IT Outsourcing: Why to Choose Ukraine as Your IT Provider
IT outsourcing to Ukraine is something that you might want to consider for your business to take advantage of. There are pretty compelling reasons for doing so.
Stay with us and we’re going to discuss what are the advantages of choosing Ukraine as your IT service provider, as well as some potential drawbacks that you should avoid while outsourcing your project.
What is Outsourcing?
Maybe you’ve heard the term “outsourcing” before, but you’re not entirely clear on what it means. Essentially, outsourcing is when a business takes measures so that another company or organization is conducting certain of its processes and functions. The company to which work is being outsourced often specializes in this type of business model.
Also, when the term “outsourcing” is used, it typically does not refer to a one-time arrangement between the two companies. Usually, the word is indicative of a more extended interaction between the entities involved.
Some world-famous companies have chosen to use this form of cooperation with other entities. It works well on occasion because it is a way to expand their capabilities with minimal investment, increased functionality, and reduced costs.
In 2019, smallbizgenius.net reported that 59% of the businesses polled had used outsourcing as a way to reduce their expenses. Also, 65% of companies that do outsourced application hosting said that they would increase their outsourcing efforts going forward. It seems evident that this is a practice that is growing more prevalent.
The Benefits of IT Outsourcing for Businesses
- If you outsource, there is a bigger talent pool available. This is true as it relates to both common and rare services.
- The hiring process is faster when you outsource.
- You can speed up the time to market for your products and services.
- IT costs are often reduced.
- You can focus more on other aspects of your business.
Why Try Outsourcing: Ukraine Has Many Appealing Features
For IT outsourcing, Ukraine is a popular choice in 2020. The more you learn about their IT market, the easier it is to see why. According to StackOverflow, there are more than 192,000 IT professionals currently working in Ukraine as of 2020.
There are more than 1,500 software development companies there, and 80% of Ukrainian software developers speak English.
When you are outsourcing software development, Ukraine should be at the top of the list because it has the largest number of IT professionals in Central and Eastern Europe. Also, you’re not likely to find a better price-to-quality ratio anywhere else in the world. Moreover, Ukraine is the 2nd in Europe by the number of freelancers or self-employed professional developers.
According to the above mentioned StackOverflow survey, Ukrainian software developers are skilled in a wide variety of technologies:
- 17.8% of them are versed in Java
- 14% know C#
- 12% know PHP
- 10.9% know Python.
Ukraine claims the third spot for the number of PHP, Ruby, Node.js, Python, ASP.NET, and Symfony developers. For front-end web developers, Ukraine outsourcing comes in fifth. There are also many active Android and iOS app developers.
The Growing Tech Community
The major Ukrainian cities with the highest number of skilled engineers, UI/UX designers, project managers, business analysts, and other IT professionals are Kyiv, Lviv, Kharkiv, Dnipro, Vinnytsia. Of course, Kyiv takes the top and even not only in Ukraine. The city is considered among the top 20 European IT hubs, according to Atomico study:
Moreover, the number of cities in Ukraine with the constantly growing communities of software developers and other IT professionals is increasing significantly.
High Tech Backgrounds of Ukrainian IT Engineers
Ukraine IT outsourcing is also appealing because of the many highly competent software engineers. They placed 8th in Europe in this metric, according to the Pentalog company and Skill Value research data.
Every year, more than 36,000 students graduate from local universities with degrees in IT-related fields. Also, the World Economic Forum named Ukraine among the top 10 countries globally for construction, engineering, and manufacturing graduates. Those three areas together produce an annual total of 130,000 additions to the workforce.
All of this can be attributed to high educational standards. The country offers many opportunities for students who are willing to join Ukraine’s bustling tech community.
Besides that, to support the highest level of IT background and skills of already graduated engineers and digital specialists, Ukraine hosts many major tech events each year. Some of them include the Agile Eastern Europe Conference, IT Arena, PyCon Ukraine, iForum, and DEVChallenge. These opportunities give the country’s IT professionals the chance to network with their peers. They can also share their experiences and learn best practices from industry leaders.
A recent survey from developers.org.ua stated that 60% of Ukrainian developers frequently attend specialized IT events. The largest conferences can attract over 7,000 attendees and international speakers from global corporations. Some of those regularly included are IBM, Skype, HP, SAP, Intel, and Dell.
1 500+ Software Development Companies
Programming outsourcing from Ukraine also makes sense because it has more than 1,500 IT companies. They offer virtually every kind of software development service. That includes R and D services, web and mobile development, IT consulting, UI and UX design, quality assurance and testing, dedicated team building, and more.
Strong Startup Community
The country’s vibrant tech scene has also fueled the rapid growth of the local startup community. Some of the names that have started in Ukraine and you know for sure include Looksery, Gitlab, Jooble, Preply, DepositPhotos, Grammarly, PetCube, Mobalytics, Attendify, CleanMyMac, People.ai, InvisibleCRM, Readdle, Looksery - sold to Snapchat the last year and much more.
Kyiv, Ukraine’s capital, is a major tech investment hub. It has more active investors than Vienna, Warsaw, Oslo, and Copenhagen. In 2017, the total venture capital investment in Ukrainian startups totaled $258 million in US dollars. 2018 saw an increase to $336.9 million.
So, if you run a startup, Ukraine is the exact place where you can find experts with rich experience of startups development.
More than 110 Multinational R&D Centers
Ukraine is one of the 50 most innovative economies in the world, at number 5. Because of this, it should come as no surprise that the country is home to more than 110 R and D centers for global tech heavyweights.
Some of those include Microsoft, Wargaming, Apple, Samsung Electronics, IBM, Boeing, Skype, Ericsson, Siemens, Oracle, and Magento. Several of these entered the Ukrainian market through outstaffing models.
As a result, there are over 100 Fortune 500 companies that have chosen Ukrainian IT services for their businesses.
Strong Work Ethic
The fact there are over 110 global R and D centers in Ukraine is a positive indicator that developers there are on a similar wavelength to clients and companies in the US and Western Europe. With Ukraine outsourcing, you can be confident in the commitment to excellence and the work ethic that you’re going to receive. Facts and figures there matter as much as personal and professional relationships. Ukrainian developers get invested in projects for which they are responsible.
4 Out of 5 Ukrainian Developers Speak English
Software outsourcing to Ukraine also works so well because eighty percent of the tech workers state that they have an intermediate or higher level of proficiency in English. Most software development and IT outsourcing companies in Ukraine offer free English classes to their employees. This dramatically increases their chances of getting hired.
The Best Price for High-Quality Service
Compared to Belarus, Poland, and the Czech Republic, outsourcing engineering from Ukraine works so well because the rates are better, and there is a much larger pool of tech talent.
The average hourly rate for software development is $25-50, while the average software developer makes from $1,400 to $3,300 per month, excluding social contributions and taxes. This is in 3 or 4x times less than any software developer makes in the United States and the United Kingdom.
You may find cheaper services in parts of Asia or Latin America. However, it’s not likely the quality will be up to par. Language and cultural compatibility count for a lot. That is why Ukraine is often the smart, strategic choice if you want to set up an engineer outsource program.
Speaking of cultural compatibility, the work ethic which dominates the Ukraine IT outsourcing industry is quite similar to what you will find with Western businesses.
Ukrainian developers are open to challenges. They get personally involved in the projects they’re working on, and want more than anything to bring them to a satisfactory conclusion. This is especially true when you communicate with them directly, without any intermediaries.
Intellectual Property Security
In Ukraine, IT outsourcing companies comply rigidly to NDAs, or non-disclosure agreements. These protect your ideas from being stolen or copied. You can feel secure that your project data will never be shared with a third party.
Favorable Business Climate
Year by year, Ukraine’s economy has improved. The same could be said of its international policies, particularly when it comes to fostering healthy business relationships.
The growth of the country’s GDP was 4.6% in the second quarter of 2019. The overall volume of IT service export as of the end of 2018 was $4B that was 4% of GDP according to Ukraine IT association.
Also, the Ukrainian government has approved its Strategic Action Plan for 2020 towards approving updated regulations to support IT industry and businesses. Also included will be additional support of innovation initiatives, and an increased focus on tech growth.
The taxation system in Ukraine for IT business owners is affordable and straightforward. IT specialists have low tax rates. This is part of what allows hourly development costs to stay low. It’s a distinct advantage for foreign companies that want to do business there.
The country has also made paying taxes easier. Ukraine introduced a lower, flat rate of 22% for the Unified Social Contribution tax, which is paid by employers. It replaced the previous rates, which ranged from 36.76% to 49.7%.
These factors have contributed to the growth and development of the local IT community. Many business owners have chosen Ukraine for IT outsourcing specifically for these reasons.
Convenient Time Zone
Ukraine is only one hour ahead of most European countries. Because of this, it is a convenient location for nearshoring. The work hours make for smooth communication between geographically-dispersed teams.
The country is an attractive offshore choice for North American companies, as well. The 7-hour time difference between Ukraine and the East Coast makes a lot more sense than outsourcing to India, the Philippines, Vietnam, and other potential options.
Convenient Travel Location
A direct flight to significant European cities from Ukraine takes no longer than 2-3 hours.
Ukraine International Airlines offers regular direct flights to New York from Kyiv. This puts Ukrainian developers within easy reach of their clients if they want to set up frequent on-site trips.
Ukrainian visa policy is quite beneficial for citizens of a lot of countries. If you plan to visit for a 90-days term and you’re a citizen from one of the countries from the below table, you don’t need a visa.
You can quickly fly to Ukraine and visit the company with which you plan to be in business. This will give you a chance to meet everyone and discuss the details in-person.
How To Avoid Hidden Costs of Outsourcing
And the last but not least, we’re going to discuss how to choose the right IT provider and avoid all possible pitfalls of IT outsourcing:
- Costs of Choosing a Vendor
Pick an experienced vendor who can produce coherent contracts and wants to form a successful partnership. Companies can incur an additional 1 to 10% cost of outsourcing through their initial vendor selection.
- Choose a Reliable Service Provider
Find the company that you’re sure is the right fit to help you with your project. Look into their reviews, and be sure to do some additional research. Check whether they have clear guidelines on their outsourcing services or are answering objectively on all questions related to outsourced software development.
- Cost of Transition and Relationship Building
Select a vendor with a responsive outsourcing model. They should have an experienced staff that needs a minimum of software development training and can begin work immediately. Make sure that you are entirely comfortable with the partnership before you commit to anything.
- Be Aware of Cultural Differences
This is another potential cost that you can minimize by carefully selecting your outsourcing partner. Select a location based on their cultural proximity to minimize any miscommunications.
- Productivity Fall Off
About 20% of organizations that go offshore experience a productivity lag. This extra cost can be avoided by selecting the remote staff that’s a good fit for your project. You can lower this outsourcing cost by being selective about who you allow on your team.
- Check Their Software Engineering Projects Examples
Make sure the company has a reliable software development projects examples. It should reveal a lot about them. Learn what types of projects the business has been involved in, their complexity, and any other relevant factors.
- Communicate and Get an Estimate
Discuss each nuance and detail of your project. Try to meet the development team and learn about their soft skills.
- Costs of Improving Internal Processes
Talk to your regular employees about outsourcing before and during the venture. Explain how they should cooperate with the new team and what they can learn from the process. Ask your vendor if they offer knowledge transfer to ensure that your internal staff can manage the IT processes upon completion of the project.
- Managing the Outsourcing Relationship
The cost of proper management can add anywhere from 6 to 10% to your overall budget. Therefore, make sure that there is a project manager who can handle the whole outsourcing process and all the processes are well-coordinated. Learn first about how to manage a distributed team then you get to know whether outsourcing IT processes are right for your business and be ready for possible challenges with management.
- Pick Your Pricing Model
You’ll need to choose the pricing model that is most appropriate for you.
There are a few types. The first one is a fixed price model, where you approve the budget before the development starts, and it remains unchanged. The executor bears any risk of deadline violation. The second one is the time-and-material model, where you pay for the hours spent on the development process. Finally, there is a dedicated team model. This is where you hire the whole team that will be engaged in the development of your project exclusively until it’s finished.
Ukraine is a great place to outsource your project, whether you want to build a website, create an app, or you need any other IT service for your business. If you have any questions regarding your project development, don’t hesitate and get a free quote on your project from our team or our answer to any questions you may have.
Anyway, not depending on what you decide, keep in mind that the more you learn about your future IT service vendor, the more beneficial it is likely to be for your business.