The Rise of Nearshore Outsourcing to Eastern Europe
In recent years, the global business landscape has undergone a seismic shift. Outsourcing has become a critical facet of the digital age, transforming into a key component for companies eager to bolster their digital capabilities. However, the traditional paradigm of outsourcing has seen a drastic shift, especially in the UK's thriving tech sector. Today, we observe a remarkable phenomenon taking centre stage: nearshoring.
Nearshoring: The New Outsourcing Paradigm in the UK
On a quest for top-grade technical support and a desire to mitigate the rigours of recruitment, UK businesses have turned to an alternative approach that brings together the best of both worlds: outsourcing and in-house resource. Nearshoring is this very concept, offering a flexible and efficient solution where services are outsourced to geographically proximate nations. The essence of nearshoring lies in bridging the cultural and temporal gaps, making the process cost-effective and convenient.
The UK and Europe: A Nearshoring Success Story
Increasingly, nearshoring has become an attractive solution for emerging and established tech companies. In light of the increased demand for immediate technical support, nearshoring offers a blend of cultural compatibility, geographical proximity, and fiscal prudence. UK businesses have found solace in their European counterparts for nearshoring solutions, especially in an age where latencies have improved and the pandemic has amplified the need for tech solutions.
The Nearshoring Boom Amidst the UK's Tech Renaissance
The UK tech market is in a state of exponential growth. According to StartNearshoring, 65% of businesses plan to continue or increase their rate of outsourcing. As the domestic IT industry, currently valued at close to £130 billion, continues to rise, investments in nearshoring solutions are no longer a luxury but a necessity for the burgeoning tech industry.
The Eastern European Edge: A Preferred Nearshoring Destination
Amidst the increasing preference for nearshoring, Eastern Europe has emerged as a favoured choice for the UK. “By 2025 the number of software developers in Ukraine is expected to reach 242K…(with) 100 out of Fortune 500 companies and 20% of global leaders have their remote development teams in Ukraine…(and) 81% of software developers have an intermediate or higher level of English proficiency” (source).
Ukraine’s rise to the top of the nearshoring food chain echoes that of Bulgaria - who offer reductions in “development costs by up to 50%...Bulgarian Java and Python developers rank second and third (in global ranking, boasting) more than 40k software engineers” (source), and Romania - who offers “an 8.8% annual growth rate for employment in the IT sector” (source)…“with KPMG listing Romania as the number one country among the mature outsourcing markets” (source).
Other countries such as Poland, France, Belarus and Hungary are also frequent destinations for nearshoring tech solutions, and in total there are “around 3,000 nearshore outsourcing companies in Eastern Europe” (source).
The Credibility of Nearshoring in Eastern Europe
The increased demand for nearshoring in Eastern Europe is not just a product of necessity. This region has gained credibility due to its equality in the workforce, affordable services, and emphasis on STEM education. Bulgaria, for instance, “employs the highest proportion of female software developers in the ICT industry with 27% of the force being female”. With many UK employers and educators struggling to engage young women in IT and tech, the importation of mentor networks with leading STEM-educated women in Eastern Europe offers opportunities for our own young domestic workforce to improve their equity of representation.
Cost-Effective Quality: The Winning Combination
The allure of nearshoring does not end with an impressive resourcing pool and cultural compatibility. Quality of delivery, improved latency and cost-effectiveness continue to also be huge draws for UK tech leaders. From flexible frameworks of nearshoring to affordable rates outside of IR35, nearshoring has become both an economic boon, as much as a technical one. In some instances, full-stack developers from nearshore resources can cost up to 30%-50% less than domestic resource.
A diagram of the nearshoring cycle in the UK's Tech Industry.
The Bright Future of Nearshoring in the UK
As Accedia neatly summarised in their report IT Outsourcing Eastern Europe: Top Destinations, Eastern Europe has carved out a niche for itself as a preferred destination for nearshoring due to a myriad of reasons, including a highly qualified resource pool, diverse technology stacks, proficiency in English, lower development costs, and a rich heritage in Computer Science and Mathematics. The growing need for tech resource in the UK's competitive tech sector can't simply be fulfilled domestically. But the resources from Eastern Europe provide a highly effective and quality solution. Thus, nearshoring stands as a beacon of hope for UK companies navigating through the stormy waters of tech demand and skill scarcity.
Embrace the potential of nearshoring. It's high time to consult a team of experts who can guide your venture into the realm of nearshoring, help your business overcome resource challenges, and ensure you stay ahead of the curve in the dynamic world of technology.