Outsourcing to Ukraine 2019/2020 — All you need to know

6 min readSep 26, 2019

Ukraine remains to be a winning market for different industries in Outsourcing. Since previous Deloitte report, released in 10.2017, new major brands entered the Ukrainian Outsourcing market.

Outsourcing to Ukraine opportunities 2019/2020

From uprising startups to midsize companies and enterprises, located anywhere in the world, outsourcing to Ukraine is an appealing and cost-effective opportunity. It might not come as a surprise; Ukraine now attracts global Fortune 500 companies that previously only outsourced to India and Israel. International companies in Ukraine opened 110+ R&D centers. Global tech enterprises are now running in Ukraine, including Skype, Microsoft, IBM, Oracle, and many other western companies like Violin Memory, SimilarWeb, ProSiebenSat.1.

The IT talent in Ukraine is reaching 200,000 specialists that are currently working in the country. Startups across the world are expanding. The flow of investments is growing, and each year the number of startups and enterprises that partner with Ukrainian R&D service providers are at rise.

Gartner placed Ukraine in the top 20 offshoring destinations in Europe, the Middle East, and Africa regions.

US, Canada & European countries are the most promising markets that outsource to Ukraine. In 2012, the USA was the largest consumer of the Ukrainian IT service exports. Recent research shows that European businesses over the years have grown their outsourcing presence in Ukraine. Many outsourcing partnerships last long productive years and small hired dedicated teams develop into large R&D centers located in Ukraine.

Ukraine has significantly advanced its air connectivity. New airlines and low coasters joined the Ukrainian market, making logistics easier and more affordable in terms of both intercity and international flights.

Advantages of outsourcing R&D to Ukraine

The biggest tech companies are already there

If you choose to open an R&D or hire developers in Ukraine, you won’t be the first one who leverages of this idea. Frankly, several globally known companies such as Snapchat, Ericsson, Siemens, Samsung, Opera Software, Wargaming, and more have their R&D teams in Ukraine. The country also stands between the world leaders in outsourcing, holding the 20th position, according to the Global Services Location Index 2019 by A.T. Kearney.

Hiring developers and dedicated teams in Ukraine is what major players are already doing. Not only that — Ukraine boasts with a range of world-class product companies including Grammarly, Jooble, LaMetric, Petcube, GitLab, and others.

Outsourcing Software design & development is cost-effective.

Where US & Western Europe software development companies offer senior developers reaching up to $100/hour, in Ukraine senior devs hourly rates fluctuate in the $35 to $60 range.

Another benefit is the country’s simple tax policy. The Ukrainian government has strong support for it’s IT sector. Also useful to know that to maintain a 1 000 sq. ft. office for a team of 25–35 IT specialists in Ukraine would cost less $1 Mill. For example, if renting the same office space in San Francisco California, you would need $3 Mill and more including rent and salary.

Business Environment That Encourages

In recent years, national and local Ukrainian legislators and lawmakers have reformed laws in favor of encouraging entrepreneurs and companies to outsource their IT to Ukraine. Those changes successively help to grow the Ukrainian economy.

Tech stack Diversity (%)

Dou.ua, Programming language popularity ranking 2019

Good English

A good amount of Ukrainian developers speak fluent English. However, project and business development manager usually take the communication under their responsibility since English is a crucial skill for those positions. Knowledge of the English language allows Ukrainian software developers to read and understand technical and project documentations while also providing decent communication between partnering companies.

Huge talent pool

The pool of IT specialists in Ukraine is enormous. It is a country with 42 Mill people. There are as previously mentioned 282 higher education institutions, with around 15,000 qualified IT specialists joining the workforce every year. The most significant asset of the Ukrainian outsource IT market is its specialists. As of 2019, forecasting experts are stating that the number of it specialists will surpass 200,000 by 2020. Sources show that approximately 60% of Ukrainian software engineers are currently employed in IT service providing companies.

Labor Supply availability

Ukraine is a country with prominent high-quality employment potential. Over 14 Mill people with higher education live and work in Ukraine.

282 — universities, institutes, academies(in 2018)

357 — thousand graduates in 2018

Average software developer salary in Ukraine ~ $2000

Average software developer salary in USA ~ $9000

Office Property Market

The office estate market in major cities of Ukraine has successfully overcome times of the economic crisis due to recovery and increased demand for new offices, particularly by IT-sector, BPO, Shared Service Center, and outsourcing companies. Many Ukrainian development agencies are now more frequently considering new development projects and partnerships.

Future IT opportunities:

Itcluster.lviv.ua, Innovation District IT Park

Lviv today is a city of possibilities opened to innovation and software development solutions. Over the years, Lviv has become one of the leading Ukrainian IT offshoring destinations and ranks in the top 3 IT-cities of Ukraine alongside the Capital (Kyiv) and Kharkiv.

Lviv shows a constant 20% annual growth in IT-Sector, and the demand for office space is regularly increasing too. That’s why Lviv IT Cluster (Community of Leading Lviv IT Companies) decided to move from utilizing city infrastructure to creating its own. On June 30, 2018, the city officially laid the first foundation stones and started the construction of the largest property project to make up for IT infrastructure demands. The project is called Innovation District IT Park, which is aimed to solve growing needs in the Ukrainian IT sector.

Lviv IT Cluster initiated the project. Investors are Ukrainian investment companies Galereja Center, Horizon Capital, and Canadian investment company Brookfield.

Infrastructure

The diversity of facilities in Innovation District IT Park will provide increased comfort to all employees:

- upscale office environments;

- Information technology-oriented campus university

- conference rooms;

- nursery school;

- hotel;

- shopping center, restaurants and gym areas.

In conclusion

Ukraine popularity for outsourcing grows year by year. Whether it’s a development of a simple corporate website or overhaul of your legacy enterprise system or integrating new solutions into old processes, CRM, ERP, SCM. Ukraine can supercharge your organization or startup with the dedicated and experienced teams of analysts, developers, project managers, QA engineers, tech support specialists and many more. Some Ukrainian outsourcing companies are small, others have hundreds, even thousands of staff in one or several offices around the country. Cooperation with Ukrainian outsourcing companies is beneficial for the US, Canada and European companies as well as for general Ukrainian economic and the IT sector.

If you need to hire developers, extend your R&D or built an R&D center in Ukraine {IT}Prosteer might be the right partner for you. To discuss opportunities contact us here

https://itprosteer.com/

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