IT Outsourcing: Europe's Approach to Software Development

Statista reports that the outsourcing market in Europe is projected to increase at an average annual rate of 10.58% from 2023 to 2028. It is expected that by the end of the forecasted period, the global market volume will reach $240.60 billion. This means that an increasing number of both small and large companies will seek assistance from remote IT teams.

The primary question facing many entrepreneurs is why they should hire software development companies in Europe. Lampa experts conducted their own research and are prepared to provide a detailed answer. Additionally, in this article, we will examine the cost of services, the peculiarities of hiring specialists from different parts of Europe, and the criteria for selecting IT providers.

Development Cost by Region

Various factors, including the region, influence the cost of hiring remote digital product developers. For example, outsourcing to Eastern Europe will be cheaper than in Scandinavian countries. The price is also influenced by the experience of specialists, their number, project scale, requirements for functionality/design, and other characteristics.

Focusing on services provided by European experts, we have identified the key regions. To form the most accurate figures, we relied on reputable sources such as Indeed, Upwork, TopTal, and Clutch.

Now, let's consider the table of hourly rates, depending on the developer's region of residence:

As we can see, the lowest rates for software development outsourcing are in Eastern Europe and the Balkans, while the highest rates are in Western and Northern countries. This disparity is explained by different economic conditions and legislative norms regulating the activities of outsourcing companies and workers. Nevertheless, Europe remains one of the most attractive places for finding highly skilled IT specialists.

Why Do Companies Outsource Software Development to European Countries?

The decision to use Western, Northern, or Eastern Europe for software development outsourcing can be motivated by several reasons. Let's briefly discuss the main ones:

• Cost Reduction: The rates of European specialists can often be significantly lower than those in your home country. For example, in the United States or Canada, the hourly rate for a developer ranges from $50 to $250, which is nearly twice as high as the cost of outsourcing in Eastern Europe. With the multitude of countries in this part of the world, you can always find a more cost-effective alternative, even if you reside in Europe yourself.

• Abundance of Talent: When considering outsourcing product development, you gain access to highly skilled specialists from all over the world. You are not limited to just one country, as IT companies often offer international teams with a high level of expertise.

• Expanded Capabilities: When your in-house team works on one project but you need to launch another simultaneously, outsourcing software development to Eastern Europe or the Baltic countries provides you with "extra hands." Hiring a remote team is also necessary if your company lacks a specific specialist or engineer to address a particular problem.

• Time and Resource Savings: Thanks to an outsourcing company, you don't need to spend time searching for and selecting qualified specialists. The contractor handles employment and logistical issues. Therefore, a European IT team is ready to start working on your solution immediately.

Software development companies in Europe guarantee a quick and cost-effective release of high-quality digital products to the market. We will now delve deeper into the specifics of working with remote teams from different regions.

IT Outsourcing in Eastern Europe

In this part of Europe, there is a significant number of highly educated IT specialists with all the necessary skills for implementing digital products. According to Coursera's research, top software development companies in Eastern Europe are in Ukraine, Hungary, and the Czech Republic. In addition to this, the low hourly rates here are due to favorable tax burdens on outsourcing companies and IT freelancers.

For example, the hourly rate for developers in Poland is considered one of the highest in this region and ranges from $35 to $55. Custom software development in Romania will cost you between $25 and $45 per hour, and in Ukraine, rates range from $25 to $50 per hour.

Western Europe IT Outsourcing

Western Europe is home to countries with higher taxes and well-developed economies. Therefore, prices here are considerably higher, and consequently, the work of IT specialists is also more expensive.

Compared to developers in Eastern Europe, in the western and central parts, the average rates range from $68 to $99 per hour. Switzerland is the most expensive country for hiring a remote team, where rates can reach $100 to $200. Lower prices are found in the Netherlands, the United Kingdom, Germany, and France, ranging from $50 to $100 per hour.

Outsourcing in Northern Europe and the Baltic Region

Scandinavia is considered the most expensive region for hiring a software development company in Europe. In Denmark and Finland, you will find specialists with hourly rates starting at $50 to $99 and reaching up to $150 to $200. More favorable prices are in Norway and Sweden, with rates of up to $100 to $149 per hour. The lowest rates for developers are found in Iceland, averaging around $38 to $45 per hour.

More favorable prices are found in the Baltic countries. Despite this, the work of IT specialists here is of high quality and is on par with their more highly paid northern counterparts. For example, Lithuania has cost levels close to those of software development in Eastern Europe, ranging from $25 to $49 per working hour. In Latvia, rates are $50 to $99, and in the most digitally advanced country in Europe, Estonia, developer rates fluctuate from a minimum of $25 to a maximum of $100 per hour.

How to Choose a Country for Outsourcing?

To make an informed decision and choose the most suitable country for implementing your IT project, you should consider the following factors:

• Expertise and Technical Skills: Focus on countries with a high level of digitization and a developed IT industry. This way, you'll have a better chance of finding qualified professionals with extensive experience in software development.

• Cost of Services: Analyze the pricing of various companies from several countries and assess your own financial capabilities to understand which team fits within your budget.

• Tax Policies and Legal Requirements: Study the tax legislation and contractual terms of cooperation in the country where you plan to engage outsourcing partners.

• Time Zones and Geographic Location: Consider the time difference between your country and the developer's country to avoid communication delays and problem resolution.

• Communication and Language Skills: When making first contact with a software development company in Europe, ensure that their employees have a good command of the English language and can understand you accurately. Also, clarify how you will maintain communication with them throughout the collaboration.

IT Outsourcing: From First Contact to Release

Working with any outsourcing software development company in Europe involves essential steps. Let's break them down using our example at Lampa.

1. Initial Call: After selecting an IT service provider and submitting your request on their website, a company representative will contact you. You will then need to provide a brief overview of your idea or project for which you seek specialists.

2. Team Discussion: A meeting is scheduled where you will discuss the project in detail with domain experts. Business analysts, lead developers, and designers are present at this stage. They help you define requirements for remote developers Eastern Europe, plan the scope of work, set key quality indicators, design requirements, and more.

3. Discovery: At this stage, all your requirements and preferences are structured into a clear work plan. The project's details, such as software functions, necessary integration services, additional features, and more, are documented.

4. Development and Quality Assurance: The team writes code, tests it, makes adjustments, refines, and tests again to ensure a high-quality product. The software created here undergoes tests on different platforms and devices as defined during the discovery phase

5. Release of the Finished Product and Support: After testing, the team assists you in launching the product on a platform or in an app store. In the case of a corporate IT product, specialists integrate it into your existing infrastructure and help train your personnel to use the new solution. Moreover, most software development companies in Eastern Europe offer post-release support, which involves releasing updates to maintain the stable operation of your IT solution.

Lampa – Your Reliable Partner in IT

For Eastern Europe, software development is a significant industry that benefits IT companies and their clients. Therefore, professional outsourcers adhere to high work standards to deliver quality digital products.

Our development studio, Lampa, is one of the most popular outsourcing companies in Ukraine, offering you the best price-quality ratio. We provide a wide range of advantages:

• Unique digital products developed by experts with over 6 years of experience in software development.

• Timely project delivery thanks to well-defined deadlines for each development stage.

• Affordable services for any business, as we offer flexible collaboration models, including fixed price and time and material.

• Competitive prices tailored to your specific business needs.

• Ease of communication, as our team excels in English language proficiency.

Do you want to get reliable software? Take advantage of a free consultation to discuss your project with our expert.