Why is Ukraine an attractive outsourcing destination?

06 jan 2018

written by: theodor spadeson
The Small Electronic Calculating Machine (Russian: МЭСМ/MESM)

Nowadays, outsourcing is not a new thing at all. There are hundreds of articles, reviews, and recommendations in all of the global Web. Many times were discussed Indian developers and their “glitch”, Israeli “miracle”, not fewer times were discussed the average rates of offshore teams, pros/cons of outsourcing, and, of course, good and bad experiences of hiring foreign engineers.

Although we are a Ukrainian company, and the article, showing the pros and cons of outsourcing to Ukraine may be counted as a promotional campaign or a shield for our business, but it is an objective review of facts. This was determined by history, that Ukraine has always been a birthplace of extremely talented people in almost every known industry.

The path of Ukrainians was thorny since the days of yore. All those thorns did not discourage or bleed us dry, they made us stronger, our wounds healed leaving scars which remind us the hard-won victories till today. Since then our Ukrainian people know NO PAIN-NO GAIN. We try our hard to develop and enhance ourselves and reach higher peaks every time. It is in our nature to keep the pace with the fickle world and open new horizons to aspire.

The Starting Line.

Let us start from the computer history of Ukraine and its contribution to the technological development. It would be unfair to skip the fact, that the first operational computer in continental Europe was created by Ukrainian engineers.

Sergey Lebedev.

The first fully operational electronic computer in Europe was created and introduced in 1951 bearing the name “Small Electronic Calculating Machine”. Despite the word “small” in the name of the computer, it was even more than a big machine. The father, the procreator of this computer is Ukrainian scientist, academician Sergey Lebedev.

Viktor Glushkov.

In 1959, another Ukrainian scientist, Viktor Glushkov set his sights on creating a machine for engineering calculations. He introduced an elaborated concept of such machine and proposed to create a mathematical programming language for it. The idea embodied in the early 1960s. The first forerunner of PC was created in Kyiv, Ukraine. It wore the name “Promin”, which in English means “Beam”. “Promin” was a new word in the world practice.

The forerunner of a PC, computer “Promin” and its creator, Viktor Glushkov.

Concluding the brief computing history of Ukraine, we would also like to mention the magnitude of the contributions to the progress made by Oleg Antonov, a prominent Ukrainian aircraft designer, and Nikolay Amosov, the worldwide known surgeon.

Oleg Antonov and his company Antonov created the world’s largest airworthy aircraft AN-225 ”Mriya”. When it was built, it surpassed any airliner built before by 50%. Since the creation of “Mriya” in the 1980s, there is still no aircraft that can surpass its capabilities.

As to Nikolay Amosov, he is primarily known as one of the best surgeons in the world, but not everyone knows, that he is the founder of bio-cybernetics in Ukraine. Nikolay was a gifted engineer and surgeon. He constructed the first CPB (cardiopulmonary bypass) mechanism in Ukraine, was committed to AI research, and even managed to cut a tricuspid heart valve out of a shirt (due to a lack of needed materials for an operation).

Top ten most attractive european countries for outsourcing.

As you can see, Ukrainian nation is abundant in talented and committed people, who contributed to the world’s technological breakthrough. Nowadays we have our modern Amosovs, Antonovs, Glushkovs, and others. They are young and aspiring to create something new.

Slipping to the main idea of our article, the modern Ukrainian IT sphere, we would like to provide some statistical information.

The Information Technology and R&D industry in Ukraine grow simultaneously with the number of experts in the field of development. Today, more than a thousand IT companies provide over 100,000 professionals for international clients. To admit, over 100 Research and Development centers of big global companies are situated across the Ukraine. Why? We will consider this a bit later.

For us, Ukrainians, technological vector is not only the possibility to get a well-paid job but also a chance to build a new country with better living conditions and a consistent economy. While the world is discussing the yet another novelty, Ukrainians implement it and start to work on its development.

Ukraine nowadays offers a good business environment, talent pool, and financial attractiveness for foreign partners and investors. According to the A.T. Kearney research conducted in 2016, Ukraine is in the TOP-10 Most Attractive European countries for outsourcing (see the diagram).

Most attractive countries for outsourcing.

On a worldwide scene, Ukraine also succeeds. According to the 2016 Statista research, Ukraine entered the list of the Most Attractive Countries Worldwide with 3.03 points out of 4.

So, as representatives of Ukrainian IT business, we would like to come closer to Pro et Contra of outsourcing to Ukraine.

Pros of outsourcing to Ukraine:

  1. Education, talent pool, and expertise;
  2. Cost-effectiveness and quality-to price ratio;
  3. A convenient time zone;
  4. English language proficiency;
  5. Visa-free entry to Ukraine for the majority of countries all over the globe;
  6. Accountability, resilience, and Western-oriented sight.

Cons:

  1. A lack of full-time communication because of remote cooperation;
  2. Military actions in the East of Ukraine.

Shortly about cons. A lack of communication can be an issue, but taking to account, that Ukraine has a beneficial geographical location and a convenient time zone, this issue turns into an inconvenience.

The military situation in the East of the country has cut off a really big IT hub of Ukraine, Donetsk. The whole Eastern part of Ukraine is now unavailable for foreign businesses as it was before, and it is indeed a big loss. The overall situation in Ukraine is calm, and the companies work in a normal working mode.

Now, pros in stages.

Education in Ukraine, and Talent Pool.

Ukrainian education.

Ukraine takes the second place in the number of IT experts in Europe (the victorious palms belong to the United Kingdom). Ukrainian higher education institutes bring ~40,000 highly-qualified IT professionals to the industry annually. Among the 402 higher educational institutions there are many ones, that maintain the IT-related programs and branches.

In addition, many of institutes provide educational programs implementing English as a language of teaching. Also, Ukrainian Universities provide internationally-approved educational systems, that are highly-valued in EU.

Ukraine has the largest rapidly growing number of dedicated IT experts in Europe. Around 86% of all IT resources of the country are accumulated in the following IT hubs: Kyiv, Kharkiv, Lviv, Dnipro, and Odesa.

Number of graduates with technical degrees(2015).

Kiev, the capital of Ukraine, is a hometown for ~55 software outsourcing companies and ~55 International R&D centers. The number of IT experts in Kyiv longs to the point of 45,000, which is ~46,6% of all IT resources in Ukraine. Educational institutions located in Kyiv release over 15,000 tech graduates each year.

Kharkiv is the second largest IT center of Ukraine. There are ~35 big software outsourcing companies in Kharkiv, which employ over 20,000 IT experts, 16% of Ukrainian IT force. Global players consider Kharkiv as an attractive destination to establish an R&D center, in view of this, there are 11 international R&D centers there at the moment. Since Kharkiv has 20+ institutions, over 15,000 graduates join the ranks every year.

Lviv is the third largest IT hub. Lviv allocates 32 big software development firms and 15,000 It professionals. 15 international Research and Development centers are based in Lviv. 17 educational institutions release over 15,000 graduates annually.

Dnipro takes the fourth place. There are 44 big software outsourcing companies, 14 R&D centers, and ~10,000 (8% of Ukrainian force) professional IT engineers in Dnipro. Dnipro educational institutions provide IT industry with over 17,000 certified technical graduates every year.

Odessa, as you already realized, is the fifth largest IT hub in Ukraine. Over 30 IT outsourcing companies are located in Odessa and over 8,000 specialists are employed (5,5% of Ukrainian forces). There are 23 R&D centers in Odessa, founded by big global IT players. Over 10,000 graduates are ready to apply themselves to an IT task every year.

As you can see, the largest IT hubs in Ukraine are in a good position and offer a solid base for the research and development in the IT sphere. Big global players already use the time and capabilities of Ukrainian talents and reap the rewards of prosperity.

Moreover, according to the forecasts, the Ukrainian IT force is expected to grow two times by 2020. This will open additional capabilities and new horizons for international business.

Cost-effectiveness of Ukrainian Services.

According to the statistics, Ukraine is one of the cheapest countries to live in the world. Ukraine is placed at the 111 place among 115 countries by the midyear of 2017.

Cost-effectivness of services by countries.

The cost of labor in Ukraine was the lowest in the world until recent years since the rates of IT specialists started to grow. Although the growth in rates is observed, the overall prices are still very, very attractive for foreign clients.

To be more exact, companies practicing outsourcing to Ukraine save up to 50% of total onshore costs for IT services.

A diagram of European cost effectiveness provided by GARTNER.

A diagram of European cost effectiveness provided by GARTNER

Without a doubt, the total cost of offshore development whether it is in Ukraine, or in another country depends on the model of negotiations you choose:

  • Full-cycle outsourcing;
  • Outstaff;
  • Startup creation.

Now. let us consider the quality-to-price ratio of Ukrainian IT services. Ukrainian Middle engineers are often correlated to Senior developers from other countries because of the distinctions in the standards. That means, that hiring a Ukrainian middle developer you acquire the senior-level quality of service for less money. Taking to account the average price ratio, which in Ukraine is at the point of ~25-35 $ per hour, you get the top-notch execution of your project. Worthy? Indeed.

English Language in Ukraine.

English as a foreign language is popular since the 1990s. Due to the conditions establishing new economic relations and business operations on the international level, the progressive post-Soviet society made a significant investment into the learning English as an international business language.

In modern IT sphere is a must, especially, when it comes to developers. As we all know, there are many clients willing to talk to developers directly in order to avoid Chinese whispers.

Here is a diagram showing English language skills of IT doers in Ukraine.

English language skill betwee IT doers in Ukraine.

To enhance the language skills of employees, companies hire native speakers or compensate the courses. This helps dedicated development teams to get a clear understanding of the client’s requirements on the project from the very beginning. Moreover, among all of the existing accents, Ukrainian one does not make the ears tingle and does not sound like an Indian gobbling (sorry, Hindu mates).

Logistics and Face-to-Face Meetings.

Today’s remote communication is a real godsend for international business because modern technologies give us a possibility to communicate with the partners scattered all over the world in a reach of a desktop shortcut.

Though remote communication is an essential part of business negotiations, the face-to-face conversation is a must. Personal meetings help parties to get each other’s values and build strong personal/business relationships.

Ukraine has a well-developed international transportation infrastructure and, comparing to India, for example, is located closer. If you opt for a flight to Kiev, the destination can be reached in a couple of hours from the majority of European countries. In addition, Ukraine is generally visa-free for visiting.

Another good feature of Ukraine is hospitality. You will feel the warmth and friendliness of Ukraine since the first minute of your visit. To check whether you need a visa to visit Ukraine, please follow the link: http://mfa.gov.ua/en/consular-affairs/entering-ukraine/visa-requirements-for-foreigners

Visa requirement for Ukraine visitors.

Time Zone.

Ukraine is situated in the heart of Europe and borders following countries: Poland, Slovakia, Hungary, Belarus, Moldova, Romania, and Russia.

Time zone in Ukraine is GMT+2, which means, that working hours in Ukraine coincide with working hours of the majority of European countries. This is a great benefit for remote business relationships because the need of late skype calls falls off your business menu. Therefore, Ukraine has a better time zone for partners from Europe, in contrast to India, China, and other popular outsourcing destinations.

Ukrainian Business Culture.

Ukraine has Western orientation, especially it appeals to the software engineering industry. Ukrainian IT sphere is focused on the USA, EU, and Australia.

Many big Ukrainian software companies have a partnership with big players and leaders in the global Internet industry. There are numerous Ukrainian IT outsourcing companies, that can boast of cooperation with Microsoft, Skype, Deutsche Bank, Apple, Bosch, eBay, Dell, Microsoft, IBM and many other big players.

Ukrainians have the ability to think from client’s perspective. This is a peculiar Ukrainian personality trait, which is embedded into a genome. We, Ukrainians, always act responsibly, when it comes to the provision of services/products. It is in our nature to deliver the best product to the client within the shortest possible time (as if the client is ourselves).

You, as a partner/client, won’t have any cultural barriers because, as it is already mentioned, we are progressive and Western-oriented. In contrast to Indian or Chinese companies and developers, where “yes” means many things but yes, our agreement means nothing else. In case, if the task is not completely understood, Ukrainians will ask you to clear up the matter. It is a common practice to ask dozens of additional task-related questions in Ukraine. Do not be surprised by this. It helps to determine all peculiarities of the assigned project/task and to structurally organize the approach in order to deliver the best possible outcome.

It is not new, that Ukrainian organizations foresee problems and warn their partners of possible difficulties beforehand. The reason for this approach is honesty of Ukrainian people. This feature helps IT companies in Ukraine to attract many investors and clients.

Ukrainian communication in traditional Western style implies a good and appropriate sense of humor but handles serious approach anyway.

Many Ukrainian software development companies provide “full-stack” development and follow-up services. It means, that you can assign the whole life-cycle of the project to one company. You can be sure that Ukrainians are capable of implementing any top-notch ideas in reality.

Before you entrust your idea to an outsourcing company in Ukraine, check its reputation, website, and have a look at independent reviews. Moreover, you can check the list of partners, and contact them directly in order to get a feedback about the experience of partnership with a company you are interested in.

Through building long-time relations with a reliable Ukrainian IT company, you write your success story and make a significant contribution to the development of technological domain.

You and your company will enjoy many benefits if you decide to cooperate with a software development company based in Ukraine. If you still feel uncertain, or you have questions not covered by the article, feel free to contact us. We will provide you with additional information about the benefits of outsourcing that Ukraine offers.