The key IT outsourcing destinations to develop an online marketplace project

Top IT outsourcing destinations to make an online marketplace project

With the increasing demand for digitization, the IT outsourcing market has seen a surge. The COVID-19 pandemic has just accelerated this growth, forcing enterprises to approach IT outsourcing companies to ensure business continuity, meet changing consumer preferences, and reduce expenses.

Thanks to software development outsourcing services, brands and institutions can focus on their core competencies, boost efficiency, access niche expertise, and cut software costs by 2–3x while preserving end-product quality.

In this article, we will describe the top IT outsourcing destinations, helping you find the best country for delegating an online marketplace project. But first, let’s consider the current IT outsourcing landscape to get a better understanding of the advantages you can obtain.

IT outsourcing market overview

Analysts say that the worldwide IT outsourcing market is anticipated to climb from $526.6 billion in 2021 to $682.3 billion by 2027, showcasing a CAGR of 4.13% during 2022–2027. Market Data Forecast reports that nearly 84.2% of subcontracting software development outsourcing agreements come from the US, followed by the UK with 5.2%.

Since remote work has become the new normal, IT outsourcing is now more accessible to startups and SMEs. Another market driver is the lack of talent. Gartner’s survey 2021 revealed that IT executives consider skilled labor shortage as the primary adoption barrier to 64% of emerging technologies, in comparison with just 4% in 2020.

The ongoing push toward remote work and the acceleration of hiring plans in 2021 has exacerbated IT talent scarcity, especially for sourcing skills that enable cloud and edge, automation and continuous delivery. As one example, of all the IT automation technologies profiled in the survey, only 20% of them have moved ahead in the adoption cycle since 2020. The issue of talent is to blame here.

A trusted B2B review and rating website Clutch found that 90% out of 1,003 small businesses will outsource business tasks this year, up from 80% in 2021. IT services were the most common function outsourced in 2022.

According to Clutch, 27% of respondents outsource in order to save time and improve efficiency while 33% of participants primarily aim to access flexible resources. In addition, 25% of executives want to cooperate with experts while 19% of enterprises with 251–500 employees mainly outsource for scaling their business.

As the popularity of online marketplace platforms is rising by leaps and bounds, organizations are increasingly turning to IT outsourcing companies to receive the abovementioned benefits. Globally famous marketplaces, like Alibaba and AppSumo, were created with the help of IT outsourcing firms.

Before we describe the best destinations for building an online marketplace project, let’s have a look at the key types of software development outsourcing.

The main types of marketplace development outsourcing

There are three categories of marketplace software development outsourcing describing where brands and institutions decide to delegate their tasks:

  • Nearshoring. By choosing this type of IT outsourcing services, a company delegates a marketplace project to a neighboring country with an identical or a similar time zone.
  • Onshoring. An organization reaches out to an IT outsourcing partner in the same country.
  • Offshoring. Means assigning IT tasks to a distant country with considerably different time zones and sometimes cultures.

While nearshoring was not as popular as onshoring or offshoring in 2021, this marketplace development outsourcing practice is gaining momentum this year.

Top 6 destinations to outsource marketplace development

1. Eastern Europe

With a pool of world-class IT professionals and strong education, Eastern Europe has a truly lucrative software development outsourcing market. Countries such as Ukraine, Belarus, Poland, the Czech Republic, Hungary, and Romania are known for a variety of economic and governmental measures to maintain the IT sector and bring innovation to multiple domains.

It is worth noting that Poland, the Czech Republic, Hungary, and Romania not only provide typical nearshoring advantages but, since they are members of the EU, payments and agreements here are regulated and protected by the same European legislation as in the customer countries.

Currently, over 2,900 software engineering firms that specialize in IT outsourcing are located in Eastern Europe, as reported by Clutch. The salaries of IT agencies in Eastern Europe are lower in comparison with the US, Western and Central Europe. For example, while developer hourly rates in the US may vary between $50 and $150, IT outsourcing vendors in Eastern Europe generally earn $30–$100 per hour.

Numerous organizations in the US and Western Europe prefer to assign their online marketplace projects to Eastern European companies, as this region is characterized by a massive and educated talent pool, cultural similarities, convenient time zone, as well as excellent English skills.

At the moment, Poland is a key player in the IT sector within Eastern Europe. Poland has the highest number of technology startups in CEE (Central and Eastern Europe). In addition, nearly 25% of software experts are based in Poland. It is worth noting that Polish IT specialists take the 3rd position in the list of best developers globally.

Belarus is another popular IT outsourcing destination. As Belarus is situated in the center of Europe, there is just a 1–3 hour difference with European countries. The IT domain in Belarus is strongly supported by the government and, particularly, the High-Tech Park, which is an analog of Silicon Valley. There are plenty of universities that provide tech education and centers offering numerous IT courses. Regarding prices, Belarusian software engineering firms typically charge $25–$50 per hour.

Ukraine is among the most significant software development outsourcing destinations you should consider. As of today, there are more than 430 top IT outsourcing companies having positive client reviews and competitive rates, according to Clutch.

Katie Gove, an analyst at researcher at Gartner, says that there are 85,000–100,000 export service workers in the country, employed prevalently in the IT service sector. Ukraine is home to a pool of IT professionals, partially due to strong academic tradition.

2. Georgia

Georgia is an emerging but fast-growing destination for marketplace software development outsourcing. Recently, a lot of IT outsourcing companies from Belarus and Ukraine have relocated to Georgia, so now the country is a new home to thousands of skilled software experts.

Salaries of Georgia-based IT outsourcing vendors are lower compared to European countries, with average hourly rates ranging between $20 and $50 per hour.

Georgia is characterized by a strategic geographical position between Europe, Central Asia, and Turkey, which makes it a great nearshoring destination for European and Asian countries. Georgia has various trade agreements, involving with the EU, China, and EFTA countries. According to the World Bank’s report, Georgia ranks 7th for ease of doing business among 190 countries. There are no issues with payments and legislation in Georgia, which is another great advantage.

Concerning taxation, Georgia has a 6% corporate income tax rate, which is applied only to the amount of profit earned in the country. Since the business landscape is improving (e.g., organizations are obliged to ensure compliance with International Financial Reporting Standards) and there are no strict requirements to set up a company, many businesses choose Georgia to scale and enter new markets. For example, Arateg moved its headquarter to Tbilisi while a part of our team has already relocated to Georgia.

The country provides multiple initiatives to help technology startups innovate. For instance, a nonprofit organization Georgia Research Alliance (GRA) builds sophisticated research infrastructure, creates cutting-edge software solutions to address industrial issues, and recruits world-class scientific talent.

What’s more, GRA cooperates with the University System of Georgia and Georgia’s Department of Economic Development. GRA partners with numerous educational centers, including Georgia State University, Clark Atlanta University, and Georgia Institute of Technology. Thanks to effective education, Georgian software experts generally have advanced technical skills.

3. China

China is among the most significant IT outsourcing destinations that provide advantages such as reduced marketplace development costs and access to niche expertise. The IT outsourcing market in the country has seen considerable growth over the past 20 years. Now, it is a key sector in the Chinese economy.

According to King White, CEO of Site Selection Group, a global location advisor, China has excellent prospects to become one of the attractive outsourcing markets, which are even more cost-competitive than India.

In its 5-year plan, China aims to make IT one of the seven most essential domains that will allow the government to move from a low-wage manufacturing outsourcing to a high-class IT outsourcing driven by innovation. The IT industry's growth is primarily attributed to the use of cutting-edge technologies, including the internet of things, artificial intelligence, big data, and cloud computing.

In addition, China is putting effort into IT education. The country offers various training programs and learning packages to students and individuals who want to acquire new or improve their skills and knowledge.

Recognizing the benefits of outsourcing, the government has removed restrictions on foreign ownership in major parts of the finance industry, which helps globalize the market. China has also implemented favorable tax policies to attract offshore investors and facilitate the work of IT outsourcing service vendors.

With the goal to prevent IT outsourcing risks, China Banking and Insurance Regulatory Commission requires banking and insurance organizations not to delegate information technology tasks associated with internal audit and strategic management. IT outsourcing that involves cross-border data processing, analysis, and storage has to ensure compliance with Chinese rules and regulations.

Regarding the disadvantages of outsourcing marketplace development to China, it may be challenging to find software experts with decent English proficiency.

4. India

IT outsourcing has seen intense competition in the Asia Pacific region, with India and China leading the market. India, for example, has been developing the IT outsourcing industry for over 25 years whilst being among the top destinations globally since then.

As the demand for skilled software experts is rapidly growing, enterprises from all over the world are turning to Indian IT outsourcing companies to create marketplace applications.

The average hourly rates of software engineers in India are $30 but you can find IT professionals asking for $15 per hour. This way, by delegating an online marketplace project to an Indian IT outsourcing vendor, it is possible to significantly cut down expenses.

Despite providing so many benefits, there are some drawbacks you should be aware of. First, different time zones may lead to ineffective communication. Second, a lot of developers have low proficiency in English.

5. Indonesia

Indonesia is another country in the Asia Pacific region that you should take into account when choosing a marketplace software development outsourcing company. According to, the Indonesian IT sector had revenue of $8.3 billion in 2021, showcasing a CAGR of 9.9% during 2016–2021.

The country has various R&D centers and talented IT professionals, which makes it a great offshoring/nearshoring destination to build a marketplace platform. In addition, Indonesia does not impose special regulations on IT and cloud services.

6. Vietnam

In order to drive innovation and raise living standards, Vietnam aims to create a service-oriented economy, migrating away from low-tech manufacturing. As a result of its efforts, the country has recently become an appealing IT outsourcing destination to delegate an online marketplace project. With an IT outsourcing history of about 20 years, Vietnam is now gaining momentum.

The price to hire a software development outsourcing company in Vietnam varies between $10 and $25 per hour. However, IT partners from other countries in Southeast Asia have higher salaries. For instance, average hourly rates in Thailand are $13–$40 while software engineering firms in the Philippines typically earn $17–$42 per hour.

Hourly rates of software engineering firms in different countries

Wrapping it up

Marketplace project success largely depends on an IT outsourcing partner and communication efficiency. When choosing a marketplace software development outsourcing firm, you should consider aspects like technology/domain expertise, hourly rates of IT specialists, time zone, cultural proximity, and language proficiency.

Furthermore, it is important to check client testimonials and overall agency ratings on trustworthy B2B review and rating platforms, such as Clutch and GoodFirms.

Additionally, you should research company achievements that can prove professionalism. For instance, Arateg is featured as a top developer by Clutch, GoodFirms, The Manifest, TechReviewer, WADLINE, AppFutura, DesignRush, and others.

To establish effective collaboration, it is crucial to hold regular meetings with online marketplace developers and request daily/weekly reports. We also recommend that you ask for access to task management and time tracking systems to easily monitor project progress. Find out how we at Arateg ensure process transparency.

If you want to build a marketplace application that will meet end-user needs and expectations, drop us a message. Project consultation is free of charge.

About Arateg

Founded in 2014, Arateg is a marketplace software development company that delivers software solutions to industries such as e-commerce, healthcare, e-learning, real estate, hospitality, and human resource management. On top of that, we have extensive experience in making NFT marketplaces. In addition, we create complex solutions, like CRM, ERP, and big data analytics systems.

Headquartered in Tbilisi, Georgia also has an office with IT professionals in the UK, as well as representative offices in Germany and Switzerland. Our team comprises over 25 software engineers, testers, UI/UX designers, project managers, and business analysts.

Apart from providing full-cycle marketplace development services, we help our customers conduct competitor research, write a software requirement specification, prioritize features, choose a technology stack, and outline a project implementation roadmap.

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