So you’ve decided to extend your development team offshore. At this point you’re likely wresting with a critical question: “Which country best fits my needs?” An important question that we’re happy to provide guidance in answering. The following is a brief rundown of your options and important data to consider when selecting the right destination in Europe. Let’s take a look at four popular European outsourcing countries: Ukraine, Belarus, Russia, Cyprus.
Labor pool: Ukraine remains one of the top IT outsourcing destinations in Eastern Europe. This is largely attributed to the ample “brand” software developers ready to tackle any coding problem. The labor pool in Ukraine is eager to utilize emerging technologies and is proficient in Agile practices.
With a population of forty-five million, Ukraine boasts the highest number of IT developers than any other CEE country.
Business environment: Ukraine provides good infrastructure and overall favorable conditions for doing business. Simplified taxation mandates that entrepreneurs pay a mere five percent tax. This acts as an incentive to companies that employ contractors resulting in substantial savings. Employers will incur the minimal of expenses which is optimal for both the contractors and companies. It is a lucrative and mutually beneficial arrangement.
Location: Ukraine is geographically centrally located and convenient to travel to from most major cities. There is also no visa requirement if you are a US or EU citizen. Several airlines operate to and from Kiev on a daily basis along with local trains and other travel options.
Labor pool: Belarus prides itself for the number of highly-skilled Lynux and Open-Source professionals. It is smaller than Ukraine in terms of population (nine million) but has a respectable community of software developers primarily based in Minsk in technology hub High Tech Park.
Business environment: Full-time employment wherein the company covers all benefits is the norm in Belarus. This establishes favorable conditions for Belarusian employees while also incurring minor additional costs for the employer. The government has instituted a number of reforms to make Belarus more attractive to foreign investments. This includes lower tax rates for employees of businesses in the technology sector (nine percent opposed to twelve percent in other industries).
Location: A visa is required to travel to Belarus. A letter of invitation from an agency, company, or organization which is registered as a legal entity by the Belarusian authorities is mandatory for procuring a visa.
Strategically located in Europe, Belarus’ developed transportation, logistics, and manufacturing base makes it an advantageous location for IT outsourcing. TechNavio’s analysts forecast the Belarusian IT outsourcing market will experience a boom in the coming years.
Labor pool: Russia boasts a highly scalable talent pool of software engineers in a high population country. Russia is a great source for securing qualified developers with a proven tech background catered to your project needs. You can easily scale the project and add professionals on demand. The pool is constantly refilled with talented grads holding degrees in Applied Math, Science and Engineering.
Business environment: Russia has a rather complicated legal system. Along with complex taxation, labor and currency laws. It would behoove one to seek the guidance of an advisor firm or a reliable partner who can help facilitate and interpret local policies. The simplified taxation system applies to small businesses with an annual income of less than 60,000,000 rubles (around $100,000). Taxes on individual entrepreneurship are set at six percent.
Location: Russia’s largest IT hubs remain Moscow and St Petersburg leaving other cities far behind. The cities are located in the European quarter of Russia and multiple flights operate from these destinations regularly. Americans and EU citizens require a visa to enter Russia.
Labor pool: Cyprus is endowed with the same caliber of developers commanding comparable robust education and skills as that in the US but at a lower cost. The overall population is around 1.1 million. Employees value their work positions resulting in low turnovers within companies.
Business environment: Cyprus is a highly secure destination for businesses. The economic and regulatory authorities offer international businesses legitimate tax-efficient jurisdiction. The taxation conditions are highly competitive with employment taxes at zero percent for incomes up to €19,500 and twenty percent for gross income of €19,501 – €28,000. Employment income is also subject to various social security contributions. Employees pay 7.8% of wage and employers contribute 11.5% of corresponding wage.
Location: The island of Cyprus is in an auspicious location and enjoys the advantages of European Union membership. A visa is not required for tourist or business purposes for United States citizens. All these factors make the island a perfect destination for long-term projects.