Outsourcing is an integral part of the modern tech industry. Yet one question remains: How to choose the best location for outsourcing tech talent?
We’ve selected 8 emerging outsourcing and IT services destinations that have the potential to compete with the traditional industry leaders, based on their tech skills, business environment, digital innovation, and English proficiency.
Best Countries for Outsourcing in 2023
Software development outsourcing is the process of hiring an external contractor for programming-related tasks rather than completing them in-house. It is a widespread business practice that allows you to cut down on development costs, add expertise to your staff, and increase product time-to-market.
Choosing the right outsourcing partner requires strong professional management. First, you need to create a clear project outline that will include all relevant infrastructure requirements, tech stack specifications, and team composition – not to mention your projected timeframe. Only after you know what you are looking for can you start exploring outsourcing destinations that best correspond to your business needs.
Currently, the top 5 outsourcing countries in the world are:
All five countries boast a seasoned information technology industry, a large talent pool of quality programmers, and a wide range of tech vendors with domain expertise in every conceivable field. However, the high demand for outsourcing providers has created a competitive market. On the path to becoming a tech giant, you’ll have to allocate a lot of resources to find capable professionals in India or any other country from the top 5.
The good news is that the global outsourcing market is not limited to these destinations. Many other countries can offer first-rate services, tech competency diversity, and a reasonable quality-to-cost ratio. Let’s have a closer look at some of the top outsourcing destinations in 2023.
Key Facts about Outsourcing to Romania
Romania has become an important player in the Eastern European tech scene. After the country joined the European Union in 2007, its IT sector started to attract significant investments, spurring local entrepreneurial culture.
These efforts eventually bore fruit, as the market value of the Romanian software industry has been constantly growing ever since. The country has managed to ensure 14.3% annual growth of its tech sector. In 2021 the ITC industry made a 6.7% contribution to the national GDP, and this is projected to reach 10% over the next couple of years. The market size of the software development sector alone is currently estimated at $3.2 billion.
Thanks to clear and transparent procedures for registering property, paying taxes, and enforcing contracts, Romania is drawing the attention of global tech companies. Several multinational corporations have already opened their offices in various locations around the country. For example, HP has built a software development center in Cluj-Napoca, IBM operates in Brasov, Microsoft in Timișoara, Amazon in Iasi, and Oracle in Bucharest.
On the downside, big tech companies spreading out their operations across the country puts extra pressure on the labor market. Romania currently houses around 140K high highly skilled developers, with an increment of about 7.5K computer science and engineering graduates per year. At this rate, it is not fit to support the growing demand for IT specialists. A tight job market has already driven up costs and forced tech companies to import talent from nearby Ukraine and other Eastern European countries.
Key Facts about Outsourcing to Poland
Poland is another one of the top countries for outsourcing in the CEE region. Polish IT outsourcing ecosystem combines around 700 business service centers located in Warsaw, Kraków, Łódź, and Wrocław.
With a massive talent pool of 401K seasoned professionals, Poland is well-positioned to become one of the most powerful R&D hubs for international enterprises operating in various fields. Some of the global tech giants that have already recognized the country’s potential as a burgeoning software outsourcing destination include Google, IBM, Intel, Samsung, Siemens, and Ericsson.
Even though the Polish IT industry started picking up steam only a few years ago, its market value currently amounts to approximately $12.4B. Most of the revenue comes from computer equipment sales, IT services, and software distribution. The software development sector is projected to grow by 7,2% by the end of 2022, while the hardware industry is expected to see an increase of 3,2%.
Key Facts about Outsourcing to Ukraine
Despite the Russian invasion, mobilization, and forced relocation of businesses and teams, Ukraine still holds the position of one of the most promising software development locations in Eastern Europe. A deep talent pool, government-backed incentives, and a good investment climate gave rise to a flourishing tech ecosystem. Ukraine’s IT outsourcing industry not only survived but also succeeded to take a hit and provide economic support for the state in the harsh realities of military conflict.
The figures eloquently illustrate this: over the past three years, the Ukrainian IT industry has more than doubled its service export capabilities. In 2021 alone, the sector has seen an increase of 36%, delivering profitable growth of $6.8B compared to $5B the year before. In 2022 the industry has once again proved itself strong, providing a record $2B revenue in the first fiscal quarter.
The nation can also boast an impressive talent pool of 285K certified programmers. In the coming years, the size of the Ukrainian tech community is likely to grow, as nearly 23K aspiring IT specialists are entering the workforce on an annual basis.
These numbers are driven by a spread network of technical universities around the country. The nation’s biggest software development hotspots, such as Kyiv, Lviv, Dnipro, and Odesa, are bustling with technology and engineering students ready to fill the market demand gap.
Ukrainian developers are often featured on numerous rankings of the best software engineers by country. The latest SkillValue ranking put Ukraine in 4th place in its leaders' matrix. The average test success rate of Ukrainian programmers on this platform is 58.17%. According to HackerRank results, the country secured 11th position in the world in terms of tech skills, way ahead of the traditional coding giants, including India and the US.
Ukrainian tech clusters unite over 3K IT service providers specializing in e-commerce, fintech, education, health and telecom domains. 87% of them develop quality software solutions, 7% deliver hardware products and the remaining 6% focus on customer services.
Several Ukrainian companies have experienced rapid revenue growth, resulting in a market capitalization of $1B or more. Such internationally known unicorn startups as PetCube, GitLab, Ring, Grammarly, People.ai, and Preply all got their start in Ukraine.
Key Facts about Outsourcing to Mexico
Mexico has a long history of being a leading nearshore outsourcing destination for North American companies. Although it’s mostly known as the top choice for the apparel, automotive, and electronics spheres, the country is currently gaining a lot of traction with enterprises seeking quality software development services.
20 years ago Mexico barely had any IT infrastructure, but it is now a rapidly growing player in the world’s information technology outsourcing industry. The market experienced a huge leap in development after 2006 when the government decided to put technology at the core of its efforts to boost the national economy. The plan eventually brought the desired effect: in 2022 the Mexican tech services industry had total revenues upwards of $10.3B, with the IT outsourcing segment accounting for $3.6B. Mexico also appears in the top 20 of the largest information technology exporters. In 2020, the country sold $427B worth of goods, with 15.4% coming from IT exports.
The country boasts a vast talent pool of 700K software engineers well-versed in the latest technologies. Mexican developers scored second highest in the Python tests offered by the SkillValue platform, whereas Mexican freelancers excel at C/C++ programming.
Local authorities saw the untapped potential of Mexican programmers and decided to prioritize tech education, promoting various programs with a focus on STEM disciplines. This resulted in the country producing almost 114K seasoned engineering specialists a year.
According to Coursera Global Skills Report, Mexican learners show 91% performance in cloud computing, 86% in web development, 66% in mobile development, and 55% in software engineering. The data science skills proficiency levels are also pretty high with 55% in data management and 50% in statistical programming.
Despite the nation’s late-blooming interest in the tech industry, Mexico can now take pride in its fast-growing IT infrastructure and several powerful tech hubs, including Mexico City, Guadalajara, Monterrey, Tijuana, and Merida. Combined with fluent English capabilities of tech talent and a convenient time zone for clients in both Silicon Valley and the East Coast, it enables the country to attract more and more clients from the U.S. and Canada. American firms, in turn, are happier than ever to look across the border for top-notch professionals at an affordable price.
Key Facts about Outsourcing to Colombia
Colombia is a part of the CIVETS group that also includes Indonesia, Vietnam, Egypt, Turkey and South Africa. They are regarded as up-and-coming states with dynamic economies, diversified exports, and large populations of people under 30 years of age. These are also the countries with relative political stability, robust financial systems, and great emphasis on higher education.
Despite the somewhat young workforce, Colombian developers scored 66% on HackerRank assessments, making the country a great place to find junior developers. This also allowed the Colombian tech community to join the top 50 nations for software development outsourcing.
Colombia is the 5th largest supplier of IT services among Latin American countries. In 2021, the software and information technology industry recorded exports worth 218.8M, which is 33% more than in 2020. To foster further growth, the government is investing $6.5B into its science, technology, and innovation sectors.
Colombia is aiming to bring the number of programmers and developers up to 100K people over the next few years. This is a pretty realistic plan, as the country already has 65K+ software engineering specialists. The majority of tech pros live in the area’s hottest cities for IT talent: Bogotá, Medellín, and Cali.
The country is constantly increasing its spending on education, which currently accounts for 4.93% of GDP. Thanks to government strategy Colombia has doubled its number of tech graduates in the past decade. Currently, over 13K newly-minted IT and engineering alumni are joining the labor market every year.
Key Facts about Outsourcing to the Philippines
The Philippines stands at the crossroads of eastern and western business cultures and can serve as the entry point to the rest of Asia. Filipinos have a deep understanding of Western culture due to their historical background as a former American colony.
The archipelago was under US rule for almost 50 years, and this period had a great impact on the country’s public health, education and political structure. Another favorable outcome of American-Philippine relations is a high level of English proficiency among Filipinos.
According to the EF English Proficiency Index, the country has an average score of 592 points, being the 2nd best country in language skills in Asia. English is a mother tongue for nearly 14M citizens, while 92% of the population use it as their second language. This makes the Philippines one of the largest English-speaking nations in the world.
The imposition of English in news media, trade, and even pop culture caused a major shift in the education sector. The Philippines committed itself to research and innovation, development of e-services, digitization and profound training in STEM fields. Eventually, these efforts bore fruit, as in the 2019/2020 academic year alone, over 47K students aimed to earn a degree in IT.
The country already houses around 190K developers, who are located in such BPO hubs as Manila, Cebu, Davao, and Bacolod. These cities have established reputations as some of the best places to outsource IT services in the healthcare and fintech domains. Filipino engineers are also good at robotic process automation and artificial intelligence solutions.
Key Facts about Outsourcing to Vietnam
Vietnam is one of the fastest-growing economies in the Asia-Pacific region. The transition from low-tech manufacturing to a service-oriented economy transformed the country from one of the poorest nations in the world to an economic powerhouse not to be underestimated. With an average economic growth rate of 5.4%, Vietnam is believed to be one of a few Asian states that could surpass larger competitors such as China and India in the coming years.
Apart from being a rising star among Asia’s bustling economies, Vietnam is gaining traction as an outsourcing destination. In the first half of 2022 the revenues of the ITC industry had an estimated value of $77B, up 17% from the same period last year. This makes Vietnam #8 among the top counties by high-technology exports in the world.
It’s hard to believe, but the country that barely had any high-tech companies 20 years ago is now home to 67.3K information technology businesses. Hanoi, Ho Chi Minh City, and Da Nang are particularly known for their vibrant start-up atmosphere. These cities have developed a robust tech ecosystem with great infrastructure and many respected universities. Tech-focused schools in the area produce 55K IT major graduates every year.
Sustainable growth, enormous talent pool, incentives packages and heavy investments in education placed Vietnam among the top 50 digital nations. The country has secured 25th position in Tholons Global Innovation Country Index. Moreover, Hanoi and Ho Chi Minh City are both included in the top 100 “Super Cities” ranking, appearing in 50th and 58th positions respectively.
Key Facts about Outsourcing to Egypt
The competition in the offshore outsourcing industry is extensive and fast-paced. As global leaders, China and India, age and their IT service sectors mature, tech companies started to look for alternatives. Many Western firms have turned to North Africa, since this region has a growing young population, tech-savvy workforce, and time-zone compatibility with Europe, making it a perfect spot for nearshore outsourcing.
Egypt is yet another emerging frontier in software development on the African continent. Egyptian vendors are particularly well-versed in technologies like Linux, Python, Ruby, and MySQL. They have an impressive track record of working with European and Northern American tech corporations. Some of the world’s leading companies such as Vodafone, Orange, Dell and Intel chose Egypt as a formidable outsourcing provider.
Egypt’s astounding achievements on the global tech scene spring from its high-quality resources. The country today has about 125K employees working in the IT outsourcing sector. Moreover, the Egyptian government has launched a new initiative called “Our Future is Digital”. It aims to engage 100K young people, and help them develop their ICT skills in areas like digital marketing, data management, computational thinking, and graphic design.
Initiatives like this are possible because Egypt has a dynamic economy with a mature financial system. It is the 2nd country in Africa by economic power, with nominal GDP amounting to $402.8B in 2021. The information and communications technology sector contributed nearly 5% of this amount.
Hire World-Class Programmers with Grid Dynamics
Finding the right team to build your product is a pretty hard task no matter where in the world you’re located. However, you can streamline this process by partnering with a reliable software development company.
Grid Dynamics is a digital-native technology services provider that accelerates growth and bolsters competitive advantage for Fortune 1000 companies. We have engineering centers in the US, Ukraine, Romania, Mexico, Serbia, Poland Moldova, Armenia, Jamaica, and India meaning that we have the resources to cater to the needs of companies of any size, no matter where they are located.
Our clients have the option of choosing the engagement model which best suits their needs and project requirements. We offer services in building dedicated teams, managed POD teams, remote development centers, as well as team extension.
Contact us to learn how to hire seasoned software developers for your team and achieve high-quality deliverables on time and within budget.