Report: Ukraine has become Europe’s #1 IT outsourcing and software development powerhouse

Nearly 100,000 Ukrainian programmers serve thousands of companies as the demand for IT workforce is constantly growing on the global market

In spite of the country’s recent political turbulence, Ukraine has seen its IT service and software R&D sector grow every year by double-digit figures. From Cisco, to Oracle, to Rakuten, to Samsung, more than a hundred global major tech firms conduct R&D activities in Ukraine, while an array of local IT outsourcing companies of all types and sizes serve clients worldwide.

Ukrainian developers often work on mobile, software, enterprise and web projects in a variety of verticals. A range of providers have build their reputation in solving complex engineering tasks. One may also find in Ukraine excellent resources for front-end development, UI/UX design, QA and other tasks.

The export volume of Ukraine’s software development industry reached at least $2.5 billion in 2015 (number 3 export sector. This is just a fraction of the country’s potential, taking into account its large and skilled workforce.

In partnership with local and international industry associations, Ukraine Digital News (www.uadn.net) is releasing the first comprehensive report on this industry.

In addition to a complete set of data, including detailed analysis by industry segments and regions, the report features fascinating cases of international software R&D collaboration – for example, how a relatively small company from Eastern Ukraine brilliantly solved mobile virtualization tasks assigned by a South Korean research institute, while disruptive UK fintech and healthtech startups have found industry and technology expertise in a company from Western Ukraine.

The report also speaks frankly about the problems that may arise in outsourcing projects. Miscommunications, inadequate methodologies, internal resistance and other frequent issues are discussed by both services providers and their clients, who share their experience and their advice for smooth interactions.

Top legal experts have contributed advice to international companies to draft outsourcing contracts and secure their IP rights, while Deloitte Ukraine has offered a detailed account of the present tax rules as far as IT services and local R&D centers may be concerned.

KEY FINDINGS Ukraine’s IT service industry

  • Ukraine has the largest and fastest-growing number of IT professionals in Europe; its IT engineering work force is expected to double to over 200,000 by 2020.
  • Ukrainian outsourcing companies offer a wide range of engineering capabilities, with most companies having already switched to agile development over the past few years.
  • The export volume of Ukraine’s software development industry reached at least $2.5 billion in 2015 (number 3 export sector), showing double digit growth year after year. This is just a fraction of the country’s potential, taking into account its large and skilled workforce.
  • The majority of local and international companies report that the country’s political turbulence has had no or little impact on their existing business – but such factors are hampering growth.
  • The US market is the main destination for Ukrainian IT firms, with an estimated 80% volume of exported services.
  • The English proficiency level among IT professionals has grown significantly over the past few years, but remains lower than that of some other CEE countries.

R&D facilities of global companies in Ukraine

  • Ukraine is home to over 100 R&D subsidiaries of global companies from a variety of industries, including telecoms, software, gaming and e-commerce.
  • A significant part of these global companies entered the Ukrainian market indirectly, through M&As, joint R&D with an outsourcing component, or outstaffing service companies.
  • The United States remains Ukraine’s largest partner for joint R&D activities (around 45% of the companies involved), followed by EU countries and Israel.
  • Kyiv (Kiev) is the most popular location in Ukraine for opening an R&D center, concentrating over half of all such bases in the country. Other key cities for R&D activity include Dnipropetrovsk, Lviv (Lvov), Odessa, Kharkiv (Kharkov) and Vinnytsia.

Business and legal environment

  • Over the past year, Ukraine has significantly improved its status in international business venue rankings, while its taxes for IT-related businesses have remained relatively low.
  • Though far from completion, the reform effort is significant, with several e-government projects launched in 2015. Important legislative changes are expected in the short term in the field of IP protection, in line with the 2014 Association agreement signed with the EU. IT service export regulations are to be simplified, while local IT companies will be better protected against bureaucracy and corruption.

KEY NUMBERS

IN PARTNERSHIP WITH LEADING INDUSTRY ASSOCIATIONS

For more information please contact Adrien Henni, chief editor of Ukraine Digital Newseditor@ewdn.com

FULL REPORT (FREE DOWNLOAD)

TAGS:
CATEGORY: Press-Releases
 
 
  • Fati

    Over the years, the IT outsourcing environment has experienced dramatic changes, mostly for the purpose of being able to improve their services and exceed the expectations of their clients. In the upcoming years, it is expected that more IT outsourcing news will continue to shock the industry and will offer novel solutions to existing problems. While no one knows exactly what will happen, below, you can see some of the IT outsourcing trends that will most likely be apparent and will cause significant shifts in the operations of IT outsourcing companies. http://bit.ly/1Yh5TnR

  • http://headnews.org/ Admin

    so smart spam and link building at the time)

  • Anonymous

    So what the American will do for $1, the Pole or Indian will do for 10 cents, and now the Ukrainian for 5… Just another new form of slavery through ‘globalization’.

  • Дніпро

    Now ask the Americans why they prefer working with the Ukrainians instead Indiands. And you are wrong in pricing. ;)

  • Boris Sokolov

    Looks funny :D So why the “Brutto” salaries are lower in Poland then?

  • Катерина Яровенко
  • Anonymous

    ??

  • asdfasdf

    Its called Net Salaries in English. Good question )

  • Boris Sokolov

    Net – means “Netto” ;)

  • Boris Sokolov

    What is unclear? Let’s say “Brutto” is 10-15% lower in Poland. In addition they have slightly higher taxes. So the difference between “Netto” salaries would be even more.

  • Tony

    Some people just dont understand the value of good, hard, honest work and building yourself up step by step while earning trust and respect. “Looser” is a good term for such people, you can also add the word “sore” in front if you start talking about slavery, globalization, blah blah.
    For everyone else there is the understanding of how economics works and how countries develop. For example China was considered as one of the cheapest manufacturers in the world but not anymore since decades of double digit growth have increased social standards, now China is starting to refine itself and move up the value chain.

  • Сергій Кабуд

    Слава Україні

  • Anonymous

    Nice article! In case you were searching for Python development shop in Ukraine https://anvileight.com/

  • http://walczak.it Adam Walczak

    So according to your logic EU and USA companies should not go into Ukraine for the cheaper work force and leave them unemployed ?
    That’s sooo much better …

  • Anonymous

    What I am saying is that developing countries should not whore themselves out that cheaply. These companies can afford to pay more easily but choose not to, hence the gap between wealthy and poor rises, both macro and micro.

  • http://walczak.it Adam Walczak

    So those programmers should work in their local business for even less?
    So what that those companies can afford more. You do understand that the job market works like any other market? Supply and demand establishes wages, not your left-wing views.
    If you go to the market and you see the same apples at different prices then you buy the more expensive one? No. Can you afford them? Yes.

    You know whats better then some companies looking for cheap labor in your country? Even more such companies! With time the demand will rise more then the supply and they will have to pay more. When wages get high enough some companies will move further east but most of them will stay. That’s what happened in the Polish IT market and it will also happen in Ukraine.

    Companies competing for skilled workers can rise wages. People like you can only talk about dumb ideals and do nothing.

  • Victor

    Good one! If you are looking for a Python/Django development team in Ukraine, http://keyua.com/en/

  • George

    A reliable alternative… http://imprezzio.global

  • Artem

    uartema.com – one more ukrainian outsource :)

  • tomtom

    I don’t understand those salaries either. I’ve read couple articles about Ukrainian developers recently and seen some digits … I can employ developers cheaper in the Czech Republic. And CZ has 4-5 times the average salary of Ukraine. So I have no clue how that’s possible.

  • Boris Sokolov

    In Ukraine there is a huge gap between “local” and “international” salaries especially after the fall of the local currency (8 UAH for 1 USD in 2014 -> 26 UAH for 1 USD in 2016) from one side. From other side there is still strong post-soviet educational system. So there is a huge amount of high-skilled professionals working on heavy projects with high rates.

  • http://mobilunity.com Mobilunity

    Why Outsource to Ukraine?
    http://bit.ly/29Aq54e

  • Алексей

    Я делал ит аудит в компании http://www.alp.ru. Все устроило. Они так же занимаются и ит аутсорсингом, поддержкой компьютеров. Я доволен!

  • Dasha Maksimenko

    Hi. Thanks for your interesting post. It can help Ukraine will be more interesting for other countries. And I hope in Ukraine we will have more R&D companies. I read more about outsourcing https://itechcraft.com/software-development-ukraine/ here. What do you think about this blogpost? And i really hope, Ukraine will have more customers and investments .))))

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