Small and Medium Enterprises (SME’s) are mainly looking towards Central and Eastern Europe to outsource software-development. Wages are lower in countries such as India and China but Asia also has several disadvantages for SME’s.
Frank de Vries and Bernhard van Oranje inventory the differences between offshoring and nearshoring.
Presently, the market for offshoring and nearshoring in the Netherlands has reached a volume of more than 400 million Euros per year and is currently dominated by India. Roughly 35 % of this volume is attributable to the financial sector that is cooperating with India on a rather large scale. These days SME’s are more and more availing themselves of possibilities closer to home, also known as nearshoring. With about 730.000 enterprises, 4.1 million employees and about 58 % of the turnover of the Netherlands, SME’s are the pivot of the Dutch Economy. Driven by cost advantages and a shortage in the labour market this pivot is also engaging in outsourcing of ICT-services outside the national borders. Market research shows that in the years to come the reasons for companies to engage in nearshoring and offshoring will change. The quality of people, productivity and fast time-to-market of product and service development will be the determining drivers to an increasing degree. Given their own possibilities, people wish to worry less about risks and cultural barriers that come into play with offshoring. The nearshore market currently comprises about 15 countries, which are all interesting as nearshore locations to varying degrees. Whilst Ireland was particularly successful in the nineties in supplying low cost services nearshore, today’s new locations can be found in Central and Eastern Europe. Dutch SME’s are currently mainly outsourcing software development to this region. The supply of services from this region is still very fragmented and to the present day the main nearshore-partners come from the capitals (Budapest, Bucharest and Prague). With regard to the total potential of about 40,000 highly qualified IT students one also has to look at lesser known or nearly undiscovered locations. Examples being Lodz, Brno, Varna, Iasi Szeged, and Plovdiv. By comparison: India has a potential of about 120,000 highly qualified IT students.
