While doing business, there may be times when you’ll need to hire IT specialists to help you with specific tasks. That’s when IT outsourcing becomes a viable option. By offering temporary specialists, IT outsourcing enables businesses to achieve optimal results at a reduced cost.
In this article, we will examine the various types of IT outsourcing, the benefits, the feasibility of outsourcing IT services in Armenia, and the associated costs of outsourcing software developers in the Armenian market.
What Is IT Outsourcing?
IT outsourcing, also known as contracting for the provision of IT services, is a business practice where individuals who are not employed directly by a company provide various IT services. Many companies outsource a range of IT functions, including, but not limited to, programming, application development, software development, and technical support.
Advantages of IT Outsourcing
- Economic and Operational Benefits: IT outsourcing can significantly impact both the economic and operational aspects of a business. It is often adopted as an effective strategy due to the following advantages:
- Cost Reduction: Outsourcing IT services helps companies reduce costs, including avoiding the expenses associated with hiring long-term employees.
- Access to Specialized Skills and Advanced Technologies: IT outsourcing provides access to a wide range of specialized skills and cutting-edge technologies that may not be readily available in the company’s home country.
- Focus on Core Business: By outsourcing IT services, companies can concentrate on their core business processes, enhancing overall efficiency and productivity.
- Flexibility: Outsourcing offers flexibility to adapt to the growing and changing needs of the business.
- Round-the-Clock Support and Availability: Many outsourcing service providers offer 24/7 support, which is particularly beneficial for businesses with global operations.
- Risk Management: Outsourcing can aid in managing the risks associated with IT operations. The responsibility for handling potential failures, security breaches, or compliance issues is transferred to the outsourcing partner.
Main Types of IT Outsourcing
There are four key types of IT outsourcing to consider for your business:
- Offshoring: Many choose offshoring as their preferred method of IT outsourcing primarily because offshore countries offer more affordable services with lower, and sometimes tax-free, rates. Additionally, these countries often have a large pool of technical workers and a stable political environment.
- Onshoring: In this model, IT functions are delegated to a supplier within the same country. Since both parties are in the same territory, this type of outsourcing is sometimes referred to as homeshoring.
- Nearshoring: This involves delegating IT functions to a supplier located in a neighboring country. Unlike offshoring, nearshoring is often more efficient as both parties are located in similar time zones, facilitating smoother communication and collaboration.
- Hybrid Model: This approach involves delegating IT services to multiple providers, combining various types of outsourcing. This model aims to diversify business risks by distributing them among different suppliers in different regions.
IT Industry and Work Market in Armenia
According to Forbes magazine, the largest volume of foreign investments in Armenia is in the IT sector. Many of the world’s most influential technology companies, including Intel, Microsoft, Google, IBM, Synopsys, and Cisco, are actively involved in the Armenian IT industry. In 2018, this sector experienced a significant growth of 33%, reaching a market value of $250 million annually.
Some of the main reasons to consider software development outsourcing to Armenia include:
Reasonable Costs
Compared to the USA, Canada, and Western Europe, Eastern Europe, including Armenia, offers excellent value for money. With robust technical skills, Armenian specialists can execute scalable projects, enabling companies to complete these projects at minimal costs.
Developing IT Community and High-Quality IT Education
Eastern Europe’s foundation for outsourcing is its high-quality education, boasting an educational level of 98.99%. Armenia heavily invests in training and encouraging young programmers, making the prospect of outsourcing programmers in Armenia more appealing. Additionally, Armenian universities implement high-quality IT programs through collaborations among universities, the IT sector, and the state.
Armenian IT professionals possess excellent English language proficiency, facilitating smooth communication and collaboration with international clients.
Flexible Working Hours
Eastern European countries, including Armenia, offer flexible working hours that align with various time zones and locations. Even if there is a time difference between an Armenian outsourcing agency and its offshore partners, the work culture and policies in Armenia accommodate flexible schedules, ensuring professional and efficient cooperation.
Favorable Business Environment
In recent years, Armenia has cultivated a favorable environment for the IT sector, supported by government initiatives aimed at boosting the industry. With a strong technological foundation, Armenia scored 47 points for ease of doing business, surpassing other Eastern European countries such as Poland and the Czech Republic. This supportive climate makes Armenia an attractive destination for IT outsourcing.
Recommended Reading
What You Need to Know About Tax Incentives in the IT Industry in Armenia
The Cost of Software Development to Outsourcing to Armenia
The costs associated with IT outsourcing to Armenia vary based on several factors, primarily the level of experience. Here is a breakdown of the average salaries for Armenian programmers based on their experience:
- Junior Programmers: With less than a year of experience, junior programmers earn an average of $976 per month.
- Mid-Level Developers: Software developers with 2 to 5 years of experience earn an average of $2,257 per month.
- Senior Developers: Senior developers, technology leaders, and software architects with more than 5 years of experience can earn between $5,045 and $7,568 per month.
Below are the hourly rates for software developers in Armenia, categorized by the available programs and compared with the hourly rates of similar specialists in the United States:
| The average hourly salary of an Armenian programmer expressed in US dollars | The average hourly salary of a programmer in the United States expressed in US dollars | |
| Java | 16$ | 72$ |
| PHP | 19$ | 76$ |
| Python | 22$ | 78$ |
| JavaScript | 24$ | 81$ |
| NodeJS | 18$ | 72$ |
| ReactJS | 17$ | 75$ |
The Armenian IT market presents numerous advantages for companies seeking outsourcing opportunities. Key benefits include:
- Educated Specialists with Technological Capabilities: Armenian professionals are well-educated and possess strong technical skills.
- Competitive Workforce: The industry boasts a competitive workforce that delivers high-quality results.
- Lower Operating Costs: Companies can achieve significant cost savings by outsourcing to Armenia.
- Stable and Growing IT Sector: Armenia’s IT sector is both stable and continually expanding, offering a reliable environment for business operations.
These factors make outsourcing to Armenia an attractive destination.
Our legal team is fully equipped to support you with all aspects of outsourcing IT companies and specialists in Armenia, including:
- Document Preparation: Discussion and preparation of necessary documents, including contracts for the provision of services, work, and software development, in compliance with both Armenian legislation and the client’s legal requirements.
- Intellectual Property Protection: Consultations and legal protection of intellectual property created during the outsourcing process.
- Registration of Branches or Representative Offices: If needed, assistance with the registration of branches or representative offices of foreign companies in Armenia, ensuring compliance with local legislation.
- Routine Legal Maintenance: Ongoing support for legal issues that may arise throughout the outsourcing process.
AT MB Legal, we are committed to ensuring that your outsourcing arrangements are handled smoothly and in full legal compliance
