Ukraine IT Outsourcing Market General Overview

Ukraine IT Outsourcing Market General Overview

Ukraine IT Outsourcing: Recent Trends

In 2020 the entire global economy has been experiencing rapid change. The beginning of an economic crisis was predicted and came right on schedule, at the start of the year, but has now overlapped with a powerful catalyst that the quarantine  has proven to be. The global quarantine has affected the business sector in ways not many could predict at the end of 2019. Despite a perhaps common misconception, the IT outsourcing market isn’t an exception and has also been affected by these crises’ overlap.

Ukraine is, without a doubt, one of the major IT outsourcing destinations and the recent market statistics show visible change, while the future prognosis remains uncertain for the time being.

Let’s take a closer look at what is happening on the market, why these developments are in fact an opportunity for businesses and what the forecasts are telling us of the coming months.

Discover more about software developers in Ukraine and how you can hire a team How to hire developers in Ukraine

Review Average hourly rates in outsourcing.

Investing

Investors are freezing some of their activities and are waiting out the big pandemic quarantine, assessing the future investment landscape. This is an opportunity for startups to also take a beat and take note of business models surviving these dire times. Now is the moment to work on your pitches and do course correction. For practical advice on these matters Qubit Labs have prepared two pieces for you recently: one on the situation on the Ukrainian investment market right now and another, with  tips on how to prepare your perfect pitch to the investors after this is all over.

Automation

Big companies will have it tough – automation and cost cutting are underway everywhere, so 20-30% cuts in costs should be expected only at the expense of cutting projects, hence downscaling in teams, hence a number of really highly qualified specialists will enter the job market. This becomes an opportunity to hire specialists your business couldn’t attract before, and most probably at a lower rate. All in all, the job market will be filled with high quality talent. All in all, the job market will be filled with skilled professionals, including Ukraine talent.

Growing businesses

Unexpected economic flip are businesses that already operate online and deal in goods and services that have become essential to the quarantined population. Retail, logistics, delivery services, online health and educational services, fintech and e-commerce – word is, these fields are bursting at the seams with demand for software developers. So essentially, the demand for IT talent is being re-channeled and re-shaped at the moment. Many will find this to be an opportunity, too.

Reasons to Hire Ukrainian Outsourcing Company

The IT outsourcing in Ukraine mostly stems from outsourcing and over ⅔ of Ukrainian software development businesses provide services for companies in the USA and Europe. And even though Ukraine companies experienced the hit of the pandemic a little down the timeline and not as hard compared to a lot of Western countries, having over 60% IT industry basically rooted in other countries’ economies, has naturally reflected on the wellbeing of the sector. Let’s take a look at the current IT employment market in Ukraine.

Ukrainian developers are highly appreciated in the world. You might think that these are just empty words and “every cook praises his own broth”, but in fact, Ukraine was called the best place for software development outsourcing by GSA.

What is more, 17 Ukrainian outsourcing companies were listed among the 100 best ones in the annual rank by IAOP. Such awards are a good proof that Ukraine is a reliable and qualified outsourcing partner.

Quality per cost ratio

Every smart entrepreneur looks for two factors, fair price and good quality. IT outsourcing market in Ukraine meets both of these requirements: the salaries of local programmers are lower that the rates of their US and Western European fellows, although the level of coding skills is among the highest in the world.

Here is what Jeff Moriarty from MothersFamilyRings.com says about advantages of outsourcing to Ukraine:

We are a jewelry retailer located in Crown Point, Indiana. We have been in business for over 30 years. Our online websites have been in business for a little over 10 years now.

In the past, our company would hire US-based programmers that worked on our website, but the cost was just very high. We were unable to do a lot of the work to improve the website and marketing due to not being able to afford it. That is when we started going to the freelance websites and finding help when we needed it. Most of the programmers there were from out of the country, which concerned us in the beginning.

After working with a few programmers from Ukraine, we found them the most knowledgeable and very inexpensive. The work that was needed to get done quickly and way within our budget. One of the freelancers we regularly used started his own company there, and we stuck with him.

He and his associates now do all the programming work for us for our 3 websites. They even help with other tech work at our company.

It’s the best work we have ever had, they speak excellent English and get the jobs done when we need them. I wouldn’t use anyone else, and it’s why we highly recommend others to use programmers in the Ukraine as well.

 

Large number of tech experts

The number of IT professionals in Ukraine is currently over 200,000. Ukraine is the second biggest country in Europe. And if you’re looking for a tech expert, you will be spoiled by choice – Ukraine can boast about 160K programmers.

And his is a population of a fairly big European city!While other countries are facing the rising issue of skill gap, here in Ukraine there are plenty of developers of any tech stack, starting from widespread PHP and Java, and up to rare AI and IoT experts!

 

Convenient time zone

When choosing a destination for software development outsourcing, always mind the time zone. Try to find a country where the working hours overlap with your local ones. Depending on your industry, you might need from 1-3 hours to a whole working day to cooperate with a remote team efficiently.

And Ukraine’s geographical location can give you such benefit. There is only two-hour difference with Western European countries and six hours between Kyiv and New York.

 

Client-oriented approach

Those who consider outsourcing are often in two minds – to be or not to be. The decision is hard indeed because the market is full of unreliable freelancers who take a task and never come back. Ukrainian IT outsourcing vendors do not tolerate such irresponsible behavior; they stick to the highest standards of client-oriented attitude which makes this service safe and convenient.

Phil Weaver, CMO of Learning Success, shares his experience of working with Ukrainian PHP programmers:

I hire Drupal developers exclusively from the Ukraine. I’ve tried hiring from the US, India, and the Philippines as well but have never had luck in any of these countries.

Since every Ukrainian hire has been a win and stayed with our company long term I no longer consider these other countries. Ukrainian developers, in my experience, are highly skilled, have great work ethic, are great communicators even when there is a slight difficulty in English, and are priced competitively.

I’ve tried many times to hire PHP developers in other countries but have regretted it each and every time. So I no longer try.

I also find that most Ukrainian developers like to work independently. I give them a job, and then after some time when I haven’t heard from them I start to worry. Are they getting it done? Then, all of a sudden they pop into my slack with the completed work. Usually completed beyond my expectations. Even after experiencing this over and over I am always surprised. Probably because my other employees need so much more oversight.

Ukrainian PHP developers are the best. I no longer look anywhere else.

 

Tech education

Ukrainian educational system has always been renowned for its tech inclination and graduates 35,000+ specialists every year. Thousands of students graduate annually from polytechnic universities and institutes in Kyiv, Lviv, Kharkiv, Vinnytsia.

Soviet tech universities were considered to be one of the best in the world, and Ukraine inherited the most efficient methods of education and combined it with the modern ones to give a boost technological development of the country. What is more impressive, 14% of Ukrainian developers have two university degrees. Here it is not a problem to find a professional economist or agrarian with programming skills.

Variety of programming courses and internships also make a significant contribution to the high level of tech education in Ukraine.

 

Growing IT community

Ukraine holds more than ten big tech events with 800+ attendees in Kyiv, Lviv, Kharkiv, and Dnipro. The most popular event is IT Arena that brought together 4000 people from various industries in 2018. And also there is a special event dedicated to IT outsourcing in Ukraine, Outsource People.

Programmers get a chance to learn more about their technologies during conferences, meetups, hackathons – everything starting from Java, Python, .NET, JavaScript, and up to the latest breakthroughs in AI and blockchain. According to statistics, 60% of developers visit tech events to boost their knowledge, so no need to hesitate about their programming skills.

 

English proficiency

Communication is the key to success.On the one hand, clients should explain their demands because their offshore workers understand them clearly. On the other hand, developers must be able to convey their ideas and the ways to implement them.

And it usually happens that clients and developers have different native languages, and the only tool for communication is English. And the good news is IT outsourcing specialists in Ukraine are skilled not only in programming languages. The average level of English proficiency is upper-intermediate (33%) and intermediate (34%).

Steven Millstein, CFA and CFP of Credit Zeal, points out English proficiency as one of the biggest advantages of outsourcing to Ukraine:

We outsource all of our web design and maintenance to the Ukraine and it has been one the best business decisions we have made. We […] have been impressed with the quality of the work for the price.

We looked for a vendor with a proven track record of success. The team we work is very hardworking, loyal and dedicated. There is nothing they have not been able to handle.

We had previously tried outsourcing to Asia, but we found the language barriers to be a problem but have not experienced this at all working with our team in the Ukraine.

 

Innovation Landscape

One of the major foci of the Ukrainian IT scene is innovation. Ukrainian software developers are keeping pace with the latest tech developments and have numerous awards and titles to prove that. Actually, Ukraine technology development does not stand aside, utilizing both the most popular, like JavaScript, and rarely used, like Apex, programming languages.

 

Trustworthiness and consistency

Outsourcing is delegating any tasks to vendors, starting from the daily routine that steals time and up to large-scale projects. No matter what they outsource, they trust their remote employees and continue working with them for the years.

Zach Hendrix, Co-founder of GreenPal, tells how outsourcing saves his time and makes him more effective:

I have used a virtual assistant named Marianne in the Ukraine that I contract for three years with great success. She helps me with all sorts of tasks doubling my effectiveness and stretching my time two fold.

Over the course of three years I have managed to offload the following tasks to her:

  • Bookkeeping
  • Research for email and contact information for sales prospects
  • Social media monitoring and interaction
  • Excel spreadsheet data entry

Each of these skill sets I had to take the time to instruct her how we wanted them done, however once we have them in place it has been a tremendous timesaver for me. Utilizing Skype and screen share services I can instruct her to do any remedial tasks to offload from my day to day workload. This enables me to focus on high leverage activities such as product development, strategy, and planning. It’s quite possible we wouldn’t be where we are today without her.

 

Leading companies

The country spots over 1,600 software development companies and is home to over 100 R&D centres for big international companies. It’s a vibrant tech scene all around.

Such giants as Samsung, Siemens, or Magento have already recognized the benefits of outsourcing to Ukraine.

Rest assured, they considered every smallest detail to take a decision, and the decision proved its value and became their smart solution to optimize operational costs.

 

Ukraine It Outsourcing Companies

Qubit Labs

Qubit Labs is a Ukraine IT outsourcing company with headquarters in Tallinn, Estonia and R&D centre in Kyiv, Ukraine.

We help clients find the most skilled developers and build effective teams. They have a strong experience in management-related processes and an impressive number of successful cases.

But if there are so many outstanding software development companies in Ukraine, where do you start? Developers of Ukraine community DOU.ua, which is the leading online community for software developers, compiled a rating of Ukraine’s top 50 IT outsourcing companies https://dou.ua/lenta/articles/top-50-jan-2019/. We want to introduce you to some of the leaders.

EPAM

This is one of the top Ukraine IT outsourcing companies, headquartered in the US. Having several development centres throughout the country, the company has one of the biggest technical staff amounts compared to other similar businesses.

With 6600 employees in Ukraine and headquarters in the USA, EPAM is on the very top of the list. Also, this company has ranked #12 on the Forbes’ list of Fastest Growing Public Tech Companies https://www.forbes.com/pictures/59234347a7ea434078d44581/12-epam-systems/#34c6bd167e16. This developer provides services in areas like banking and finance, commerce and travel, media and entertainment, software and hi-tech, healthcare and life sciences.

SoftServe

Founded in Lviv, this company employs professional Ukrainian game developers that deliver outstanding results. SoftServe is one of the largest IT companies in Central and Eastern Europe.

SoftServe Inc. is the largest global IT-company with purely Ukrainian roots that has proudly been the best employer of 2010-2015 according to the Developers of Ukraine, AON Hewitt, Hewitt Associates and HR Center, among others. With just over 6300 employees and headquarters in Lviv (Western Ukraine), this is one of the leading global outsourced product and application development company. And, taking into consideration SoftServe’s 200+ new job openings, the company is well set for continued growth.

GlobalLogic

This Ukraine IT outsourcing company has its main office in the US. However, it has many offices in different Ukrainian cities where over 4,000 professionals work.

With just over 4000 employees and headquarters in the US, GlobalLogic is a full-cycle software development company with offices in four Ukrainian cities. Concentrating on digital media, electronics, finance, retail business and telecommunication, GlobalLogic works with startups as well as with industry leaders well known on both hardware and software markets.

Luxoft

Ranked #4, with just a bit under 4000 employees in Ukraine and an HQ in Switzerland. With its deep expertise in finance, telecommunication, energy, automotive, travel, and aviation industries, Luxoft managed to build long-lasting partnerships with companies like with Boeing, IBM, Deutsche Bank, and many others.

Ciklum

Being one of the most famous IT companies in Ukraine, Ciklum has its development offices all over the world. It has partnered with many tech giants, like Microsoft and IBM.

Ciklum ranked #5, has seven offices in Ukraine, and the HQ located in Denmark. Of more than 2800 employees, about 2500 are technical specialists who are involved in over 200 global client teams worldwide. Its areas of expertise are as diverse as gaming, digital advertising, banking, and financial services. Ciklum was the first company in Europe to receive IC Agile certification in 2009. Workers of this company are native speakers in 15 languages: English, German, French, Italian, Irish, Danish, Hebrew, Russian, Ukrainian, Belarusian, Pakistani, Arabic, Swedish, Dutch, and Polish.

On top of it all, 17 Ukrainian IT outsourcing companies got ranks in The Global Outsourcing 100 https://www.iaop.org/GlobalOutsourcing100, which is the International Association of Outsourcing Professionals annual list of top tech firms (as of February 2019).

 

Ukraine Employment Market

Meanwhile, businesses should seize the new employment opportunity – in offshore outsourcing hubs like Ukraine, a lot of top-tier Ukrainian developers are entering the market, and the rates are inevitably dropping. Now is the time to hunt for perfect Ukrainian software developers.

The undeniable fact is that just like many other spheres of our lives, finance and economy will steadily continue on the path of digitizing. The need for software engineers and coders won’t decrease, but rather the opposite. The current economic drop will kill some businesses; there is no use in sugar-coating that, but it will also be an essential stepping stone to betterment and prosperity for others.

History and economics teach us that every crisis is an opportunity and a ladder of perpetual innovation. In a similar fashion, this crisis is expected to be a boost in technological development of so many processes, such as advanced automation and robotization of core business processes, in-depth business analytics, etc. What is important for businesses to do now is to observe, take notes, react in the fastest way possible and make adjustments. Success in the post-corona world will be based on adaptability and innovation.

  • There are big shifts in consumption trends. As a result of the quarantine, overconsumption has become a well-defined tendency.
  • Productivity of the businesses is unlikely to change due to the quarantine, since IT usually operates remotely anyway. Social distancing will have a minimal effect on productivity and might even increase it – there are just so many things you can do locked at home.
  • There will be a definite surge in cost cutting and cost optimizing. Employees might see some benefits taken away or paused. The crisis is also to lead to the temporary salary reductions.
  • Clients are requesting  price reductions on projects, pausing ongoing projects in attempts to optimize their budgets and freezing new recruitment, so many companies have already reported salary cuts.

The DOU has conducted a survey

on how the quarantine has affected the employment market and salary rates in the Ukrainian market. 16% of the respondents mentioned salary cuts. According to the survey, almost every third respondent indicated that the company was losing customers. Many reported that some of the employees simply don’t have new projects to work on, so raises and promotions are being frozen, offices are being moved to spaces with lower rent rates, while some companies are even obliging their employees to use some of their paid vacation days by a certain time. Quarantine has reduced wages by more than 25% in 3% of Ukraine developers, and overall, 9.5% have experienced wage cuts.

On the other hand, some specific Ukraine technology development fields haven’t felt the hit as hard. Gamedev is riding a wave of demand. 13.3% of respondents said that the crisis was not felt, and the situation, in fact, got better while another 77.7% chose the option “No, everything is unchanged.” A quarter of interviewed Ukraine developers said that their income increased due to the weakening of the hryvnia.

The dynamics of salary changes is more pronounced in small and medium businesses that have scarce resources and little resilience to tolerate the crisis. But together with large companies’ crises, smaller enterprises may embrace the new opportunities by hiring experienced developers who lose their jobs now at much more competitive rates than a couple of months ago. The Ukrainian market landscape gets ever more favourable for talent hunters, promising greater expertise at lower costs to most businesses.

The trend for IT outsourcing and outstaffing has swept the globe, now that technological tools allow for smooth online communication and businesses around the world realized they didn’t have to limit themselves with their local employment pool, but could look for their best match for a developer literally anywhere. Thanks to this trend, several hubs developed as the most prominent IT outsourcing destinations, Eastern Europe and Ukraine in particular, being one of them. The country is considered to be one of the first big players among the software developing hubs in the CEE region and has even been named the offshoring destination of the year. In this whitepaper, we’ve gathered statistical data regarding the current state of the Ukrainian IT market and disclosed the reasons why IT outsourcing in Ukraine is evolving rapidly.

Popular Development Technologies

According to DOU, JavaScript is the most popular programming language in Ukraine, outrunning Java. Let’s take a look at the top 10 technologies from the overall rating, based on the questionnaire conducted in 2020.

Position in the Rating Programming Language Average Annual Salary
1 JavaScript $30,000
2 Java $33,600
3 C# $31,200
4 Python $31,200
5 PHP $24,000
6 C++ $29,400
7 TypeScript $30,780
8 Swift $28,800
9 Kotlin $30,000
10 Ruby $28,800

As you can see, the average Ukraine developer versed in JavaScript receives $30,000 per year. At the same time, if you decide to cooperate with a local developer who will deliver high-quality Ukrainian products written with Java, one’s services will cost $33,600 per annum. Speaking of C# and Python, these programming languages imply the same programmers’ salaries, namely $31,200. As for PHP software development Ukraine, businesses pay $24,000 annually to the specialized engineers. C++ and TypeScript developer salaries are on the same level, $29,400 and $30,780 accordingly. When it comes to Ukraine IT outsourcing utilizing Swift or Ruby, you will make a forward-looking decision when hiring local developers because their salary is $28,800 per annum. Finally, Kotlin programmers are paid $30,000.

Developers by Ukrainian Cities and Their Salaries

City Number of Developers Average Annual Salary
Kyiv 55,500 $32,400
Lviv 18,900 $31,200
Odesa 8,600 $30,000
Kharkiv 25,700 $28,020
Dnipro 15,200 $27,600

So, it’s no surprise that the biggest Ukraine IT outsourcing companies are in Kyiv, where there are over 55,500 developers. The approximate average salary of a local developer is $32,400, but, of course, is affected by many factors. Lviv is another centre of Ukraine outsourcing with rapidly developing projects and a large number of professionals, namely 18,900. Programmers from this city receive a bit lower salaries compared to Kyiv ones, $31,200, but the difference is insignificant.

Although in Odesa there are not that many IT specialists, 8,600, the salaries are quite competitive, namely $30,000 per year. The next concentrator of software development Ukraine is Kharkiv, with 25,700 programmers. Local developers are offered $28,020. The last city on our list is Dnipro, which has quite an extensive number of software engineers, 15,200. However, Ukraine IT outsourcing companies located there pay the lowest wages to their employees than other cities, which is $27,600 per annum.

The general number of Ukrainian software developers is growing each year, especially in the mentioned IT hubs. Ukraine outsourcing is one of the major sources of the country’s income because the demand for services is increasing, which attracts more specialists and enhances the workload. An average Ukraine developer can easily stand out among its foreign colleagues, thanks to his/her professionalism and the quality of delivered

Additional reading for you: How Much It Cost to Outsource Software Development?

One extra reason to be hiring Ukrainian software developers right now comes from the delicacy of the current economic situation.

Businesses that are less affected by the overlap of the general economic slump and the COVID-19 employment crisis will now have a unique opportunity to hire the cream-of-the-crop Ukrainian software developers that were hard to attract before or were simply too expensive. This, of course, will also help prevent the surge of unemployment.

A Typical Portrait of IT Specialist

Another valuable research has been conducted by DOU, which makes it more clear what specialists you will encounter if you consider Ukraine IT outsourcing.

The developers’ share is 46%, QA Engineers’ – 16%, and project managers’ – 5%. More than 70% of the respondents are based in the top three cities we have mentioned above, namely Kyiv, Kharkiv, and Lviv.

The share of women in Ukrainian IT market is 25%, while the number of men is 75%. There are more females taking non-technical or about-technical positions, like HR, Marketing, Business Analyst, and among designers, the gender balance is almost equal. The average age of a Ukrainian IT specialist is 28 years.

The most popular areas of software development Ukraine are eCommerce, Fintech, and Mobile. For DevOps and System Architects, the most sought after the sphere is Cloud Computing, and for designers – Media.

The share of Ukraine outsourcing is 45%; there, work large numbers of Project Managers, Senior PMs/QA Engineers, Software Engineers, and Tech Leads. More than half of the IT specialists have a work experience of 2 to 5 years, and 12% of the respondents – 10 and more years. 22,8% of the companies that have established their part in Ukraine IT outsourcing suggest that the pandemic hasn’t affected their performance, and 3,2% mention their performance became more effective.

What to Expect?

Global economy is going through a unique and unpredictable phase where a general and more predicted economic slump is catalyzed by an external force of a dangerous pandemic, so the world is adapting and coping on the spot and partially in the dark. The IT industry has become absolutely essential to most aspects of life in the developed world, so it’s only natural that it will see the immediate effect of the crisis.

However, this is the industry with some of the highest levels of adaptability, so it is safe to say that IT and software engineering will come out stronger for it on the other side. Some companies will not only survive, but will thrive in the new market realities.

As discussed before, these are the businesses riding the wave of high demand induced by the quarantine – online platforms rendering remote services and retail logistics providers, along with businesses focused on adult products, food delivery, health and sports products, Fintech, Computer Vision, Business Automation companies, all of these are expected to enjoy the greatest market success in the coming years, if not months.

More on this topic:

Where To Outsource Software Development: Talent pool, Prices, Countries

What Is Outsourcing? How Does IT Outsourcing Work?

What Is ODC — Offshore Software Development Center?

Offshore Software Development Outsourcing. What Are the Advantages?

Recommended for you:

Why Outstaffing and Outsourcing in Ukraine?

Upcoming Tech Conferences in Ukraine

Ukraine as an emerging R&D center

30+ Places to Visit in Ukraine Spotted by Locals

 

 

 

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Iva Kozlovskaya
Managing Partner
Iva Kozlovskaya is a Managing Partner of Qubit Labs. Iva has been working in operations, sales and project management from the beginning of her career path. Nowadays Iva runs her company that helps clients from the USA, Europe, and the Middle East to establish their development teams in Ukraine.