Baltic countries are a group of three sovereign states, which are located in a long and beautiful low-lying landscape of Baltic Plains on the Eastern coast of the Baltic Sea. The total area of these states is about 175,000 square kilometers and a combined population of about 6.1 million people. The names of the Baltic States are Estonia, Latvia, and Lithuania.
At present, they have become a new technology hub for IT outsourcing and the development of digital services for export to the world, especially for the European countries. Let’s explore the digital prowess and capacity of these countries and also the comparative analysis of benefits, reasons, downsides, and other factors of IT outsourcing in Baltic countries with Ukraine, which is another attractive hub in the Eastern European region for IT nearshoring services to the major countries in Europe, North America, and other regions. In the quest to find the best nearshoring destination, businesses should also explore options like outsourcing to Serbia, while comparing the advantages and challenges of Estonia, Latvia, Lithuania, and Ukraine, in order to make an informed decision based on their specific project requirements and goals.
Why Is IT Outsourcing in Baltic Countries So Attractive for Companies Worldwide?
There are numerous reasons for companies across the globe to hire developers in Tallinn, Vilnius, and Riga, which are the top hubs of Estonia, Lithuania, and Latvia respectively. Baltic states are popular for their technical-savvy population with a strong urge for Science, Technology, Engineering, and Mathematics (STEM) education. These states are powered by a few world-class universities providing professional-level education in the field of technology.
Baltic states are very popular among a wide range of companies, especially the software development companies, for providing highly skilled Estonia software engineer C++, mobile app developer Vilnius, Dynamics consultants in Latvia, and Riga dedicated team for remote development due to numerous reasons. A few very important of them are mentioned below:
- Geographical location. All Baltic states are located in the Northeastern part of the European continent. This region is very close to numerous European countries such as Finland, Sweden, Denmark, Poland, Russia, Hungary, Belarus, Germany, Norway, and other major countries in the region. Physical traveling is very easy and less expensive; so, it is very suitable for nearshoring for the companies in Europe.
- STEM education. Baltic countries are very well known for their STEM education powered by a few best universities and technical institutes in the regions. A majority of the technical degree holders including a Tallinn developer, Riga developer, or even an Estonia web developer are highly skilled and very well-versed in one’s respective domains of technologies.
- Shared culture and work ethics. The roots of Baltic countries originate from the European culture and share common traditions, ethics, behavior, and work ethics. This creates the feeling of at-home among the companies from Europe and surrounding regions very. The communication and understanding of the responses and behaviors become so easy among the on-premises and remote teams.
- Competitive prices. The prices of hiring a wide range of developers for building a dedicated development team in Estonia, Latvia, or even a Lithuania dedicated team are very competitive as compared to many major European countries. Thus, companies choose one of the Baltic states as the best country to nearshore their IT services and software development.
- Higher ranking in ease of doing business. According to the World Bank statistics, Baltic states are among the top twenty countries in the world where doing business is very easy without any hard bureaucratic redlines. In the ranking of 2020, Lithuania ranks 11th, Latvia 19th, and Estonia 18th in the list of 190 countries and sovereign states in the world.
- Overlapped working hours. The time zones of Baltic states fall within UTC+2 and UTC+3, which create overlapped working hours with numerous countries in Europe, North America, and Asia-Pacific regions. Thus, the Baltic states are very suitable for coordination and communication.
- Innovative countries. The Baltic states are among the top 40 countries in the Global innovation index released by Bloomberg in 2020. The rankings of Latvia, Estonia, and Lithuania are 34th, 39th, and 40th respectively. A web development company Latvia or located anywhere in the world can obtain the best value by hiring developers from Baltic countries.
- Quality of work. The quality of work done by the software development company Estonia or located in any country of the Baltic Plains is in line with the European standards.
Comparison of IT Nearshoring Latvia, Estonia and Lithuania
The comparison of IT nearshoring in the countries – such as Latvia, Estonia, and Lithuania – of a particular area with a wide range of similarities is governed by numerous factors such as size of talent pool, capacity of the market, status of economy, major IT hubs, language proficiency, and the cost to hire developers in Riga, Vilnius, or Tallin. The main factors that can provide you with a very clear comparative picture of the Baltic states are shown in the following table.
Comparison Factor | Estonia | Latvia | Lithuania |
| IT Talent Pool | 28,400 | 37,000 | 31,500 |
| IT Graduates Annually | 3,036 | 8,900 | 4,500 |
| IT Market Capacity | 3.13 billion USDs | 4.97 billion USDs | 877.58 million USDs |
| English Proficiency Level | 7th | 14th | 24th |
| Major IT Hubs | Tallinn, Tartu, Narva | Riga, Daugavpils, Liepaja | Vilnius, Kaunas, Klaipeda |
| Average Developer Salary (Monthly) | $2,773 | $2,554 | $2,505 |
If you look at the IT talent pool, you will find very little difference. Latvia has the biggest IT talent pool followed by the Lithuanian and Estonian pools respectively. The demand for IT specialists such as React developer in Estonia, Lithuania tech programming experts, and Android mobile app development agency Vilnius in the Baltic countries is very high. But, the annual inflow of tech-talent graduates in Latvia is comparatively higher than in the other two countries.
One thing very common in those Baltic states is that a sizable number of IT specialists, especially web developer Estonia and other professionals belong to foreign countries. Estonia ranks the most fluent in English language as compared to Latvia and Lithuania. The average Estonia developer salary is a bit higher than the Lithuania software developer salary as well as the software engineer salary in Latvia.
So, we can say that the landscape of the IT outsourcing market of all three Baltic countries is very much similar with a very slight difference in the market parameters.
An Overview of Estonia, Lithuania and Latvia IT Outsourcing
After the comparison of a few top factors of the IT outsourcing market of the Baltic countries, let’s have a deep dive into the dimensions of IT and software development of those countries individually.
Outlook to Hire Developers in Estonia
Estonia is also referred to as the “Baltic Tiger” due to numerous factors that make this country one of the most vibrant economies and the connected societies in Europe. The main reasons for calling Estonia as Baltic tiger are listed below:
- A huge pool of over 37K tech-talent and counting
- Ranks as #1 entrepreneurial country in Europe
- Ranks #1 startup friendliness country in EU countries
- Ranks #3 in terms of number of startups per capita
- Over one thousand startups and 5 unicorns in the country
- English is spoken widely among the people
- Negative inflation rate
- A sizeable economy of 31.01 billion and 1.3 million population
- Nearly 100% literacy rate
- Highly digitized society – first to use digital online voting
- Great level of gender equality
- Over 99 public services available online
- Ranks 1st in digital health ranking and 2nd in internet freedom
- Balanced budget and economic growth
- Very good tax regime
- Double-digit growth in the IT sector
- Easy process for doing business
- Attractive landscape and location
- And much more
Hiring an Estonia Python development team or DevOps teams for improving the nearshore development capacity of any software development company Estonia or located in European or North American countries is very beneficial. The main advantages of hiring Estonian developers are mentioned below.
Advantages:
- Access to a highly skilled tech-talent pool
- Innovative and creative approach to the problem-solutions
- Higher quality of software development and IT services
- Competitive Tallinn software engineer salary to reduce development cost
- Increased staff production and efficiency due to efficient use of working hours
- Helpful in bridging the gaps of technology expertise
- High level of professional commitment and flexibility
- And much more
Disadvantages:
- Comparatively higher cost as compared to many other global IT destinations
- Acute shortage of IT tech-talent and software developers
- Aging workforce due to low fertility rates
- Harsh weather, especially winters
Interesting facts about nearshoring to Estonia:
- ICT sector employs as much as 5.9% of the entire workforce in Estonia
- Over 130 countries use IT services of Estonia
- Ranks #1 country in terms of the number of unicorns per capita
- Over 99% financial transactions occurring through digital ways
- Capable of producing IT solutions in finance, banking, electrical engineering, chemical and mechanical engineering, telecommunication, manufacturing, healthcare and many other sectors
- Ranks #5 in the world in human capital potential maximization index
- Hotbed for startups adding 66 just in 2020 making the total figure of 1110 startups in the country
- More than 4,800 IT service provider companies in the country with a turnover of about €3.6 billion
- Prominent startups emerging from Estonia include Skype, Bolt, PipeDrive, PlayTech, and others
- IT experts specialize in databases, data analytics, artificial intelligence, web development, web designs, cybersecurity, mathematics, and other top domains of science and technology
Outlook to Hire Developers in Latvia
Latvia is one of the three Baltic countries located in the Baltic Plains of North-East Europe. This country is located in the middle of the three countries on the Baltic Sea coast. The total area of Latvia is about 64,573 square kilometers with a population of about 1.9 million people. The capital of the country is Riga, which is also the most important IT hub of the country.
Latvia has emerged as one of the most popular nearshoring Lettland hubs in the European continent. The profit growth of the ICT industry grew at over 30% Year-Over-Year growth. This gigantic growth also pushed the demand for a developer Latvia CV in all IT companies in the country. Available tech-talent has started becoming short as compared to the demand, which lead to issuing work permits for the foreign engineers and developers.
There are many factors and reasons that have made nearshoring Latvia one of the most popular hubs of the IT outsourcing industry in the region. A few facts and statistics to support this notion are mentioned below:
- IT is the fastest-growing sector in the country
- A sizeable pool of 37,000 IT specialists
- Ranks #16 in the world in terms of the internet connection speed
- One among the first countries that implemented 5G technology
- The largest ICT exporter of Baltic states (including developers and DevOps)
- The most common sector in which ICT is pervasively used include automation, robotics, data analytics, finance, telecom, IT support, app development, cloud-based solutions, healthcare and others
- Fourth most matured country in e-government among the EU countries
- The contribution of the ICT sector in the GDP of the country accounts for about 4.4%
- Ranks #1 in ICT students per million students among EU countries
- A large number of higher education institutes (52) with an average enrollment of over 80K students annually with a sizeable ratio of ICT students
- About 23 professional-level IT outsourcing companies in the country
- More than 50 shared service centers (SSC) and BPO centers
- Over 15.5% of enterprises of all types are selling products online
- Highly digitized business ecosystem powered by websites, apps, and online transactions
Choosing Latvia as an IT outsourcing destination, the companies may have the benefits and disadvantages as mentioned in the following lists.
Advantages:
- Access to a highly skilled and tech-savvy pool of IT specialists
- A competitive Riga software developer salary to reduce the cost of software development
- Availability of powerful and efficient IT infrastructure to help improve staff productivity
- Shared culture and multilinguistic workforce for better communication and coordination
- Proximity with numerous major countries in Europe and other regions
- Ideal time-zone that provides overlapping timings with many countries
- Provide high-quality of work in line with the European Union quality standards
- Options for bridging technological gaps in the development teams
- And many others
Disadvantages:
- A bit higher costs of development as compared to may other competitor countries like Ukraine and others
- Faces an acute shortage of IT specialists and developers
- A bit higher rates of taxes
- Higher living cost
Outlook of Software Development Lithuania
Lithuania is one of the Baltic countries with a total area of 65,286 square kilometers and 2.78 million population. The country has emerged as one of the fastest-growing IT outsourcing, nearshoring Lithuania and software development hubs. Vilnius is the capital city as well as the largest hub of the country. Starting a web development company Lithuania is one of the biggest trends in the country, which is also one of the biggest aspirants of creating startup companies in the region.
The most interesting facts and figures about the IT sector of Lithuania are listed below:
- A pool of over 31K IT specialists with over 18,100 software developers and counting
- Over ¼ of the students enrolled in tertiary education belong to science and mathematics
- Young professionals are about 85% fluent in English
- Highly educated national with a little less than 100% literacy rate and over 55% of youth population has higher degrees
- Ranks #14th in ease of doing business and #4th in cybersecurity ranking
- Leader in FinTech with over 170 companies in the country
- Top companies working in Lithuania include Wix, Unity, Uber, Adform, Oracle, and others
- Over 1000 startup companies and counting
- The most common and flourishing industries of Lithuania are FinTech, cybersecurity, software development, automation and robotics, data science and others
The main advantages and disadvantages of choosing Lithuania as an app development company Vilnius destination for IT outsourcing are mentioned below.
Advantages:
- Availability of highly skilled and innovative tech-talent pool
- IT outsourcing to MS Dynamics developers in Lithuania saves you development cost
- Improves the work efficiency and productivity
- Ideal location for traveling from many countries in Europe, North America, and other continents
- Similarity in culture, work ethics, language, and personal behaviors to build a friendly work environment
- Great quality of work in line with European quality standards
- And others
Disadvantages:
- Very small tech-talent pool
- Comparatively higher cost
- Expensive living
Why Ukraine Is a Popular Alternative to Baltic Countries for Nearshoring Services?
Ukraine has become one of the most attractive destinations for IT outsourcing services, especially in software development, building remote R&D centers, and dedicated team building. Powered by numerous natural and man-made drivers, the country has attracted hundreds of multinational companies to establish their presence in this country.
The main reasons for IT companies from all over the world to choose Ukraine as their most attractive destination for IT outsourcing services are listed below:
- The fastest growing IT sector with a growth of over 26% YOY.
- A huge pool of tech-talent of around 200,000 IT specialists and counting
- A huge IT ecosystem with more than 4,000 IT companies and over 1,600 IT service companies
- A huge IT market with annual revenue of over $5 billion
- Offers the most competitive prices as compared to the Baltic countries and other competitors
- Provides high-quality services with a proven track record of past successes
- An ideal location for physical traveling from multiple regions worldwide
- Well established and robust IT infrastructure to support IT development and other services
- And many others
FAQ
Why should businesses consider nearshoring to Estonia, Latvia, or Lithuania instead of Ukraine?
Estonia, Latvia, and Lithuania offer a highly educated workforce, stable political environments, and a strong integration with the European Union, which provides seamless access to EU markets and compliance standards. In contrast, Ukraine offers lower labor costs but faces challenges such as political instability and differing legal frameworks.
What are the key advantages of nearshoring to the Baltic countries?
The Baltic countries provide a high level of digitalization, advanced tech infrastructure, and multilingual professionals. They also have a cultural affinity with Western Europe, making communication and collaboration smoother for European companies.
How does the cost of nearshoring in the Baltic countries compare to Ukraine?
While labor costs in Ukraine are generally lower than in Estonia, Latvia, and Lithuania, the Baltic countries offer competitive pricing for higher-quality services, more robust data protection laws, and lower risks associated with business continuity.
What are the main industries benefiting from nearshoring to the Baltic countries and Ukraine?
IT and software development, finance, and customer support are key sectors for nearshoring in both regions. The Baltic countries, however, are increasingly becoming a hub for fintech and high-tech industries, while Ukraine excels in software development and engineering services.
What are the main challenges of nearshoring to the Baltic countries versus Ukraine?
In the Baltic countries, higher labor costs and smaller talent pools can be challenging for some businesses. In Ukraine, companies may face geopolitical risks and a more complex legal environment. Both regions require careful consideration of these factors when making a nearshoring decision.
If you compare all factors and indicators of Baltic countries with those of Ukraine, you will find that there are many similarities in the Baltic states; but Ukraine has many plus points as compared to the Baltic states that make it a better place for IT outsourcing for the companies across Europe, North America, and other continents.
If you are looking for the best alternative to Baltic countries for nearshoring services, consider Ukraine as a powerful place to hire remote developers with full confidence!
