We believe many of you have heard about Ukraine as an IT outsourcing country and you are already familiar with some key facts. Ukraine’s IT industry has been booming for the last 10 years to top $1.8 bn in 2013 capitalizing on the strong science schools inherited from the past that switched to producing programmers under market conditions.
The industry has grown tenfold over the last 10 years, and it is expected to double in size over the next three years, growing five times quicker than the world’s average. In this blog post we will try to give a comprehensive, updated overview of Ukraine as an IT outsourcing destination, and outline five reasons why you should consider it when choosing the place for your nearshore or offshore development center:
1. Established IT outsourcing industry
IT industry in Ukraine is marked by over twenty years of continuous growth and currently includes over 1,000 local and foreign IT outsourcing companies, and over 100 R&D centers, including those for Siemens, Samsung Electronics, Huawei, Gameloft, Crytek and many others.
- Ukraine ranks fourth in the world in the number of certified IT professionals and in terms of export of software products.
- IT industry’s has been growing about 27% annually over the last four years.
- Over 70% of country’s IT specialists have a vast international experience, part of which acquired by working in offshore development centers with American and European software development companies.
- There are over a thousand of IT outsourcing market players in the country with developers working for Microsoft, Skype, Deutsche Bank, Apple Inc., Bosch, Dell, IBM and other international and local companies.
- Country’s IT talent pool is approximately 250,000 IT specialists and is expected to grow to 350,000 by 2020.
2. Strong technical education
Since the mid-90s, Ukraine has been taking steps to improve its education frameworks. In 2005 it became a member of Bologna Process and European Higher Education Area as they meant to ensure more comparable, compatible and coherent systems of higher education.
- There are over 800 higher education institutions in Ukraine with 16,000 annual IT graduates.
- $1 billion will be invested to improve country’s IT education in 2014 according to a project initiated and launched with the help of local industry players.
- 50,000 qualified IT-industry professionals are expected to graduate by 2018 as a result of educational reform.
3. Convenient location
- Companies operating in Ukraine work in Eastern European Time Zone with only one hour difference with Stockholm, Berlin and Paris, two hour difference with London and Dublin and seven hour difference with New York and Toronto.
- There is possibility to fully align working schedules with Western European countries and to work out a four hour overlapping schedule with the East Coast of the USA and Canada.
- Flight to western Ukraine is only one hour from Warsaw and less than two hours from Vienna and Munich.
4. Government support of the industry
- The government exempted IT-companies from VAT and set a tax at 5% to encourage further development of the industry.
- In 2014, IT outsourcing sector received substantial government support. According to the Brain Basket Foundation , a project on economic development, it is planned to train 100,000 IT specialists till 2020. The project also includes introduction of scholarships, loans for education, sponsoring online education and certification along with support of professional competitions, communities, associations and finally boosting English trainings.
5. The cost factor
Offshore development center in Ukraine enables software development companies to implement projects of any complexity fast, with their limited budgets at hand. According to the European IT Outsourcing Intelligence Report, companies are likely to achieve about 40 – 60% savings developing software in Ukraine compared to in-house development.