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The war in Ukraine is putting additional pressure on the IT Market for resources in the DACH Region and whole Europe. Published on May 19, 2022 Edit article View stats
We at dc nearshoring are now active in the area of IT Services in nearhshoring modus for two years. When we started, our company was based on the observation, that many IT Projects in Germany were postponed or even cancelled because of missing IT resources. As of today, two years later we have selected partners in 21 countries and are engaged with them on a daily basis. So, we are in a position to observe the developments on the pan-european IT Market and to feel the changes, well not being a research institute and not claiming their precision.
Nearshoring has always been perceived in Germany by midsize enterprises as something somehow risky ... without direct control, with partners from different countries, with different culture and working attitudes and speaking a different language (and here I mean English ... not the local language).
Still many companies overcame the fears and started nearshoring activities in the last years Among other countries, often with the wrong target to maximize savings (even if the quality of the engineers is indeed excellent) Ukraine, Russia and Belarus were selected. Thousands of IT experts used to work for German companies out of those countries. Here I just want to recall, that according to Bitkon around 100.000 IT resources were missing in Germany already in January.
The war has now in a few weeks totally stopped or at least on a large scale reduced these cooperations with the three countries Ukraine, Belarus and Russia.
The reactions that we observe are twofold. From one side some Delivery Partners who were already multi-country, are smartly shifting resources out of those countries, mostly toward EU (difficult obviously for the colleagues from Ukraine) and are growing local teams there also through local hiring. From the other side many customers are cancelling their service contracts or firing employees and closing down their own centers in the three countries to replace and recreate under time pressure new ones in the EU.
As overall result now the IT Market in terms of resources is under huge pressure also especially in Poland, Hungary and Romania. Prices for IT resources are growing much faster and much more than inflation.
Putting other countries as Serbia and the whole Baltic region also in an area of uncertainty and somehow Priority 2, western Europe is growing again in interest. Spain and Portugal are the new Eldorado .... even if also there, the market was already under pressure before the war. Italy for the moment is watching from the window, if finally the small/medium IT Companies want to compete in the international arena and not only on the local market, offering a decent level of English and international attitude in addition to the technical skills.
The overall industry in Europe needs in our opinion a quick reaction. Tendencies to bring back all activities into Germany to minimize the risks is in our opinion a big mistake. We need to foster the collaboration among all countries, or we will have a real negative impact on our power of innovation with all consequences we can imagine.
What is your experience? What is your opinion? How is your company reacting to the overall situation? Happy to read in the comments from your experience.