[Infographic] Outsourcing to Ukraine: Is It a Wise Choice?
It is obvious, that the choice of the geographical location of outsourcing partners is an important task, and it depends on many factors. There are lots of countries offering such services — and, in any case, a company that is looking for outsourcing partners, come to Ukraine as a possible choice. In our article, we will review the main facts about Ukraine as an outsourcing destination.
Ukraine is located in the Eastern European time zone (UTC+02:00), which is convenient for the Europeans with minimum time difference — only one hour with most European countries. Seven hours of the time difference with North America can also provide more convenient overlapped working hours (compared with India, for example). Therefore, communication gets easier and more productive.
Traveling for lots of foreign citizens, including the United States and Europe, to Ukraine is visa-free for 90 days. In cases where online communication is not enough, the opportunity to fly to a personal meeting at any time can be a decisive factor. For example, Ukraine is a one-hour flight away from Poland, 2 hours from Germany, 5 hours from Dubai, and 9 hours from New York or Beijing.
Prices in Ukraine are lower than in the most of other countries providing outsourcing services, while the quality of Ukrainian development is higher. Also, Ukraine has International Agreements for the Avoidance of Double Taxation with 67 countries of the world.
Regarding payments, a Ukrainian professional will cost around $24-$35. According to reports, Ukraine has one of the most attractive price-to-quality ratios.
According to Statista report, Ukraine is one of the most attractive countries for offshore business services worldwide with a score of 3.37. The annual revenue of software development in Ukraine (and other IT services) reached at least $2.5 billion in 2015. At the same time, Ukraine has rather low taxes compared to Europe: the individual income tax is 18%, and many independent contractors paying only 4%.
Certified Tech Professionals
Ukrainian population makes up only 1% of the world population. However, out of that 1% of the global population come 6% of the world’s certified professionals in many technical spheres including Mathematics, Computer Programming, and others. 87% of high school graduates deciding to continue their studies in universities, and 35% of them choosing IT as their future specialization. Additionally, in 2002 Ukraine was in the 4th place in Top 10 Nations with the Most Certified IT Pros.
There are thousands of experts employed in the Information Technology industry in Ukraine. This abundance of available IT specialists allows Ukraine to keep up with all demands of management and product development standards. There are 402 universities and colleges in Ukraine, and every year the country gets over 150,000 of new graduates. 36,000 students get a degree in technical studies annually, including around 15,000 IT specialists. In total, there are more than 90,000 IT professionals — programmers, engineers, project managers, and other developers for hire now in Ukraine — this data is provided by IT Ukraine – IT Services And Software R&D In Europe’s Rising Tech Nation report.
Many Outsourcing Partners
There are many different outsourcing partners and companies for all kinds of businesses whose development offices are located in Ukraine. There are more than 1,000 IT companies and 2,000 startups in Ukraine, and this number is constantly growing. As a result, IT shared 4% of national export in 2016.
Ukrainian outsourcing companies are represented not only by well-known giants but also by hundreds of others smaller IT companies that cooperate with major world’s enterprise companies as well as popular startups like Gett. These outsourcing companies offer a wide range of services in the areas of web development, the development of mobile applications, as well as their further support and promotion.
The European mentality of Ukrainians simplifies communication for the Western companies who are looking to outsource to Ukraine. Positive thinking in the traditional Western style let Ukrainians easily get over communication barriers. Multilingual managers are available almost in all companies.
80% of Ukrainian IT specialists, including Ukrainian software developers, have Intermediate or higher level of English working proficiency, and professional or technical English is being taught almost in every educational institution — from elementary school to university.
According to a report from AVentures Capital and Sourcingfocus, Ukraine has been named Europe’s top IT outsourcing and software development destination in 2016. From 2009 to 2013 outsourcing industry in Ukraine grew by 20-25 %, as shown in Ukrainian IT Industry Overview 2009-2013.
While Ukraine’s IT industry remains dynamic and resilient, there are also some weak spots. But every outsourcing destination has some shortcomings. And the benefits of the choosing an outsourcing partner from Ukraine increasingly outweigh its negatives: despite the problems, Ukrainian IT outsourcing companies clearly identify the existing gaps and invest in the development of the industry.
Of course, we can not fail to mention some risks of software outsourcing to Ukraine — and outsourcing in general:
- As of late 2015, the country has significant geopolitical and economic problems.
The level of corruption in most government bodies is quite high.
- Some problems in legal, commercial, financial and technological fields, little efficient IP protection legislation for companies and individuals.
- No tax breaks for most IT companies and startups.
But in most cases the benefits of outsourcing to Ukraine are more significant:
- Ukraine has the cheapest and largest IT engineering labor force in Europe. Average developer salary is $1,600. Manufacturing wages are at $1.2 per hour, twice lower than China.
- Highly educated population (100% literacy rate, 87% students graduated from universities and colleges, 35% has IT specialization), 402 higher educational establishments.
- European mentality, 80% of Ukrainian IT specialists have an intermediate or higher level of English working proficiency.
- Visa-free travels for 90 days and easy work permit regime for foreigners from most countries.
- Favorable geographic location.
- Low taxes: 18% of the individual income tax.
- Well-developed and growing IT infrastructure.
Reviewing all the above-mentioned data, it is hard to ignore the fact that outsourcing to Ukraine can be a great choice to make.