isn't a 'one size fits all' type of solution here, but for the sake of this article, let's analyze one particularly attractive Eastern European destination to open an R&D center: Poland.
Poland offers a stable, affordable, and supportive framework that favors foreign investment for the creation of research and development facilities.
Some of the benefits that Poland offers to multinational companies are:
On the other side of the world, Latin America is quickly positioning itself as another prime outsourcing/outstaffing destination. The sector has grown considerably over the past 12 months. Countries like Argentina, Brazil, and Colombia are seeing significant financial growth, from an outsourcing perspective. Though many countries are choosing Latin America as their business partner, the United States is once again the largest investor by far, with an estimated $145bn worth of IT outsourcing investment forecast for 2022.
While Latin America offers propitious conditions for outsourcing and outstaffing, some companies might run into challenges.
Overall, while Latin American nations offer a very affordable and cost-efficient ratio, it can still be higher than costs that may be found in other destinations, such as India and other Asian countries. But generally speaking, the outsourcing/outstaffing conditions found in Latin American nations tend to outweigh cost considerations.
Legal and taxation frameworks in foreign countries can be a minefield, as compliance laws and other rules might be substantially different -and perhaps, more strict- than those at home. Because of this, some companies might be dissuaded from doing business there. A partner company -such as AllSTARSIT- with knowledge of the local legal and taxation system is the best option to avoid running into unforeseen problems.
Once again, the choice of country depends on many factors, as explained earlier on this article, and as before, there isn't a 'one size fits all' type of solution here.
Let's use Colombia as an example.
The IT industry there has been growing steadily for several years, with an estimated market value of $6.38bn. Internet access reaches 65.5% of the population, and outsourcing in Colombia is supported by a government that endorses international investment with initiatives like Free Trade Zones.
One of the most attractive aspects of the country's capital, Bogotá, is the availability of relevant staff. According to LinkedIn data, there currently are 17,000 people across Colombia listing their job title as 'Technical Support Engineer,' most of them in Bogotá.
Apart from such an abundant workforce, Bogotá offers other advantages. The city's time difference with the United States is minimal. Young professionals have a high proficiency in English, and Colombia is one of the countries that form CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa), a list of emerging nations identified as having a diverse and dynamic economy, and a young, growing population. Many international corporations, including industry giant IBM, have a strong outsourcing presence in Colombia.
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