2022-01-106 min read
Outsourcing has gained a vast popularity over the past years. As of the beginning of 2022, 60% of companies outsource at least part of their software development (compared with 56% in 2021).
The demand for outsourcing services is especially topical due to the issue with the talent gap, and businesses need to go digital to meet the demands of pandemics. For example, Accelerance experts predict a shortage of 1.2 million engineers in the USA by 2026. And according to the same report, PHP is among the top 5 technologies businesses seek to outsource. So the competition is fierce.
Still, outsourcing has become one of the significant ways to address the talent gap and accelerate digitization. But what are the best countries for PHP outsourcing? Are there differences in outsourcing to different countries? Or has globalization evened out the destinations? Let’s find out!
Outsourcing provides businesses with the core benefits: low costs, flexibility, and rare skill sets.
Still, it is not a magic pill you can take and get a ready-made solution. Covid hit even outsourcing software development companies, causing a talent gap to become one of the significant challenges for them as well. As a result, it is complicated for vendors to find great developers fast. As a result, the hourly rates increased all around the world, especially for those specialists with rare skill sets.
This problem is not unique to just some countries – the shortage of talent occurred globally. So when you are looking for a dedicated development team, prepare for a more extended hiring period and fewer bench-available specialists no matter the country you choose. Talent shortage evened up the outsourcing destinations. Still, there are some differences they hold that can be more or less suitable for you. Here’s what you should keep in mind:
Price: Hourly rates vary between the countries due to economic factors, minimum salaries, taxes, and the maturity of the IT sector.
Example of how the rates range in the world:
Business environment: Some governments entice investors (and it pertains to outsourcing too) and provide incentives, while others do not support businesses as much.
Skill sets and education of developers: Countries with a robust education system have more qualified developers (and higher hourly wages).
Time zone difference: Determines how frequently and conveniently you will communicate with your vendor.
The level of English: To ensure smooth collaboration between you and the developers.
The Ukrainian IT market responds well to developers’ needs, so a growing number of people choose to work in software. In the last 4 years, the number of developers has risen from 150 to 250 thousand, according to Dou.
Ukraine has been able to transition to remote work better than ever before (which is good for outsourcing) because 71% of IT specialists are working remotely as of January 2021. Developers report that their companies have become even more flexible in how they organize their work during quarantine.
In Ukraine, PHP ranks among the top 5 most popular programming languages. PHP forms a core part of SapientPro’s tech stack, for example.
IT specialists receive an adequate education in Ukraine. The Global Competitiveness Index finds the quality of Ukrainian developers’ skill sets to be quite high (39th place worldwide). Ukraine has a competitive human potential compared to other leaders of Eastern Europe (Poland ranks 35th in the index cited above). Nevertheless, the key to Ukrainian developers acquiring their technical skills is via non-formal means: courses and IT academies.
The Ukrainian business environment has been improving in the last few years. The government has introduced key reforms, such as a flexible exchange rate, simplified business regulations, stabilized and restructured the banking sector, and set up anti-corruption agencies.
Average Hourly Rate for Central and Eastern Europe: $40-77,5
Software Readiness: High
Business Operations Quality: 70.2/100
English Proficiency: 52.13/100
Skills: 70/100
Time Zone: 7 hrs ahead of EST
Innovation Capability: 40.1/100
(Source: Guide to Software Outsourcing in Eastern & Central Europe)
The European Union’s top outsourced country is Poland. Its political and economic ties to most European countries make it easy to form strong partnerships with Polish companies when you are, for instance, in Germany or France. This allows you to conduct business more easily because the regulations are mostly alike. Also, Poland’s government offers enticing tax incentives to investors.
Poland provides high-quality education to the tech sector. Around 78,000 tech graduates graduate each year here. Programmers specializing in the front-end, server-side management, APIs, and big data contribute greatly to the field. Java, Python, JavaScript, HTML, and Objective C are among the top used programming languages. PHP is gradually losing its popularity here. Additionally, Poland has one of the fastest-growing sectors in video games development.
Average Hourly Rate for Central and Eastern Europe: $40-77,5
Software Readiness: High
Business Operations Quality: 76.4/100
English Proficiency: 63.76/100
Skills: 72/100
Time Zone: 6 hrs ahead of EST
Innovation Capability: 49.7/100
(Source: Guide to Software Outsourcing in Eastern & Central Europe)
The free and equal distribution of education is one of the reasons Romanian developers rank 20th on all HackerRank tests. Romanian developers offer a wide range of skills and excellent specializations. Approximately 7,500 engineers and computer scientists graduate from Romania’s 41 technical universities each year. A total of seven Romanian universities rank among the world’s best in computer science.
As Romania’s outsourcing market is smaller than that of its neighbor, Ukraine, it can be challenging to locate as many developers of needed skills as you would want. Due to a tight job market in the past few years, tech companies even had to consider hiring talent from Ukraine and Moldova.
The political situation in Romania is stable. In the 2020 Global Peace Index, Romania is ranked 22nd for investment safety. Romania has been a member of the EU since 2007, so Romanian businesses can easily comply with EU laws.
Average Hourly Rate for Central and Eastern Europe: $40-77,5
Software Readiness: Medium
Business Operations Quality: 73.3/100
English Proficiency: 61.36/100
Skills: 62/100
Time Zone: 7 hrs ahead of EST
Innovation Capability: 42.3/100
(Source: Guide to Software Outsourcing in Eastern & Central Europe)
Example of how the rates range depending on the team role:
Portugal remained in the top three safest countries globally, behind Iceland and New Zealand, in the 2020 Global Peace Index. So political and social stability will not be your concern.
About 17.5 thousand people work in the Portuguese IT industry. Startups and investors are offered a slew of benefits by the government to encourage them to invest in these people. Also, Portugal has been working with the talent gap since 2019 by implementing the Tech Visa program. This initiative aims to increase the Portuguese IT sector by recruiting and providing relocation to specialists from outside the European Union.
Recent years have seen Lisbon become a technological hotspot. A record amount of greenfield foreign investments were made in the capital city in 2019, and approximately 75 million US dollars were invested in just ten projects.
Average Hourly Rate for Europe: $40-77,5
Software Readiness: Medium
Business Operations Quality: 76.5/100
English Proficiency: 63.14/100
Skills: 70/100
Time Zone: 5 hrs ahead of EST
Innovation Capability: 53.7/100
(Source: Guide to Software Outsourcing in Eastern & Central Europe)
When compared to the Philippines, Vietnam’s outsourcing industry is relatively young. And the BPO sector still outstrips the IT sector here. However, the situation will likely change. As of now, Vietnam is home to nearly 400.000 IT engineers. The number is growing by 50.000 tech graduates from over 153 IT educational institutions annually. Also, over 1,900 vocational schools now offer courses that will help future employees land jobs, including those in tech.
Vietnam is one of the fastest-growing markets that still offers huge potential for outsourcing. International investment is viewed as a top priority by the government. Additionally, the country is expanding its internet economy by 40% year over year, looking beyond its traditional manufacturing practices.
Average Hourly Rate for Southeast Region: $30-40
Software Readiness: High
Business Operations Quality: 69.8/100
English Proficiency: 51.6/100
Skills: 57/100
Time Zone: 12 hrs ahead of EST
Innovation Capability: 37/100
(Source: Guide to Software Outsourcing in South and Southeast Asia)
Another top PHP outsourcing destination, the Philippines’ IT market, is constantly growing. The Philippines is an attractive location for foreign outsourced companies because of its wealth of IT infrastructure, which offers incentives, training, and other perks.
A large portion of the Philippines’ population is young, and the economy is improving at a fast pace with their efforts. Their median age is 23. Thanks to local universities and colleges, a pool of skilled and qualified workers grow by more than 500,000 annually.
There are very established labor laws in the Philippines, and they tend to be pro-labor in general.
By 2025, the digital economy in the Philippines is expected to be worth $25 billion.
Average Hourly Rate for Southeast Region: $30-40
Software Readiness: High
Business Operations Quality: 68.2/100
English Proficiency: 60.1/100
Skills: 64/100
Time Zone: 13 hrs ahead of EST
Innovation Capability: 38/100
(Source: Guide to Software Outsourcing in South and Southeast Asia)
Thailand has undergone a digital transformation that affects all aspects of its life in the last few years. As a result, technology outsourcing has gained more ground here. Thailand deserves extra points for simplifying registration processes for new businesses and revising its rules and regulations to be in line with market demands.
Thailand’s government has created new incentives by the end of 2019 to attract investment into the nation’s new hub for tech manufacturing and services located in the eastern part of the country. A good example: STEM-oriented companies are exempt from paying taxes for a minimum of five years after they begin conducting education and training.
Moreover, Thailand stands out for its protection of minority investors.
Average Hourly Rate for Southeast Region: $30-40
Software Readiness: Medium
Business Operations Quality: 80.1/100
English Proficiency: 47.6/100
Skills: 62/100
Time Zone: 12 hrs ahead of EST
Innovation Capability: 43.9/100
(Source: Guide to Software Outsourcing in South and Southeast Asia)
Brazil saw a strong jump in IT investment in 2018, with figures exceeding the global average. The COVID-19 crisis, however, interrupted this trend. The Economist Intelligence Unit’s Robert Wood predicts that foreign investment will be difficult for Brazil.
Yet Brazil has some of the world’s top IT higher education programs, which graduates more than 100,000 students every year. Brazilian Silicon Valley Florianópolis has a number of universities, research institutes, and incubators.
Brazil took the second place as an emergent country in technology in Latin America, according to Coursera Global Skill Index, and 42nd globally.
Technology infrastructure has been developed in Brazil as a result of government and business incentives and investments in the past. The country planned to diversify its economy through digitalization in 2020-2022.
Average Hourly Rate for Latin America Region: $45-80
Software Readiness: High
Business Operations Quality: 59.1/100
English Proficiency: 50.1/100
Skills: 56/100
Time Zone: 1-2 hrs ahead of EST
Innovation Capability: 48.9/100
The Colombian free-market economy offers a large and stable workforce to companies seeking to outsource to the country. Having grown by 38 percent since 2016, the Colombian IT sector has drawn foreign direct investments as a result of the global demand for software products like mobile app development, game development, and custom application development.
During the past decade, the number of engineers, computer scientists, and IT professionals has doubled here. Now, it has approximately 120 thousand available IT specialists ready to be outsourced.
As the IT sector in Colombia grows thanks to foreign direct investment from the United States, the Colombian government continues to entice companies seeking to outsource with a tax law that exempts foreign investors from paying Value Added Tax.
Average Hourly Rate for Latin America Region: $45-80
Software Readiness: High
Business Operations Quality: 70.1/100
English Proficiency: 48.75/100
Skills: 60/100
Time Zone: 0-1 hrs ahead of EST
Innovation Capability: 36.4/100
India has an impressive talent pool, almost the biggest one in the field of IT outsourcing. Over 3.1 billion Indians graduate each year, and over 300,000 earn a postgraduate degree. Furthermore, about 500,000 engineers graduate every year from Indian engineering colleges. All these people are well-educated and have good English acquisition skills. This provides India with 80% of all outsourcing market.
However, as a result of the COVID-19 crisis, this country has lost its title as the world’s fastest growing economy. As a result of this pandemic, India has suffered a great hardship, disrupting almost everything – from its medical system to its business operations (including those run by foreign investors). Hopefully, the situation will improve in the future.
Average Hourly Rate for South Asia Region: $30-55
Software Readiness: High
Business Operations Quality: 71/100
English Proficiency: 55.5/100
Skills: 50/100
Time Zone: 10.5 hrs ahead of EST
Innovation Capability: 51/100
(Source: Guide to Software Outsourcing in South and Southeast Asia)
Once you have selected the countries for your next outsourcing project, you will need to identify specific outsourcing companies. To help you choose the right vendor, we have provided a list of questions to ask and factors to consider in our recent article.
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