What do you pay for?

Since the demand for highly-skilled IT specialists is growing, we have decided to analyze these demands and create the scheme of what the price for Ukrainian IT outsourcing and development services comprises of. We provide an insight into what you get after choosing the cooperation with freelancers, small IT outsourcing companies and key IT players.

Freelance staff

Freelancer’s services are considered the cheapest in the Ukrainian IT sector: the senior developer will take $15-$25 per hour or up to $2500-3800 a month. This price comprises of the salary itself and taxes. Comparing to the other approaches, hiring a single person wouldn’t provide the customer with any additional benefits; rather opposite, it has a significant risk level, since no one can guarantee that the job will be completed in time or completed at all. Moreover, the communication process cannot always go smooth as individual characters can often find it difficult to make deals and agree on certain issues. Freelancers are humans so they could be indecisive and moody, not always able or eager to answer many questions professional clients’ support managers usually cover. Most frequently losing the moment when hesitation arises can break the deal. Another point to mention relates to sickness or emergency - it is solely employer’s trouble to search for the replace, therefore, additional costs are on the employer as well. Also, you can not know for sure on which stage the project will require a fresh approach or application of expertise and competence a freelancer doesn’t possess, thus, this lack may be troublesome for an employer entailing delay in the project release.

Freelancers are a rather unreliable option since the risk level is way too high - you cannot be sure what may occur the next moment. Considering freelancer for a project an employer has to clearly outline and define all the requirements, nuances, and risks, and only then search for the appropriate employee and make sure a worker is eager to provide daily reporting on the job performed; and adequately completes the tasks.

Small IT outsourcing companies

Some high-skilled specialists sooner or later decide on establishing one’s own business instead of working for a large company. In Ukraine, this tendency has been observed owing to the large demand for IT outsourcing services, and not everyone wants to work within big IT corporations. And that is the way where the bulk of small Ukrainian IT outsourcing companies start. The arrangement of own teams, making decisions for own good is supposed to be more exciting and bring more income.

What do customers get then after opting for such cooperation? Firstly, the price for the service would be a bit higher – on average it’s in between $4000-4800 per month for a senior software engineer. This price comprises of the person compensation plus cost of management, office support, employee benefits, HR, resource pool, sales and other supporting teams. Instead, this extra 20%-25 % will bring significant added value including full-stack project support on all stages of the project implementation, substitution/replacement available, on-place supervision, performance and mood monitoring, access to extra skills, and what is more critical a legal contract and 2-3 levels of escalation which govern your project. Also, the majority of such companies have the specialization (like .NET or open-source stack) which guarantees quality delivery to the client. This option is suitable for small/mid-size clients with a relatively small number of remote engineers striving for reducing costs and yet not going to risk their project or IP to freelancers.

Key IT outsourcing market players

Big international outsourcing providers are viewed as the most reliable and stable IT outsourcing partners in Ukraine since they guarantee complex customer support and distributed team of specialists. Like small companies do, they also arrange local management and contract governance. But they maintain richer resources pool allowing the immediate replacement of specialists in case of unsatisfactory job performance. Big players apply for wider technologies and software development methodologies support, more robust governance and reporting hierarchy, etc. One of the main advantages of this type of companies is the ability to establish big teams with significantly short time span (over the dozen of specialists per month), R&D department, centers of excellence and other structure which may help with researching and developing the project to the highest. The price starts with $5500 and up to $8500 per month for the seniors and may even grow higher depending on the service range provided – despite salary and taxes, the rates include office support, employee benefits, HR management, cost of R&D, CoE, onsite client partners, and vast marketing and sales expenses.. De facto, the direct cost of labor rarely achieves 40% of big company’s rate, while it is 80% for small IT services provider and 100% in case of a freelancer. A good part of this overhead is going to maintain marketing, branding and sales expenses which do not directly improve quality and speed of provided service.

Owing to the large staff, there is no risks that your project developer will say he doesn’t want to continue anymore and quits. You get 100% assurance with appropriate job performance, but…the risks is still present. If you are a big company, your project will have the highest priority, if smaller – you can wait in a queue. This is not a common thing but is sometimes met. Due to the client's significance, the aforementioned sacrifice is made to catch a big fish.To sum up, we would like to advise the businesses thinking of who to hire to outsource the software development to carefully consider all the risks and benefits occurring during the cooperation process. Hence, if you are a big public company that needs

  • to staff big teams amounting to hundreds of engineers, or
  • to assure their stakeholder that they outsource to the worldwide recognized partner
  • then big IT international outsourcing companies providing full-stack development and support services are the best choice for you.

    If you are an SMB looking for the right balance of price/quality rather than a brand, then small IT outsourcing providers will be exactly what you need. And those startups who are short of money and ready to risk may consider freelancers.

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