State of global AI outsourcing

The global artificial intelligence (AI) and information technology (IT) services market is growing rapidly. According to Grand View Research, the worldwide AI market exceeded $279 billion in 2024 and is expected to expand at a compound annual growth rate of ~36% through 2030. Companies across industries are adopting AI on a large scale – a recent survey by McKinsey found that 92% of businesses plan to invest in generative AI in the next three years. However, as McKinsey reported, many organizations face a significant skills gap, with about 87% of leaders feeling their organizations are unprepared to deal with technology skills shortages.

These dynamics drive companies to look for external talent as traditional IT outsourcing grows (approximately $430 billion worldwide in 2023 and projected to reach $682 billion by 2027). Cost reduction remains a primary motivation for companies to outsource, with about 59% outsourcing to reduce expenses. At the same time, there is a surge in demand for specialized AI experts. Many executives report that outsourcing is becoming an increasingly popular strategy for accessing scarce skills and accelerating time-to-market in the emerging tech areas of data science, artificial intelligence, machine learning (AI/ML), cybersecurity, and the cloud.

Strengths of Eastern European providers

Eastern Europe has become a leading source of AI and software outsourcing talent due to its unique combination of technical skills and cost-competitiveness. The region has over 1.5-1.7 million software developers, with Poland, Romania, Ukraine, and Bulgaria having the largest tech workforces. More than 130 universities in Eastern Europe are ranked in global QS, reflecting strong STEM education. Local universities graduate approximately 80,000 IT and engineering specialists each year, and renowned coding competitions and global reports frequently rank Eastern European programmers as some of the best in the world in fields such as Java, Python, data science, and computer vision. This gives clients confidence in the availability of deep technical expertise.

In parallel, Eastern Europe offers significant cost savings for businesses. The average software engineer’s salary in Eastern European countries is often a third of that of the United States. For example, a data engineer might earn $150,000 in the US versus $40-60,000 in Poland or Ukraine, representing a 70% savings. Many providers also benefit from local tax advantages, such as lower corporate tax rates in Bulgaria and Romania (9-16%) compared to the United States (~33%). These lower overhead costs allow Western firms to build larger teams and stretch their R&D budgets without sacrificing quality.

Cultural and logistical factors further support the case for Eastern Europe. Most Eastern European countries follow EU-style business practices and have high English proficiency. Consultants note that teams from Poland, Romania, Bulgaria, and other Eastern European countries typically work in the same time zones as Western Europe and the United States and share similar communication styles and work ethics. This cultural compatibility makes collaboration smoother, as there are fewer language barriers and misunderstandings.

According to one analysis, 77% of European companies now outsource work within Europe, demonstrating trust in their nearby partners. Additionally, as members of the EU, these countries adhere to strict data privacy laws (GDPR) and transparent legal systems, providing multinational clients with confidence in the security of their intellectual property and compliance. To summarize, Eastern Europe offers a vast pool of well-educated talent, strong English language skills, and shared business standards, all at lower labor costs than Western countries.

Eastern European development teams, renowned for their expertise in advanced AI technologies, can collaborate with tools like AppsGeyser AI app builder to accelerate their clients’ app development. By leveraging the power of AI and the region’s affordable, skilled workforce, businesses can expect a streamlined process, reduced expenses, and quicker delivery of AI-integrated solutions.

How to evaluate a regional AI partner

Choosing a reliable Eastern European artificial intelligence (AI) partner requires thorough research and evaluation. When selecting a potential partner, it is essential to consider their team’s expertise and experience in the relevant field. Verify that they have direct experience in your domain and technology stack, such as Python and TensorFlow, for AI projects.

Ask about the scope and complexity of past projects and request references or case studies to gain insight into their work. It is also recommended that former clients be contacted to gather information about the quality of their work and deliverables. Inquire about the qualifications and certifications of the project managers and engineers involved in the development process.

Additionally, assess the potential partner’s technical proficiency and processes. A reliable AI partner should clearly articulate its development process, including quality controls and key performance indicators (KPIs). Reputable vendors typically use agile/scrum methodologies and incorporate code reviews and automated testing to ensure high-quality results. They should also track project milestones and bug counts to monitor progress and maintain quality standards.

Third, consider data governance, security, and legal terms. AI projects often involve sensitive data, so it’s essential to ensure that the vendor follows best practices for handling this data. Ensure they have secure development processes, such as code reviews for AI models, and comply with relevant regulations. Also, intellectual property ownership and confidentiality in contracts should always be clarified.

Fourth, consider cultural fit and communication. Make sure the team has strong English proficiency and working hours that overlap with your own. Ideally, they should be willing to have regular video calls and provide transparent project updates.

Finally, look at client feedback and reputation. Platforms like Clutch or independent rating services can provide insights into the provider’s strengths and weaknesses. Balanced feedback, such as timeliness and responsiveness, can help you understand how the provider might behave after the contract ends.

Conducting a small, paid pilot project or starting with a brief engagement can help mitigate risk. This “try before you buy” approach allows you to test the team’s skills and working style in a limited capacity. Such steps ensure that your Eastern European partner has the necessary AI expertise and aligns with your quality standards and communication expectations.

Case examples and best practices

In March 2025, IBM and Amazon Web Services (AWS) opened a joint innovation lab in Bucharest, Romania, to co-develop generative AI and cloud solutions for clients in 22 countries. This significant initiative highlights Romania’s emergence as an AI and cloud technology hub. Beyond software, Eastern European companies are now providing AI solutions for various industries. For example, a global telecommunications company outsourced its infrastructure management to a specialized AI vendor, who used machine learning to optimize network operations and significantly reduce time-to-market for new services.

In practical terms, best practices for successful partnerships include establishing transparent governance. Firms often include their product owners or liaisons on the outsourced team and maintain regular checkpoints, such as weekly demos, to ensure the AI project remains aligned with business goals. Agile development and incremental delivery are highly recommended for complex AI features, as they allow for course corrections as the models are tested on real data.

For example, let’s take 8allocate, an AI development partner from Eastern Europe. Founded in 2015, 8allocate is headquartered in Estonia and has R&D centers in Poland, Ukraine, and Romania. They offer AI consulting, MVP development, and custom AI/ML solutions for various sectors such as FinTech, InsurTech, and Logistics. According to Deep Knowledge Analytics, 8allocate has been recognized as one of the leading AI development companies. Client testimonials have praised 8allocate’s teams for their agility and professionalism in delivering predictive analytics and computer vision solutions. This case study highlights the capabilities of Eastern European companies, as partnering with 8allocate allows companies to build sophisticated AI systems faster and at a lower cost than if they were to develop them domestically.

Conclusion

Overall, decision-makers in the industry find that Eastern European providers offer a compelling combination of quality and value for AI projects. After careful vetting, these providers deliver deep expertise in AI/ML and reliable delivery.

For many clients, this results in access to world-class AI development teams that can drive innovation faster and more cost-effectively than onshore alternatives.