Competition in the IT sector – India vs. Belarus

IT Offshoring

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We are well into the Competition series now and this blog will discuss India vs. Belarus. Just to recap, we have been discussing the competitiveness of different low cost countries (LCC) in the IT sector; here are the links to the previous blogs where I have compared India with Philippines, Kazakhstan and China.

Competitiveness in the IT sector – Introduction to the series

Competitiveness in the IT sector – India vs. Philippines

Competitiveness in the IT sector – India vs. Kazakhstan

Competitiveness in the IT Sector- India vs. China

Now to India vs. Belarus. Bangalore, India is still the number one destination when it comes to Outsourcing according to Tholon’s research on the 2015 Top 100 Outsourcing Destinations. Although Belarus is no immediate contender, it is being considered a lucrative outsourcing destination for IT. Where it stands in terms of price, innovation and IT capability will be discussed through this blog.

Belarus as an IT destination

Belarus’s tryst with IT dates back to the Soviet times, when Minsk’s factory for manufacturing computers, produced 70% of all of the general-purpose computers manufactured in the Soviet Union.

In recent times though, Belarus has been known for its heavy machinery exports than for its expertise in the IT sector, but things are changing. Belarus has shown some definite promise in the past few years owing to these reasons:

  • Geographical proximity to EU countries and cultural ties with those countries.
  • Growing IT strength with more than 800 IT companies
  • Highly skilled IT manpower with about 30,000 IT professionals and 16,000 technical graduates every year.
  • Attractive tax benefits for businesses in the IT sector.
  • Advanced IT research centres

Perhaps the most attractive of all of Belarus’s attributes, is the ease of setting up a business there. The Belarus Government has made many provisions to support the Belarusian ICT industry in this endeavour. The benefits include a preferential taxation regime; this means an exemption form VAT, and profit and real estate taxes. Individual taxes are fixed at just 9% for HTP Companies, which has led to a boost in the IT sector.

Labour costs

When it comes to salary competitiveness, India is definitely way ahead. The payscale comparison for the salary of a software engineer in Bangalore, India compared to one in Minsk, Belarus shows this all too clearly. Both specialise in ASP.net and have an experience of 5 years. The results: The average salary of software engineer in India is 9,121.14 USD, whereas a software engineer with the same qualifications will cost you $27,671 in Belarus.

Here are the average salary reports generated through Payscale:

Bangalore, India

salary_bangalore

 

Minsk, Belarus

Belarus pay report

Image Source

Innovation Index

While labour costs play a major role in cost effectiveness of outsourcing IT operations, we know that there are many other factors to be considered. A comparison that I drew up between the two countries on the 2015 Global Innovation Index shows these results:

 Indicator India  Belarus
Ease of starting a business 68.4 91.9
Ease of paying taxes 55.5 78.3
Human capital and research 20.0 43.0
Education 26.8 63.2
Tertiary education 10.5 49.9
Research and development (R&D) 22.6 15.8
Information and communication technologies (ICT) 38.6 47.8
Business sophistication 26.4 30.3
Knowledge workers 13.7 59.6
Innovation linkages 37.3 8.1
Patent families filed in at least three offices 9.9 4.4
Knowledge absorption 28.1 23.2
Communications, computer and information services 20.8 11.8
Knowledge and technology outputs 30.1 37.1
Knowledge creation 15.2 48.2
National office patent applications 11.8 68.0
Patent Cooperation Treaty resident applications 2.3 0.9
Knowledge impact 35.0 38.9
ISO 9001 quality certificates 12.3 1.6
Knowledge diffusion 40.1 24.1
Communications, computer and information services exports 100.0 27.2

 

Both countries have their areas of strength. Belarus, as was considered, is a great option if you are starting an IT business there, the ease of starting a business is definitely greater. The number of graduates in the sciences is more as well. But when it comes to cost benefits and quality as per the ISO 9001 quality certification, India fares much better.

Many companies have found – as indicated by India being the number one outsourcing destination – that although starting a business or an IT centre in India is not as easy as in other countries, outsourcing it to a trusted established centre here works to their advantage.

Finding a trusted provider who combines the benefits of the talented workforce in India with world class technologies is vital for success here in India. My company specializes in creating products with a focus on Microsoft and Java technologies, we can talk and see if it is a good fit for you. If you just want advice on the IT atmosphere in India or on setting up a business here, I can definitely help you with that too.

Sowmya Emmanual

Sowmya Emmanual

Sowmya is passionate about helping Startups tap into the massive potential of Content Marketing for their business. Check out more about her: sowmyace.com

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