Embracing digital technologies to meet the ever-increasing customer needs remains crucial for most business leaders. This raises the demand for digital talents as the major force behind the company’s technological advancement. More and more organizations realize that they don’t have enough capacities to take advantage of the new and cutting-edge tech. Therefore, they explore the most vibrant IT outsourcing destinations, such as Eastern Europe, trying to find a reliable IT outsourcing company.
Software development in Eastern Europe is a vibrant path for introducing innovations. Eastern European IT is recognized for its impressive diversity of tech professionals, developed infrastructure, and strong educational background.
With this in mind, we’ve decided to compare some of the leading software development destinations in EE region – Ukraine and Belarus. The article explores IT market growth and development, availability of IT resources, the current state of the business environment and technical education in these countries.
IT Market Overview
IT industry is one of the most dynamic sectors in the Ukrainian economy. According to PricewaterhouseCoopers, it grew by 15-20% in 2016 (from $2.5 billion to $3 billion) and its growth pace is getting faster every single year. Around 230,000 specialists are involved in the Ukrainian IT sector, which is the biggest number in Europe. Colliers International states that Ukraine is 4th by the number of IT professionals globally. Furthermore, Ukrainian BrainBasket Foundation aims to train 100,000 new IT specialists by 2020, thus turning Ukrainian IT sector into country’s number one export industry.
1000+ IT outsourcing companies are located in the country providing a wide array of services in various industries like insurtech, hospitality, healthcare, fintech, telecom, media & entertainment, etc. Additionally, 12 Ukrainian IT companies, including N-iX, have been featured in the list Global Outsourcing 100 2017 by the International Association of Outsourcing Professionals (IAOP) as top outsourcing providers.
Ukraine is continuing to gain traction in terms of IT industry development with a big number of multinational companies setting up their R&D facilities here. For instance, 100+ R&D centers of global companies such as Microsoft, Samsung Electronics, Apple, Boeing, Skype, Wargaming, eBay, Siemens, IBM, etc. are located in Ukraine. The country was also included in Gartner’s top 30 offshoring and outsourcing destinations and recognized as number 1 in Europe in the sector of IT-outsourcing according to IT Outsourcing News in 2016. According to Bloomberg Innovation Index 2017, Ukraine is ranked 42nd for its adoption of innovations, while Belarus is not featured on the list.
Belarus is home to 1,000 IT companies employing around 35,000 IT specialists. Belarusian IT companies have clients in more than 50 countries all over the world and approximately 45% of them are from the USA and Canada, and 30% are from Europe. The exports of Belarusian IT services have been steadily growing over the recent years at an annual pace of 10%. The total production and sales revenue of its IT sector amounted to USD 1,120 million in 2015.
What’s more, some of the Belarusian IT companies were included in the Software Magazine’s Software 500 ranking of world’s largest software and service providers and were recognized by the International Association of Outsourcing Professionals (IAOP) as The Global Outsourcing 100 companies.
In addition, the country has attracted such tech trendsetters as Viber, Fitbit, Playtika, IHS, Yandex, WorkFusion and Juno, to open their R&D centres. Moreover, the success stories of Belarusian product companies like Wargaming, Apalon, Masquerade have also stimulated the development of the local IT and startup ecosystem.
Ukraine boats strong technical education with more than 38,000 highly qualified professionals graduating every year with certificates in technical disciplines. More than 400 educational institutions are located in Ukraine and many of them maintain IT related educational programs. The most popular tech institutions are the National Taras Shevchenko University of Kyiv, National Technical University of Ukraine “Kyiv Polytechnic Institute”, Lviv Polytechnic National University etc. Ukrainian universities have also launched a number of IT-related courses in Artificial Intelligence, Data Science, IoT etc.
The majority of Ukrainian developers have a good command of the English language (around 40.2% has fluent English skills and 38.6% – intermediate level) and the country holds the 34th place in EF English proficiency index 2015, which is improving year by year.
Belarusian tech talent pool is growing with around 4,000 new software engineers graduating every year. Around 54 higher educational establishments provide courses in computer science and other IT-related disciplines. Moreover, large IT companies in Belarus actively collaborate with higher education institutions, which allows students to acquire practical skills in different technical areas. Besides, some software development companies in Belarus offer their own courses that help those who are eager to start their career in the IT sector. Nevertheless, the country is still behind its regional counterparts in terms of educational innovations.
Ukraine is on the path to Euro integration and is introducing a number of business reforms. Now starting a business there is much easier due to the simplification of the taxation system and improvement of registration procedures. As of 2017, the country is 22 positions higher in the World Bank’s Ease of Doing Business comparing to 2014. Moreover, the World Economic Forum ranks Ukraine 68th out of 140 countries in its Global Competitiveness Index, with high levels of education development, business sophistication, and innovation adoption.
Local authorities recognize the need to support the development of the Ukrainian IT industry as a strategically important area for the country’s progress. That is why they increased the state order for graduates in technical specialties and adopted the law on the simplification of export services. And this is just a minor part of governmental incentives for the local IT market growth and development.
During recent years the Belarusian IT sector received governmental support as one of the top-priority economic sectors for future development. The emergence of Belarus Hi-Tech Park stimulated IT sector development and provided special business environment for local IT companies. Around 159 Belarusian IT companies are residents of the High Tech Park bringing together 25,000 tech professionals. The annual volume of export of park’s residents has increased from $21 million in 2006 to over $705 million in 2015. Moreover, the HTP resident-companies are exempt from corporate taxes, including VAT, profit, real estate and land taxes.
All in all, software development in Eastern Europe is one of the most dynamic sectors, providing new and attractive opportunities for offshore leaders. Ukraine remains one of the leading forces in the region, due to its solid talent pool, strong technical education, and developed business infrastructure. This IT outsourcing destination was recognized among the Top 25 IT services exporters and attracted a myriad of multinational companies. Now the main challenge rests in finding the best IT outsourcing provider to help you allocate a strong team for fruitful cooperation.