Setting up an in-house software development team is challenging. It requires a lot of time, effort, and overhead costs to hire and manage the experts you need. That’s why so many businesses choose to focus on their core business functions and go for a team extension to take care of software engineering.
But how to find the professionals who have the tech and domain expertise you need? Typically, businesses partner with tech vendors that help them address this challenge.
We've compiled this guide to help you find the right partner and hire an offshore development team. It covers such aspects as what outsourcing destination to choose, how to select the best vendor, what legal questions to consider, and more.
Where to find a development team
Usually, businesses choose outsourcing destinations based on their geographical location, billing rates, cultural compatibility, and time zone differences. According to these criteria, Latin America, on par with Central and Eastern Europe (CEE) are the hottest spots to find developers.
Where to hire an offshore development team: Latin America
Latin America is a favorable location for outsourcing due to its vast tech talent pool. Moreover, the competition for talent is much lower compared to North America, which, in turn, makes the recruitment process easier, faster, and less expensive. Global rankings, including Kearney, Global Innovation Index, Ease of Doing Business, and others, recognize Latin America as a prominent outsourcing destination. Colombia, Mexico, Costa Rica, and Brazil are home to the most sought-after professionals. The overall talent pool in the region amounts to nearly 2M tech experts. Take a look at the biggest tech players in the region.
Let’s now examine some of them in more detail—namely, Colombia, Brazil, and Mexico.
Why outsource to Colombia: market overview
The local government actively promotes the nation's digital transformation, frequently launching initiatives to enhance the ICT sector. So, it is no surprise that the Colombian technology sector has grown at a CAGR of 24.5% since 2010, bringing it to Latin America's top three IT markets. For example, through the Investment Promotion Program targeting key sectors, the government has offered tax breaks to technology companies. Additionally, since 2017, specific digital content and cloud services have been exempt from taxes. These tax incentives, among others, attract innovative firms to Colombia, promoting technological progress.
Learn how to hire software developers in Colombia
Why outsource to Brazil: market overview
Brazil boasts the largest technology sector in Latin America. Local tech vendors focus heavily on fintech, ecommerce, and mobile app development. Positioned 124th in the Ease of Doing Business index, the country has fostered innovation within the IT sector by establishing science and technology parks, digital inclusion efforts, startup support programs, and cybersecurity measures. The Brazilian ICT market is experiencing rapid growth, with expectations of a 5% increase in 2023, reaching close to $8B. Brazil improved its standing by four ranks on the Kearney Global Services Location Index, entering the top five in 2021. The major centers of technological activity in Brazil are Sao Paulo and Rio de Janeiro.
Learn how to hire software developers in Brazil
Why outsource to Mexico: market overview
Mexico is the second-largest technology market in Latin America, specializing in software development, fintech, and ecommerce. Globally, it ranks 12th in innovation and third in Latin America and the Caribbean. The country benefits from various government initiatives, technological parks, and startup investments that bolster its robust tech infrastructure. Additionally, Mexico boasts a vast reservoir of tech talent, with more than 700,000 developers and 3M STEM professionals as of 2020-2021.
Learn more about the market landscape of IT outsourcing to Mexico
Where to hire an offshore development team: CEE
IT outsourcing to Central and Eastern Europe is an advantageous business strategy. It offers access to an extensive tech talent pool and specialized expertise while facilitating partnerships with dependable tech firms to enhance technical capabilities. This article delves into the key outsourcing hubs within the region, examining resource availability, the corporate landscape, and the overarching economic and business environments.
Among the leaders in tech talent are Poland, Ukraine, Romania, and the Czech Republic, which boast the largest concentrations of professionals engaged in IT outsourcing, and R&D. Poland is home to over 500,000 ICT specialists. Despite the ongoing war, Ukraine remains a premier outsourcing destination with more than 300,000 ICT experts. So, many businesses still choose this country to hire an offshore development team.
Hungary and Bulgaria are also emerging as notable centers due to continuous innovation, supportive government policies, and an increasing pool of ICT professionals, numbering 180,000 and 108,000, respectively.
This region has a well-deserved reputation as a reliable IT outsourcing destination thanks to its growing talent pool, cost-effectiveness, and the constant growth of the IT industry.
Let’s now examine some of the region's most prominent tech hubs: Poland, Ukraine, and Romania.
Why outsource to Poland: market overview
Poland stands out as a prime outsourcing destination, thanks to its rapidly growing economy and strong appeal to foreign companies seeking software development expertise. The country boasts a significant tech talent pool with over 525,000 ICT professionals. Most Polish IT specialists are engaged with global shared services, business process outsourcing, and various non-IT corporate sectors. Notably, Poland has the largest working-age population in Central Europe, predominantly under the age of 34.
Each year, the Polish software development market is bolstered by over 13,000 ICT graduates. According to Statista, enrollment in ICT-related subjects reached 68,000 during the 2021/2022 academic year.
Clutch identifies more than 1,350 companies in Poland offering software outsourcing services. While most of these vendors are smaller entities with up to 250 employees, over 120 are mid-sized to large firms. Key sectors these vendors serve include financial and business services, information technology, ecommerce, and healthcare, highlighting the diverse expertise available within Poland’s IT outsourcing industry.
Why outsource to Ukraine: market overview
Ukraine is recognized as one of the top destinations for global software development services in Europe. The country's software development industry shows consistent growth, offering several advantages, such as a large pool of IT talent, extensive expertise, cost-effectiveness, and a strong foundation in technical education.
Home to approximately 300,000 ICT professionals, around 60% of whom are employed by IT outsourcing and outstaffing companies, Ukraine continues to be a hub for technological expertise.
The country hosts over 2,000 companies that deliver a wide array of IT services, nearly 1,000 of which are featured on Clutch. These firms have cultivated deep expertise across various sectors such as fintech, information technology, healthcare, ecommerce, and retail, contributing to Ukraine's robust position in the international IT arena. Additionally, Ukraine houses over 100 R&D subsidiaries of major global companies from industries like software, gaming, telecoms, and ecommerce, with giants like Microsoft, Samsung Electronics, Apple, and IBM establishing their research and development centers there.
Ukraine's IT industry is also achieving notable recognition globally. It ranked 42nd on the Kearney Global Services Location Index and 4th in its category on the 2022 Global Innovation Index by WIPO. Impressively, 15 Ukrainian IT companies, including N-iX, were listed in the 2024 Global Outsourcing 100 by the International Association of Outsourcing Professionals (IAOP) as top outsourcing providers. This growing acclaim further establishes Ukraine as a favored IT outsourcing hub in Europe.
Why outsource to Romania: market overview
The IT sector in Romania boasts approximately 202,000 ICT specialists known for their high-quality services, placing the country 23rd in the SkillValue ranking and 12th on the TopCoder lists. Romanian developers are also recognized for their strong English proficiency, securing the 15th position in the EF EPI English proficiency ranking.
In 2022, Romania's IT industry surged, reaching a market value of $3.4B. According to McKinsey, IT services contribute 6% to the national GDP, and Romania is ranked 32nd on the Kearney Global Services Location Index as a favorable outsourcing destination.
Romania is home to over 450 companies that offer a wide range of technical and domain expertise, predominantly in industries such as IT, business and financial services, and healthcare. Since joining the EU in 2007, the Romanian IT sector has flourished, attracting major global players like Hewlett-Packard, Huawei, Ericsson, and Gameloft. Additionally, Microsoft operates two global business support centers in Bucharest and Timisoara, playing a significant role in advancing Romania's technological landscape.
MARKET REPORT
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Success!
No matter what destination you choose to hire an offshore development team, the best practices to partner with an outsourced team remain the same. Let’s now take a look at them.
How to partner with a development team successfully
Ensure effective knowledge-sharing
Don’t underestimate the importance of knowledge transfer when you hire an offshore development team. Unshared knowledge costs money, especially when it comes to IT outsourcing projects. Knowledge loss could result in a lot of organizational waste when the whole process is reworked from scratch.
There are two types of knowledge transfer flows: from a client to a vendor or from a previous vendor to a new vendor. No matter which case is yours, the knowledge transfer plan stays the same. It all starts with a demo and the investigation and ends with setting up the environments, taking over business-as-usual, and the first successful release.
The successful knowledge transfer in IT outsourcing is about people, processes, and a product. The vendor has to understand what the product does, how it operates, and what people are responsible for specific tasks to deliver on the client’s expectations. So, choose a vendor that has a robust knowledge transfer plan. It will make the entire journey smooth and safe.
Streamline effective communication
The more effective your communication with your offshore developers, the more successful your collaboration will be. But to avoid misunderstandings and unmet expectations from both sides, be ready to create an effective working environment.
Some ground rules are vital for fruitful cooperation when you hire an offshore development team. Some of them are the unification of coding practices within the team, establishing channels of communication, and promoting knowledge transfer among developers.
Working with a development team offshore: Success stories
There are many large tech companies and enterprises that have successfully hired offshore developers, shaped strategic partnerships with them and benefited from the cooperation. Here are a few examples:
1. Lebara
Lebara is a global telecom that has formed a long-term partnership with N-iX. Our software engineers have helped Lebara with software development, quality assurance, database administration, application and infrastructure support, and more. We set up an offshore development center for Lebara (100+ experts) and worked on such products as LebaraPlay, MyLebara, LebaraMoney, Bluepipe, and others.
2. Currencycloud
Currencycloud is a global payment platform that enables companies to send and receive cross-border payments worldwide. The company started an ongoing partnership with N-iX in 2013. Our development team has worked on migrating to microservices, enhancing the platform's functionality, including APIs, core banking and payment services, customer-facing features, and more.
3. Fluke Corporation
Fluke Corporation is a world leader in the manufacturing industry and a global producer of electronic equipment. N-iX development team has been working with the company on developing enterprise automation solutions. Such leading companies use the products as Honda North America, Toyota UK, Volkswagen, and many others.
These are just several global businesses that have decided to hire an offshore development team and enjoyed the results.
Wrap-up
A lot of businesses hire developers to fill the skill gap, boost their capabilities, and bring their products to market faster. Despite a thorny way of finding the development team, it is worth the struggle. However, you have to pay attention to some crucial aspects to know that a particular vendor is a reliable partner. Here's how you can hire the best developers:
Step one: Choose the outsourcing destination that is culturally and (or) geographically close to your country;
Step two: Research the companies in the chosen region regarding their track record, expertise, and security issues;
Step three: Sign a contract that will cover all of the possible issues and nuances of the future collaboration: financial side, the quality of the services, etc.;
Step four: Establish effective communication with your offshore software development team and share all the needed information with them to make sure that you are on the same page;
Step five: Scale a team up or down according to your business needs;
Step six: Deliver a reliable and secure product with your offshore developers.
If you have any questions about finding and building a successful offshore development team, please contact us. We'll be happy to help.
