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March 02, 2017

Three Reasons Why Silicon Valley Will Outsource to Belarus

Fourteen million – this is the average number of outsourced jobs the U.S. came up with a couple of years ago, and this figure is growing yearly according to BEA. Thus, not only does outsourcing allow the country to successfully balance in search for lucrative labor costs and by-standard quality, it also provides the U.S. with robust competitive advantage at the global market. In other words, outsourcing keeps the U.S. economy at a good rate.

When it comes to IT outsourcing, the facts talk even louder than numbers. Silicon Valley, desperately trying to fill the gaps in the IT talent pool, has already been caught among the leaders of H-1B Visa claimers. IBM (News - Alert), Microsoft, Google, Facebook, Amazon and Apple are all among the top 20 companies inviting IT professionals from overseas.

However, when only 30 percent of these visa claims randomly move forward for processing, outsource and development center relocation remain the only options to fill the remaining 70 percent of the U.S. tech talent hunger. Just to name a few, Google, Amazon, and Facebook have already moved their AI research centers to Europe.

Meanwhile, Belarus, although it is not on the official list of emerging markets, stands out from other locations (see infographics) and takes credit for a hefty bite of outsource jobs from the U.S. Last year, Reuters and Euronews both focused their attention on this location for its High Tech Park and remarkable IT giants such as Viber, Epam and Wargaming, for a reason.

For about a decade, the country has been working to become an IT development center that provides high quality products and services at reasonable costs. Today, Belarus wins over other well-known outsourcing destinations with a number of benefits: a loyal tax system for IT, visa-free entry, steadily growing IT talent pool, and high education standards, to name a few.

1. Outstanding Quality and Trust

Will Silicon Valley even notice Belarus? Clearly, it has. Today, the U.S. is already a No. 1 market that buys IT talent and products from Belarus, with Great Britain, Germany, Russia and Finland lagging behind. In fact, 44 percent of all IT outsourcing to Eastern Europe comes from the U.S., and a huge part of it finally sets in Belarus.

Of the 1,000 software development companies in Belarus, more than 600 are engaged in outsourcing and represent research and development and captive centers of international companies. However, outsourcing to Belarus goes beyond coding, QA and technical support. More and more Belarus companies are representing full-scale technical partnerships, engaging in IT product-based models, offering business solutions and solving large-scale business issues, rather than simply selling the parts of code of development force.

Today, the country is already known for the captive centers opened by many companies such as Fitbit, IHS, Netcracker, Playtika, Yandex, HTC (News - Alert), Netologic Inc., IHS Global. Not to mention the remarkable products such as MSQRD, Juno, World of Tanks, Pandadoc, Quoteroller, Maps.me, and the number of fintech solutions successfully launched for AMEX, Barclays, Citibank, MasterCard (News - Alert) and many more.

2. Qualified Tech Talents

Silicon Valley relies on the tech talent from Belarus to cover all the bases: to fill the gaps in development needs and add ingenuity and innovation to the process. How come?

According to recent data, of the 40,000 IT professionals residing in Belarus, more than 90 percent have at least one university degree. Not to mention awards on international coding completions, such as Google (News - Alert) Code Jam, Facebook Hacker Cup, Google Hash Code World Robotic Olympiad, where Belarus talents regularly show remarkable gold-level results.

According to IAOP yearly rating in 2016, seven Belarusian companies joined the club of top 100 Most Promising IT Companies, moving with the trend of deeper specialization.

Following the idea mentioned above, around 30 percent of Belarusian companies are involved in fintech projects that deliver to the world’s largest financial organizations such as MasterCard and Barclays. With a deeper level of specialization, eventually, comes new positioning: delivery of business solutions and digital transformation strategy consultancy, instead of fractional fixed-price coding.

3. Cost Efficiency Factor

Regardless of overall financial and social complications that the country has been going through in the recent decades (extreme depreciation, high unemployment rate, low minimum wage, brain drain), the Belarusian IT sphere is blossoming.

However, compared to the average developers’ salaries in the U.S., an average development hour in Belarus ($25) surprises foreign contractors in search of a cost-efficient partner with over the average quality performance. In particular, the yearly regular (middle) developer salary of $65,000 in the U.S. is incomparable with $14,000-$24,000 in Belarus ($1,200-$2,000 average monthly wage in 2015, according to dev.by). This is nothing compared to senior level developers, who make $75,000/year (U.S.) against $36,000-$42,000 (Belarus).

No wonder why the list of U.S. companies outsourcing to Belarus includes world leaders such as Google, Microsoft, Amazon, IBM, Accenture, Facebook, SAP, Ebay, Expedia, Fujitsu Technology Solutions (News - Alert), HP, Oracle and Teradata, to name a few.

Successful examples of such partnership deserve sharing; that’s why panel discussions and forums on outsourcing are held across-the-board. This March 8, together with U.S. experts, we are organizing a MeetUp on SmartSourcing. Anyone interested is welcome to join. The registration is still open.

It’s clear now that the combination of these three basic reasons, along with the dozens of other advantages– overlapping working hours, communication, mentality, legal system – will encourage Silicon Valley to outsource to Belarus more. And, according to trusty in-house experts like Megan Smith, the chief technology officer of the United States and former Google executive, “There’s going to be 1.4 million tech and I.T. jobs coming within the next decade [in the U.S.] and only 400,000 trained people to fill them.”




 
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