Feeds

IT outsourcing goes east

Unlike the Village People

  • alert
  • submit to reddit

The Essential Guide to IT Transformation

Could Oymyakon in eastern Siberia - named the world's coldest inhabited village according to Guinness World Records - ever be the Silicon Valley of the future? It's not as unlikely as it sounds.

Analysts see the early signs of an eastward migration of white-collar jobs in IT services. Polish company ComArch, the country's third-largest IT integrator, is considering moving most of its operations to Ukraine "within one to three years," according to the Warsaw Business Journal. The Polish company, based in Kraków, has already established a subsidiary there.

Like so many former eastern bloc countries, Poland has greatly benefited from European firms looking for cheap IT labour. More and more Western companies rely on skilled coders in the Baltic states, Bulgaria or even Romania. Russia's current revenue from IT outsourcing alone is between $150m and $200m annually.

But now that some of these countries have joined the EU, benefits such as low labor costs are likely to disappear. Hungarian companies have already outsourced their production to China, Taiwan and Vietnam. There are 4,000 Hungarian-owned companies in Romania alone and a third of them are totally dedicated to outsourcing.

Ukraine in particular is becoming popular. Bill Gates, whose wealth exceeds the gross domestic product of that country, described the area as the fourth most important source of innovation in computer programming. He is not joking: Ukrainian engineers reliably developed software for Boeing space and military programmes.

The Ukrainian IT industry grew by a staggering 24 per cent last year, and now represents 6.5 per cent of GDP. This is more than three times the ratio in Poland, even though only three per cent of Ukrainians can afford a PC.

Of course, eventually even Ukraine will lose its appeal and it is only a matter of time before companies will have to migrate even further. Maybe even to Siberia’s polar regions. Arctic coders get ready for business. ®

Related stories

Accenture wins £400m Barclays outsourcing gig
Outsourced IT staff fingered porn stash banker
Inverclyde IT staff fight outsource threat

The Essential Guide to IT Transformation

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
Microsoft says 'weird things' can happen during Windows Server 2003 migrations
Fix coming for bug that makes Kerberos croak when you run two domain controllers
Multipath TCP speeds up the internet so much that security breaks
Black Hat research says proposed protocol will bork network probes, flummox firewalls
Cisco says network virtualisation won't pay off everywhere
Another sign of strain in the Borg/VMware relationship?
Forrester says Australia, not China, is next boom market for cloud
It's cloudy but fine down under, analyst says
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.