IT outsourcing to Ukraine: risks, reasons, benefits

IT outsourcing to Ukraine: risks, reasons, benefits

According to industry reports, the global software development outsourcing market is expected to grow by a whopping 70% and reach a staggering $430.5 billion by the end of this year.

So what makes Ukraine the best destination for companies like Google, Gameloft, Panasonic, and more?

As companies around the world continue to seek ways to cut costs, improve efficiency, and expand their global reach, outsourcing has become an increasingly popular option. And when it comes to IT outsourcing, Ukraine has emerged as a top destination for companies of all sizes and industries.

In this blog post, we'll explore the key reasons why companies are turning to Ukraine IT outsourcing, the potential risks involved, and the many benefits that can come from working with Ukrainian IT professionals. 

Whether you're a small startup or a large corporation, this information will help you make an informed decision about outsourcing your IT needs to Ukraine.

So let's begin!

Ukrainian IT industry today: risk and opportunities

Software development companies in Ukraine have become a go-to destination for outsourcing IT needs, as evidenced by the growing number of globally recognized companies turning to them for support. Tech giants such as Google, Magento, and Huawei have already established their own offshore R&D centers in Ukraine. 

In fact, despite the ongoing war between Russia and Ukraine, the IT industry in Ukraine continues to thrive with the country's IT exports expected to surpass a 10.97% growth rate (CAGR 2023-2027) starting this year.

These figures alone are enough to represent the potential opportunity in Ukraine's IT market. But what about the risks?

Political and Economic Risks 

The military invasion of Ukraine by Russia has not only been a humanitarian crisis but has also raised concerns for IT outsourcing customers with interests in the region and those utilizing the global IT services market.

  • The conflict has had a significant impact on Ukraine's IT outsourcing industry, which exports around $6.8 billion of IT services each year, accounting for approximately 4% of the country's GDP, according to the trade group IT Ukraine Association.
  • Ukraine and its neighboring nations employ about half of the 1.5 million IT and business services professionals working in nearshore Europe, as per research conducted by IT services and BPO firm, Everest Group. Thus, the hostilities have the potential to affect not just the local IT industry but also the broader IT services market.

Nonetheless, the country's IT sector has continued to show steady growth, with an increase in tax payments to the budgets even during the crisis. Furthermore, Ukraine's partnership with the EU, which includes the coordination of the EU digital union, is expected to strengthen Ukraine's position in the global information technology market. 

While there are still risks to be aware of, the government's commitment to supporting the IT industry and the country's partnerships with the EU make Ukraine a promising destination for outsourcing IT needs!

Ukrainian IT industry today: risk and opportunities

Main reasons for outsourcing to Ukraine

Now that we've cleared up the big question on everyone's mind, here are the 6 major reasons you should be outsourcing Ukraine:

Enormous talent pool

More than 160,000 IT specialists are already running the market, and this number only keeps growing. Every year more than 40,000 university graduates come to supply the industry. To compare, the annual number of tech graduates in Ukraine equals the amount of young IT specialists in Asia and Western Europe.

Favorable business terms 

Recognizing the significance of the IT industry, the Ukrainian government has taken measures to create a favorable business environment that promotes its growth. 

One such example is the simplified taxation system for independent contractors working in the IT sector. These contractors now pay only 5% of their income and a monthly unified social tax, making it a compelling proposition for both domestic and foreign organizations to explore partnership opportunities with Ukrainian developers.

This has also facilitated outsourcing in Ukraine and fostered a favorable business environment for potential investors. By creating an environment that is conducive to the growth of the IT industry, the Ukrainian government is positioning the country as a competitive destination for outsourcing IT needs.

More than 1000 IT companies and 2000+ startups

The local startups and tech companies keep attracting venture investors and business partners to outsourcing Ukraine. Startups like Grammarly, Jooble, PetCube, and Readdile are just a few big names in this compelling list, and some of them, like Looksery and Viewdle, were acquired by Snapchat and Google.

Strong tech community

The average Ukrainian IT specialist is 21-29 years old, which means the tech community involves young, skilled, dedicated and enthusiastic people, who share the same values. Almost all the IT specialists devote tons of time to self-education and development: training, courses, participation in the industry events. 

There are also numerous tech events being held in Ukraine, including Agile Eastern Europe Conference, PyCon Ukraine, iForum, IT Arena, and DEV_Challenge, and 60% of developers regularly attend such events. Another ongoing trend in the Ukrainian IT industry is creating small local communities, like Ivano-Frankivsk Ruby community or IT-Vechornytsi, which engage tech specialists to develop, join interesting events and educational projects. 

All of these initiatives allow to strengthen Ukrainian tech society and raise professionals.

High level of english proficiency

Nearly 80% of developers have a high command in the English language. The knowledge of language lets Ukrainian specialists easily communicate with their business partners gloablly and make quick adjustments.

Western mentality and labor Days

Ukrainians are open to communication, dedicated, involved in their projects and rather straightforward when it comes to business. Their work attitude is similar to American and Western European, which means projects are operated quickly, and all the details are clearly outlined. Also, Ukraine has only 11 paid state holidays per year, and most of them do not correlate with American and European.

Western mentality and labor Days

Benefits of IT outsourcing to Ukraine

While you already have all the reasons you should outsource to Ukraine, there are also some exclusive benefits of working with the Ukrainian IT professionals you shouldn't miss out on!

Expertise and skills

According to stats, Ukraine is among TOP 10 countries with the most skilled developers with an average index 91,26%, which is higher than Switzerland and Germany. The country is also the 1st outsourcing market in Eastern Europe according to Outsourcing Journal. 

The extensive expertise and high proficiency level make Ukrainian developers the best solution for any challenge, no matter how complex the task is. Ukrainian developers are competent in a variety of technologies, including the most popular programming languages such as Java, Ruby, C#, JavaScript, PHP, and Python. 

The country’s IT industry experts offer many services, including web and mobile development, UI/UX design, testing, R&D services, IT consulting, big data analytics, and much more.

Quality on a budget

The compelling benefit of IT outsourcing in Ukraine is having the highest level of skills for a twice lower cost than your local one. The average rate for software development is $24-40 per hour, compared to $100 or more in the US and Western Europe.

Highly-educated specialists

Almost 85% of tech specialists have a university degree. Since there are more than 400 universities and colleges, which provide a very deep and thorough knowledge base, it’s safe to say that graduates already have a deep awareness of the industry. Moreover, they are often practicing as freelancers or interns in the companies.

Perfect time zone

Ukraine is only 1 hour ahead of most of the Western European countries, and 7 hours ahead of the US time. This gives Ukrainian developers a great advantage over other outsourcing locations because when the customers sleep, work gets done. 

Isn’t it perfect to wake up being provided with all the updates?

After all, Ukrainian developers are loyal to their customers and passionate about the projects. They are not just performers – most likely, they will bring fresh ideas and quickly understand your needs because of their capability to visualize complex processes. Thanks to the strong IT environment, Ukrainian developers constantly improve their performance and exchange experience!

Outsourcing in Ukraine – it's the right time to start!

There are several compelling reasons why Ukraine ranks among the best countries for outsourcing software development. Whether you prioritize cost-efficiency, expertise, or convenience, Ukraine is likely to meet your needs.

In the end, having a partner who shares the same work ethic and upholds high standards is also essential for a smooth and successful business partnership. 

With COAX Software, you can expect seamless collaboration and an opportunity to expand into new markets. If you are looking to reap the benefits of outsourcing to Ukraine, partnering with COAX Software is an excellent option.

So why not  book a Free Consultation? With our commitment to quality and expertise, we are confident that we can help you achieve your business goals.


Why to Choose Ukraine for Software Development Outsourcing?

There are several reasons why companies prefer outsourcing to Ukraine outlined in this article. To summarize, it's due to the large pool of highly skilled IT professionals, favorable business environment, simplified taxation system, and cost-efficiency.

How does the time zone difference affect software outsourcing?

The time zone difference between Ukraine and the United States is around 7-10 hours, depending on the location. It's lesser but still significant for other western countries. This means that when businesses in the US and Europe are closing for the day, Ukrainian developers are just starting their workday. 

This can result in a faster turnaround time, with software development being completed overnight and ready for testing the next day.

Furthermore, this time difference can lead to increased productivity, as developers have more uninterrupted time to work on projects without the need for constant communication with their clients. 

Clients can provide project updates at the end of their workday, and Ukrainian developers can work on the project overnight, providing updated progress reports at the beginning of the client's workday. This leads to more efficient communication and a faster development cycle.

However, the time zone difference can also present some challenges. Clients may have to adjust their schedules to accommodate communication with Ukrainian developers. This can mean early morning or late-night meetings, which may not be convenient for everyone. Additionally, urgent issues may require immediate attention, which can be challenging to handle with the time zone difference. Therefore, it is essential to establish clear communication protocols and processes to ensure that issues are addressed in a timely and efficient manner.

What are the prices for development in Ukraine?

As mentioned before, one of the main advantages of outsourcing software development to Ukraine is the cost savings. Ukraine offers competitive pricing for IT services, with rates much lower than in the United States or Western Europe. 

The average hourly rate for a Ukrainian software developer ranges from $25 to $50 per hour, depending on the level of expertise and the complexity of the project.

However, it is important to note that pricing can vary significantly depending on the location, size, and reputation of the software development company. Larger and more established companies may have higher rates, while smaller startups or freelancers may have lower rates. Additionally, more complex projects may require more experienced developers, resulting in higher rates.

When comparing pricing for software development in Ukraine to other outsourcing destinations, such as India or China, Ukraine falls in the mid-range in terms of cost. However, the quality of work provided by Ukrainian developers is typically higher than that of developers in lower-cost destinations.

Do low prices for outsourcing services affect the quality of work provided by Ukrainian IT professionals? 

Low prices for outsourcing services in Ukraine do not necessarily equate to low-quality work. Ukrainian IT professionals are known for their high-quality work and strong work ethic, regardless of the price. However, it's important to note that the quality of work can vary from vendor to vendor, regardless of location. When evaluating potential IT vendors, focus on their experience, expertise, and track record rather than their pricing alone.

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