Eastern Europe could benefit from a wave of first time offshorers

Because I write about IT outsourcing I often forget that the proportion of IT outsourced is only a fraction of the work that is done in-house.

There is massive potential for growth with loads of greenfield sites. This is multiplied when it comes to offshoring.

I recently met an executive at an Indian service provider. He told me that the company he works at is seeing a lot of companies, many of which are mid-sized, considering offshoring IT for the first time. This comes after a few years of outsourcing to onshore suppliers.

With this in mind now could be the time that Eastern Europe shows its hand. Nearshoring to countries such as Romania and the Ukraine could be a happy medium for first time offshores.
Computer Weekly journalist Kathleen Hall has been looking into this. See this link for an article she wrote about Eastern Europe’s IT outsourcing service capabilities.

But what has Romania got over India?

To give you a taster here are five reasons to outsource to Eastern Europe:

1. High skilled labour

The former Soviet Union had a strong educational emphasis on engineering and the sciences. As a consequence, many of the countries in this region today have a highly skilled workforce in areas such as computer science, but at much lower labour costs than the UK.

2. Cultural similarities

Some companies believe that Eastern Europe has a distinct advantage over places such as India when it comes to outsourcing because employees tend to take a more collaborative and less process-driven approach to projects.

3. Time zones

Eastern Europe covers a vast region, but most of the countries within it are just a few hours away from the UK in terms of time difference, making it easier to communicate within working hours.

4. Data protection

Eastern European countries within the EU could be a good choice for work which requires adherence to the Data Protection Act.

5. Growing labour market

While skills shortages remain a problem in the UK, growth in IT outsourcing in Eastern Europe continues to increase. In 2009, Romania was found to be the country with the highest growth of IT specialists, increasing by about 12% compared with 2008. Ukraine followed with over 9% growth.

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Another big advantage is that UK nationals don’t need work visas for Eastern Europe, there are many more flights available, flights are cheaper and the flight time is a lot less when compared with India. This makes it much easier to arrange face to face meetings at short notice. Applying for an Indian Business Visa is a hassle, there is only 1 direct flight a day from London to Bangalore which departs and arrives at an inconvenient time, BA charge up to £5,000 for this flight in Business Class, the flight time of almost 10 hours and having to get over jet lag means that you can’t just “pop over” at short notice for meetings or to sort out issues.