Nearshoring in Europe. Choose the best country for IT outsourcing
23 February 2019
Easy to reach, but politically unstable. Offering low labor costs, but lacking talent able to communicate fluently in English. With highly skilled specialists, but also cultural differences. Choosing the right country for nearshoring requires conducting in-depth research and may seem complicated. However, it is enough to take a few key factors into consideration to simplify making the final decision.
As you are already familiar with the advantages of nearshoring, it’s time to think which European country will be the best destination to place your business in. There are various rankings that may prove helpful in the decision making process and one of the best known is TSGI – Tholonos Services Globalization Index. It ranks, among others, Top 50 “Digital Nations”. Let’s take a closer look at the latest 2018 edition of this publication.
India, Philippines, Brazil – that’s what the podium looks like. This leadership has been defined by the scale and cost of skilled talent pool. But you can find “digital nations” also in Europe. Russia, Poland, Ireland, Turkey and Czech Republic – these five countries were ranked best by Tholonos in Europe and Russia even made it to the top ten.
What contributed to such a high score? And which of these European countries offers the best conditions for cooperation?
Take a look at our comparison:
1. Russia
7th place on the Top 50 Digital Nations list up from the 11th position in the 2017 ranking edition. The unquestionable advantage of this country is its size – with a population of 144,5 million people, Russia has a large number of IT talents easily available to employers from Europe. The more so because Russian developers are the best in the world – at least according to the HackerRank. They dominate in algorithms, the most popular and the most competitive arena. One ruble is worth 0,01 euro and 0,01 dollar.
If you also take into consideration the low salaries (12,360 euro per year for Java developer according to PayScale) it seems that Russia is an ideal destination for IT outsourcing. There are, however, some disadvantages, as for example general knowledge of English, which EF English Proficiency Index describes as moderate. But the biggest business concern should be the political situation in Russia. It is a country that does not respect international agreements and regulations. It is ruled by oligarchs and initiates armed conflicts. Russia does not respect human rights either.
2. Poland
11th in the 2018 edition and 9th on the Top 50 Digital Nations 2017 list. Poland can also boast the 3rd position in the HackerRank and 13th in Europe when it comes to English proficiency (EPI describes it as high, above European average). Population wise, Poland cannot compare to Russia, but is still a rather big country, inhabited by 37,9 mln people.
An average Java developer’s salary in Poland oscillates around 20,243 euro per year (PayScale). It is more than his Eastern neighbours earn but still relatively little compared to the wages in Western Europe. What’s important, Poland is a European Union member, but not a part of the eurozone. One Polish zloty is worth 0,23 euro and 0,27 dollar. Poland has to meet high EU security standards and has implemented the GDPR guidelines. It is ruled by a right-wing, conservative party, but the country is rather politically stable.
3. Ireland
Compared to previous year, Ireland has fallen by 5 places in the 2018 edition of Digital Nations list, to 15th place. It is a small country inhabited by 4,7 million people. Because Ireland is an island, it is also more difficult and expensive to reach. As Irish are bilingual, they communicate in English as native speakers. They earn in euro and that’s why IT specialist’s salary is the highest compared to the other described countries.
According to PayScale, a Java developer in Ireland earns 40,893 euro per year. Although the country has some excellent IT specialists, HackerRank ranks them merely on the 32nd place. Ireland is a part of the European Union and will remain as such. However it is highly possible that Brexit will have a negative impact on the Irish economy. The government in Dublin is already struggling with its consequences, such as customs controls on the Irish-British border and the status of Northern Ireland.
4. Turkey
Turkey consequently holds 18th position on the Top 50 Digital Nations list. Similarly to Russia, it is a country located at the meeting point of two continents – Europe and Asia and two cultures at the same time. Knowledge of English among the Turkish population is rather poor – the country has ranked 73rd in the EF English Proficiency Index, which translates into very low language skills. It is worth remembering, however, that Turkey is a large country with 79,8 million people.
Among developers from large cities, language skills are certainly better. One Turkish lira is worth 0,16 euro and 0,18 dollar. An average Java developer’s salary in Turkey, according to PayScale, is 30,861 euro per year. The HackerRank ranks them close to Irish developers, on the 30th position. As far as the political situation is concerned, Western politicians are worried about the conservative direction of the Prime Minister’s policy. Turkey is also involved in the conflict in Syria, on the Russian side.
5. Czech Republic
In the 2018 edition of the Digital Nations ranking, the Czech Republic fell beyond the top 20, to 22nd place on the list. According to the HackerRank, Czech programmers are number 9 in the world. To employ a Java developer, you would have to pay him 24,078 euro per year. That’s the average salary for this specialization according to PayScale data. The Czech earn in crowns and one Czech crown is worth 0,04 euro and 0,04 dollar.
According to the EF English Proficiency Index, knowledge of English in the Czech Republic is good (20th position on the list). The country’s population is 10,58 mln people. The Czech Republic is an European Union member with all the respective benefits (common law, high security standards). Despite the latest political storm and corruption charges against the Czech Prime Minister, the country remains safe in terms of long-term investments.
If you are still not sure, which country to choose, check out how Euvic delivers the most innovative projects using resources in Poland. Do not hesitate to contact us if you have any further questions, not necessarily concerning the outsourcing IT services.
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