Ukraine’s IT Outsourcing Draws Praise around the World and Here is Why

Ukraine’s IT outsourcing has long established itself as an Eastern Europe software development powerhouse. It has become the second largest industry in the country following the official data shared by the National Bank of Ukraine. The total income received from IT services export in 2018 totalled $3,204 billion, a 29% increase compared to 2017.

In 2018, the International Association of Outsourcing Professionals (IAOP) released the Global Outsourcing 100 list with 18 Ukraine’s tech companies amongst the finest. Just four years ago, in 2015, Ukraine’s IT outsourcing was not such a success with only 5 companies awarded.

   Ukrainian IT in international rankings

                                                         Source: Ukraine IT Association

                                                         

Another reputable B2B research and rating firm Clutch has recognized 92 Ukraine’s IT outsourcing companies as the top global providers of IT services. What’s more, Clutch’s Top IT Outsourcing Companies in Ukraine now features 253 software providers with an average project size ranging from $25,000 to $50,000. 

International recognition is not the sole factor that encourages giants like Samsung, Oracle, Cisco, Gameloft, and Wargaming to set up R&D centers in Ukraine. The country has a huge tech talent pool with 150+ major educational institutions and 23,000 IT specialists graduating annually, favorable economic and tax environment, and beneficial outsourcing cooperation models. 

Unit.City, Ukraine’s innovation park that brings together startups, mature businesses, and international companies, has recently delivered a comprehensive research on Ukraine’s software development

We at Astarios have carefully examined the key findings set out there as well as analytical data provided by IT Ukraine Association, and a few more reputable sources to give you the big picture of what Ukraine’s software outsourcing is today. So let’s dive in.

 

Software Development in Ukraine: Industry Overview

 

Following the data released by Unit.city, the exports of IT services in 2018 made up about 4% of Ukraine’s gross domestic product. These numbers are expected to reach $8.5 billion by 2025. 

Here is how the IT service exports have changed over time:

Ukraine IT services export in 2013-2017

                                                         Source: https://data.unit.city/tech-guide

                                                         

As the report suggests, 70% of the income earned through software development in Ukraine comes from abroad. IT Ukraine Association assumes that more than 50% of IT software outsourcing in Ukraine is rendered to the United States and UK. Other customers reside in Canada, Germany, the Netherlands, Ireland, Israel, and other EU-based countries.

AIN states that 78% of all earnings come from web development, whereas mobile application development makes 64%.  

According to Clutch, the key areas of focus for the most of Ukraine’s IT outsourcing companies include ecommerce, enterprise solutions, fintech, edtech, healthcare and a few more.

Ukraine IT companies by industry focus

                                                         Source: https://idapgroup.com/blog

 

The steady growth of Ukraine’s IT outsourcing market can partially be explained by the service quality. IT companies no matter how big or small strive to incorporate best QA and cybersecurity practices to ship robust and safe solutions that can resist data breach attempts and maintain high credibility with end-users.

Searching for greater quality, customers tend to hire Ukrainian developers in order to fix or redo the projects completed by some Asian IT outsourcing providers. 

With such a big emphasis on quality assurance, Ukraine’s IT outsourcing companies may sometimes be a good alternative to inhouse dev teams and save a pretty penny.

                                                   

IT Companies in Ukraine: Economic Environment

 

Despite the war raging in eastern Ukraine, the IT industry has never stopped growing. It remains the country’s strongest engine that accounts for 5% of the total export revenue. Being well aware of the fact, the Ukrainian government is supporting the industry and Ukraine’s IT software outsourcing in particular.

In the next few years, it is going to implement a series of regulations made for smooth operation of the IT companies in Ukraine. The changes will be made in data protection, taxation, employment procedures and service export to streamline collaboration with foreign customers.

Another positive factor is that Ukraine’s economy has stabilized. Inflation has been slowly going down: to 7.4% in April 2019 and 0,7% in May 2019.

Inflation rate in Ukraine in 2018-2019

                                                         Source: Tradingeconomics.com

 

Ukraine has also implemented a series of anti-corruption reforms. The official government portal claims that the state has maximized criminal and administrative liability for breaking income and property requirements. 

The introduction of e-declaration system was one of the biggest changes made. E-procurement system Prozorro, open access to property registers, automatic VAT refunds system also belong to the list of the recent improvements.

IT software outsourcing in Ukraine contributes much to local budgets, as most of the employed tech specialists have a sole proprietorship status paying taxes to regional tax offices. They play a pivotal role in further development of regional economies and therefore gain more support from the state authorities.

 

Ukraine’s IT Outsourcing Market Today

 

In 2018, Ukraine’s IT outsourcing market boasted 20% of all country exports. The number of IT companies amounted to 2,000, while the total quantity of tech experts fluctuated between 160,000 and 172,000 people. 

These figures have significantly grown with time. Unit.City affirms that today’s number of registered tech companies in Ukraine has increased up to 4,000. IT professionals have also multiplied in number, amounting to 184,700. 

 

Ukraine IT market stats and numbers

 

                                                         Source: https://data.unit.city/tech-guide

 

In 2018, IT outsourcing companies gained the biggest share of the Ukrainian IT market. Others operated as outstaffing service providers, R&D centers, or product companies.

Nevertheless the number of tech companies has increased, the market is dominated by IT outsourcing with an average employee number ranging from 80 to 1,500+ per company.

As for the major IT clusters based in Ukraine, Kyiv (accommodates about 47% of all IT specialists) and Lviv (employs 20K IT specialists) are not the only cities taking the lead.

Kharkiv (22K+ IT specialists), Dnipro (8K software engineers and 2K tech specialists graduating annually), Odesa (6K IT specialists with over 150 IT companies located there) are also keeping up the pace.

IT hubs are multiplying encouraging smaller cities to join. This is how the map with IT clusters looks now:

 

Ukraine IT clusters geography

 

                                                         Source: https://data.unit.city/tech-guide

 

Ukraine’s IT outsourcing companies strive to create favorable working conditions for their employees. They make individual development plans and provide a wide range of non-wage benefits and perks to increase retention and motivate them to grow within the company. 

Leadership and mentoring programs, inhouse educational trainings and workshops are among the many activities initiated by many IT outsourcing companies.

Apart from inhouse IT events, Ukraine is hosting a series of international conferences that promote knowledge sharing and encourage new generations to enter the IT world. 

IT Arena, Dev Challenge, iForum, and IT Weekend Ukraine are among the most popular ones. In addition to these large-scale events, Ukrainian IT clusters often run specific workshops that bring together specialists from one domain, like Data Science fwdays (with a focus on Artificial Intelligence and Data Science), Frontend://zt, Systems Engineer Day (with a focus on DevOps), The Rolling Scopes Conference (with a focus on JavaScript, Node.js, Front-end, Android, iOS, and UX/Design).

Thanks to the initiatives taken, Ukrainian software developers get a chance to exchange insights and upgrade their skills.

 

Ukrainian Software Developers: Hard Skills and Hourly Rates

 

A huge range of career opportunities, distant work, flexible schedule, and high salary rates stimulate specialists from other industries to transition into a career in the IT field. This is another reason why Ukrainian software developers are quickly increasing in number. 

On average, Ukrainian developers and QA specialists boast 3-5 years of experience. The survey conducted by DOU says that only 1% of the surveyed developers (DOU surveyed a total of 9,387 people) work in the IT field less than a year.

The biggest share of the manpower works on software development with PMs and QAs making smaller cohorts.

 

Ukraine software developers PMs QAs stats

 

                                                         Source: DOU.ua

 

DOU affirms that the most popular programming languages used by Ukrainian software developers are these:

 

Popular programming languages in Ukraine

 

                                                         Source: DOU.ua

 

If developers were to choose any programming language to code, their choices would differ:

 

languages Ukraine’s developers would like to choose

 

                                                         Source: DOU.ua

 

64% of Ukraine’s developers taking part in the DOU survey said they would definitely learn a new language the following year:

 

languages Ukraine’s developers will learn next

 

                                                         Source: DOU.ua

 

As for the language and experience interdependency, most popular languages are used by the IT specialists with a 3-year experience.

 

Experience of Ukraine’s IT specialists and languages

 

                                                         Source: DOU.ua

 

By 2020, the number of Ukraine’s developers is expected to surpass 200,000. Hard skills will mature, while soft skills will be taken much more seriously. There is a huge tendency towards nurturing efficient managers.

The hourly rate set by Ukrainian IT outsourcing providers offer the best price-quality ratio in contrast to other neighbouring countries like Poland or the Czech Republic. In Ukraine, the hourly rate usually amounts to $25-50 with an average software developer salary amounting to $2,500-4,000 per month. 

Even though these rates may be bigger than in many Asian outsourcing countries, they still remain lower compared to the rates set in the U.S. and Western Europe.

 

Why Outsource Software Development to Astarios?

 

Astarios combines both Ukraine’s tech skillset and Swiss quality, as our teams are located in Kyiv and Zurich. You get a highly secure and powerful solution, since we put a lot of effort into security of the solution delivered to you. 

 

Services we deliver: 

  • Web and mobile app development
  • Application security services (secure DevOps, Secure Software Development Lifecycle, etc.)
  • Robust M2M and IoT solutions

 

Cooperation models: 

  • Fixed project scope 
  • Team extension
  • Outstaffing and office rental
  • Dedicated IT team 

 

All-around support:

astarios keeps you timely updated on the project progress and ensures instant communication. We put special emphasis on discovering your business needs and stick to security development practices since the first line of code. 

Interested in getting a quote and scheduling an individual meeting or call? Get in touch with us by filling out the form here or call us on (US) +1-650-996-2875 or (UA) +380-95-168-3652.

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