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How to Open Your Own R&D Office

16 January 2024
8 min

McKinsey identifies a lack of tech talent as the primary constraint to growth: nearly half of future tech trends require rare skills. Gartner, in turn, emphasizes the need for investing in IT headcount in 2023. Meanwhile, the hiring & operational costs are staggering in the USA, Canada, and Western Europe, not to mention possible recession concerns. So, is there a way to navigate the storm? 


I’m Dmytro Ovcharenko, CEO at Alcor, a software R&D services and IT recruitment company in Eastern Europe and Latin America. We’re experts at bridging US clients with skilled coders and have already helped, Sift, ThredUP, and many others to benefit from their own R&D centers. 


How to Open Your Own R&D Office - Alcor BPO


In this article, I’ll fill you in on what a software R&D office is, the benefits and components of this solution, top locations for setting up your own R&D branch, and the most convenient way to achieve fully balanced IT R&D services management for your company.



What Is a Software R&D Office?



A software R&D office is a branch of a tech product company in a foreign country where an offshore team of programmers contributes to developing your product.



Benefits of Building an R&D Office



Long-Term Perspective

Launching a turnkey research and development office is an excellent way to take care of your product in the long run. All because R&D coders have a product mindset and tend to deliver strategic value that will derive revenue to the company rather than hit temporary milestones and get paid strictly by the hour, like in the IT outsourcing model.



Own Branding 

Your own R&D office will operate under your company’s brand from the start, as opposed to being part of the provider’s workforce. R&D developers will blend in with your in-house team, embrace your corporate culture, and be more dedicated to your product as a result.



Development Efficiency 

IT stars from LatAm and Eastern Europe deliver top-notch development results as these regions even outperform the USA and Canada regarding innovation and high-quality computer science education. Once such outstanding expertise meets a product-oriented mindset and nurturing corporate culture in your own software R&D center, your software development can be cheaper, faster, and first-rate.


Room for Cost Savings

Other markets might be more lucrative to develop your product in terms of labor cost differences. Thanks to considerably lower taxes and salaries, you can cut costs with your development team performing at its highest. 



Direct Team Control 

Another perk of having an offshore R&D department is full control over your team and product development. Unlike in the Build-Operate-Transfer model and IT outstaffing, a team in a software development office belongs to you from the very beginning and doesn’t have to be bought out or transferred back at the end of the cooperation.



All-in-One-Place Solution

R&D offices have one more significant upside as a model. Essentially, with a trusted provider, you won’t have to hire numerous operational managers to handle different stages since this service includes everything. In the next section, you’ll learn more about what it covers.



Components of an R&D Office



IT Recruitment

The first step towards setting up your own R&D office is to hire a professional team of software engineers. To begin with, you should choose a location and find a trustworthy software R&D services provider. Next, your provider’s IT headhunters will create ideal candidates’ profiles, employer value proposition & job descriptions, source the candidates of your choice, e.g., Java or Node.js developers and others, pre-screen them, then interview the most suitable ones, and leave the final decision up to you. Experienced recruiters usually factor in cultural peculiarities and national mentality to select the candidates whose work ethic matches yours. At Alcor, it takes us 3-6 weeks to hire a suitable candidate, so how fast you obtain the result largely depends on your provider.



Employer Branding

To become more known to local software developers and attract star Senior/Lead talents who are desired by other companies, you’ll need employer branding. It involves establishing your presence in social networks, local media, and IT communities. A solid brand will also help you prevent offer rejections, as it did for Sift, a US online fraud detection company. To conduct an effective campaign, Alcor shot a video with Sift´s Hiring Managers and took up social media management. The results astounded both sides — Sift hired 30 programmers in a year!



Employer of Record 

Employer of Record, or EoR, is an indispensable service while opening your software office abroad. All because with EoR, you won’t need to open your legal entity in a foreign location or several locations if you have plans to expand to a number of countries. Instead, your software R&D center solution provider will legally employ your software developers, pay their salaries, handle accounting, manage all paperwork, and help you provide benefits so your software R&D branch complies with local laws.



Legal Compliance

To successfully run a software research and development office, you need further help in legal and compliance matters. Their local lawyers will handle tax planning, assist you in applying available tax incentives, take care of employment contracts, NDAs & other agreements, protect your commercial confidentiality and intellectual property, provide support for opening business visas, and prepare everything for any inspection. As a result, your offshore software center will fully abide by foreign laws. 


Often, legal compliance cannot go separate ways without expertise in R&D management. So the best case scenario is when your provider’s experienced enough and you don’t have to worry about anything. This is exactly what — a US-based machine learning company that opened a turnkey R&D office with Alcor experienced. Check out how it went:



How to Open Your Own R&D Office - Alcor BPO


Physical or Remote Office & Infrastructure

Along with all recruitment, EoR, and legal stages, it is high time to think about a comfortable office and IT infrastructure for your business. If you opt for a physical office, it should have enough space for your employees (in Ukraine, it’s 6 sq.m. per employee by law), good sunlight, heating and air conditioning, a kitchen, cleaning service and security, as well as nice Internet, of course. A bonus would be a spacious parking lot and different restaurants, cafes, shops, and maybe a fitness center nearby. Everything to make working conditions for your software developers comfortable.


With a reliable IT R&D partner, that’s not sweat at all. Typically, a real estate manager and a lawyer help figure out rent and sign an office lease agreement, while a financial manager calculates total costs, files invoices, and is in charge of accounting. Finally, an IT manager procures and sets up necessary equipment and software, as well as ensures data security for your research & development office.


Another important aspect is to keep differences in mind. On the one hand, you can save up on renting a software R&D center in Eastern Europe — in Kraków, you pay €24 per square meter a month as opposed to €38 of the European average. On the other hand, an office in Ukraine costs €17 per square meter with €5 for operational payments but may go unfurnished, so it will be wise to add procurement costs to your plans. Learn more about other destinations below.



Destinations to Set up Your Own R&D Office



Eastern Europe


Poland has accumulated the largest number of software developers in Eastern Europe — 607,000 — and prepares 20,000 ICT graduates on an annual basis. Polish 60,000+ IT businesses are spread across its vast IT hub network, which includes Warsaw, Krakow, Wroclaw, Poznan, Lodz, and Tri-city (Gdansk, Gdynia, Sopot). Polish software engineers specialize in a variety of languages, such as Python, TypeScript, JavaScript, Java, Ruby, Shell, PHP, and C#. Besides, their command of English is among the best in the region.




Romanian developers number 200,000+ and are widely recognized in JavaScript, Java, PHP, C#, Python, React, and Angular ratings. Each year, 10,000 graduates join the ranks, while 13   Romanian higher education institutions made it to QS World University Ranking 2024. Its IT hubs, especially Bucharest, are prized for front-end frameworks, application development, and gaming & graphics design. On top of that, Romania offers favorable corporate income taxation — from 1% to 16% depending on revenue.




Bulgaria is another location bustling with expert talent — 50 national universities prepare 5,000 tech graduates annually to join the existing 110,00 pool. Bulgarian coders made it to the European top 20 for IT expertise. They excel in JavaScript, Java, C#, C++, PHP, .NET, and Python, so it’s your treasure trove for web and mobile development and cloud computing.




This country abounds with 53,000 software engineers and 3,000 annual tech graduates. Slovak developers are exceptionally skilled in Python, PHP, Microsoft ASP.NET, and Node.js. What’s more, Slovakia incentivizes research and development: companies with software R&D offices can benefit from a special tax regime.



Czech Republic

The Czech talent pool amounts to 221,000 software engineers and will further increase with an estimated 16,000 ICT graduates yearly. With developers in this country famous for their Python, Java, JavaScript, C#, HTML, and Swift expertise, the Czech Republic is an excellent location for app development. Last but not least, take a look at Prague — it has the 3rd highest density of database engineers in Europe.




Opening an R&D center in Ukraine is possible even in times of war. The Ukrainian IT industry has demonstrated remarkable resilience, as 85% of IT specialists managed to keep their full-time jobs. What makes Ukraine worth the risk is its large talent pool of 363K IT professionals and a whopping 25,000 tech graduates adding to the number each year. Ukrainian coders specialize in cybersecurity, IoT, AI, and cloud computing with superb skills in JavaScript, Java, Phyton, C#, TypeScript, PHP, and Kotlin.



Latin America


With its 700,000 developers and 124,000 annual tech graduates, Mexico is one of the fastest-growing tech locations in the world. Now, it is home to 38 IT clusters, over 400 startups, and 3 major IT hubs. Mexican programmers shine in JavaScript, Python, SQL, C#, React.js, and Angular and are second in LatAm for tech skills.




Despite its size, Colombia boasts a considerable 150,000 talent pool and a bilingual higher education system that prepares 13,000 more tech specialists a year. Its well-developed IT hub and tech park infrastructure promote startup culture, resulting in 300 startups and counting. Colombian work ethics is highly collaborative, result-driven, and expertise-based, making the country just the place for a software research & development office, especially if you’re looking for Java, Python, SQL, C#, or Ruby programmers.




Argentina is your go-to choice for data science skills: it’s unparalleled in LatAm and made it to the global top 30 in Python, SQL, TensorFlow, and NLP. In addition to 100,000+ tech experts on the market, the Argentinian government develops incentives to prepare 25,000 more yearly. Coupled with the highest English proficiency levels in the region and over 1,000 startups, Argentina is a promising location for talent investment.




Chile is a booming startup location and tops the innovation charts in LatAm. Its software engineer talent pool amounts to 61,000 specialists, prized for their knowledge of ASP.NET, Java, Perl, PHP, and Python. Around 5,000 tech graduates join the ranks of Chile’s workforce every year. With its 122 startups, the country is a great location for products connected to data analytics and mobile development.



Open Your Own Software R&D Office with Alcor



Alcor is your trusted partner for every single stage of your turnkey software R&D office launch, be it IT recruiting, employer of record, legal & compliance, office lease & WFH support, employer branding, or others.



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Numbers speak volumes of our approach: we need just 8 CVs to get 1 accepted job offer, while 98.6% of our candidates pass the probation period and stay on after onboarding for 2.5 years on average. Excited to try? We’re waiting for your message!

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Contact Us

Contact us to receive a free analysis of your positions!

It includes the salary ranges and availability of the requested developers in Poland, Romania, and other countries in EE (as well as time-to-hire metrics and other KPIs for your case).

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