In a nutshell: IT companies are shifting developer capacity from low-wage countries to geopolitically stable partner states, as operational risks and compliance requirements outweigh cost savings advantages.
Companies are relocating IT development from traditional low-wage countries to geopolitically stable partner states. Geopolitical tensions and regulatory requirements such as NIS2 make stability and legal certainty more important criteria than cost savings.
Classical IT offshoring was based on the paradigm of cost minimisation: software development, testing and system maintenance were relocated to low-wage countries to benefit from wage cost differentials. This strategy relied on stable international trade relations and borderless digital infrastructure.
Geopolitical shifts, trade conflicts and the growing importance of digital sovereignty have, however, dissolved these foundations. Technology executives and risk managers now assess the concentration of critical software infrastructure in geopolitically unstable regions as an incalculable operational risk. Classical offshoring is associated with considerable operational risks: the fragility of global supply chains extends to data transport routes and physical security of development centres. Infrastructure damage such as destroyed subsea cables can cut IT clusters off from global data traffic. In addition, there are tightened legal frameworks in many Asian offshoring nations regarding data protection and intellectual property protection. When foreign states demand access rights to server structures, conflicts arise with the GDPR and national security requirements.
Friendshoring responds to this threat landscape. In contrast to pure nearshoring, friendshoring is defined by political, legal and societal alignment between client and service location. Target regions are stable democracies with reliable legal systems, strict intellectual property protection and high security standards. Within Europe, this movement concentrates on Central and Eastern European EU and NATO members such as Poland, Romania or the Baltic republics, which offer a harmonised legal framework. Outside Europe, selected partner countries in Latin America and democratic core countries in Asia are gaining importance.
For business purposes, the decisive shift is from pure nominal hourly rate calculation to total cost of engagement. A low hourly rate in South Asia proves to be a fallacy upon holistic analysis when hidden costs for infrastructure risks, compliance deficiencies and operational complexity are added. NIS2 requirements can be enforced significantly more efficiently when service providers’ security standards are already aligned with European norms.
Source: www.it-daily.net · Published 28 June 2026
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