This post was updated on October 09, 2018.
An increasing number of businesses are considering Ukraine as a primary destination for outsourcing their software development needs or opening their own offices there. In fact, Ukraine repeatedly ranked as a top IT outsourcing destination in numerous sources:
We’ve compiled a list of the key reasons that best explain why Ukraine has been gaining momentum as an attractive destination for offshore software development and why globally-recognized brands hire Ukrainian developers for their projects.
Ukrainian IT industry is expected to reach $10 billion in value by 2020. Local software development community has grown by 27% in 2017 and currently employs over 166,000 IT specialists. The country ranks fourth in the world by the number of tech workers after the United States, India, and Russia. Moreover, its IT workforce is expected to surpass the 200,000 mark by 2020 (1).
According to SkillValue, Ukraine ranks 8th among the world's top countries with the best programmers with an average score index 91.26%.
Top Countries with The Best Developers by SkillValue
Meanwhile, our own research shows that there are a number of technologies that are more widely used in Ukraine than in any other country in the world.
Ukraine’s 402 universities and colleges (4) boast more science graduates per year than many other countries prized for innovation, like Japan, Sweden, Norway, Belgium, and the Netherlands (5). Every year more than 36,000 students graduate from local universities with degrees in IT-related fields. What's more, World Economic Forum named Ukraine among top 10 countries globally by the number of engineering, manufacturing, and construction graduates producing an annual total of 130,000 graduates.
The country also offers various educational opportunities for students willing to join Ukrainian hi-tech community. In cooperation with local software development companies, regional IT clusters regularly launch educational programs at universities and set up innovation labs at colleges and schools. For instance, Lviv IT Cluster has recently launched educational programs in emerging disciplines such as AI, Data Science, IoT, and Computer Science at 2 leading universities in Lviv.
Ukraine has over a thousand IT companies that offer virtually every kind of software development service, including web and mobile development, UI/UX design, quality assurance and testing, dedicated team building, R&D services, IT consulting, big and analytics, and much more.
And it’s not just about the quantity. Recently, 13 software development companies that either have a large branch office in Ukraine or are fully local featured among the world’s top IT outsourcing companies (6).
The country’s rich tech scene has also fueled the rapid growth of the local startup community. Jooble, DepositPhotos, TemplateMonster, GitLab, PetCube, Mobalytics, Preply, Attendify, CleanMyMac, Grammarly, InvisibleCRM, Looksery (acquired by Snapchat in 2015), and Readdle are only a few of the big names that got started in Ukraine.
Global market leaders have already shown their interest in the local startup scene which lead to a number of big acquisitions. Google purchased Viewdle - a facial recognition company, Snapchat has acquired Looksery - a real-time facial modification app, and Oracle has bought Maxymiser - a Ukrainian provider of cloud-based software for marketers.
Additionally, Kyiv, Ukraine’s capital and major tech hub, has more investors than Warsaw, Vienna, Oslo, and Copenhagen (7). These include AVentures Capital, Chernovetsky Investment Group (CIG), Digital Future, Imperious Group, SMRK, TA Ventures, and Vostok Ventures.
The country’s IT specialists have built strong business relationships with clients from major European hotbeds with venture capital funds such as UK, Germany, the Netherlands, etc. As a result, the total venture capital investment in Ukrainian startups has reached US$258 million in 2017 and has been growing steadily ever since.
Given the fact that Ukraine is one of the 50 most innovative economies in the world (5), it should come as no surprise that the country is home to more than 100 R&D centers for global tech giants, including Microsoft, Samsung Electronics, Apple, Skype, IBM, Boeing, Ericsson, Siemens, Oracle, Aricent, Magento, and Wargaming, just to name a few. Many of these entered the Ukrainian market through M&As, joint R&Ds, or outstaffing companies like Daxx.
Agile Eastern Europe Conference, PyCon Ukraine, iForum, IT Arena, and DEV_Challenge are only a few of Ukraine’s major tech events giving the country’s IT professionals the opportunity to network with their peers, share experiences, and pick up on the best practices of the industry leaders. According to a recent survey from developers.org.ua, 60% of Ukrainian developers regularly attend specialized IT events.
The largest conferences attract over 7,000 attendees and international speakers from global corporations such as Skype, IBM, HP, SAP, Intel, and Dell, to name a few. On a more local level, smaller tech events take place all the time, covering the hottest topics like AI, big data, virtual and augmented reality, data science, blockchain, etc.
Eighty percent of Ukraine’s tech workers report having an intermediate or higher level of English proficiency (9). The majority of software development and IT outsourcing companies in Ukraine offer free English classes for their employees which increases their English fluency levels.
Ukraine belongs to a low-context culture, as do the western cultures, which means that here, facts and figures are more important than personal relationships, while in most of the Eastern world, top priority is given to honor and reputation.
The work ethics dominating the IT outsourcing industry in Ukraine is also very similar to that of Western businesses. Ukrainian developers aren’t just performers. They’re open to challenges and confrontation, get personally involved in the projects they’re working on, and are interested in facilitating their success. This is especially true if you communicate with them directly, without any third-party involvement.
Here’s what Alex Oleynikov, Director of Software Engineering at Compuweigh (USA), says about working with Ukrainian software developers:
“Our team in Ukraine is very loyal and dedicated, Ukrainian developers really strive to understand our business and add value to it.” (Read the full case study.)
Compared to its neighboring countries — such as Poland, Belarus, and the Czech Republic, Ukraine offers more competitive outsourcing rates paired with a much larger tech talent pool.
The average hourly rate for software development is within the $25–40 range, with the average software developer salary varying between $2,500 and $4,000 per month (excluding taxes and social contributions).
Average Hourly Rates for IT Outsourcing Services in Different Regions
Admittedly, these rates may seem higher than in some other popular IT outsourcing countries. But they’re still significantly lower than those in Western Europe and North America, where a software engineer of similar caliber could cost close to $100 per hour, or even more.
Additionally, the recent reforms in licensing have dramatically improved the ease of doing business in the country — Ukraine ranks 20th globally in terms of how easy it is to start a business here (10).
Year by year, Ukraine is harmonizing its international policies and moving towards a more thriving business environment. The country is now close to hitting its target for 3.5% GDP growth in 2018. The Ukrainian government has already approved its Strategic Action Plan 2020, which includes cancelation of 450 outdated regulations, support of innovation initiatives, focus on the enhanced corporate governance of state agencies and privatization, and much more.
Moreover, Ukraine has gone 20 positions up over the last 3 years in the World Bank’s ease of Doing Business ranking by introducing a number of regulations. It simplified the process of dealing with construction permits by reducing fees. The country also made paying taxes easier by introducing a lower flat rate of 22% for the Unified Social Contribution tax paid by employers (which replaced the previous rates ranging from 36.76% to 49.7%).
All of this contributed to the growth and development of the local IT community and stimulated numerous business owners choose Ukraine for IT outsourcing.
Being only 1 hour ahead of most European countries, Ukraine is an incredibly convenient location for IT outsourcing, as it enables smooth communication and workflow between geographically dispersed teams. A direct flight to major European IT cities from Ukraine takes no longer than 2-3 hours.
Ukraine International Airlines offer regular direct flights from Ukraine to London, Berlin, Amsterdam, and other major European tech hubs. For instance, Ukraine's capital Kyiv provides at least 3 direct flights per day to London's biggest airports (Heathrow, Gatwick, and Luton) from Ukraine International Airlines or British Airways. To avoid overspending, you can travel to London from major Ukrainian IT hubs like Kyiv, Kharkiv or Lviv with Ryanair or Wizz Air UK for as little as €18 or €22. On a regular basis, you can also take a direct flight from Kyiv to Amsterdam or Berlin offered by Ukraine International Airlines, KLM, or Wizz Air.
Direct Flights From Kyiv To Major European Tech Hubs
The country also makes for an attractive offshore choice for North American companies, since the 7-hour time difference between Ukraine and the East Coast provides the opportunity for much more convenient shared working hours compared to India, Vietnam, the Philippines, and other lowcost IT outsourcing destinations.
Today, Ukraine International Airlines offer regular direct flights to New York from Kyiv starting from €488. This allows Ukrainian developers to be within easy reach to their clients and arrange regular on-site trips.
What's more, Ukraine made traveling to the EU clients even easier by approving a visa-free travel regime for Ukrainians in 2017.
Compared to Ukraine, countries in South and Southeast Asia are a lot more culturally and ethnically diverse, with each religious or ethnic group celebrating their own unique holidays on which employees expect to receive paid vacation days. In Ukraine, however, there are only eleven universally observed public holidays.
Whereas in other Eastern European countries such as Czech Republic, Poland, Romania, and Hungary there are at least 13 paid public holidays and in Bulgaria their number reaches 19 days.
Ukraine is on its way to becoming a leading IT outsourcing destination in Europe due to its booming tech ecosystem, large talent pool, and strong education. Ukrainian developers are recognized among the strongest IT professionals globally thanks to their solid technical expertise, high English proficiency level, and knowledge of emerging disciplines such as AI, big data, blockchain, etc. No wonder a growing number of international giants hire Ukrainian developers to build cutting-edge software solutions.
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