Until recently a motivation to outsource was primarily connected with cost savings. But as the global outsourcing market is growing bigger and wider, and offering various options, companies become more sophisticated in their business relations. Nowadays not only money has vital importance. Efficiency also does matter. And the choice of an outsourcing location becomes the issue requiring a well-thought and balanced approach.
Today companies from Western Europe and North America tend to choose partners from Eastern Europe, sacrificing their contracts with Indian and Chinese outsourcing providers. The answer to the question “why” seems to be simple – they’re closer both in location and in culture. But that is not all. Companies that make a deeper analysis and comparison of popular outsourcing locations normally base their research on various key points. And many of them, taking an option to outsource to Eastern Europe, decide on Belarus, a country widely known for quality of software services. Let’s take 9 most typical criteria, have a look at each and try to find out the reasons of Belarus’ success on the global market and it’s competitive advantages over neighbor countries.
Language
Definitely, no one is willing to be “lost in translation”. Especially when it mostly about business (no Scarlet Johansson included). And in a relationship with a software provider it’s crucially important to find a common language – both in the primary and figurative sense. Most commonly it’s English. With Belarus it’s pretty easy. According to traditions of local education English is normally taught to children starting from primary school. As a result, development team members – not only managers, but software engineers as well – are most likely to speak English at a sufficient level.
Government Support
In Belarus the government and ministries realize the benefits of IT export and support the industry. They establish agencies, hi-tech parks that develop better opportunities for software providers, introduce special dues and taxes regimes to boost the competitive power of national IT-industry. This interest from the government side ensures favorable conditions for outsourcing providers, and guarantees possibilities of long-term cooperation with them.
Labor Pool
Both quality and quantity of Belarusian labor pool is widely known the world over. Country’s work conditions, career opportunities for IT professionals and modernity of facilities make software development sphere an attractive option for talented people.
Infrastructure
This includes quality and stability of country’s telecommunications, satellites, power, as well as transportation facilities: roads, rail service, air transport. In the recent years Belarus has had a technological boost – modern internet access technologies are available to the majority, and the costs are getting reasonable. Modern travel infrastructure and geographic proximity make the country a good destination to visit. No extra time loss. And, as we know, time is money.
Educational System
Since the Soviet times this region was recognized for its strong educational traditions. The results of today’s world-wide IT students’ competitions prove that these traditions are being constantly improved and enriched. Belarusian State University and Belarusian State University of Informatics and Radioelectronics are constantly among the winners.
Cost
Well, let’s say it open – labor rates are not so low in Belarus, as they are in China. But they reasonably low, that makes Belarusian offer “costs + effectiveness” probably one of the best in the world. The prices for real estate, infrastructure and telecommunications are also affordable here that minimizes all possible extra costs.
Political Environment
Belarus is politically stable and has no outside enemies that excludes the risks of force majeure circumstances.
Cultural Compatibility
Belarusian work ethics and culture are very similar to that of the United States and Western Europe. No “culture shock”, no surprises – business relations are predictable here, that makes communication, planning and goals achievement effective with a software provider from this country.
Global and Legal Maturity
As we’ve already mentioned, Belarusian government encourages export-oriented software development and creates favorable conditions for cooperation between IT companies and foreign business. This normally includes legal support and multiple privileges for companies involved in outsourcing process.
Not sure yet? Well, it takes only two hours by plane from Frankfurt to Belarus. Just come and see. You’ll definitely be impressed by professionalism of people involved in IT and hospitality of everyone there.
Please, do not hesitate to contact us for assistance.
Ukraine seems to be better taking into account all 9 parameters considered in the paper/article 🙂
Taras,
Simple answer similar to “We are best!”, “We are first!”, but it is your own opinion or it is industry facts? Please provide arguments and facts. Analytics of Eastern Europe show, that Belarus grow very rapidly in comparison with any other countries in regions. You can find industry analysis on our blog, which show it.
Alex,
You are good of course there are many issues such as:
1. political isolation
2. lack of direct international flights
3. language barrier (in most cases)
4. only one really big city (Minsk, 2 million)
5. poor Internet communications (total bandwidth to Western countries including Europe and US is only 2Gb for the whole country!)
6. goverment-oriented economy (too tight conditions for private business)
Seems to be more than enough for those who think of a relly reliable cooperation. Although I admit that it is only my personal opinion.
Taras,
Not sure, that you have last information. Last few year country make many positive steps to liberalize economy. Anyway:
1. IT Industry in Belarus is most opened sector in economy. In country legislation defined many definitions to facilitate IT sector growing – taxes, rent of real estate, educational support, university support and etc.. In country operate InfoPark which support IT sector with additional benefits.
2. Not sure from where? You can easy flight from Baltic (airBaltic, Estonia Airlines), Europe (Lufthansa – Frankfurt an Main, Austrian Airlines, Czech Airlines, Alitalia, Belavia, LOT ..), Eastern Europe (Aeroflot, Airlines of Moscow Government, Belavia – Russia Moscow/St.Petersburg, Belavia,) – lots of direct flights excepted of many of charter flights. Also as by me and many country guests it better to flight on additional flight, than travel by road deep into any country in CIS.
3. I think situation on this question is very similar in any CIS country.
4. It mean, that customers don’t need travel after flights by car/bus/train deep into country – main poll of IT specialists are located in Minsk, but also in Gomel, Grodno, Mogilev, Brest ..
5. Last information on December 1, 2009 – 22 Gb. If you establish this question, you also should take in mind, that in Belarus 10Mln peoples and in 46-49 in Ukraine we don’t need so huge channels as USA (350Mln, where located main part of all data center in the world), UK, Germany. Also Belarus are not specialized on hosting services – channel are growing with market demand.
6. Not true 🙂 Many step to liberalization are done and many in progress, but anyway – IT is most opened sector and I think it is one of reasons why Belarus outsourcing market growing so rapidly comparing with others in Easter Europe. Also leading Outsourcing Companies of Eastern and Central Europe had started in Belarus and still maintain main part of IT resources in Belarus.
I think this little part of additional information can avoid your sceptice about Belarus.
PS: About political situation – we can see, that most risky country are Ukraine, because government structure are not very well established (Timoshenko everytime fighting with President Yushchenko – just spending time on this, not on solving situation in country) and sometime European customers have huge losses – simple example with many Bank’s with European investment are bankrupted and most buzz-ed where Gaz channels (from Russian Gazprom to Europe through Ukraine) which was closed by Ukraine. I’m not sure, that same situation are in Ukraine IT sector comparing with Ukraine Real Sector – but you can look on this like my stereotype about Ukraine, same as yours about Belarus.
Alex,
we are close but so far away from each other 🙂
Taras,
As any other country.
Hi colleagues,
I am running an IT company in Belarus, and here goes my opinion & experience:
Language – we are good but still have a lot to improve. But I strongly doubt Ukraine is better.
Political environment is closed but very stable comparing to Ukraine. With respect to IT industry we are not politically isolated country. Big number of IT companies have foreign founders. In general we are politically isolated country, but I dont really feel any influence on operation in IT business.
Direct flights is something we lack sometimes (for instance Zürich) but we keep improving on it.
Internet channel is sufficient but the price is too higher.
We do liberalization but too slowly.
Government support takes place. If a company joins High Tech Park, it has best ever tax exemptions in Eastern Europe, but operation under HTP has its risks.
IT labor market is not mature and is too overheated because IT industry is developing very rapidly.
Cultural proximity to EU is our advantage comparing to India but Ukraine has it as well.
I dont think one can state that Belarus or Ukraine is better. We are just competitors with close conditions in outsourcing market.
Alex, what do you mean with legislation which facilitates rent on real estate?
Hi Guys,
Thanks Alexey for sharing your vision.
Probably it would be nice if we could operate by some numbers such as:
1. the number of people involved in IT (% of the population)
2. the number of Universities specialising in IT industry (with the number of graduates annualy)
3. the number of IT companies
4. total annual revenue of IT industry (% of the total national income)
5. annual growth (of graduates, revenue, IT companies) would also be interesting
6. range of salaries for different positions, ie. junior delevolers, testers, admins, senior developers, team leads, PMs
7. range of rental fees (per sq meter)
8. number of IT providers, real bandwidth
9. flight connections to USA, Canada, Europe and Australia as well as their prices
This would give us much better vision and understanding of the potential of both countries. It would also be nice to compare both countries with our neigbours such as Russia, Baltic countries and Romania. As a results we could compare different percentagies and formulate conclusions.
If you are ready, I can find out the numbers for Ukraine and Romania. If you are happy with the idea, you could find the numbers for Belarus, Russia and Baltic countries. Please let me know.
Regards,
Taras
Hello Taras,
Question is not about how many something cost inside the country, because it is problem of service providers. Article describe situation from customer point of view. Article show advantages of Belarus it is not battle between Ukraine and Belarus, but anyway, as I have defined previously in one of my answer, you can find CEE market overview with answers on main part of your listed questions:
http://www.iksanika.com/blog/belarus-on-the-global-it-outsourcing-market-small-country-big-perspectives.html
with link to source of data in article.
Alex Vergej
http://www.iksanika.com
Alexey,
Just move this point into sentence with InfoPark. They give very great opportunities with rental places for doing business, for members.
Alex Vergej
http://www.iksanika.com
Alex,
As for the prices inside the country and your idea that this is the problem of a service provider, it is not quite true as finally clients/customers are those who pay for everything. Thus, all the parameters mentioned in my previous post should be taken into account and normally they are.
I am not quite sure where Ukraine is in the diagrams of the source you referred to in you previous post. It looks like Ukraine is the first one in all of them. Is that the case?
As for the battle, this discussion is not about the battle but rather about the current situation in the region. I only comment this (and at the moment I am the only one in this forum who is not located in Belarus) because I am really interested in what is going on in your country.
Regards,
Taras
Alex,
By the way, who is the author of that article?
Thanks,
Taras
Taras,
Outsourced Software Providers provide Services – sells entity is “Services”. Main thing for the services (from customer point of view, basically) – reliable partner, price, quality, availability/communication, expertise/experience, delivery time. Customer don’t really care in which building you are working, but may care about information security. For example (just imaging) if you spend $25 per sq for real estate and someone in Belarus $29 per sq, but comparing with you Belarus guys propose price $35 comparing with yours $40 – it doesn’t mean, that if you have rental’s lowers as other you can deliver cheaper price, It only mean, that operation margin in any country/business can be much higher or lower comparing to others. And it’s question only about expenses optimization, it is task for the management team of service provider.
If you get to the shop and looking on the table with different types of breads – I’m sure, that for choice bread you don’t asking about – on which car this bread were delivered to shop, or in which building this breads was cooked, or who exactly have prepared selected bread, also you are not interesting how much any of elements (from which breads was cooked) were costed to company who prepared this bread – but you may care about tasty (quality), prices (on which you will buy), freshness and which services/communication were provided for you in the shop by selling this breads.
Answer on your question – yes, you are right, also article say, that Belarus are most rapidly growing country in region, and show data for comparison.
Alex Vergej
http://www.iksanika.com