Nearshoring in Europe: Top Destinations
The concept of Nearshoring arose on the basis of the popular business term “offshore outsourcing”, which means the process of transfer some business functionals to the remote team to foreign countries with the aim of saving. Nearshoring in the IT sector becomes more and more popular due to globalization processes and great increase in technologies.
This type of distribution of workflows allows software development companies in Europe to cut a large number of costs by moving offices to countries with lower wages but close in time zone and location.
Brief Overview of the Development Model of Nearshore Europe Countries
The general logic of the concept nearshoring is aimed at reducing the risks and complexity of work and interaction between the customer and the supplier, which arises due to cooperation at a distance, as well as the direction to the territory where the distance, the difference in time zones, the language and cultural barrier will be minimized. The first countries used for the system of nearshore Europe were primarily the Far Eastern countries, mostly due to cheap labor costs. However, now more and more alternatives are being considered for outsourcing, due to the different needs of the company.
- Time Matters
One of the key criteria in the selection of countries for outsourcing is the difference in time zones. As usual, offshore outsourcing tends to cooperate with nearshore outsourcing companies located in countries within the same time zone. This is a critical point if online interaction between the developer and the support team is critical to the work.
In this case, when you’re to nearshore Europe, no one needs to work in uncomfortable hours, which affects the quality and speed of production.
- Hard to Get
For many companies, direct communication and interaction between teams are crucial for productive work. So, if the company relies on frequent business trips for company members, it should take into account the distance to the outsourcing country.
In this case, the financial and time costs of traveling around Europe is incomparable to the hours-long flights between continents. As a result, nearshoring in Europe provides many favorable options for savings on travel expenses.
A factor that can later both greatly facilitate and complicate the working process is undoubtedly a cultural affinity. It is difficult to interact and impose a pleasant and efficient work process if there is no common language or sense of humor between employees.
- Visa benefits
One of the unforeseen obstacles to communication and interaction between partners in outsourcing may be buying a ticket for the flight. Therefore, we must also take into account the difficulty of obtaining a visa, if necessary, on frequent business trips. In this case, EU countries provide a significant advantage.
Trends of Software Development Outsourcing: Eastern Europe as a New Trend
It is indisputable that when choosing a country for software development outsourcing in Eastern Europe it is necessary to consider such a factor as technical training of specialists in this country. For the most efficient production, it is necessary to find a middle ground between low wages and the quality of the work provided.
It so happened that the nearshoring Europe countries in Eastern parts have a strong intellectual base and solid technical training that allows you to hire qualified personnel with knowledge of languages and science. Eastern Europe provides a large share of qualified professionals with the potential, thanks to its school and educational system. The data of GoalEurope indicates that about 30 thousand specialists in the IT field are produced in Ukraine annually. At the same time, at the sociocultural level, the countries of Eastern Europe are quite close to all English-speaking countries of Europe and America.
The spectrum of popular locations for outsourcing is located in a wide area of potential sites, which include countries distant culturally and remotely, such as China, India, and Qatar on the one hand, and such close areas for nearshoring – Spain, Portugal, or Ireland. In this case, the golden mean of this spectrum and potentially ideal countries in terms of geographic location and cultural similarity are software development outsourcing Eastern Europe countries, such as Poland, Bulgaria, Spain, and the Czech Republic.
Such a direction as nearshore software development in Eastern Europe considers the countries of Eastern Europe and the post-communist countries as the most beneficial for cooperation in comparison with even the EU member states. This is due to the fact that the cost of services in Europe for IT services is much higher than similar offshore services in India, where the market is more common and used. However, Europe also offers a number of advantages, reducing the risk of doing business in these countries.
Top Destinations of Nearshore Software Development: Europe Might Be Your Best Option
Nearshoring in Europe is actually more convenient due to free labor laws, as well as accessibility to data centers and relative freedom to move this data outside the EU. This, plus a slight difference between European countries in the time zone, allows communication between suppliers during the working day.
It is undeniable that when it comes to the costs and availability of labor, nearshore software development Europe cannot compete with such an established outsourcing center as India or China. But in recent years, more and more companies are paying attention to cooperation with European nearshoring countries such as Poland, Bulgaria or Romania, especially for economically developed European countries like Switzerland or England, who want to get IT services abroad, but also have close access to these countries. This arrangement improves collaboration between customer centers and their colleagues, removing complicating factors such as temporary differences. For example, nearshoring Bulgaria is obviously cheaper and credible because of the European location.
At the same time, in Nearshore software development Europe sector, there is a tendency to lower costs for resources with a fairly strong base of specialists with IT and engineering skills.
Eastern European countries to attract more potential customers, introduced incentives for IT companies, which allows you to cut costs by opening centers for nearshoring Poland or Romania. At the same time, due to the fact that these countries belong to the European Union, there is no need for control over such areas as the regulation of confidentiality of customer data, since data protection is carried out within EU laws.
Nearshoring allows you to simplify the integration of interactions and the exchange of confidential information. At the same time, the close location of the countries and the similarity of the legislative base give confidence and comfort between the client and the customer, which is an advantage. Such cooperation provides an opportunity to hire workers who will question the services they need to perform, and as a result, the product provided will be of guaranteed high quality.
Another equally significant advantage is the multi-linguality of Eastern Europeans, which simplifies the process of interaction with customers scattered throughout the world. In Eastern European countries, it is often possible to find specialists who will combine technical skills and ability to communicate in several languages other than English.
Since many modern IT products need to be developed, supported and implemented in real time, the time zone is an important factor when choosing an outsourcing country. Current trends of software development outsourcing Eastern Europe are moving away from fixed-system centers toward cloud companies, especially in such niches as data science.
Implementation of projects and their technical support now require more flexible approaches due to the constant need for optimization and improvement of technology, for which constant feedback and close communication between teams is necessary.
In the past, if the location and time zone of the country in which the outsourcing was carried out were not critical, since large projects took months or years of preparation and development, in the modern digital world time plays a crucial role. For projects, it is important to be in touch and online with each other, which means the need for a synchronized working day. Since most projects are optimized and customer-oriented, shorter time zones allow teams from different countries to work comfortably at the same time. The obvious need and efficiency of the nearest driver is an advantage for countries such as Eastern Europe when searching for outsourcing for specialized companies.
However, with this choice, labor costs can be a significant disadvantage when choosing European countries, since the average earnings in Eastern European countries follow EU figures, and tend to increase in the coming years.
What Are the Main Nearshoring Options in Europe? Exploring Ukraine, Poland, Serbia, and Romania
Among popular countries, for nearshoring (Eastern Europe) Romania occupies a key position. Located in the Black Sea region of southeastern Europe, Romania has been a member of the EU and NATO since 2004. According to the A.T. Kearney Global Index, Romania, as an economically developing middle-income country, is number one in terms of popularity in the IT outsourcing market. Nearshoring to Poland is the choice for the large global brands, such as Microsoft and Oracle, which have research centers.
Romania is the choice among IT nearshore Europe countries to develop software for such Barkov brands such as Deutsche Bank, UniCredit, UBS, as well as such brands of software developments Hewlett-Packard, and Gameloft.
Ukraine has developed world-famous applications such as WhatsApp, Petcube, Kickstarter, as well as two famous games, STALKER and Metro 203. Many Ukrainian specialists participate in the development of games and applications for major game publishers such as Ubisoft, Electronic Arts, and Activision, working through software outsourcing companies. According to TechNavio, Ukraine shows the following numbers:
Romania, based on the availability of accommodation, the number of specialists and the business environment, is a popular nearshoring destination for Italy, France, Germany, and other European countries.
Ukraine is also a potentially interesting country in terms of business opportunities in the IT sector for nearshoring. Ukraine is the largest country in Europe, ranks 4th among the most educated nations in the world, the volume of IT industry and IT outsourcing carried out in the region involves about 15 thousand employees. Ukrainian modern IT developers are highly qualified in various fields.
Due to its location in Central Europe, Ukraine has only an hour difference with other European countries, which is comfortable for business communication. In addition to direct flights to many destinations across the continent, the procedure for entering Ukraine is simplified for many EU countries and the USA.
Nearshoring Serbia is a potentially effective option for doing business, as it is endowed with a strong technological base and a large number of IT specialists. The state market is actively investing in the development of the IT industry, so the Serbian IT outsourcing market is among the leading countries in the region.
Current nearshoring trends in Europe have proved unproductive for vertical examination. Using the model of the nearest nearshoring Spain, non-distant nearshore outsourcing centers, the company can exercise clear control over all business projects while extracting all the financial benefits from outsourcing.
While the IT industry is developing in all countries of the world and nearshore software development Europe-based solutions are constantly growing, it is potentially beneficial in the future to transfer the general tasks of the company’s service centers to outsourcing. In the same way, nearshore Europe centers can be created and operated by a third party to avoid the pitfalls that inevitably appear in unfamiliar locations.
Europe as a Great Nearshore Provider
For the past 5 years, Europe is the main destination for countries all over the world in terms of finding outsourcing labor forces, which mainly includes companies that nearshore Madrid. It becomes more common for world brands to turn the attention to nearshoring Hungary IT developers or looking for companies who will provide IT specialists that is more inconvenient for European countries due to its time zone. If compared to nearshoring in Panama, European area looks more convenient for business operation.
Most of the companies that hire remote workforce in Eastern Europe are part of the IT industry connected for the development and maintenance of products and is also responsible for the remote control of managing some tasks.
Most companies that are nearshoring Eastern Europe believe that maintenance of obsolete applications is not very complicated and easy to implement. However, when you are trying to tune up nearshoring control, you need to make a transition from managing project work to set up management to work with more stringent requirements for managing and controlling processes.
Over the past few years, the interest for business processes in the outsourcing market has risen sharply by 50 percent over the past three years and will potentially develop in areas of Eastern Europe that are suitable as a nearshore provider in all respects.