We were lucky enough to shoot a few interviews before the Covid-19 pandemic. The first interview was dedicated to hiring a remote team in Ukraine. Our second guest, Andy Morrey, a Managing Director at Magma Trading, told us about the…
Why IT Outsourcing in Ukraine Is A Must?
As the owner of a small to middle-sized business, you must have thought about outsourcing some parts of your business.
The perks of outsourcing sound indisputable, lauded by industry gurus across the globe as an ultimate solution to lower costs for business running varying from information technology to sales and marketing.
Outsourcing makes it seem possible that you could run a business without ever signing a contract with someone.
You won’t be surprised to know that the IT sector is one of the most outsourced support functions with 28% of outsourced forces. Security. Backing. Aptitude. System. The IT sector has got it all covered.
Unfortunately, most small and middle-sized companies fail to notice that the IT function is a fundamental business component, mainly due to the expense to create and keep up a tech division.
Luckily, the IT outsourcing trend gains momentum, thus bridging the gap. As a result, businesses that finance outsourced tech services obtain considerable benefits that allow them to function more efficiently without having to build a full-fledged IT department.
The principal things you need to search for while deciding on the best IT outsourcing locations are lower costs, an exceptionally evolved IT market, a top-notch instructive framework, and the capacity to communicate in English.
Anyway, have you ever thought about IT outsourcing in Ukraine?
Read on to find out what makes Ukraine software outsourcing the perfect decision for growing your business.
15 Reasons Why IT Outsourcing to Ukraine Is a Good Idea
Ukraine offers an unbeatable combo of boons that make it tailored to tech development. Therefore, this country has the best potential to outsource your tech development needs. In fact, in 2017 GSA Global shortlisted Ukraine as one of the most popular IT outsourcing destinations in the whole world.
Here are quite a few reasons why companies are flocking here for top-quality, cost-effective, and flexible software solutions.
1. Mature outsourcing market
Ukraine is well-known for its seasoned outsourcing market with more than 4,000 IT companies operating on the market. The total number of coding gurus has surpassed more than 191,000 already in 2019. All this makes Ukraine a forward-runner in the global IT space.
With booming tech startups and growing investment flow, more and more companies collaborate with the Ukrainian IT market to build the solution they need. In all fairness, there has never been a better time for this magnificent country with historically robust expertise to pick the right horse.
2. Experienced outsourcing companies
As we have stated above, Ukraine has an invaluable asset to offer to foreign businesses, which is a huge number of IT outsourcing companies. Today, the world is engrossed with technological breakthroughs. And Ukraine was not left untouched either.
Thanks to the strong tech environment with more than 4k companies, Ukraine continues to hit the top of Eastern Europe IT destinations. In fact, 100 out of Fortune 500 companies have their remote development teams in Ukraine.
Recommended reading: Why Hire A Remote Team In Ukraine? Interview With CURE Media Tech Lead [VIDEO]
3. World-known startups of Ukrainian origin
Ukraine is a country that has a vast reservoir of talent to be tapped. This also goes for tech startups that have resonated all over the world. Despite some shakes in the economical space, the industry of pioneering startups grows exponentially in Ukraine.
Recommended reading: How To Hire Developers For Startup?
We have watched several unicorns coming aboard over the last couple of years. Some projects are soon to become unicorns as well. Since 2015, the software development industry in Ukraine has skyrocketed and is not going to slow down. As the numbers of 2019 indicate, the tech sector in Ukraine experienced a 19% growth.
The startup ecosystem here is truly remarkable. Thus, the IT Walk of Fame features such major tech players as Grammarly, Preply, Invisible.io, Competera, Allset – the list goes on.
4. Trust of tech giants
You cannot underestimate the importance of research and development centers for innovations. In the IT sector R&D is a backbone of innovation and a success factor in building a new competitive edge.
Although Intel is considered a Holy Grail of R&D, Ukraine also has something in stock for foreign companies. With no legal limitations and Ukrainian bright minds, Ukrainian programmers have already been widely recognized by such highfliers as Google, Amazon, Boeing, and Oracle that have opened their D&R centers there.
5. Convenient time zone for nearshoring and offshoring
As a rule, European-based companies choose nearshore outsourcing in Ukraine, since Eastern European IT hubs are practically around the corner.
Recommended reading: What Is Nearshore Outsourcing In Software Development?
Also, a convenient time difference helps establish cooperation in the context of nearshoring. It means that your in-house and remote teams will be synced, which allows convenient scheduling for real-time meetings and briefings.
As for offshoring, Ukraine has its perks as well. As its time zone is GMT+3 in summer and GMT+2 in winter, it has overlapping working hours even with the USA.
6. Visa-free regime
Ukraine has introduced a visa-free regime for many countries, including EU countries, the USA, and others. This allows outsourced programmers to freely visit the company’s head office for conferences and other events if needed.
7. Comfortable conditions for starting business
Business culture in Ukraine has been molded by its long and rich history of turbulent economic environments and unstable governments. Today, Ukraine has implemented a progressive approach towards Europe, thus opening new opportunities for setting up a business in the country.
Also, with the implementation of crucial economic reforms, Ukraine is on its way to a free economy. There are multiple benefits of Ukrainian IT outsourcing companies, including:
- The astonishing potential of human resources
- Limited competition
- Simplified taxation system
- Low taxation rates
- Hassle-free reporting
All this makes the Ukrainian software development market a true Mecca for foreign IT companies from the bureaucratic side of things.
8. Quality of tech education
Ukraine is widely known for its tech education that makes Ukrainian coders experts in their niche. Every year, a famous Ukrainian community of devs posts a survey of Ukrainian programmers.
According to the 2019 survey, the majority of Ukrainian IT gurus hold a degree with more than 80% of all graduates possessing an academic degree. On top of it, more than half of all developers hold a STEM-related degree.
Accordingly, the number of tech graduates is growing at a steady pace. Thus, the average number of IT graduates amounts to more than 36,000 every year while the number of engineering graduates equals 130,000 annually. This makes Ukraine top the list of European countries that have the largest number of engineering graduates.
9. Growing number of software developers
Ukrainian developers have been repeatedly noted among European tech experts by foreign companies. Indeed, the phrase ‘developer from Ukraine’ is now associated with expertise, professionalism, and high performance.
With a vast tech talent base of almost 200,000 tech pros, such results are more than astonishing. And it’s no surprise that outsourcing in Ukraine is getting to be more attractive to many companies in the context of offshore or nearshore software development.
10. Western mindset
Communication and collaboration are two success factors for any business. If dev teams experience a cultural gap and have different business ethics, you need to make sure everyone is on the same wavelength.
Ukraine, however, is another case. As it is located in Western Europe the country shares most European values and cultural views. You can see some slight mentality differences as a foreigner, but this is an indispensable part of national identity.
Overall, Ukrainian software developers are close to European and American partners culture-wise.
Moreover, the tech industry is dominated by young professionals, hence, you won’t experience any significant cultural stumbling blocks while collaborating with Ukrainian software services.
11. Variety of tech stacks
If we think about any tech product or a company, there are some tasks that are assigned to different engineering groups. These tasks may be different in nature but call for the same infrastructure. Therefore, choosing the tech stack for a full-cycle application can become a challenge.
As Ukraine boasts a large number of tech engineers, it is easy to switch between technologies and hire the needed tech stack. Ukrainian coders have expertise in a wide range of coding languages, technologies, and tools.
And, more important, they know how to apply hands-on knowledge of many technologies to various domains. This helps outsourcing companies speed up the programming process and optimize team resources.
12. Big IT hubs
Kyiv has a well-deserved reputation as the major IT hub location in Ukraine. With professionally trained coders and geographical vicinity to Europe, the vibrant IT market in Kyiv is thriving. However, the Ukrainian IT industry doesn’t live by Kyiv alone. In fact, over the past few years, such Ukrainian cities as Lviv, Kharkiv, Odesa, and Dnipro have joined the cohort of leading Ukrainian IT locations.
The developed network of IT hubs across the country is especially convenient, as foreign companies can choose a well-suited option for their outsourced teams.
13. Variety of different industries
Since Ukrainian technology development companies always stay on top of cutting-edge technologies, the number of ‘-techs’ doesn’t seem intimidating to them – Fintech, Medtech, Media, Edtech, etc.
Based on the needs and business objectives, Ukraine outsourcing providers can quickly scale your software development team with professionals making up for the skill gaps in your staff.
For example, if you are on the lookout for an Angular coder specializing in logistics, you can find the one in Ukraine in no time. Also, the diversity of tech projects in the country implies that it is relatively easy to hire a programmer specializing in several industries. Therefore, a client saves time and financial resources.
14. English proficiency
Profound knowledge of English contributes a lot to finding a common ground with any client. If you look at the stats, you can see Ukraine trailing somewhere behind as for English proficiency. However, this is not quite true for the information technology sector. The English knowledge rate is known to be ranked high in the IT industry and is not at all represented by the rest of the citizens.
Also, IT companies invest a lot in English training classes offering full reimbursement for English courses. The same trend is reflected in job requirements. To make it to the top company, a tech candidate is to have at least a B1 level. The DOU survey shows that more than 81% of the Ukrainian tech pros have B2 to C1 level of English, and the situation is continuously improving.
15. Optimal quality to cost ratio
There is one key reason for bringing software development overseas. Outsourced programming allows a business to save costs. However, the average hourly rate still may vary from country to country. Ukraine has the highest value-for-money rate among all outsourcing destinations across various tech disciplines and coding roles.
Let’s have a look at some numbers. On average, a Ukrainian tech specialist charges around $20 per hour.
Obviously, there are various advantages of outsourcing software development to Ukraine; that is why it is rightly placed high on the global tech arena.
How COVID-19 Will Impact It Outsourcing in Ukraine?
The Coronavirus effect on the economy is likely to be long-lasting. According to business analysts, we will be seeing grave repercussions till the end of 2021. Today, small to middle-sized businesses are going through a long-lasting recovery process after COVID-19 has lightened its hold. Overall, it seems that we may have to get used to the modern reality with quarantine rumors swirling around.
Of course, the IT industry has not been immune to the pandemic as well. The global pandemic has surely slowed down the rapid growth of IT in Ukraine. A small part of tourism and hotel projects had to be temporarily suspended. Some projects had to be repurposed. For example, the offline event aggregator began to announce events taking place in the online space.
However, the tech sector has not taken such a hard hit as other businesses. Regardless of the shifting landscape, this industry is not hard hit, mostly thanks to its remote-working capabilities.
This is how Konstantyn Gytko, General Manager at Devox Software, commented on the situation:
In general, the COVID-19 pandemic had a strong impact on the Ukrainian economy. The entertainment sector, in particular, had a low blow, including tourism, restaurant business, cinemas, and events. It was the toughest during the lockdown.
All public places were closed, and you couldn’t go anywhere, since public transport services were completely paralyzed. We lived in complete chaos – people had no idea what to do, how to reorient, and had to make important decisions on the run.
We closed the office among the first to keep our employees safe. The management department had to handle the extra workload since we needed to prepare our infrastructures, tools, and processes. We had to build a new workflow in mere days.
Although remote work meant more freedom, none of us was ready to be trapped inside four walls 24\7. So, besides management, we had to help and support our employees.
The economy has a domino effect – if one industry slows down, this slowdown affects others. Let’s take banking as an example.
The customer flow pauses since companies don’t take loans for business financing because of possible risks. People withdraw deposits as well. What will the bank do? It’ll reduce the cost of process optimization, which may well be outsourced to the IT company.
Surely, IT outsourcing is not among the most affected by COVID-19 industries, but the impact of the pandemic is echoed here as well.
The top 50 IT companies in Ukraine used to grow up to 6% every six months. The current situation is different – it was only 1.9% from January to July 2020.
Of course, this is not an impressive growth, yet still a growth. If you look at top companies, they offer some open positions. At the same time, the larger the business, the harder it is to adapt it to the new realities such as providing remote work for a staff of 2000-3000 workers.
Small and middle-sized businesses have it easier in this respect since they enjoy more flexibility. The same goes for clients – medium companies are oriented towards medium and small businesses.
It is easier for such market players to find a mid-sized project than to sign a contract with an enterprise.
You may ask me at this point: What are Ukrainian outsourcers going to do to avoid the negative consequences of the pandemic? Well, this is what comes to my mind:
- follow the financial plan
- reduce costs
- look for alternative sources of income
- create new opportunities for the company
- keep employees occupied with interesting tasks to motivate them and not to lose them
In my opinion, these are basic steps to mitigate the consequences. If companies follow these steps and there is no force majeure, the IT outsourcing market in Ukraine will continue to develop, but at a slower pace.
The pace of hiring will slow down a little with the growing competition in the labor market. This will add a competitive side for developers. They will have the motivation to upgrade their skills even more; hence the market will be filled with even more qualified employees.
Besides quality, quantity is also important. COVID-19 has not affected the number of students in any way. In Ukraine, the market is annually replenished with 36000+ tech graduates. Next year will be no exception; however, the demand will slightly drop.
If you look from the perspective of the client, the larger the labor market, the easier and faster it is to hire a developer, and therefore begin developing your project.
How Companies Can Work Collaboratively With Their Outsourcing Providers?
From worker safety to sick-leave policy, business continuity, and office safety, businesses need to build a clear plan for managing their outsourcing providers.
Here is what C-level managers can do in the face of Coronavirus pandemic and global situation:
- As a client and team leader, you should take care of the staff, including outsourced teams. The human factor is especially important at the time of such tragedies.
Outsourcing providers make their best to take care of their workers and provide office safety or remote work for their employees. This means taking people front to all provider interactions, outlining clear work guidelines, offering psychological support, and secure activities on key infrastructures.
- Make sure your outsourced developers can work effectively remote-wise. Even if it seems that the provider has provided remote work, you still need to keep an eye on performance.
Such crucial elements as work protocols, processes, technologies, and people management tools should be implemented in a remote workflow.
Make capacity readjustment if needed. To do that, contact your outsourcing provider to discuss the current capacity and potential effect or any performance declines. For example, if the performance is likely to drop significantly, create and implement relevant readjustment plans between locations and/or providers.
- Keep in touch with your outsourcing providers to be ready for anything coming your way. When the basic needs have been tended to, CIOs should then be proactive in discussing the feasible continuous impacts.
These might incorporate business -continuity, planning limit decreases, managing remote work issues, and creating ways to deal with new needs as they come up.
- Have an honest discussion with your outsourcing provider about the probable financial consequences of the COVID-19 crisis.
This is an indispensable step to take a stand against the financial repercussions and find mutually beneficial solutions.
Your Cut-Out-‘N-Keep Summary
Today, Ukraine is known for a plethora of IT outsourcing companies, which makes it the true haven for developers. With a vast talent pool, IT companies galore, and a perfect quality-cost ratio, IT outsourcing to Ukraine increasingly makes sense for large companies and attracts global businesses.