October 16, 2024
It’s been another rough year for Eastern Europe. We’ve noted a slowdown in development work across the region, and rates fell by 9% year over year as customers looked to negotiate discounts due to a competitive market and their own budget constraints.
Despite this, the World Economic Forum’s latest Chief Economists Outlook reflects increased optimism that conditions in Europe are set to improve, with the majority view expecting moderate or better growth in 2025.
A survey of our own outsourcing network in Eastern Europe bears this out, with software development firms indicating plans to increase headcount by 6-10% in the next year. The message from our partners in this resilient region is that they’re open for business and continuing to take on new clients.
All of the firms we work with in Ukraine have moved their teams into neighboring countries or to safer locations in the west. This flow of cross-border migration has led to new metropolitan areas emerging as tech hotspots.
Solid Foundations and Skilled Expertise
Europe’s highly educated, quality workforce, good English skills and cultural alignment remain strong factors in its favor. Sharing a single passport and currency is another major advantage, creating more flexibility in the software ecosystem.
Our 2024 Europe, Africa, and the Middle East Guide to Software Outsourcing draws on international data and expert insights to analyze 18 countries and their potential for offshore partnerships, from well-established tech hubs in the Balkans to new emerging markets.
When you’re considering candidates for your next development project, here’s why these regions should be on your shortlist:
| Reduced development expenses | Cost savings of up to 30% compared to North American developer rates allow budget maximization without a trade-off in quality. |
| Top-tier talent | Access to a highly creative and skilled workforce, with large pools of experienced engineers proficient in AI, cybersecurity, mobile apps, and more, supported by a strong educational focus on science, technology and engineering. |
| Seamless communication | Finding and interviewing candidates, negotiating compensation, and onboarding a new employee takes time – only for some to leave a year or two later for a new opportunity. Working with an outsourcing partner allows you to delegate a lot of the recruitment process, enabling tech leaders to allocate time and energy to more high-value initiatives for the company. |
| Workday overlap | U.S. teams benefit from a time-zone advantage when working with partners across Europe, the Middle East, and Africa due to the part-workday overlap and potential for rolling shifts, enabling faster turnaround and real-time collaboration. |
| Industry strength | Political and economic ties with the European Union bolster government support for the IT sector, from investment in vital infrastructure to the development of technological expertise. |
The Top Contenders – Plus a New Addition to Our Network
Three European countries stand out for their depth of experienced talent, diverse skills, and familiarity with Western clients. This year, we also welcomed our first software development partner from South Africa.
Despite the unrest on its doorstep, Poland remains Europe’s growth champion and consistently ranks in the top 10 best countries in the world to outsource software development. A remarkable 43% of Poles aged 25-34 have a bachelor’s degree or higher in technology or software development, according to the National Science Foundation. The creation of the Polish Investment Zone has also made the country a magnet for investors, who can qualify for tax exemptions when launching a startup or developing an existing company.
The capital city, Sofia, is the focal point of the country’s tech industry, accounting for the vast majority of software development firms. Its strategic location, competitive costs, and skilled labor pool offer attractive outsourcing opportunities, with emerging technologies such as AI, cybersecurity, and blockchain bolstered by a supportive environment for startups and innovation hubs.
An entrepreneurial hotspot for software outsourcing, app development, and tech research. In 2024, the tech sector contributed around 6.2% of GDP. A recent Economist Intelligence Unit report describes Romania as “a bright spot on a rather dismal European landscape” and expects economic growth to remain strong by EU standards through 2028.
A recent addition to our global partner network, South Africa is a relative newcomer on the outsourcing scene with tech centers in Cape Town and Johannesburg. Advantages for Western clients include alignment in culture, language, and time zone, and there’s development talent to be found here at attractive rates if you know where to look.
Cautious Optimism and the Embrace of AI
As we race towards a new year, the software development market is poised for yet more growth and innovation. Our exclusive 2025 Global Software Outsourcing Rates and Trends Guide is an invaluable resource, featuring a comprehensive analysis of the past 12 months and research-driven insights into what lies ahead.
Across all our key outsourcing regions, the embrace of artificial intelligence is already having a profound impact.
Uncertain times may still lie ahead for Eastern Europe. However, with its established track record for offering expertise in highly specialized, high-value areas of software development, the region is poised to make the most of the AI boom.
