Offshore to Eastern Europe for Israeli Companies

14/2/2018

CONTRIBUTOR

OREN SARIG

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Offshore, (often referred to as outsourcing), relates to the relocation of a business operation from one country to another. It is an economically astute solution, well known in the hi-tech market segment as a cheap alternative to high development costs.

While many large firms Offshore to China or India, it may not be the best solution for everyone.

The 21st century introduced global opportunities and alternatives that allow us to Offshore not only for traditional manufacturing and production purposes, but also for services and innovation purposes. It is now much easier and cheaper to hire employees, open an R&D center or expand business activity to another country.

Moreover, Offshoring is also accessible to small and medium companies that can enjoy its many advantages, as there is no need to invest a large amount of money or relocate.

 

Why Offshore to Eastern Europe ? 

“Cost of service is directly related to its quality.”

Eastern Europe is firmly established as a major and attractive Offshore center with a wide array of IT services. This is due to the fact that its employees possess:

  • High levels of education
  • Advanced IT skills and knowledge
  • Excellent English skills

 

Beside these attributes that increase the quality of labor, we can also see that employees in Eastern Europe are highly motivated, well trained and maintain strong degrees of productivity and flexibility.

Eastern European employees also have extensive experience working with multinational companies as outlined in the McKinsey Global Institute report “Sizing the Emerging Global Labor Market.” The report analyzed the potential availability of offshore talent in 28 low-wage nations and concluded that Eastern European candidates had the highest suitability rates across all occupations.

 

What About the Cost?

Cost reduction is one of the major reasons to Offshore. While the hourly costs for developers or engineers varies due to experience level and project requirements, the hourly rate for development outsourcing in Eastern Europe is still invariably substantially lower than in Israel. According to research provided by Viacheslav Pronskyi, the average price for IT services in Eastern Europe ranges between $28-$40 per hour. This compares to an outsourcing rate in Israel, Western Europe or North America in excess of $100 per hour. The difference is substantial, making offshoring a compelling value proposition.

 

Culture

Culture is a critical element that plays a key role in business success, especially in multicultural working environments. Eastern Europes cultural proximity to multinational partners serve as a key advantage, since 90% of the regions revenues are generated from international clients (Multilingual). Communication is much easier and collaborations tend to proceed smoothly and quickly, with less time spend rectifying misunderstandings.

 

Location

Eastern Europe is close to the large European economies. And given that Europe is relatively compact, all European destinations are readily accessible and cheap to reach by plane, train or even car. Moreover, EU members enjoy the advantage of having the same political and economic entities and regulations.

Let us not forget that having the same working hours and the same-time-zone makes for seamless communication.

 

The growth of Offshoring in Eastern Europe continues to increase and is considered a profitable and logical choice for companies from Europe or the Middle East.

By Offshoring, Israeli companies with Israel-based R&D centers seeking to expand or market their products abroad can enjoy the many advantages the region has to offer.

 

Romania, Bulgaria, Czech Republic, Slovakia, Ukraine, Hungary, Poland.

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