Where to Outsource Software Development Services in 2021

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Tech

Outsourcing has expanded exponentially during the past couple of decades. It has emerged in numerous fields of industries such as software development, business process management, database management, IT operations, and others. New areas and countries emerged as major hubs of this business; among such hubs, IT outsourcing Ukraine is a very important one. A series of Ukraine IT outsourcing reforms were implemented to achieve the prospective benefits of IT outsourcing trends emerging worldwide.

According to Statista information, the market size of global outsourcing is about $85.6 billion in 2018. The share of IT outsourcing is about $62 billion, which accounts for over 72% of the global outsourcing market size. The share of software development leads to all other domains of business that use outsourcing services.

What Is IT Outsourcing?

Hiring services of remote workers or other companies to handle your IT projects such as application development, website development, and maintenance of software applications, databases, computer networks, servers, cloud hosting, and others is known as an IT outsourcing. The handling of IT projects or IT functions by any external firm, team, or person is known as IT outsourcing.

There are two major components of the outsourcing industry; one is known as business process outsourcing (BPO) and the other is referred to as IT outsourcing (ITO).

Software development plays a very critical role in the ITO, which is far away ahead of the BPO nowadays. Ukraine outsourcing is one of the top entrants in the market for quite a few years now. Ukraine government supports for IT outsourcing by taking numerous reforming industry-specific steps to help the industry grow. The share of software development in Ukraine’s GDP is about 3.3% up from just 0.06% in 2014. It is expected to become the top export of the country in the coming years.

What Are the Major Benefits of IT Outsourcing?

IT outsourcing is continuously growing in the given conditions when the other modes of outsourcing are decreasing. The main reasons for the consistent growth of IT outsourcing are the benefits it offers to all sizes of businesses and entrepreneurs. A few very important benefits are listed below.

  • IT outsourcing saves costs significantly as compared to accomplishing tasks in-house in major countries like the USA, UK, Canada, Australia, and Western European countries. Sometimes, IT outsourcing saves costs over 3 to 5 times or so.
  • It increases the quality of software code and IT function management due to the focal teams working dedicatedly on the assigned projects
  • Reduced capital investment on infrastructure and resource hiring
  • Faster completion and delivery of the projects
  • No hassle of managing teams and resources
  • Outsourcing helps the business owners and managers to focus on their core ideas of business rather than distributing their energies on multiple things
  • Access to a huge pool of tech talent located across the globe without any kinds of boundaries
  • IT outsourcing also improves the efficiency and competitive edge of your team and business by providing the experienced and skillful support 

Top 7 Prospective Countries for IT Outsourcing in 2021

The outsourcing culture is expected to become a powerful catalyst in digital transformation by 2021 and beyond. Numerous companies and countries are positioning to this desirable digital transformation by leveraging the power of IT outsourcing. In this pursuit, many ITO hubs are emerging. A few of them are mentioned below.

#1 Ukraine

Ukraine is one of the fasted growing ITO markets in the world. Powered by a large pool of IT engineers, developers, professionals Ukraine is emerging as a hotspot for IT outsourcing services. ITO is contributing over 3.3% of its GDP in 2018. Ukraine is the fourth highly educated country in the world with over 99.7% literacy rate. It produces over 16,000 IT graduates out of 640,000 graduates per annum. It is the largest producer of engineers in Eastern Europe.  

The geographical location and time-zone of Ukraine is a natural boon for the country. All major Western European countries are not far away. The work culture is fully influenced by the developed European and North American countries, which focus on quality, cost, value, and customer satisfaction. The GDP is expected to grow at about 3.7% and inflation will continue reducing. This will impact less on the salaries of IT professionals in the next couple of years. At present, the average salary of a software developer in Ukraine is about $24,706 per annum. It is expected to increase salaries by about 3% to 4% per year.

#2 Poland

Poland is another attractive place for IT outsourcing. According to Statista information, the total market size of IT outsourcing will reach $2.311 by 2021 from $2.196 billion in 2019. This is almost half of its entire IT market value. The number of people employed in the outsourcing sector is about 160,000 in 2015. Poland is at 27th place in ease of doing business rank. ITO sector is growing significantly. The present salary of a software engineer is $2071 per month. The average increase in the salary range is about 2% to 4% annually.

#3 India

India is the top country that attracts the clients for outsourcing their business processes and software development. According to the Ranker ranking, it stands at the top rank of outsourcing business with a huge population of over 1.3 billion people. Indian economy is growing at the fastest rate of about 7%. The rates for software development are very low. The average annual salary of a software developer is just $6712. But due to the high inflation rate and faster economic growth, the salaries are expected to increase at over 7% to 10% per annum.

#4 Malaysia

Malaysia is one of the emerging outsourcing markets in the world. Powered by better business policies and a better environment, Malaysia has the potential of becoming a big outsourcing destination in the coming years. According to AT Kearney information, Malaysia is the third preferred location in terms of people skills, financial position, and business environment ranking. The growth rate of BPO is about 8.5% in the Asia Pacific region in which Malaysia plays a vital role. The present average salary of a software developer is $13,979 per annum, but the salary is projected to increase sharply.

#5 China

China is the world’s most populated country with a population of over 1.38 billion. There is a huge number of about 6,000,000 IT professionals that work in the software industry only. The number of IT professionals grows at about 3.4%, which means about 200 thousand professionals add to the tally every year. The current average salary of a software engineer in China is about $26,544 per annum. But the rate of increase in the average salary is very high. The salaries increase at an average of 14.9%, which is not a good sign for the clients to outsource their projects to China in the coming years. 

#6 Bulgaria

Bulgaria stands at the 15th preferred location position for the IT outsourcing business, according to the AT Kearney ranking. It is one of the fastest-growing IT outsourcing markets in Eastern Europe. The total revenue of IT outsourcing in Bulgaria was about $250 million in 2017. About 25K plus IT specialists work in the IT sector in the country. The average salary of a software developer in Bulgaria is about $$30,374 per annum. The expected increase in salary is about 3% annually owing to the increased cost of living costs in the country.

#7 Brazil

Brazil is going through an economic recession period, but this country has great potential in the IT sector. It is the seventh-largest economy in the world. Despite some difficult circumstances, Brazil maintains one of the attractive destinations for IT outsourcing. AT Kearney ranks Brazil in 12th position in IT outsourcing. The average salary of a software developer in Brazil is about $14,317 per annum. There is huge inflation in the country, which will push the salaries sharply up by 2021.

Final Takeaway

There is substantial growth in IT outsourcing in traditional as well as emerging destinations. Ukraine is emerging as one of the best destinations for IT outsourcing, especially in the software development sector. There is a huge competition among old and emerging destinations for ITO business. The cost factor and quality will determine the power and attractiveness of the ITO destination in 2021.

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