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IT Outsourcing in Ukraine: the Advantages Over Other IT Outsourcing Markets

Outsourcing is one of the most demanded services in some business areas. At the same time it is one of the main sources of foreign trade revenue for some countries nowadays. Therefore, it is not surprising that this market is very competitive and each of the countries interested in increasing external revenues in its economy tends to make running such kind of a business easier and more convenient.

Historically, the business – strategy of outsourcing dates back to the 70s of the 20th century, when for the first time production with a transfer of functions and processes to a specific specialized organization was used in the car engineering industry. Due to regular use in the 90s, the outsourcing tool gradually but firmly integrated into international business, which is very clearly seen in the example of our state. Recently, moving in step with the countries of the East, outsourcing is gaining momentum in Ukraine. For example, in India, as one of the main players in this market, thanks to its English-speaking population, a large number of call centers of different companies have been located. In turn, Ukraine, with its impressively educated workforce, has a chance to position itself as a country- developer of high-quality software. At the moment, Ukraine is among the three leaders in the concentration of certified ІТ – specialists per capita of the working-age population among the main countries-suppliers of outsourcing services, ahead of the Russian Federation, Hungary, Poland and India.

According to Upwork statistics, Ukraine ranks first in Europe and fourth in the world in the number of freelancers. More than 82% of outsourcing orders in Ukraine are software development or maintenance of IT systems, while the share of other outsourcing, for example, call centers, etc., is very small.

At the moment, there are more than 1,000 IT companies in Ukraine that provide outsourcing services, while every year the IT market in Ukraine grows by at least 20%. Most orders come from English-speaking countries such as the USA, UK, Australia and Canada. The International Association IAOP has published the annual Top-100 ranking of the best outsourcing companies – The 2018 Global Outsourcing 100. This rating represents 18 companies with offices in Ukraine.

However, competition in the market is quite high, new players are constantly appearing. Such can be countries that, 3-5 years ago, were practically not represented on the market. So, according to the Oxford Business Group, the Philippines back in 2015 was the most attractive country for outsourcing call centers, which employed more than a million employees, while IT outsourcing was poorly represented.

It is not surprising that, for example, potential customers are increasingly asking themselves: where is it better to order IT outsourcing services: in Ukraine, or in the Philippines?

Undoubtedly, programmers from Ukraine have professional advantages compared with the Philippines. Such are the number of developers and their experience, because Ukrainian specialists have long been collaborating with Western customers and have experience working on complex projects. However, IT outsourcing companies from the Philippines often offer a price not just 20-30% lower than their Ukrainian counterparts offer, but, sometimes, the price 3-4 times lower.

One of the reasons for such dumping is that the skills offered by programmers are not very high. Of course, such a level of professionalism may be sufficient for simple tasks and then the position of the customer who chooses the option that is several times cheaper is clear. However, on complex and extraordinary tasks such a difference in price does not seem reasonable because the market clearly defines the price for the professionalism.

Also, Ukraine has a fairly good high school, which prepares IT-specialists, that’s why even beginner programmers usually have a fairly high level of knowledge and many of them are also taking specialized courses from world IT-companies. Therefore, by default, the chance of starting a quality programmer in Ukraine is always higher.

Another aspect that is usually taken into account by customers is the location of Ukraine in the close to the EU countries time zone. The time zone of Ukraine is GMT + 2. This is very convenient for Europe – the working hours area almost the same. And even for companies from the USA or Canada, Ukraine is a better choice by this criterion compared to Russia, China or India, with which the difference in time zones is more significant.

The factor of speed and quality of the Internet is a not less important aspect in working with IT-outsourcers. Ukraine is ranked 20-21st in the ranking of Internet speed among the countries of the world, while it should be understood that the cost of such an Internet compared to other leading countries is very small – in any Ukrainian large city you can connect to a 100-megabit connection in just one day, the subscription fee for such Internet speed is often in the range of 4-7 USD per month. There are 2-3 trunk cables inside the most of buildings at the same time or even more, so switching to another provider takes a short time and does not destroy the business process of the outsourcer!

The geographical position of Ukraine is also attractive, both in terms of business travel and natural / climatic factors. There are never natural disasters such as hurricanes, typhoons, cyclones or tsunamis, which can stop business processes for a very long time.

Thus, many Western companies might be interested in the IT outsourcing market in Ukraine. And it is not necessary to work with the giants of the IT outsourcing market, it’s quite realistic, if you are interested, to create your own IT department in Ukraine that will serve the business processes of the parent company, etc. Or find a single specialist for some one-time projects. And in order to insure in such cases, you can use the services of lawyers in Ukraine, who may not be completely versed in IT issues, but they know the specifics of business in the country and help you to protect your interests in controversial issues.

Author: Kydalov Igor

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Publication Date: 23.10.2018
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