COVID-19 and Outsourcing

For more than 2 months COVID-19 has affected the globe. Of course, it caused a lot of pain to humans and affected businesses of absolutely different areas. In our previous article last week we did an overview of the impact on the industries. Being a part of IT outsourcing community we can not stay away and silent.

Did COVID-19 affect IT outsourcing industry in general and in Eastern Europe in particular?

Yes, for sure it did. Most of IT outsourcing companies based in Eastern Europe represent development teams of B2B. While business part is done locally, in Italia, UK, Germany, US or Canada, multiple companies decide to outsource all the technical part of work fully to Eastern Europe for two main reasons: high level of expertise and lower prices.

While the level of expertise is high, the average salaries of developers are much higher than average salaries in any other niche. As the result of pandemic, many customers inform IT outsourcing companies that they need to pause works until the situation with COVID-19 is clear and the quarantine is over. It is now a great secret that the outsourcing company is not eligible to fire all the developers same day customers refused to proceed or asked to stop contracts for an undefined period of time.

COVID lockdown and software development outsourcing

Most of the outsourcing companies applied the following procedures to survive:

  • agreements to increase the salary with most of the employees were revoked;
  • a number of employees were fired;
  • some employees were informed about immediate vacation;
  • some got proposals to proceed with the lower salary;
  • most of the bonuses outsourcing companies used to provide to their employees were cancelled;
  • all active employees started working from home using different tools to track time.

Together with high moral pressure the situation remains very difficult. As we have mentioned before, most of the companies which managed to survive in order to keep working places reduced prices for the development and increased email marketing making everyone aware they provide discount options. As the only way for business to survive now is going digital — spam has increased dramatically for well-known reasons.

In an already published article regarding niches and impact of COVID-19 on main industries we have outlined that B2B segment such as travel agencies, different kind of stores (apart groceries and pharmacies), restaurants, theaters, cinemas, malls and much more than mentioned, are in a very bad situation. A part of them won’t survive. Many of the outsourcing companies worked with art, travel and e-commerce industry. For them this pandemic means losing customers. What is more, many IT outsourcing companies are not working on the basis of the prepayment what means most of them didn’t receive payments for the work they have already performed.

From the other side, outsourcing companies which were IT tech partners of online banking platforms, food and delivery, online books, online news, online tools to do video calls and other solutions which are of a high demand — these companies have chance “to earn on the pandemic”.

To finalize, IT outsourcing industry itself is not in the best but also not in the worst position during these pandemic times. While some clients might not proceed, other clients would go digital and order software for the business. Some of local developers were fired and in order to decrease budget for development some companies would for sure look to outsource the work.

While stores, restaurants, discos, cinemas, theaters and so on are closed, and people cannot work from home, development work can be easily done from home, the only requirement is to provide access to working computer of the developer.

If you ask, has the pandemic situation impacted IT outsourcing everywhere and in the Eastern Europe in particular — for sure it has. However, we still have options to survive. The work is still in demand for most of the business and the work can be easily organized from home.

At Code Inspiration we decided to provide free consultancies to all the business willing to go online. If you want to find the pandemic and move your business to digital but still don’t know which are the first steps. Don’t hesitate to contact us. Consultancy will provide you with a general understanding of the process, possible ideas and what is more — it is a completely free option now.

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