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Top IT outsourcing destinations: Ukraine, Poland, and India in 2021

Quick Summary - Most software developers in the USA and Israel are employees. Both countries need more developers - and are often finding them in Ukraine, Poland, and India.

Software Developer Supply & Demand - Ukraine, Poland, and India in 2021

Software developer demand in 2021

While the pandemic has slowed a lot of businesses down, the software development industry has been left unscathed. Companies with remote working capabilities have seen an increase in demand, according to Deloitte. That’s to say that the global demand for software developers is still not being met with about 1.4 million vacant positions.

In the United States alone, there are 9.3 million unfilled jobs (highest ever), and roughly 1 million of them are for software developers and IT specialists. And even though the US is turning out about 400,000 new developers every year, that’s barely keeping pace with the number of developers retiring every year.

Many of these vacancies are high-end positions in data science and machine learning. It’s unlikely that new developers will have the skills and experience to apply for these openings. Most will need to come from existing developers engaged in continuously developing their skills.

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Select Comparison of Software Developer Statistics 2020

2021 for American and Israeli software developers

Both the United States and Israel have a pronounced shortage in software developers. Where the US is in need of nearly a million software developers, Israel’s shortage is merely in the range of about ~15k developers. In perspective, Israel’s population of 9 million – correlates fairly closely to the State of New Jersey (9.3 million).

The vast majority of American and Israeli developers are employees (87%). Some are independent developers, are working on their own startup, or doing well with the on-demand “gig” economy. They mostly aren’t with IT staffing agencies.

Work from home employees?

We’ve noted a few times that developers having a chance to work from home will be reluctant to return to the office. Just recently, Tim Cook of Apple gave notice to developers that they can start returning to the office shortly. Immediately following, Apple’s employees wrote back,

“… That Apple’s remote/location-flexible work policy, and the communication around it, have already forced some of our colleagues to quit. Without the inclusivity that flexibility brings, many of us feel we have to choose between either a combination of our families, our well-being, and being empowered to do our best work, or being a part of Apple.”

The prospect of returning to the office prompted 4 million Americans to quit their jobs in April, a 20 year high. It’s necessary to underscore that in software development there’s little to no advantage to having work-from-home employees vs. outsourcing. You get all of the extra fully-loaded cost (aside from office space) – but few to none of the benefits.

Outsourcing to Ukraine, Poland, and India

Why these three countries? Ukraine, Poland, and India are the three most popular outsourcing destinations for Israeli companies, as referenced in the Y. Benjamin “Startup Snapshot” that we recently covered. It can be seen that Israeli companies are likely making outsourcing decisions based on Quantity, Quality, and Value.

Outsourcing from Ukraine

Israel and Ukraine share a special relationship in culture and language. It’s estimated that of the Israeli companies that do outsource, 45% outsource to Ukraine. Ukraine’s developers come in only .21% behind Polish developers in technical skill, but for almost half of their wages. Ukraine is not part of the EU and its ties to the “Former Soviet Union” has substantially suppressed its economy, still. Ukraine offers the greatest value proposition – or tech proficiency for the dollar (or New Israeli Shekel, as the case may be).

Ukraine’s government has prioritized development of its technical services industry to the extent that IT industry exports have increased from $3.2 billion to $5+ billion in just 3 years. That signifies an average early growth of 26%. Characteristics of Ukrainian developers include:

  • Highly skilled Java, JavaScript, C#, C++, SQL, PHP and Python developers.
  • Significant numbers of developers specializing in a wider range of languages.
  • Recognized as #2 in best value globally by the 2019 Kearney Services Location Index.
  • Strong communication skills – 80+% have intermediate or higher English proficiency.
  • Below average turnover rates ~8% compared to 12.3% industry average.
How much does it cost to build a remote team in Ukraine?

If you decided to hire a development team in Ukraine or even open an R&D center, this calculator helps you figure out how much it would cost.

Calculate now

Outsourcing from Poland

Poland is the proposition offering the highest quality, if by just a small margin. In Eastern Europe but in the European Union, Polish software developers are highly skilled and still offer a significant value compared to most other countries in the EU. SkillValue’s 2019 Report ranked Poland #3 Globally based upon over 550 technical assessments. The core issue is that only 20% or so of Polish software developers work with outsourcing agencies. Polish software developers are known for:

  • Highly skilled C#, JavaScript, SQL, Python, Kotlin and React Native developers.
  • Good value compared to most EU and US-based developers.
  • Very high English skills (Top 10 Globally).
  • Prefer to work on the basis of an employment contract.
  • Limited outsourcing availability.
  • Weak on legacy languages and technologies.

Outsourcing from India

Quantity. Alas, one infamous person said, “Quantity has a quality of its own.” At face value, with so many software developers available with very low average wages, why not outsource everything to India? The answer resides in the averages themselves reflecting a much wider variance – in wages and technical skill than most other countries. You can find exceptional software developers in India though most of them will charge rates closer to their Western counterparts.

There’s also a pronounced tendency for Indian software development agencies to accept jobs even if they don’t have all of the required skills. However, outsourcing with Indian developers is still viable when managed according to the tips below.

  • Potentially best value with the right management team.
  • Largest pool of developers outside of China.
  • Most popular languages include Python, Java, JavaScript, PHP, C++/C#.
  • Wide variability in technical skill levels and quality of coding.
  • Significantly higher turnover compared to industry average (25+% vs 12.3%).

The key to working with Indian teams focuses on having a software engineering manager with very strong communication skills. Tasks for developers must be explicit, leaving little room for ambiguity. Keep up to speed with the health of your team and project with software development analytics – to help optimize tasks and pairings for code reviews, mentoring, etc.

These points apply to all software development teams but you will need to vet your team more carefully and take more care in assigning tasks by complexity. Leastwise, India’s pace of development will see the country having more software developers than the United States by 2025.

Summary

Learning about the international market for software development is enormously helpful when it comes to finding strong technical talent at an affordable rate. Companies that prefer and are accustomed to hiring locally are likely to find that the dynamics have changed a lot in this past year. Hiring locally is still possible but comes at a premium. It arguably puts you at a disadvantage against competitors who have spent the last year coming up to speed with and refining communications and work processes for distributed software development teams.

You still have many options available. Working with an IT Staffing Agency like PerceptionBox can help you assemble teams of developers with all of the skills you need and be ready to start working on your project in just ten business days. We take care of payroll, taxes, and turnover to help keep your business lean while adding valuable weeks and months to your funding runway.

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