Lithuania shifts from IT Outsourcing to IT Outsharing

IT Development has been a hot topic for a while. Lithuania has built its reputation as a reliable IT outsourcing destination. Many businesses and organizations has sought for talent in this region. Yet, in most cases it was associated with low cost development and price arbitrage. Nevertheless, not everyone has noticed that the situation has changed. Many Lithuanian software developers have become equal partners and high profile solution developers. They have grown into high value-add vendors and move from low-cost primitive programming to integrated solutions development. World Economic Forum Global Shapers Vilnius calls it outsharing as opposed to outsourcing.

Outsharing refers to having an equal tech partner, who analyses your business case deeply, reads beyond the specification lines and pro-actively proposes optimization solutions. Outsharing partners focus on value whether it’s designing and building new functionality, enhancing existing user experience or optimizing the processes. Such developers are ROI driven and measure their inputs by monetary value added or time saved. They communicate actively and adjust to the client’s culture. In many cases outsharing partners are treated as company’s 2nd office.

Outsharing to Lithuania

There are numerous remarkable cases of outsharing to Lithuania. For example a Danish company Magenta together with the Lithuanian software development house Baltic Amadeus have developed an all encompassing Emergency Management Solution for 40 schools in Norway (Lithuanian source). The same company has developed a massive surveillance and analysis system for the whole fleet of Ro-Ro class ships owned by a Swedish giant Shippersys (Lithuanian source). A mobile app for the greatest water professionals network in the world was built by Telesoftas. Another Lithuanian development company has developed a messaging solution for Bloomberg and a mobile app for a Chicago based bank. Bank-wise there is a whole spectrum of Scandinavian banks outsharing their IT development to local offices in Lithuania – SEB, Swedbank, Danske bank and Nordea. There are dozens of examples like these. AdeoWeb is famous for moving regular retail business to online – they were selected to create eshops for such brands like Lenovo in the Republic of South Africa. There are also examples of UAVs (drone), robotics, augmented reality cases in Lithuania as well: Magma solutions are building aerial data processing software cooperating with world famous NVidia.

The Outsharing price

Such developers possess higher demand, recruit more skilled (and expensive) talent, value themselves better and as a consequence are more expensive than conventional outsourcing software engineers. For example, Aismantas Bulanavicius, a CPO at Aciety – network of top software development companies, mentions that an hour of high quality mobile app development service could cost from 40 to 60 Eur / hour in Lithuania, while the general average is around 30 Eur / hour. The outsharing premium comes at a price. However, there are companies, which use mixed teams of junior, mid and senior software engineers to provide with outsharing services at blended rates. It brings the price pretty close to the general market average. From increasing number of cases, we can conclude, that when done right, outsharing is comparable in price to outsourcing while surpassing it in the value created.    

The 4th Industrial Revolution

Lithuanian software development companies have been developing top class solutions for a while. They have been solid tech partners for many tech business developers in Western Europe and USA. Such firms move away from low cost outsourcing to value-driven remote development, which is called outsharing.

World Economic Forum is talking a lot about the 4th industrial revolution or industry 4.0, where significant developments in automation, robotics and artificial intelligence are changing the way we manufacture and consume products. A great number of processes will be automated and the need for low cost tasks will shrink. As a consequence it’s smart to start thinking about high value-added services now and prepare Lithuania to be competitive in the upcoming years. Thus, it’s no surprize, that IT market is becoming aware of potential for outsharing.

The outsharing initiative has just started, but has already been featured at World Economic Forum, Forbes and presented at Lithuanian Economics Conference. Bearing the 4th industrial revolution in mind, it’s the time to think how to build and communicate this value. Global Shapers Vilnius is taking the initiative and encourages IT associations (Infobalt), networks (Aciety) and biggest suppliers to make sure this potential is put to use.

This article has been guest posted at Delfi.lt.

Published by

Tomas Pagirys

Dying 2 win - dying 2 live type of explorer. Biz dev @ Aciety.