Software Development in Eastern Europe: Does it differ from the Rest of the World?

January 09, 2023 • 248 Views • 15 min read

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Bohdan Vasylkiv

CEO & Co-Founder

Today seems to be not the best time for investments like outsourcing software development services. Various aspects like possible economic crises, worldwide inflation, the russian invasion of Ukraine, and many other situations, that happened in the previous year, shaped the investment strategies. It is easy to understand the possible fears of the investors, as well as their skepticism about Eastern Europe as a potential market for investments. However, what if we say, that all these fears have nothing in common with the real situation in this specific market?

Before explaining our statement, we need to give you the overall context of software development in Eastern Europe.

What is so Special about Eastern Europe?

Frankly speaking, it is even hard to compare software development in Eastern Europe with the rest Western World. Almost all the time, Eastern Europe was a popular outsourcing destination for numerous reasons. Thus, most innovative products and tech companies were designed rather as a service, not a product. In other words, most specialists and Eastern European software developers were providing their skills and experience specifically for outsourcing software development or software product extension and improvement.

As a result, software developers from this part of the world were able to highly improve their skills and technical expertise due to the fact, that in a short amount of time, they were forced to quickly adapt to new conditions. While the rest of the world was mainly working with the same tech stack and on a single software project, Ukrainian software developers were constantly changing their work environment, immediately switching from one project to another. The same is true for most Eastern European software companies.

Nevertheless, nowadays, software development in Eastern Europe rapidly changes. A high level of competition, numerous specialists with technical expertise, and years of experience resulted in the “startup boom”. As a result, Ukrainian programmers started developing their own products, some of which have already become unicorns, which shows a high level of expertise and overall possibilities of Eastern European developers. This is a tendency all over Eastern Europe. In fact, in recent years numerous development companies have shown impressive results in multiple software fields. For instance, polish CD Project Red and their worldwide known games like The Witcher 3 or Cyberpunk2077, Ukrainian GSC Game Word with upcoming Stalker 2, 4A Games, and their Metro series are also originally from Ukraine.

Apart from it, Ukrainian programmers have shown unique products like Diia, a governmental mobile app, which gives numerous useful features for citizens. It has already become known as the “state within a smartphone”, giving the opportunity to gather all documents in one click, pay taxes, vote for various initiatives like the recent National Selection of Eurovision representatives, etc.

The FinTech sector is not an exception. Frankly speaking, Ukrainian banks are working much faster and more effectively than their competitors from western countries. Moreover, one of the most successful neobanking examples, Monobank, was also developed in Ukraine.

All the foregoing illustrations are only a small piece of the overall technological solutions, developed in Eastern Europe. For instance, we didn’t even mention the technologies, that appeared during the russian-Ukrainian war.

How Software Development in Eastern Europe Differs?

As we mentioned before, this region was and still is a popular outsourcing destination. Eastern European outsourcing software development shows great cost/quality results. Due to the specifics of the region, developing software products here is much cheaper than in the US, Israel, or Western Europe countries like Germany or France. Still, the software engineers' technical expertise and overall background knowledge in the East are similar if not bigger in some fields than the rest European developers.

However, low cost, hourly rate, and misunderstanding of the region resulted in the fact, that mostly Polish developers and Ukrainian tech professionals had to develop only unimportant parts or additional features, while the main development was maintained in other countries. Honestly, for a long time the possibilities of Ukrainian programmers and their Eastern European colleagues, as well as their importance were underestimated.

Nevertheless, quite unexpectedly for the rest of the World, software companies, based in Eastern Europe managed to get into top software companies in Europe at first. Now, their products are distributed all around the globe, giving them a chance of becoming top software companies Worldwide. For example, Grammarly, a startup, designed and created by Ukrainian programmers, has already become a recognizable unicorn.

How Salary Defines the Perspectives?

You may misinterpret the tendencies and decide that in the nearest 5-10 years Ukrainian programmers will switch from outsourcing software development to own product creation. However, it is not quite true. Undoubtedly, there is a trend to create their own software projects, based in Eastern Europe. Most specialists and engineers not only managed to gain a lot of experience in working with various tech stacks, technologies, and industries, becoming full-fledged niche-experienced developers but also earned enough money to start their own businesses.

Actually, software engineers’ average salary in Eastern Europe is a great example of balance. The cost of development in this region is much cheaper than in the rest of the world, so the engineers' salaries are even smaller than other European developers’. At the same time, they are much higher compared to other incomes within the region. This gives an opportunity for skilled professionals to start their own businesses in some time. As a result, the overall hierarchy is rather horizontal than vertical. As a matter of fact, most Ukrainian startups and outsourced companies are established by successful developers. Incora is not an exception.

Still, the tendency also shows, that developing its own software products won’t highly affect the outsourced nature of the region. Software development in Eastern Europe has truly unique conditions when outsourcing is as effective and popular as in-house development. So, yes, in the nearest 5-10 years, the number of software products with in-house teams in Eastern Europe will definitely grow. Nonetheless, it won’t affect the field of outsourcing. As for now, this region is full of talented developers and effective businesses, which are fine working both in outsourcing and own product development. Each option is a winning strategy for software engineers and software companies and it seems that the cost of outsourced development or simply team extension from Ukraine or Poland won’t raise significantly.

Experienced and Succesful Developers

Another advantage of this particular region is the fact, that there is a wide range of developers, who are interested and experienced in specific industries. As we mentioned before, eastern European developers may be the most experienced in their field. On the contrary, for example, American developers, Ukrainians, Poles, Latvians, Estonians, and others had experience in multiple working conditions like freelance, in-house, and outsourcing. In consequence, it will be much easier to find a dedicated team of tech experts for any of the software development cycles and be sure that they will meet all your requirements.

To add some more, niche experience is not the only advantage of the regional developers. It is hard to argue, that Eastern Europe has extremely difficult and other working conditions as other regions. Probably the best illustration of this is the recent russian invasion of Ukraine. Despite the full-scale war and constant shelling, the Ukrainian tech sector managed not only to stand on its feet but to show surprising growth but Ukrainian programmers continue working while constant shellings and issues with power all over the country. However, for those, who are aware of the context, such results won’t be as surprising as they seem. For instance, just a few years ago, during the COVID pandemic, the innovative technologies sphere has also shown a significant growth rate.

In other words, stress resistance is not a temporary phenomenon but rather a constant quality of the entire region.

What is the Potential Future?

Despite all the benefits of Eastern Europe's outsourcing software development, it is worth admitting some important truths. For example, despite the growing prospect and development of the IT industry in this geographical location and the appearance of full-fledged standalone software development companies, that are aiming to develop their own software products or switch from outsourcing to product orientation, it is still unsettled.

Frankly speaking, successful software products, based in Easter Europe are rare and can be counted on the fingers of one hand. Thus, in the nearest future, the tech industry in this area will still be dependent on outsourcing. Hence, most likely, the conditions for investment will stay almost the same.

On the other hand, the modern economical situation is also unstable. Therefore, it may result in cutting the budget and closing some projects. This is especially relevant in the field of Cryptocurrencies and Blockchain, which was caused by falling prices for crypto assets including even giants like Bitcoin and Ethereum. So, a decrease in investment will lead to a decrease in the pace of the software development industry. Nevertheless, it won't result in its stagnation. On the contrary, it seems that software development in Eastern Europe will rise with new strength in the nearest future due to its multipurpose nature and the high technical skills and flexibility of the developers.

Final Thoughts

Clearly, the Eastern European software products and services market differs from the rest of the world. It is possible to assume that it become a golden mean, providing high-quality services and products for a relatively low cost. Moreover, the number of services in this area is surprisingly big, providing all possible software development approaches and forms like outsourcing or in-house teams, freelance niche-experienced specialists, familiar with most of the software industries, etc.

The only issue is the unawareness of possible investors and their doubts about this market. For instance, it won’t be a secret, if we tell you that most projects, developed in this region are unserious or unimportant. Instead, we encourage you to relocate your software project and fully rely on local skilled developers. As for us, it is a “win-win” strategy, which can help you to save money and other resources, while still getting a high-quality product. At the same time, development companies and engineers will get enough resources to support the development of the industry at a high level.

For a better illustration of the proven capabilities of Ukrainian developers, we recommend you check some of the case studies. It is only one of the possible examples of what you can get with fewer resources and effort.

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