IT outsourcing in Ukraine:
why is Ukraine such a popular choice?
Hello, friend! Glad to know you’ve found this file:) It’s really cool that you’re interested in ukrainian IT outsourcing services, ‘cause we’ve prepared a lot of interesting information on this topic, especially for you! We tried our best to make this research complex, but at the same time concise and easy-to-read. So we hope that we’ll help you answer your questions and tip the scale in favour of Ukrainian outsourcing! It’ll take you approximately 8 minutes to find out: key facts about Ukrainian outsourcing; the level of professional competence and rates of Ukrainian developers, legislative peculiarities of holding business with outsourcing companies in Ukraine, risks & perspectives, pros & cons of Ukrainian outsourcing.
Key facts about Ukraine
Kyiv (3 million people)
Kyiv, Kharkiv, Dnipropetrovsk, Lviv, Odessa
Software outsourcing firms with 80+ employees
International R&D Centers
Universities & colleges with texhnical education
Technical graduates (2015)
IT services and software R&D in
Europe’s rising tech nation” 2016
by 76 positions from 2012 to 2018
Ukraine holds the 24th position in the list of the top outsourcing countries in the world, according to the Global Services Location Index by A.T. Kearney.
Moreover, Ukraine was recognized as UK’s offshoring destination of the year according to the Global Sourcing Association (GSA) UK. This index is quite significant, as the UK is the world’s second-largest outsourcing market.
According to the A.T. Kearney report, Ukraine holds the 7th position among the most attractive European countries for outsourcing.
Owners of big companies probably had the same thought, and that’s why they decided to place their R&D centres exactly in Ukraine.
It’s very important to emphasize that the United States consider Ukraine as the largest partner for collective R&D activities (around 45% of the companies involved), followed by EU countries and Israel.
And what else attracts clients to Ukrainian outsourcing companies?
The professional level of Ukrainian developers is also possible thanks to the qualitative technical education in this country.
The Ukrainian IT market is full of creative ideas and boasts more than 2,000 startups, including Grammarly, Readdle, PetCube, Preply, DepositPhotos, People.ai TemplateMonster and Attendify.
In the table below you can find information about the biggest investments in Ukrainian startups in 2017.
Prices in Ukraine are lower than in the most of other countries providing outsourcing services, while the quality of Ukrainian development is higher.
The support of the IT sphere in
To ensure a predictable growth in the export of IT services, the following regulatory and legislative conditions can be observed:
the contract between the client and outsourcer can be presented in an e-form in the language of one of the contractors;
the act of provided services can be replaced by invoice;
e-signature is officially recognized.
So, to outsource or not to outsource, is this a question?
Let’s find out the pros and cons of Ukrainian IT outsourcing:
- Ukraine has the cheapest abd largest engineering labor force in Europe. Average developer salary is $1,600 Manufacturing wages are at $1.2/hour, twice lower than China
- Lowest operating costs in Europe
- Ease of recruiting and laying-off employees in the absence of strong legal restrictions or trade unions.
- Highly educated population (100% literacy rate), strong presence of higher educational establishments (317 colleges and universities)
- European mentalit
- No-visa regime and easy work permit regime for foreigners from most countries
- Favorable geographic position for globally operating business. Ukraine is one-hour flight away from Poland, 2 hours from Germany, 5 hours from Dubai, 9 hours from New York or Beijing
- The individual income tax is at 18% with most independent contractors paying only 4%
- Well-developed and developing IT infrastructure, with a fast-growing innovation ecosystem.
- As of late 2015, the country was experiencing significant political and economic challenges after the recent revolution and geopolitical crisis in the region. Howewer, the military conflict was contained to only 3% of Ukrainian territory in the eastern part of the country
- High level of corruption across most goverment bodies, Howewer, some progress has been noticed since the 2014 revolutio
- Cumbersome legal entity
- registration and closure laws
- Legal loophones in commercial, financial an technological fields
- Little efficient IP protection legislation for companies and individuals. Howewer, legislation is to be harmonized with EU rules
- Except VAT exemption for software development service companies, IT companies and sturtups do not enjoy tax breaks
- Cases of arbitrarily-led tax police inspections in IT companies
One of main stop-factors for potential clients is the conflict between Ukraine and Russia, because it can be the reason of difficulties in the business process.
Therefore, you have to make sure that your offshore partner complies with security regulations and has the certifications to prove it. Here are some tips for protecting your Intellectual property (IP) rights:
- Make sure that copyright ownership is specified in a contract with the developer;
- Do not authorize the executor to create any intellectual property asset;
- Register copyright on your IP;
Ukraine is 7 hours ahead of the U.S. east coast, and 1-2 hours ahead of most European countries, including the U.K. So this fact can significantly facilitate your cooperation and working communication with Ukrainian developers. Since their day probably begins before yours does, they will already have progress to report on your daily Skype call or email.
Some tips on working in different time zones:
Should you outsource your projects to Ukraine or not? Hopefully our article has given you many great reasons to.