Data: 1 , 2 ,3 , 4 , 5 , 6 , 7
You can see an undeniable economic advantage from Poland:
- Higher GDP (both absolute and per capita)
- Lower inflation rate
- Higher salary
- More export
- Higher ease-of-doing-business rating
All of this is proof that the market is in a healthier state, which should undoubtedly be just as relevant within IT. Let's take a look at the indicators inside the information technology industry and outside.
Data: 1 , 2 , 3
The numbers can be quite unexpected for people unfamiliar with the industry in Eastern Europe. Ukrainian programmers get more Polish? While Ukrainian juniors receive almost half the salaries of their Polish counterparts (which already cannot be compared with salaries in other spheres), foreign ministries and seniors receive more foreign comrades. There is one obvious reason for this - it is cooperation with the "West" (USA, Great Britain, Germany, etc.). This is due to such concepts as "outsourcing", "outstaffing" and "offshoring". The essence of all of the above strategies is to move the work "outside" the company. While offshoring involves moving work overseas, outsourcing and otstaffing can take place domestically. Most of the readers already know how this is all different, but for those who do not know,let's quickly repeat using definitions fromQubit Labs .
Outsourcing
The most popular of the three terms refers to the process by which a product manager finds a group of workers to complete a job for a client. Employees do not participate in negotiations with the client (this is done by the PM). Workers receive an assignment from the RM and, at the end of the work, receive payment from him.
Outstaffing
Outstaffing is a process in which a development team hires outsiders to help with a project. The project can be divided into two parts in the process (part for internal developers and part for outstaffers), or both groups can work together on the project. In any case, in this model, one of the companies plays the role of a client and an employee at the same time.
Offshoring
Offshoring is the transfer of a project abroad, usually to reduce costs. The main benefits of offshoring are lower wages for workers, lower resource prices and lower taxes. Despite the fact that Ukraine cannot be compared with India, Vietnam and the Philippines in terms of the volume of work transferred there, the number of companies that hire Ukrainian developers is constantly growing.
Offshoring does not exclude outsourcing / outstaffing and from this point on, we will not divide these three terms. Also, this article will not mention more specific concepts such as Dev Shop or freelance, but you can read about this in the article from DevsData .
Why?
While the Polish economy is in a more developed and stable state, which undoubtedly should have made it an obvious choice, IT companies for some reason prefer to hire Ukrainian programmers. Companies from countries such as the United States, Great Britain or Germany can afford to pay salaries in the thousands of dollars for Ukrainian programmers while remaining profitable.
Let's say an American company wants to create an application that requires 8 programmers to develop. This company can hire 8 people in the US for about $ 5,500 ( US average IT rate), or hire programmers from Eastern Europe, paying an intermediary firm $ 4,000 for each person in the team. Even after the middleman takes his share, programmers can get $ 2000-2500 each, which is more than 5 times the national average. As a result, the developers earn, the intermediary earns, and the client saves. Why is this happening in Ukraine, but not happening in Poland? People, as a rule, prefer to work in a company that has its own goals and points of the plan how to achieve this goal. Instead of one order for 3 months for a foreign company, the developer will choose a position for several years in his city. The difference is that Polish firms have the means to compete with foreign ones. Of course, in Ukraine there is work in IT for Ukrainian enterprises, just foreign orders are much more profitable.“Working for Foreigners” may pay off in the short term, but it could be a disaster in the future.
On the one hand, all parties benefit, as described in the previous paragraph, but on the other, there are many side effects for each of them.
The most obvious side effect for the economies of countries that outsource is money leakage from the local industry. Many companies are reluctant to hire programmers in their home country due to high salaries and taxes and instead spend on developers from India, Vietnam and Eastern Europe.
The second problem is communication. Different time zones, inability to meet in person, and language barriers are pretty big hurdles that can slow development at best and be cheating at worst. It often happens that the client finds an intermediary
abroad, sends money and the next day the intermediary disappears forever.
The last problem is that offshore, as a rule, a very clearly defined amount of work. Rarely does someone want to give access to their databases or proprietary algorithms to someone outside. As a rule, work for people from another country is writing an application or a website, which is why students prefer to cram specific frameworks and libraries instead of learning more general things like algorithms or data structures.
Is there any hope for Eastern Europe?
Yes. While the mass of "galleys" take on more people (usually students) than necessary to get more money from the client, there are also companies that do everything "honestly" (keep permanent employees with education and work experience who fulfill orders with high quality). Also, digitalization is in full swing: while not so long ago in the countries of Eastern Europe there was no 4g, there are already plans to introduce 5g , mobile banking, Google and Apple Pay are becoming the norm, more and more successful startups of domestic production are beginning to appear ( e.g. Ring and Grammarly ). Perhaps all we need to get to the “West” level is time?