Why US Companies Choose Ukraine over India, China and Latin Countries for Offshore Development

Aug 25, 2017

US-based companies represent a large share of clientele for the Ukrainian IT outsourcing industry. 

Daxx employees visit current and potential clients at their American offices. Alyona Pershykova has been with Daxx for more than five years and has extensive experience connecting professional Ukrainian developers with American companies.

In this interview, she shares her insight into the specifics of American-Ukrainian partnerships.

 

  1. You are in the US quite often, what does your business schedule look like when you are there?
  2. How many clients does Daxx have in the US?
  3. During your 5 year-long employment at Daxx, have you noticed any patterns in terms of the industries your US clients typically represent?
  4. What about the size of the companies you usually work with?
  5. What actually makes American companies consider outsourcing?
  6. Why do companies choose Ukraine over India, China and Latin American countries as an offshore location?
  7. How do your clients usually handle the time difference between the US and Ukraine?
  8. What are the differences between American and Ukrainian developers?
  9. How easy or difficult is it to get started with a team?
  10. What is the average team size and contract length?
  11. Daxx markets itself as a long-term solution. How do you make sure that developers won't just unexpectedly disappear?
  12. Do developers visit their clients’ offices in the US if needed?
  13. What are the potential risks American companies need to be aware of when they decide to go offshore?
  14. To summarize, what would be your advice to US-based companies on how to successfully onboard and run a remote team?

You are in the US quite often, what does your business schedule look like when you are there?

I’m in the US around once per quarter. We usually agree on meeting times with companies beforehand, and then I just stop by their offices. Usually, meetings last for about an hour — I tell the company representatives about who we are and what we do, and we discuss possible collaboration models.

How many clients does Daxx have in the US?

Currently, we have 26 clients from all over the US (out of approximately 90 clients in total).

During your 5 year-long employment at Daxx, have you noticed any patterns in terms of the industries your US clients typically represent?

We aren't focused on any type of industry or company size, so we work with very different types of companies. The list of our US clients includes agencies, the healthcare industry, financial companies, logistics, the travel industry, e-learning, security, game companies and many more.

What about the size of the companies you usually work with?

Company size differs as well: most of our clients are small and medium-sized businesses. They usually select Daxx over other providers in Ukraine because we are an established company, and they feel comfortable with our processes and work model. Daxx currently has 250 employees, and we are at the stage where we are flexible and able to pay attention to each client, but at the same time we are mature and big enough to be considered as a reliable and experienced service provider.

What actually makes American companies consider outsourcing?

Our partners outsource because of a number of factors. 

The American market is good for hiring IT personnel, and it doesn't really lack talent in the same way Europe does. However, the salary levels in the US are quite high. When it comes to hiring senior personnel in the States, prices can go up significantly. 

Other factors include administrative and legal issues. Basically, we help our clients build their own offshore unit, and we take care of all the back-office hassles so they don’t have to deal with them here in Ukraine. The cost of infrastructure and local support staff is much cheaper in Ukraine than it is in the US, which is another costcutter in addition to salaries. 

The most important factor is flexibility: we work with a one-month notice period, which means our clients can scale their teams up and down quickly, adjusting the team composition to their current needs.

Why do companies choose Ukraine over India, China and Latin American countries as an offshore location?

I believe that that every seller finds their buyer. Latin countries offer geographical proximity and minimal time difference, while India and China offer significant cost reduction and speed, sometimes compromising on quality.

What Ukraine has to offer is a unique combination of quality and price. The average salary in Ukraine is higher than in Asia but lower than in Latin countries. We don't promote ourselves as a cheap solution, but when it comes to quality, Ukraine is a happy medium for most. 

Cultural differences also matter, so it is up to our clients to decide.

How do your clients usually handle the time difference between the US and Ukraine?

There is a 7 to 10-hour time difference depending on the state. Most of our clients follow the Agile/Scrum methodology, and they organize their work with remote developers in such a manner that all the important meetings are held during the morning hours in the US. Also, many developers don't mind staying online during their non-working hours to accept urgent calls if needed. Usually, they don’t consider this to be overtime.

What are the differences between American and Ukrainian developers?

There aren’t many, especially in terms of culture. Of course, we deal with different people and personalities, but an average Ukrainian developer is easy-going, responsible, and eager to learn.

When it comes to English, Ukrainians obviously have different levels of language skills. Senior and mid-senior developers, however, are likely to have very good English.

I frequently hear that Ukrainians are more open-minded and creative in their work than an average American programmer. They think outside the box — which isn't very common in tech-related industries. 

How easy or difficult is it to get started with a team?

Getting started is very easy with our model. We just ask the client to provide us with their requirements, discuss all the details over the phone, open the vacancy, and then start screening candidates.

What is the average team size and contract length?

The average team size at Daxx is three to four developers. This number differs largely among our clients though: there are many cases where clients hire only one developer, but there are also teams with more than 30 engineers. Everything depends on the client’s needs.

Our average contract length is a year and a half.

Daxx markets itself as a long-term solution. How do you make sure that developers won't just unexpectedly disappear?

Retention is definitely one of our main services. It starts at the early interview stage. It is extremely important to set the right expectations to make sure that both the client and the developer are on the same page about the technologies being used, business needs and visions, career plans and many other factors. 

Later, during the working process, we also help monitor the progress of our developers by carrying out regular evaluation interviews. 

We try to foster a family culture in our Ukrainian offices, as developers spend a huge part of their life here (40 hours per week). At the same time, we encourage clients to think of their Ukrainian developers as a remote extension of their in-house team, and we promote the same ethic among our own personnel. I believe that the biggest Daxx's achievement is that we have a number of clients who have been with us for over five years, and they are happy clients, I have to say!

Do developers visit their clients’ offices in the US if needed?

Most companies prefer to invite developers to the US at the beginning of their cooperation to successfully onboard them into the team, but this could also happen after the start of the project. Such business trips normally last between two and four weeks. We cooperate with the American Chamber of Commerce to help with visas and paperwork on the developer side, so the entire preparation process only takes about two weeks on average.

What are the potential risks American companies need to be aware of when they decide to go offshore?

Some companies suffer because of the loss of control over software development, hidden costs and security issues. There are a huge number of articles on this topic. We do our best to help clients mitigate these risks by giving them full managerial control over the team, working within a fixed monthly fee so that the client knows how much they are paying and what they are paying for, and signing NDA documentation with each developer.

To summarize, what would be your advice to US-based companies on how to successfully onboard and run a remote team?

I would say that 90 percent of success lies in choosing the right developers. It is definitely important to find a reliable partner-company in Ukraine, but this is not enough. The Ukrainian IT market is huge, and Daxx helps you pre-select the candidates and facilitate your cooperation with them once they are hired by providing offices and local support. 

The most important thing is to understand that building a remote team is a responsible job, and both parties — we and our clients — have to invest their time and effort into making this relationship successful and rewarding. I am absolutely positive that Daxx has enough experience to guide companies through this process.

Find out more about our cooperation with Israeli and German companies in other interviews with our business managers.

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