The Outsourcing Saga – Asia vs Europe vs Africa
- Mar 12, 2020
- By proproots
- In Outsourcing
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Outsourcing of applications and software development is a key source of GDP and exports for many countries. India, China, Vietnam, etc., are few of the largest hubs for software development outsourcing.
Outsourcing companies provide a wide range of services. They have expertise in technologies such as IoT, Blockchain and AI/ML. The article below take a dive into various destinations across the globe for outsourcing your app or software development.
India’s IT industry contributed around 7.7% to the country’s GDP and is expected to contribute 10% of India’s GDP by 2025. This is the reason why India is considered to be one of the best countries to outsource software and app development projects. Large industry powerhouses form the cream layer of the Indian IT segment while new startups also keep evolving in the industry. According to the latest reports, US$10 billion have been invested in Indian startups in 2019.
English language skills is not a barrier in India. Though India has 19,500 spoken languages, English is among the officially recognized languages that unifies the country. Students complete basic English in their schooling. India is a land of 1.3 billion people with 65% of people below the age of 35, there is little to no constraint on the availability of resources. The availability of resources also helps companies in building their support infrastructures cost-effectively.
The software/app outsourcing market is dependent on resource availability. India’s demographics make the industry cost-effective when compared to other parts of the world. With government initiatives like Startup India, the IT infrastructure is more robust than before.
Over the years, China has been the hottest destination for IT outsourcing. In the latest 5-year plan of China, IT infrastructure is one of the seven strategic industries they intend to concentrate on. This will propel China from cheap-labor outsourcing to innovation-driven countries. It is further divided into four segments :
- Telecom Industry with a focus on 5G
- Hardware Manufacturing
- Software Outsourcing
- IT-enabled Services
China is the world’s most populated country with nearly 1.38 billion people. Though traditionally known as a region with a language barrier, the country has significantly improved their skills in English to compete in the global market.
Being one of the largest producers of electronic hardware along with cutting edge software solutions, China is at the forefront of IT solutions. With dedicated, experienced and cost-effective resources, the country boasts a great ecosystem for development and support. However, when compared to India’s demographics, China’s working population has been on a steady decline in the last 20 years mainly due to the government’s “One Child Policy”.
Largely known for its BPOs/KPOs and customer support, software outsourcing is gaining momentum in the country. There are few ventures in innovative technologies that have increased the focus on the Philippines. It is estimated that the IT industry reached $1.9 billion in 2019 and further expand its footprints by 2023. The language barrier is significantly lower with more 92% of the people able to speak English as a second language after their mother tongue.
Though the majority of the population can speak English, the skill levels are considerably lower. This makes skilled resources higher demand, thereby, the prices are double from India. Customer support is the backbone of the IT industry in the Philippines, thereby, making the experience better.
Government policies are employee-friendly thereby enhancing the performance of the employees.
The Vietnam Software and IT Services Association (VINASA) released a figure that the IT industry reached revenue in excess of $70 billion while employing 780,000 people.
Though, the industry runs on foreign-invested capital with leading brands and powerhouses pouring billions of US dollars to build electronic component manufacturing factories in Vietnam. IT development has put Vietnam on the world stage as one of six leading destinations for technology transfer in the Asia-Pacific region in 2016, according to Gartner. In addition, Tholons, a strategic advisory firm for outsourcing has rated Vietnam in the 8th position for delivering IT services. Vietnam through its 5 year plans to develop IT industry further through policies, set targets and tax incentives plans to increase competition and attract investments.
When Europe is considered for outsourcing software or app development, Ukraine is the most feasible. With a nearly one-third increase in the number of IT professionals in 2017, Ukraine is expected to reach the figure of US$10 billion by the end of 2020. However, the biggest drawback is the language barrier with low English Speakers.
The Ukrainian IT market is growing currently with competitive pricing with a primary focus on software developments from neighboring countries. The legal system is significantly modernized ensuring intellectual property rights through e-documents signed by concerned parties.
There are three other outsourcing destinations in Europe that are viable for development outsourcing; Romania, Poland, and Belarus. All three nations are growing markets with governments drafting policies to improve IT infrastructure. The mentioned nations have resources who are fluent in English and highly recommended neighboring countries.
Contrary to beliefs, Tech Ecosystems, and Hubs across Africa are growing rapidly. Companies like Microsoft are investing over US$ 100 million to grow its developer pool. According to Github, developers from Africa have created 40% more repositories than any other continent. Out of which, Morrocco has accounted for the highest number. Other countries that are promising destinations with skilled developers are Kenya, Nigeria, Egypt, and South Africa.
However, the greatest challenge Africa faces is the retention of resources. Promising offers from Europe might entice them to move while within Africa, the Republic of South Africa seems to be a preferred destination.
In conclusion, Asia is ranked higher on financial attractiveness, technical skills, and programming expertise. While European nations rank higher on quality, cultural closeness and geographical comfort. However, both Asia and the European IT market must closely watch the evolution of the African market, so as to not lose its unique selling points.
To sum it up in a line, Asia remains the most preferred destination to outsource along with Europe and Africa closely following as second and third choices.