Laurynas Pletkus
Laurynas Pletkus

Why You Should Outsource Your IT Projects to Lithuania

August 16, 2019
6 min read
Why You Should Outsource Your IT Projects to Lithuania

To stay competitive in the business world, companies increasingly rely on outsourcing tech.

For many, staying competitive means capitalising on cost-efficiency in their work, taking advantage of lower expenses and the convenience that comes with outsourcing.

In other words, they got more bang for their buck when outsourcing IT projects.

The online gig economy is constantly growing and outsourcing is becoming a more common solution for many businesses.

To back that statement up with some numbers, here’s what you need to know about the global IT outsourcing industry:

  • The revenue of the total global ITO (information technology outsourcing) industry peaked at $62 billion in 2018. 
  • 65% of the firms that outsourced in 2017 say they would like to continue doing so.
  • IT is one of the most common outsourced service types, as 31% of it was outsourced in 2017.
Source: transcosmos

The point is, more and more businesses choose to outsource certain tasks and positions.

More specifically, these positions usually include tasks they can’t do on their own – like IT!

Meanwhile, the other side of the coin is hiring an IT professional in-house. Now, there’s nothing wrong with that but if you’re working with a tight budget or a short deadline – then outsourcing might be more up your alley.

If that’s the case, then this guide is for you as we’ll be covering how you can start outsourcing your IT projects and why you might want to consider Lithuania 

Now, outsourcing implies hiring another person or a business to do your job. Typically, from an outside country.

So, where do you outsource?

Let’s take a look…

Where to outsource

As of now, in the IT world, the most common countries businesses outsource to include India, Ukraine, Poland, and more. But the most common ones don’t necessarily mean they’re the best choice.

Let’s take at a couple of factors that define these top outsourced regions.

Eastern Europe 

Eastern Europe countries often deal with highly-competent outsourcing developers who can deal with innovations and keep up with the latest tech trends. Experts are known for high-quality education and a good level of English. Services can be provided full-time due to the convenient location and relatively lower expenses.

The time-zone difference is negligible and the culture is close to the Western one, too.

Note: We discuss the time-zone difference in more detail here.

Asia and the Middle East

This region, India in particular, still remains one of the most popular destinations for programming outsourcing. The number of outsourcing developers is also one of the biggest for its size.

With that said, the geographical location is not that convenient and the time-zone is more noticeable. Another downside has to do with the communication aspect and the different mindset.

Receiving services for the cheapest price rates also comes with certain risks.

If you’re still on the fence about outsourcing, be sure to consider all of your options first. 

Latin America

Latin America is still a relatively new player in the world of IT outsourcing. This destination has become particularly attractive for the US customers due to its convenient geographical location and time-zone difference.

Though, the IT sphere is going through a stage of development due to the insufficient technical knowledge.

Other questions you might want to think about when outsourcing include:

  • What is the infrastructure like?
  • Is the culture exposure high?
  • Is the economic/political environment stable and under control?

All of these questions are worth considering to discover whether or not it’s worth doing business abroad.

So far, there are a number of key takeaways here.

First, cheap work doesn’t necessarily mean quality work. “Soft skills” (such as communication, involvement in projects, etc.) matter in terms of their mindset and who you’re going to be working with. And though the time-zone difference can be fixed, it still requires regular commitment and discipline.

Note: also consider other things you should look for when outsourcing tech.

Outsourcing to Eastern Europe is becoming increasingly popular for that perfect balance of quality and quantity the best of both worlds.

Each nation provides access to both an affordable and highly skilled pool of labor. It can be hard to find a developer with a mix of strong soft skills as well as the technical background.

From the Eastern Europe region, one country, in particular, stands out due to its competitive advantages and the country’s approach to IT and tech development.

Here’s what you need to know about outsourcing your IT projects to Lithuania:

1. Talented and young labor pool

It’s important you’re getting the best talent for your budget when outsourcing. For businesses that prioritise results (budget + quality) outsourcing to Lithuania lets them invest in quality teams and save money.

The tech sector has been thriving in this Baltic state since 2015, with education and STEM fields at the core of its growth. 

Lithuania’s ICT sector is quickly evolving, with no signs of slowing down any time soon. 

With some of the fastest internet connections in Europe and a particularly tech-savvy population, the labor pool is naturally drawn to the IT sector.

In the recent years, the country has become more and more attractive to tech giants as well, such as Google and Nasdaq when they decided to set up shop in Lithuania in 2015 (more on that here).

The abundance of IT professionals in the country is very much part of its appeal. According to Invest Lithuania, there are currently 26,000 residents employed in the ICT and IT industries, with an additional 1,600 future experts graduating each year. 

Additionally, Lithuania is one of the most educated countries on the continent, with the highest proportion of university graduates among people aged 30-34 (Source). Nearly all young professionals speak English as well, making it ideal for international business.

Note: Interested in finding the right talent for your future IT projects? We work with IT projects from scratch, improve current ones, and help in finding a dedicated team for your development project. We work with businesses internationally and make IT projects go by a lot smoother by connecting them with talented individuals perfect for the specific job. If you need help with finding the right individuals for your future IT projects – get in touch at [email protected]

2. Focus on high-quality infrastructure and progress in innovation

Due to its convenient location and strong logistics infrastructure, Lithuania is an ideal tech hub with access to the EU and nearby markets.

Lithuania’s physical infrastructure includes a reliable, and high-quality logistics option for streamlining operations. And the location gives easy access to Northern Europe, Western Europe, as well as Asia through the sea, air, road, and rail.

In terms of innovation, the capital, Vilnius, is one of the main forerunners in Europe within IT, and other fields. 

The country’s accomplishments also include:

  • 10% of the global laser market.
  • 19% annual growth in life sciences.
  • 5x startups increased in the last 5 years.
  • 20% high-tech export growth in 2017.
Source: Lithuania in Focus

The most important takeaway from those numbers has to do with the great start-up ecosystem. 

The number of startups has been consistently growing in Lithuania for some time now, with over a total of 183 million EUR of investments in 2018 and government entities such as “Startup Lithuania”, “Startup Visa”, LitBan”, and more.

Now, the main reason so many tech and IT startups flock to Lithuania is partly due to its high-quality infrastructure and the country’s business environment.

3. Business-friendly environment 

For those looking to grow their business with little red tape and bureaucracy, Lithuania offers a lot of benefits and the connectivity needed to succeed.

Lithuania is committed to providing the best conditions for businesses (and startups) to thrive. It takes only 24 hours to register a business using an e-signature and to get it up and running

Currently, Lithuania is ranked 14th globally in the ease of doing business and among the top 10 EU countries in ease of paying taxes.

The Lithuanian government is actively attracting and helping businesses transition within its borders. For foreign investments as well as IT outsourcing, there are plenty of incentives for businesses to move (and do) their work in the country.

Here’s what you need to know in terms of taxes when doing business in Lithuania:

  • Corporate profit tax varies from 0-15%
  • The standard value added tax (VAT) rate is 21%
  • The personal income tax is 20% on wages (Source)

What does this mean for the IT sector?

Essentially, we’re likely to see more tech and IT startups in Lithuania, due to the growing innovation potential. 

With Lithuania’s affordable high-quality labor and a relatively lower median wage (compared to most bigger countries), foreign investments in the IT sector are not likely to end any time soon.

Let’s look at that last part in more detail.

Lithuania by the numbers

As far as IT projects are concerned, Lithuania provides the ideal place for tech professionals. 

Here’s why:

  • Perfect internet speed for the modern business – fastest public wifi, 3rd most affordable in Europe
  • Talented labor pool – over 31,500 IT professionals, 2,000 IT graduates in 2018, 85% proficiency in English among young professionals. (Source)
  • Enhanced tech-savvy culture – one of the largest startup communities and dedicated office hubs in Baltics (Vilnius Tech park Sapiegos), first in region blockchain technology center & co-working space to incubate and accelerate blockchain startups, local offices for corporations like Google, Uber, Wix, and more. (Source)

Recap

Thinking of outsourcing your IT projects?

Due to Lithuania’s talented labor pool and business-friendly environment, working with international businesses from here is easier than ever. 

The country also happens to be the geographical center of Europe. With easy reach to neighboring markets, making it an ideal location for IT projects and professionals.

Lithuania has the largest ICT industry in the Baltics with potential for local as well as foreign expanding businesses. 13 of the 20 largest IT companies in the Baltic states are located in Lithuania and some of the national corporations have decided to move their business there as well.

In terms of the ICT services, the main ones include:

  • Computer programming, consultancy and related activities
  • Telecommunications
  • Information services activities
  • Web solutions, and more

And the top 5 key markets include:

  • USA
  • Ireland
  • Great Britain
  • Germany
  • Denmark

Finally, the country’s key competitive advantages include:

  • Largest industry in the Baltic states
  • Leading professionals within the region that’s growing annually 
  • Rapid technological development of services and outsourcing potential
  • Growing startup community and rising investment into IT field

If you’re looking to outsource your next IT project,  consider Lithuania as a potential market.

The country has a thriving IT sector and plenty of benefits, as well as incentives, for tech startups to set up their business here. 

If you need help with your IT, tech, or design projects, we’re interested to hear you out. We regularly work with clients within their existing projects through improvements or from scratch. We also make sure you work with the right talent. If you need help finding the right individuals for your projects, get in touch at [email protected] and we’ll collect a dedicated remote team that’s right for your specific project.