Estonia, Lithuania, Latvia: Baltic Countries IT Outsourcing vs Ukraine
IT Outsourcing is incredibly popular worldwide as it offers a solution to many problems, such as lack of local talent and budgeting. Delegating IT software development to service providers in another country is an excellent way to achieve goals faster and save some money in the long run.
IT Outsoursing to Baltic Countries: Overview
Although the first region to gain international attention was Asia, nowadays, there are many other outsourcing destinations, including Baltic countries.
A Baltic country is a term in geopolitics that refers to three states located on the east of the Baltic sea – Estonia, Lithuania, and Latvia. These are highly stable economies that are open to innovation and international partnership.
IT Outsourcing to Estonia, Latvia, or Lithuania is attractive, especially for the European companies because of the proximity, little to no time difference, and similar work style and ethics.
Eastern Europe is also known for strong STEM education – 30 out world’s best institutions out of the QS World University Ranking are located here. It means that software development Lithuania and neighboring countries is attractive because of the talent expertise.
Another factor that makes Baltic outsourcing attractive is that these countries are economically and politically stable. There is also governmental support of international cooperation in each case. The legislation adopted regulations of data security and labor-management pretty fast.
According to the World Bank, many companies also choose to outsource IT Services to Lithuania, Estonia, and Latvia because it is quite easy to do business here. At the same time, salary rates are significantly lower than in other European countries, like Germany or the UK. Of course, each of these destinations has its pros and cons, so let’s get a detailed look at each separately.
IT Outsourcing Estonia: All You Need to Know
Estonia is one of the top 20 tech countries according to the State of European Tech. There are 20,700 professional developers that can offer high-quality services, and every year 700 students graduate with a STEM degree. It is a highly developed and beautiful country with 1,500 islands and islets. It is also quite known for its startups, such as Skype, Prezi, or Transferwise.
Why choose IT outsourcing to Estonia? Its IT market is highly developing, and currently, 5.9% of professionals of Estonia are employed in ICT. The government also adopted the Digital Strategy that expects IT to become the leading sector of the country’s economy.
Another reason for IT Outsourcing to Estonia is that the local market adopts innovation easily and is recognized by industry leaders. Microsoft and SAP have offices here. The innovation includes adopting a wide range of digital services, from e-banking to nationwide ID-card systems. Software development in Estonia has very low risks due to the country being part of several international organizations, such as WTO, NATO, OECD, and Eurozone.
The pros of hiring software companies in Estonia:
- Great STEM education and high quality of professionals;
- High knowledge of English among the population and IT employees, Estonia is in 25th place worldwide;
- Stable ICT infrastructure, also economic and political stability;
- Convenient time zone and salary rates are lower than in the USA or UK.
But there are also several cons of IT Outsourcing to Estonia, such as:
- The talent pool is relatively low. 20,700 professionals are not enough to fulfill all demand;
- There is a risk of natural disasters with coastal floods that might endanger the project’s efficiency;
- The rates are still higher than in some other outsourcing destinations such as India, China, or Ukraine.
Time zone: GMT+2
Average Monthly Rate: 2.333 euro ($2.773)
Biggest Tech Hubs: Tallinn, Tartu
Size of Talent Pool: 20,700
Comparison table of monthly salaries in Tallinn and Tartu (in euro):
|Java developer||3.050 ($ 3.621)||1.742 ($ 2.069)|
|C/C++ developer||2.250 ($ 2.671)||1.920 ($ 2.280)|
|VB .NET developer||2.608 ($ 3.097)||1.562 ($ 1.854)|
Pros and Cons of IT outsourcing in Lithuania
Lithuania is the largest of the Baltic countries and has 29,570 experienced IT professionals to offer. IT Outsourcing to Lithuania is also popular because it has one of the fastest-growing economies in Europe. The ICT market here is also developing pretty quickly, with many industry giants opening their R$D centers here, namely Google, Uber, IBM, and AIG.
Another significant feature of Lithuania IT outsourcing and the local market is that there are numerous industry-related events and conferences. For example, Global Game Jam and Silicon Valley Comes to Baltics are held here. The government also supports the ICT market with a focus on the educational sector and STEM specifically. There are also many strategies to implement modern technology and e-services in daily life.
IT outsourcing in Lithuania has several major pros, namely:
- Proximity, comfortable time zone to EU partners;
- Strong STEM education and good English knowledge – the 24th place worldwide.
- The bigger number of specialists than Estonia and about 750 graduates each year in computer sciences;
- Ease of doing business, low salary rates and related costs (office space and transportation), and reasonable taxes.
But there are also several cons of IT outsourcing in Lithuania:
- Many experienced professionals leave the country to work abroad, which results in skills’ shortage;
- The innovation isn’t as quickly adopted as in neighboring Estonia;
- The talent pool isn’t huge in comparison to other European countries.
Time zone: GMT+3
Average Monthly Rate: 1.360 euro ($1.614)
Biggest Tech Hubs: Vilnius, Kaunas
Size of Talent Pool: 29,570
Comparison table of monthly salaries in Vilnius and Kaunas (in euro)
|Java developer||1.092 ($ 1.296)||782 ($ 928)|
|VB.NET developer||1.066 ($ 1.266)||771 ($ 915)|
|C++ developer||1.165 ($ 1.383)||831 ($ 987)|
Overview of IT Outsourcing in Latvia
The ICT sector is one of the fastest-growing in Latvia. IT process outsourcing in Latvia is popular because of many reasons; one of them is mature infrastructure. The country is in 16th place worldwide for internet speed, and it is the third country in the world for mobile usage. Latvia was one of the first countries to implement 5G technology, which shows its openness to tech innovation.
There are 37,000 IT professionals here, so a Latvia dedicated team is easy to find. This is the biggest number of workers out of three Baltic countries. It is also the largest service exporter among them. The main sectors of the local ICT market include Telecom, IT support, cloud solutions, AI, and of course, software development.
Choosing Latvia for outsourcing software is beneficial because of the following factors:
- Highly developed infrastructure, fast internet connection, wide adoption of e-services in the country’s daily life (84% of the population use the internet every day);
- The ICT sector has a decent talent pool of education professionals;
- Latvians know English very well, they are in the 29th place worldwide, which contributes to easy and direct communication;
- Like other Baltic countries, it offers a comfortable time zone and location for European and USA partners.
- Latvia is also known for high-quality STEM education.
But like any other destination, it has its challenges, such as:
- The R&D center located here get much less funding in comparison to other European countries;
- The number of specialists is the biggest in Baltics but still lower than in other EU countries, which might make it a bit harder to recruit developers.
- The rates in Latvia are significantly higher than in Estonia or Lithuania.
Time zone: GMT+3
Average Monthly Rate: 3.750 euro ($4.453)
Biggest Tech Hubs: Riga, Daugavpils, Rezekne
Size of Talent Pool: 37,000
Popular Technologies: PHP, Microsoft ASP.NET, Python, Perl, Java, Ruby, Node.JS
The average rate for a Java developer in Riga is 2,173 euro, and for a VB.NET developer, it is 2,063 euro.
Alternatives to Baltic Countries Outsourcing
Baltic countries are popular IT hubs, but they are not the only destination in Europe that attracts international attention. Another excellent option for those seeking outsourcing software development in Ukraine. It is gaining momentum because of great IT infrastructure, huge talent pool, and several other benefits, such as:
- Convenient location in Eastern Europe with minimal distance, which is both comfortable for EU and US companies;
- Minimal time zone differences and easy travel options from any part of Europe;
- There are no natural disasters here, and the country’s economy is pretty stable;
- Ukraine is a European country that has the same business ethics and values. Ukrainian developers have a very similar culture to other EU countries;
- There is a high education level among professionals and a huge talent pool – 200,000 specialists. Local universities graduate about 16,000 STEM students per year. It makes recruiting IT experts much easier than in Baltic countries because the number is bigger than in three of them together.
- Local developers are well-known for the quality of their work; we are in 14th place worldwide according to TopCoper, which is much higher than Baltic countries.
- Local professionals are also quite good at English, which ensures easy communication.
- There are numerous offices and R&D centers from Forbes 500 companies and industry leaders, including Microsoft and Samsung.
All of these factors make Ukraine a stable competitor to Estonia, Latvia, and Lithuania in terms of IT outsourcing:
Comparison Table of Four Countries
To summarize all stated above, here is a comparison table of all four outsourcing destinations’ attractiveness.
|Size of a tech talent pool||20,700||29,570||37,000||200,000|
|English proficiency||High, 25th worldwide||High, 24th worldwide||High, 29th place worldwide||Decent, 44th worldwide|
|Risks related to natural hazards||Decent, coastal floods||No natural hazards||No natural hazards||No natural hazards|
|Average monthly rate for middle developers||$ 2.736||$ 1.595||$ 4.398||$ 2.500*|
* Ukrainian rates are based on the data of our internal Recruiting Team
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