When businesses consider outsourcing software development, they take into account many factors such as the development cost, availability of talent, quality of services and geographical location of the team. Eastern Europe has become the primary destination for IT outsourcing, offering an unequaled combination of benefits. Poland, Ukraine, Romania, Hungary, Bulgaria and many other countries attract more business every year thanks to the great number of skilled programmers, proximity to Western Europe, cultural compatibility and good value for money.
In this article, we are going to compare and contrast Poland and Ukraine – two most prominent IT centres in the region. Both countries have hundreds of companies providing software development services, highly skilled workforce with good technical education and mature IT industry. So let’s find out what each country has to offer.
Ukraine is the largest country in Europe placed at the crossroads of important trade routes. Such location is especially favourable for business as it takes just 2 hours to fly here from most European capitals. Besides, for the United States and European citizens, it’s visa-free. The time difference between Kyiv and Berlin, for example, is only 1 hour. The country has the population of 45 million people and hence, huge labour market potential.
The largest IT cities are Kyiv, Lviv, Kharkiv, Dnipro, and Odessa.
Culture and politics
The reason for the extraordinary growth of IT industry in Ukraine lies not only in the good geographic location but also in cultural compatibility of Ukrainian programmers with Western clients. Despite the remnants of the Soviet Union, people in this country, and especially young people working in IT sphere have European mentality. They are modern, tolerant, clever, they get a good education, travel, and dream of joining the European Union.
The pro-European orientation of the country has led to a conflict with Russia, which is, fortunately, fading away now. At some point, the crisis affected the economy of the country and its business climate but as the situation stabilized, the investments started flowing into Ukraine again. In addition, the IMF has provided a multi-billion dollar plan to help Ukraine handle the crisis and ensure its the stability. Ukraine has an open economy and it’s been WTO member since 2008. Also, it has International Agreements for the Avoidance of Double Taxation with 63 countries of the world.
A. T. Kearney research also indicates that Ukrainian currency depreciation led to a major gain in its compensation cost score, accompanied by the improvement in the competitiveness of its tax and regulatory costs. The increase in political risk is partly eliminated by the government’s implementation of reforms that boosted the country’s competitiveness. As a result, Ukraine has moved up 17 positions in the Global Services Location Index.
The country has a rather strong educational system. 87% of high school graduates go to colleges and universities, and 35% of those students choose IT related subjects. About 30,000 IT students graduate from the universities each year. The most popular ones are the National Taras Shevchenko University of Kyiv, National Technical University of Ukraine “Kyiv Polytechnic Institute”, Lviv Polytechnic National University etc.
Ukraine is also famous for its achievements in science and tech such as Antonov An-225 – the largest aircraft in the world, Sikorsky helicopter, launching the first artificial satellite into orbit, the invention of X-Ray etc.
The literacy rate is really high and constitutes 99.7%. Ukraine is a country with moderate English proficiency as it holds 34th place in EF English proficiency index 2015. According to Developers.org.ua, the number of IT developers with fluent English skills has increased to 40.2% and 38.6% of respondents have an intermediate level.
Ukraine holds the 1st place in Europe in terms of IT specialists. Around 90,000 people work in the sphere now, and by 2020, this number is expected to reach 200,000. Not only does Ukraine take the lead in the availability of the workforce, it is also the country with highly skilled engineers. Many IT professionals in Ukraine have the international education or job experience abroad. Suffice to say that the country holds the 4th place for the number of certified IT specialists worldwide (after the USA, India, and Russia).
Most Ukrainian IT companies dedicate much attention to the professional development of their employees, so they organize training, workshops, English classes, they entice them to get certifications and take part in international events.
Yet the main reason for outsourcing software development has always been cutting costs. Ukraine has been seriously hit by a recent crisis and inflation of the currency. So the dollar equivalent of an average monthly salary now constitutes merely $300. The average salary of a Ukrainian programmer is $2,000 a month so you may imagine how many young people are willing to build a career in the sphere. Based on labour costs alone, companies outsourcing software to the country save up to 60 percent. Ukraine offers an access to large IT resources for the salary approximately 10-20% of an American or European IT engineer.
IT industry overview
Ukrainian IT industry now amounts to $2.5 billion, which constitutes 3% of the country’s GDP. By 2020, it is expected to reach $10 billion with 5.7% contribution to GDP. Naturally, the government sees ample opportunities here and cooperates with IT companies to make the legislation more transparent and attract more business.
The U.S. is the main target market for Ukrainian IT firms, with an estimated 80% of exported software development services. It is also Ukraine’s largest partner for R&D activities, followed by the EU countries and Israel. The industry comprises more than 500 outsourcing service providers and over 100 global R&D centres of such big brands as Oracle, Cisco, Samsung, NetCracker, Magento, Huawei, War Gaming, Playtech, Gameloft, etc.
Poland is the country situated in Central and Eastern Europe. It is the 6th largest economy among European Union members with the population of around 38 million people. It is the EU member that achieved the highest GDP growth despite recent global economic problems. EU membership has provided access to funds boosting the economy, helping to fight unemployment and improve its infrastructure. So one of the main benefits of outsourcing software development to Poland is economic and political stability.
Another important factor is proximity to European countries. Even if we take the US, the time difference between Poland and New York is not that big and constitutes just 6 hours.
IT business is focused in such cities as Warsaw, Krakow, Lodz, Katowice, and Wroclaw.
Culture and politics
Poles are Europeans with the Western mindset and values, so on the cultural level, you can expect smooth communication with your development team. When compared with other popular outsourcing destinations such as India, the country has excellent political and social affinity to the countries of Western Europe and North America.
A further advantage is a transparent legal system and government support of IT business. Poland is leading the World Bank’s Doing Business ranking in the pace of reforms and improving the business climate. As a business centre, the country offers attractive tax incentives, low inflation, and stable GDP.
The regulatory structure can be critical when it comes to handling certain sensitive data. When outsourcing to Poland, you are protected by the EU legislation. So for instance, you don’t have to worry about your intellectual property protection, which is an acute issue in software development outsourcing. Poland follows all European Union laws for copyright and IP and complies with US standards in data security and IP protection.
The country has the quality higher education system with particular strength in science, technology, engineering mathematics areas. According to the NYTimes, 39% of citizens in Poland aged 25 – 34 have university degrees. Around 211,000 students graduate from its nationwide network of 427 centres of higher education every year. Every 2nd young person studies at the university level, which is above the EU average.
Polish Information and Communication Technologies universities and specialists are valued in the world. The universities that produce most IT professionals include Gdansk University of Technology, Jagiellonian University, the University of Silesia in Katowice, Warsaw University of Technology etc.
Poland is a country with very high English proficiency. It was ranked 9th in the world for English skills in the EF English Proficiency Index 2015, getting ahead of most European countries. Also according to Hill International report, eighty percent of Polish students speak English.
EF English proficiency index 2015
Poland has the largest working population in Central Europe, which is also one of the youngest populations on the continent comprised mostly of people under 34 years old. According to the Association of Business Service Leaders (ABSL), you can hire experienced Polish developers for under $3.000 a month. In comparison, you’ll have to pay about $100.000 a year for the same services in Silicon Valley. Labour costs in Poland are about 50% lower than in Western Europe.
As for the availability of IT talent, 15,000 IT graduates enter the market annually. These are motivated employees who share European values, speak English, German, French and have excellent technical skills.
IT industry overview
Polish IT services market reached US$ 7.9 million in 2016. There are more than 450 outsourcing centres with 140,000 of IT professionals working in the industry. Data indicates that 200,000 IT jobs are to be generated by 2018.
The country is #6 in Tholons Top 100 Outsourcing Destinations 2015. Three Polish cities, namely Krakow, Warsaw, and Wroclaw ranked highly on the list. Another respectable source – Bloomberg has ranked Poland 25th among the most innovative countries worldwide. So it’s not surprising that it has attracted such big tech corporations as IBM, Google, Microsoft, Motorola etc.
Although companies outsourcing software development to the region manage to save up to 50%, Poland is not the least expensive outsourcing destination. It’s an EU country with a strong economy and stable political situation so you’ll have to pay for it a bit more than in Ukraine, for example.
On a final note, both Poland and Ukraine are excellent destinations for outsourcing IT services. So first of all, you need to decide which factors are the most critical for your business. We hope this infographic will help you draw the final conclusion and choose the right place for developing your product.