Moldova: The Promised Land for Software Giants

MoldovaThere are great web development companies to be found all over Eastern Europe and Moldova is no exception.  SourceSeek recently began a relationship with a truly fantastic team of developers in Chisinau, the capital of Moldova.

We’ve found them to be as skilled and professional as any team around the world.

But is Moldova primed to become a leading software outsourcing destination? Many experts have been predicting the rise of Moldova outsourcing over the last few years. My personal prediction is that Moldova outsourcing firms will continue to do well, but by mostly catering to the giant software companies of the world rather than evolve into a full-blown IT hub like we’ve seen in Ukraine and Poland

Nestled between Ukraine and Romania, Moldova has all the basic structural requirements to become a successful IT destination. The Moldovan government supports the IT industry and salaries are very competitive on the global IT market. They have solid universities producing a steady flow of skilled IT grads to fuel their success. And thus, experts have long been predicting Moldova’s meteoric rise in the IT outsourcing space. They are largely correct – software exports continue to rise dramatically year after year, and Moldova’s IT sector is booming.

However, evolving a region into a world-class outsourcing destination takes more than that. A top outsourcing region requires an IT ecosystem built around well-managed companies. This includes everything from startups to enterprise vendors and everything in between. It needs a culture of enthusiasm, energy, and optimism to take on the daunting task of solving software problems, dealing with foreign clients, and keeping their internal culture healthy.

Yes, there are fantastic software teams in Moldova, but evolving into world-class outsourcing destination takes more than that

This broad range of companies and energetic culture is where Moldova outsourcing may fall short. During the first few days of SourceSeek’s first trip to Moldova, a theme started to emerge. The software companies I met with are talented and professional, but they were almost all settled into the ‘slow and steady IT professional’ culture, which is best suited for very large organizations and complex applications at the enterprise level. Ultimately, I found a generous amount of enterprise-friendly teams but precious few small, agile, product development teams working with technologies like Ruby or node.js.

This makes Moldova outsourcing a terrific option for larger companies who want to own and operate a large development center in a low-cost region, but perhaps less ideal for startups or product companies. In fact, there is some evidence of a brain-drain in Moldova with young, innovative developers frequently traveling to nearby Romania or Ukraine to join a more cutting-edge, exciting tech sector.

A terrific option for larger companies who want to own and operate a large development center in a low-cost region

I had a lot of conversations with vendors about this, and they confirmed that almost all the growth in the IT sector was coming from the ‘big dogs’ – the Microsofts and Oracles of the world. Big companies like that have been establishing development centers in Chisinau, where they can quickly ramp up 300 or more terrific developers with tremendous savings relative to just about anywhere in Europe.  A terrific option for larger companies who want to own and operate a large development center in a low-cost region

Over time, these big companies eat up the entire pool of software developers. This leaves very few of those young and adventurous entrepreneurs to foster a diverse and dynamic software ecosystem. These big companies drive tons of revenue and are good for Moldova.  However, to become a true software hub, Moldova needs to be more like Ukraine. Ukraine has tons of giant software companies employing thousands of developers, but also a sizzling culture of people starting their own boutique shops or launching startups.

moldova outsourcingMoldova seems to be heading in the direction of Romania and Bulgaria. They are establishing themselves as a solid, reliable source of IT talent well-suited for enterprise work. You’ll find tons of java and.Net teams there and even seasoned PM’s who can handle big-ticket projects.

For clients who fit this profile, Moldova can be a winner.  Moldova outsourcing offers one very nice differentiator which is that it is cost competitive. Moreover, it’s easy to get there, and they have a solid infrastructure with good connectivity. It’s also a very pleasant place to be, with an easy-going atmosphere and plenty of good hotels and restaurants.

Moldova may evolve into a diverse, dynamic IT hub over time. For now, however, I’ll be keeping Moldova as a great option for our larger clients. Those looking to establish a talented team of enterprise developers who can handle long-term development projects.

Dave Hecker

Co-Founder at SourceSeek at SourceSeek
Dave is a seasoned technology executive focused software delivery, quality, process, and helping clients succeed at international software outsourcing.