IT outsourcing involves hiring people or teams of people to work on individual tasks or projects related to all areas of IT. Lithuania has a population of just 2.9 million, yet it’s making a huge impact on Europe and around the world.
Lithuania’s history of IT up to today
It wasn’t until the fall of the Soviet Union in 1990 and 1991 that business opportunities started to grow in the Baltic area. Scandanavians, Brits, Americans, Russians, and many Western European businesses started to turn to the best-developed region of the former Soviet region. While business grew over the following 20 years, nothing really exciting happened in the field of technology. The Lithuanian government didn’t invest a lot into technology and therefore foreign investment was also minimal. So the growth in this industry was rather slow.
The IT mini-boom
The economic crisis came to an end in 2008 and soon after, Lithuania began to be seen as a hub and hotspot for well-priced and valued IT services. Giant companies like Barclays, Google, and AIG soon followed suit by opening offices or IT service centers. This didn’t just boost the IT sector, but it also jump-started the whole Lithuanian economy.
In mid-2015, ZDNet labeled Lithuania as a new and developing IT force. Today, since joining the Euro and significant encouragement from the government, and the world’s fastest public Wi-Fi has lead to serious recognition. It has the best laser-building infrastructure in the world and the launch of a domestically-built satellite. To say that the IT sector in Lithuania is successful is an understatement.
So what about its IToutsourcing trends? Let’s take a closer look at what this Baltic country has tooffer.
Who outsources in Lituania?
2017 data shows thelargest foreign investors are:
- The U.S.A-15%
- The U.K-11.5%
- Germany-11.5%
- Sweden- 8%
These major investors are using Lithuania for its supply management, distribution, and/or IT solutions. Vilnius, the capital, is the second-largest city and located in the center of Lithuania. 1950 jobs were created in Vilnius in 2017. 2700 jobs were created in Kaunas and another 400 in the port of Klaipeda. Between 35-40% of these jobs were in the IT industry. These numbers will impress you more when you think that just 1,500 people graduate in the IT industry per year.
Local governments encourage foreign investment by compensating their employees better than many other local businesses. The environment for IT outsourcing is balanced and stable and looks to remain this way for the future.
Why are companies choosing to outsource toLithuania?
One of the main reasons is the low cost of exceptional workers. An average salary could be approximately $800, whereas in IT salaries are a little higher, the average Lithuanian wage of an IT specialist are nothing compared with IT salaries in the US or Western European countries. This is only going to encourage more foreign investment.
More foreigninvestment can only benefit Lithuania’s economy as it accounts for 6% of thecountry’s GDP, (over 3 billion USD).
The unknown Lithuanian treasure
Near Kaunas and Klaipeda there are a couple of hundred hectare-sized areas of land, The LEZ (Laisvoji ekonominé zona). These zones are perfect for medium to large-sized businesses as the Lithuanian government offers 6 tax-free years for those employing 20 or more Lithuanian or permanent residents. This provides startups and existing businesses from all over the globe a massive opportunity.
Next, let’s take alook at some of the trends we are seeing in the IT sector within Lithuania.
IT Outsourcing trends in Lithuania
As mentioned, one trend is the increased amount of foreign investment, most noticeably from Sweden and the US. They have set up small to medium-sized offices providing IT solutions. Some other major investors are coming from Europe, Canada, and the US
Their reason for choosing Lithuania is mainly because of the highly skilled workforce, plus the ability to speak English and the affordability over other countries. Some companies have said they save between 30-78% when outsourcing in Lithuania.
It is worth mentioning the high work ethics you will find. To overcome the differences in time zones, Lithuanians that have US-based clients work around the clock in order to work within US working hours.
Cybersecurity is another trend making an appearance. Copyright and similar laws and regulations from the EU are becoming more important. More IT jobs from the public sector can now be outsourced into any state, including Lithuania. More VPN offices are opening or expanding due to the growth of the service they provide.
We have seen the rise of cryptocurrencies all over the world and in Lithuania is no exception. Monetha and BitDegree are a couple of examples of crypt-based projects and startups that have emerged from Lithuania.
Finally, not only are the employees well qualified, but they are also extremely happy. They are able to represent international companies with great brand images, they are well compensated, and they are skilled in a variety of areas like VPNs, cryptocurrencies, iOS and Android development, game development, graphic designers, as well as the latest programming languages.
What about IT outsourcing and the rest of theworld?
While China and India are still significant players for IT outsourcing, it is mainly because of the size of their populations. If you are looking for highly experienced and qualified workers with the efficiency to match, Eastern Europe is the direction to head, Lithuania, standing out.
These trends, along with the opinions of experts point to further growth in AR and VR and people haven’t begun to look at the potential in the 3D market. By 2021, it is predicted that the AR/VR market is expected to reach 133.78 billion USD worldwide.
Politics in Europe are exceptionally volatile at the moment. Elections are creeping up in many countries. New laws are likely to be in favor of IT development, leading to more foreign investment in IT outsourcing.
A Summary of Lithuania’s IT OutsourcingServices
Here is just a quick review as to why you should consider Lithuania as your chosen destination:
- IT salaries of approximately 25-35% lower than average.
- Exceptionally high levels of English with many also speaking Russian or Polish, around 800,000 can speak, read, and write in three languages.
- Lithuania ranks 16 in the business freedom index, along with great conditions for business development.
- LEZ- areas for business setups and expansion with 6 years without taxes providing you hire at least 20 Lithuanian or permanent residents.
- More openness in business practices.
- It is in the center of Europe with easy assess to major IT hubs.