IT Outsourcing Destination – Ukraine

You were looking for the best outsource developers? And you find out, that they are from Ukraine – that’s not surprising. However, what you know about this country equals to nothing or less than you would like to know.What country is it? What will you get from cooperation with it and what are the risks?In this article, you’ll find out the main characteristics of Ukraine, its territory, currency and political system. If you want to learn more, please, feel free to contact us and we will help you with all the points that might be of interest.

Ukraine is the second largest country in Europe – the country with over a thousand-year history and traditions. Well-known for its beautiful sights and history, Ukraine is one of the most magnificent European countries.Speaking about the main peculiarities of Ukraine it is impossible not to specify that this country is situated in Eastern Europe; it borders seven other countries: four European - Poland, Slovakia, Hungary, Romania and three non-EU: Belarus, the Russian Federation, and Moldova.The total population of Ukraine amounts to about 45,500 000 people.

Ukraine has a parliamentary-presidential governing system. For the past few years, the country has been infamous for the military conflict in its eastern part, but even the period of conflict could not break the Ukrainian desire for growth and development. Creating a friendly environment that would be attractive for more and more clients is seemingly a great goal to be achieved.

"Ukraine’s IT outsourcing service industry and Ukrainian outsourcing companies were… recognized by global research organizations, national industry associations"

Today Ukraine offers highly skilled IT specialists and, according to the recent research, it has been occupying leading position among the European countries in the number of IT specialists. Subsequently, beat developers, designers, analytics undoubtedly live here. That is why Ukraine’s IT outsourcing service industry and Ukrainian outsourcing companies were recognized many times by global research organizations, national industry associations in their reports, listings, and rankings, as well as awarded in different nominations.

However, a lot of experts agrees that all the advantages of Ukraine such as unique geographical location or the accessibility of extensive IT talent pool, strong scientific legacy, and cost benefits make Ukraine a natural choice for outsourcing and destination for numerous foreign clients. The demand of the market has promoted the set-up of specialized training for IT specialists, on both private and national level. In order to have qualified staff and, hence, be more attractive in the international arena of IT outsourcing and high-techs development.

Over the past eight years, the volume of software development and IT outsourcing services Ukraine has provided has grown by a factor ten, according to the “Exploring Ukraine. IT Outsourcing Industry” report, just published by the Ukrainian Hi-Tech Initiative, leading association of the Ukrainian software development and IT outsourcing companies. In 2011 the volume of IT outsourcing and software development services provided in Ukraine reached US $1.1 billion and the number of IT specialists working in the industry reached 105,000 people with 20% growth. This remarkable rate only evidences the current success of software development outsourcing, as well as claims for a great future of the IT outsourcing for the next years.

In 2011 the volume of IT outsourcing and software development services provided in Ukraine reached US $1.1 billion and the number of IT specialists working in the industry reached 25,000 people with 20% growth. This remarkable rate only evidences the current success of software development outsourcing, as well as claims for a great future of the IT outsourcing for the next years.

Among the risks, one should be familiar with the difficult political situation due to military actions taking place at our eastern borders. However, this is not the point scaring foreign customers away. Corruption does. Being at its peak, it is present at most governmental institutions on various levels, yet, the situation has improved since 2014 events. Another obstacle for establishing proper and healthy IT outsourcing environment is the legislation, namely, the loopholes, which allow avoidance of punishments for various crimes: be that economical, commercial or whatsoever. One of the steps forwards the IT service development has been tax-friendly policy, namely, VAT exemption for software development service companies. Moreover, the vast majority of the industry employees work as individual contractors, hence, the taxation system and reporting are easier and not as much time consuming. There is a fixed taxation rate paid by the employees depending on the income, hence, the employer does not have to deal with any complication related to taxes. Significant changes in the taxation system are now subject to heated discussions, as the officials claim that lowering the annual earnings limit would be beneficial for the economy. Others claim that VAT exemption for IT companies should be cancelled. However, VAT may have an impact on such expenses as rental payment, office support, etc.

These findings and other insights are revealed in detail in the report “Exploring Ukraine. IT Outsourcing Industry” which captures key developments in Ukraine’s IT outsourcing and software development services industry. The report includes analyses of the main indicators of the state of Ukraine’s outsourcing industry: the volume of provided IT outsourcing services, the number of IT specialists engaged in delivering the IT outsourcing services, the number of companies operating in the industry, and service rates.

"Current political situation scares potential customers away due to the existing instability of the economy"

Having difficulties in predicting more or less accurate state of events, Ukraine’s outsourcing market does not fail and has a lot to offer to foreign investors and market players. Comparatively low hryvnia’s rate in relation to USD, makes it beneficial, especially for IT-companies and specialists: additional services, office rent and support necessary for conducting a business here would not cost much.

Having difficulties in predicting more or less accurate state of events, Ukraine’s outsourcing market does not fail and has a lot to offer to foreign investors and market players. Comparatively low hryvnia’s rate in relation to USD, makes it beneficial, especially for IT-companies and specialists: additional services, office rent and support necessary for conducting a business here would not cost much.

All in all, current situation of IT outsourcing industry in Ukraine is good: the substantial growth of both numbers of companies/specialists and quality of the services are another sign that in the future it will become one of the leaders in the market. The political situation is changing, and, hopefully, it will not be affecting the existing progress. IT friendly tax system is attractive for foreign investors, however, with the industry development the prices will definitely be increasing. Surely, they will not be as high as those of the US or Western Europe. As to the quality index, it is also improving, aligning with the one of the world IT outsourcing leaders.

One Response to “IT Outsourcing Destination – Ukraine”

  • Daisy

    hi. Thanks for your interesting post. i agree what outsourcing in Ukraine has grown. I know many reasons. I recommend read this post httрs://itechcraft.com/software-development-ukraine/ . Ukrainian outsourcing companies really work good.

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