Is Armenia a Top Software Outsourcing Country?

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CodeRiders
  • Date Published
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Why do so many international organizations choose Armenian software outsourcing companies to build web/mobile apps, custom software? Check this article.

Software development outsourcing has been stepping up into the game for years now as an effective substitute for an IT team. Nevertheless, there are still many companies that avoid outsourcing their software development services due to trust issues and cultural or national barriers.

However, before rejecting an efficient way of saving time, money, and cutting out additional resources for in-house employees, I suggest going through some interesting facts. If you’re interested in finding the best countries to outsource software development, you’re in the right place.

In this article, we’ll learn why international companies are interested in outsourcing software development especially to Armenia. Before that let’s make sure we understand what is offshore software development and how it works.

What’s the use of software outsourcing and how do companies benefit from hiring a custom software development firm? 

Software development outsourcing is a business model where a company decides to hire a third-party dedicated developer or a software development house to cover its technical requirements. The most common and widely spread industry-standard engagement models for software outsourcing include:

Project-Based 

This model is an ideal solution for those companies that exactly know what they want, have a fixed budget, and delivery deadlines. In this case, an agreement between the custom software development house and the client is made beforehand. Constant demos are held to make sure that the two sides are on the same track.

Time and Material 

Time and material solution is a great option for those companies that clearly understand and imagine their desired product. One of the advantages of this model is its flexibility. The client can make some changes in their requirement but that will not affect the overall project. This particular model requires daily reports and meetings. Unlike a project-based model, project changes don’t hurt the client’s budget.

Staff Augmentation 

Staff augmentation is often used for large projects with tight deadlines. The number of developers is set beforehand. If the chosen software development vendor is a skilled one, then costs will be reduced or diminished in case of adding new people on hand. We, at CodeRiders constantly train our developers and motivate them to be very productive and flexible during staff augmentation models. Daily reports are also provided.

Custom Model or Hybrid Model

If none of these models seem a good fit for you then there are always possibilities for a customized model. Hybrid models are also very popular in software development outsourcing. We, at CodeRiders, offer all the above models and are open to new suggestions from the clients.

Choosing the right software development house is also as important as the engagement model. To learn more about successful software vendor selection check CodeRiders’ previous article.

After a keen consideration of custom software development outsourcing and how it works, country selection research is advisable. Draw out the best countries to outsource software development and start searching for your ideal custom software development house according to the countries. First, this selection process is much easier and you save lots of time. Second, you don’t get lost in the endless polls of the best companies that offer custom software development services. In the meantime, you have a chance to have a more in-detail picture of the general pros and cons of possible candidates regarding country specifications. In this article, we’ll introduce the reasons Armenia is considered one of the top software outsourcing destinations worldwide.

Why Armenia?

Armenia is a small, landlocked country in the Caucasus-Caspian region. The country falls under UTC+4 (AMT) time zone. The country’s history dates back to the 9th century BC. Yerevan is the capital and the largest city of Armenia. The population is about 3 million people. Armenia’s official language is Armenian. Other widely spread and popular languages include Russian and English. Ethnic Armenians form 98% of the overall population.

Throughout the past several years, the Armenian tech sector retains 27% + consistent annual growth. In 2017 the turnover of the country’s IT sector formed up to 7% of its GDP. Various international IT companies open their branches in Armenia for quality and cost-saving reasons.

Custom software development companies and startups easily position themselves in the international market and shortly become one of the most competitive ones. For example, we at CodeRiders, have been recently announced as the Best Regional Software Development Partner by EuroAsian Startup Awards and were a finalist at Global Startup Awards.

Reasons international companies choose Armenia as their next offshore software development destination

It’s easy to work with Armenians

Armenia is a perfect example of a highly growing country. In 2019, the world-famous journal The Economist declared Armenia as “The Country of the Year”.

According to the journal, Armenia was the fastest growing country in the latest 12 months, which made its impact on the IT field. On the other hand, cultural and national differences aren’t highlighted. It’s easy and comfortable to communicate with an Armenian developer. This makes Armenian software development houses more attractive for offshore software development. Most of the companies are also open to long discussions and consultations, which is true about CodeRiders as well. If you have any certain questions feel free to let us know.

Top custom software development companies in Armenia are skilled in good business communication and have no language barrier

There are no strict, sharply underlined national characteristic features that can complicate a foreign co-operation. These people have an ordinary, internationally accepted working routine, speak fluently in multiple languages (usually English and Russian), and share business ties with people from various backgrounds and nations. This is highly emphasized especially in the IT field.

Thousands of successful foreign IT companies open their headquarters in Armenia and a very extensive number of custom software development firms in Armenia work remotely for international organizations. The employees gain a magnificent opportunity to constantly train and improve their professional business communication skills as well as language skills. In the meantime, the custom software development companies eventually adapt to flexible working. Both employees and software development firms view the job as a “mission” that should be completed genuinely.

Quality custom software development services and affordable prices go hand-in-hand

According to a Silicon Valley pre-seed venture capital fund, SmartGate’s overview of the Armenian tech sector,

Today Armenia’s tech is a hyper-growing industry with a massive shift from outsourcing to product creation, a generation of mature engineers who have 5+ years of experience working on cutting edge projects in multinational tech corporations and Silicon Valley startups, and rapidly growing demand for senior talent in engineering and tech business development, which can’t be met in the short to mid-term internally or through local educational institutions.”

As Armenia’s tech sector is still undergoing constant changes and developments, the industry rates are still quite low compared to service quality. So, unlike other well-known countries that pay lucrative wages to their developers, in Armenia, the developer salaries are much lower.

Let’s take “the PHP salary” example and draw comparisons between the following countries and Armenia.

USA: According to Indeed reports, the average salary of a PHP developer in the United States is $88.431 per year as well as a yearly $3000 cash bonus. In the meantime, to stay competitive with the other firms in the field, the companies should at least include some of such popular benefits as:

  • Free snacks, drinks, lunch
  • Work from home hours
  • Gym membership, Insurance
  • Stock options, Flexible schedule, etc.

Canada: According to talent.com, the average salary of a PHP developer in Canada is $90.000 yearly again without additional privileges. Here you can also find the numbers per region, such as:

Ontario – $100.000/year

British Columbia – $83.750/year

Quebec – $80.000/year

Australia: In Australia, the yearly wages of PHP developers vary from approximately $91.000 to $110.000 forming an average result of $97.945 per year. The top highest paying cities in Australia include the capital, Melbourne, Sydney, Brisbane, etc.

Germany: In Germany, the PHP average yearly salary may vary from $59.000 to $76.000.

These numbers are mentioned for a medium-level developer without other work-related complimentary services, and privileges. As an alternative to such higher wages and demanding conditions, you can hire a dedicated software developer from top software development companies in Armenia, and you’ll most likely pay an annual wage of $38.000 to $59.000 without additional expenditure. For further information, I suggest getting in touch with team CodeRiders.

The Armenian IT industry is under special state sponsorship 

In regards to the fact that the Armenian IT sector is becoming internationally recognized and it paves its way to the lists of best countries to outsource software development, the Armenian government has taken the industry under state sponsorship. Many privileges are given to local companies. These include:

  • Tech startups receive such attractive tax incentives as 0% income tax and 10% flat payroll tax.
  • 71.8% of Armenia’s population uses the internet. Mobile 3G covers almost 90% of the country following 4G and 4G+ services that are available in large cities.
  • No stated minimum capital requirements
  • The company’s paid capital can be as low as 1$
  • Dormant companies automatically avoid tax fees or recurring fees of filling reports
  • Compliance requirements are brought to a minimum
  • Newly registered IT companies get tax holidays.

The IT sector receives special attention in Armenia with millions of opportunities for students

Software developer quality in Armenia is at a high stake as various governmental and subvention programs are being implemented to make tech education highly available to everyone. Armenia is also among one of few countries in the world that has a free IT-oriented public school that provides software development and hardware classes to mid-school and high school students.

TUMO Center of Creative Technologies is a public tech and design school for teens that want to learn technology. It has branches around the country and in the world. Teens are provided with the necessary tools and chart their own learning paths through hands-on activities, workshops, and projects.

Besides public schools and universities in the country, many tech companies open up IT classes to teach programming and technical staff to interested people. CodeRiders was one of such companies in Armenia. In fact, the firm was originally established as a software development school back in 2013 before making a name among the best custom software development companies.

The initial idea of the school was to educate and prepare competitive software developers that would be able to leave their print on the international software development industry. In just a year, the school gave more than 800 alumni. The quick progress and successful results of our students became the fatal stimulus for us to form our own custom software development company out of the best 15 students and work on international projects. Ever since, we’ve been successfully gaining new clients and building their desired software solutions, and are only planning to enlarge our horizon.

In Armenia every year more than 1800 students graduate from IT-related faculties. Today the ICT sector employs 28,460 employees out of which 16,212 are in IT companies. As a darpass report mentions, one of the unique characteristics of the Armenian tech sector is the high percentage of women (45,2%) in tech.

It all comes from early times 

Not everyone may know that Armenians are often associated with the world’s mathematicians.

Armenia has been the leader in high-tech research, development, and production from the time of the Soviet Union. Armenia was the main vendor of military electronics for the USSR countries covering over 35% of its overall products. In 1991 Armenia gained its independence from the USSR and is still firmly keeping its position as one of the chief technology product and service providers among CIS and Middle East countries.

Among some successful software and hardware projects, you’ll find the 50.000 Young Robotics Engineers project, which often associates Armenia with the land of Robotics. This high-school-level robotics curriculum has just been launched and has the potential to be the world’s leading one. Due to the reasonable number of software development houses, the country has its own computer and cellphone production, which is also used by country authorities. Regarding the National Statistical Committee of the Republic of Armenia, in the period of January-May 2018, over 233 “Ա” computers were produced in Armenia while a new smartphone brand, “Armphone” entered the market in 2016.

Slowly but firmly Armenia is becoming the world’s tech center 

In 2019, Armenia hosted WCIT (World Congress on Information Technology), one of the largest and most prestigious tech events in the world. It is held annually for over 40 years now and is the signature event of The World Information Technology & Services Alliance (WITSA), a consortium of ICT associations from 83 countries, representing 90% of the industry. The event gathered together more than 2000 delegates from more than 70 countries. It had 10+ keynote speakers and 80+ moderates and panelists.

Besides, there are new IT hub and tech city projects under development right now in the capital city of Yerevan. We are going to have a small Silicon-Valley-like center where many of the tech companies and startups will have their offices.

IP and data protection laws are supported and put into action

International IP enforcement guidelines are adopted by the Armenian government including those by WIPO (World Intellectual Property Organization). International copyright, trade secrets, know-how, confidential information, trademarks, data protection laws on IP have already been adopted and enforced in the country.

To sum up, nowadays finding an offshore software development house that compacts with the best custom software development services and affordable prices is quite difficult. The number of software outsourcing companies is growing daily. People often get confused by the huge flow of information. Furthermore, filtering out your research into 2 parts, first finding the best countries to outsource software development and secondly exploring each country’s offshore software development industry and remarkable custom software development houses will highly facilitate the candidate selection process. Along your selection process, we highly recommend considering Armenia as a possible software outsourcing destination. The country is becoming the world’s next tech hub and you’ll get many profits throughout this development cycle.