Ukraine Among the Fastest Growing Outsourcing Locations – Here’s Why…
As outsourcing remains popular, everyone is looking for the best market for outsourced workers. Ukraine is one of the hottest destinations for businesses of all sizes that are looking for skilled, well-priced, and committed freelancers for a range of projects. When it comes to IT and software development, Ukraine is the strongest choice of the moment.
Over 100 global telecom, eCommerce, software development, and gaming companies have R&D offices in Ukraine, including Grammarly, Magento, Ericsson, and Crytek. The country boasts the greatest percentage of software engineers in Central and Eastern Europe. With a predicted 200,000 IT specialists by 2020 positioning the country for global success, we share important data about outsourcing to Ukraine’s booming freelance market.
Trends for Outsourcing to the Ukrainian Market Remain Strong
The IT development market in Ukraine is expected to keep increasing in the near future. This is at least partly thanks to government initiatives such as tax exemptions for IT businesses and stronger intellectual property rights’ laws. In 2017, Ukraine saw a boom of over 3,000 tech-intensive companies in the country, with over 1,000 focusing on software development. This creates a competitive atmosphere, with outsourcing companies competing both for the best IT developers and the best clients, which has produced a thriving market in IT development.
Payoneer allows for businesses to make international payments, among these are vendor payments made by companies paying freelancers. When analyzing our user data, we see a growing trend towards increased outsourcing to Ukraine. We can see a clear positive trend in year over year growth for Ukraine’s freelance market on our platform. Since 2017, we’ve seen over 50% growth in transactions for this market. We are optimistic that this trend will continue. Transactions aren’t the only thing growing, we also see consistent growth in transaction volume, showing us that not only are more companies outsourcing to Ukraine, but the scope of the projects is increasing.
Outsourcing has become one of the most promising industries for young entrepreneurs in Ukraine, especially as it’s a business that you can develop without any start-up capital or external investments. Thus, Ukrainian specialists can compete on equal terms with service providers from all over the world and in fact, they’re doing very well. Many our clients are a great example of companies who started out with just a few employees and then grew substantially. – Michael Deinega, Payoneer Country Manager – Ukraine
Why Outsourcing to Ukraine is a Good Decision for Startups
Ukrainian developers are dissolving the myth that IT engineers and programmers who trained in the UK or the US are better than their Ukrainian counterparts. 85% of Ukraine-based workers have a university-level education, which is part of what makes them such reliable and skilled IT engineers. Almost two-thirds of Ukrainian freelancers have a higher degree in computer science, and 55% have more than three years of experience in their profession.
Universities in Ukraine have similar admission requirements to those in the US or the UK, requiring a full secondary school or vocational school diploma with good grades. Over 80% of Ukrainians attend university. The 4-year Bachelor’s and 1-2 year Master’s degrees are awarded in accordance with the Bologna Process, which aims to equalize teaching standards across the EU.
Six Ukrainian universities featured on the QS Top World University ranking – three located in Kyiv, Ukraine’s capital city. When it comes to computer science in particular, Kyiv Polytechnic Institute and the National Shevchenko University stand out as the best, offering a number of courses in computer science, computer programming languages and more abstract computational sciences.
Most Ukrainian freelancers speak English fluently – over 75% at intermediate level or above. So you can look forward to working with well-educated, experienced developers who can understand your instructions and respond in the same language.
Although the cost of salaries for Ukrainian IT engineers has risen noticeably since 2015, they are still a fraction of those paid to IT engineers in the US or UK.
Junior full stack IT developers in Ukraine expect to be paid around $1,600 per month, while those in the US charge over $6,200, in the UK over $5,200, and developers in Switzerland begin at over $11,300. This price discrepancy is largely due to the very low cost of living in Ukraine, which makes it possible for skilled IT developers to undercut their equally talented counterparts elsewhere in the world. There are predictions that the cost of IT development in Ukraine will start to rise soon, so this amazing market might not stay the same for long.
Data from our platform shows that Ukraine-based developers work with clients from all around the world, with the US, UK, and Canada leading the charge as the biggest contractors of Ukrainian development services. Businesses located in Russia, Germany, and Israel also benefit from the use of outsourced development services in Ukraine. It’s safe to say that companies are happy outsourcing development to Ukraine.
What Projects are the Best to Outsource to Ukraine?
There’s a sizeable and growing roster of tech startups that have outsourced development to Ukraine. Companies such as UrbanSitter, Mailburn, and We Are Off The Record took this route successfully – but they all advise to choose which projects to outsource carefully. UrbanSitter outsourced their first MVP prototype, which they didn’t intend to keep long-term. Mailburn used remote iOS developers working beneath an in-house iOS lead and product manager; Tilt CEO James Beshara outsourced smaller, time-consuming jobs such as usability testing.
Recommended projects for outsourcing to Ukraine include:
- Your early prototype MVP that you intend to jettison once more funding comes through
- Website design and development
- Small, static pages that aren’t vital to the product
- Non-core updates to the product that don’t require sharing your core code
Some of the reasons why tech startups chose to outsource development to Ukraine include:
- Budget – The vast majority of tech startups bootstrap on a shoestring. Frequently they are self-funding and simply don’t have the capital to spend on an in-house developer. They need the best talent for the lowest price, and Ukraine is where the two converge.
- Management – Outsourcing software development allows startups to keep management teams focused on the big picture of management without the distractions of handling in-house developers.
- Time – All too often, the team that’s the first to come out with their MVP wins the funding. Startups that are competing for investment need to get a prototype on the ground as soon as possible. Outsourcing allows them to find the expertise they need to get it done in a hurry.
Overcoming the Fear of Outsourcing to Ukraine
There’s still a stigma about outsourcing development, but it’s not always grounded in reality. Investors frequently demand to know who the tech co-founder is on a project, and there are still venture capital teams that won’t invest when development has been outsourced. It’s true that when handled carelessly, outsourcing to Ukraine remains risky. A startup that has a coding co-founder or a CTO shouldn’t outsource their core code. Sharing core code without putting permissions, database access and other developmental operations into place first is a recipe for disaster.
It’s also vital to make it clear who owns the coding knowledge. When it comes to tech startups, knowledge ownership is power. If that knowledge is handed to remote freelancers, it could be permanently lost to the company. Intellectual property rights are nebulous, although Ukraine is working at strengthening laws in this area.
That said, most if not all of these issues can be addressed with some forethought, and especially with a strong contract. The contract should cover ownership of IP, and include a non-disclosure agreement that prevents remote workers from sharing your secrets. It is rare for a freelancer to run away with IP and sell it to a competitor – it usually is more effort than it’s worth.
It’s also important to make it clear who is responsible for hosting and ensuring that code operates properly. Startups want to avoid finding that the code they paid for doesn’t work properly on the hosted site and that their developers can no longer be found.
When there’s an in-house management team that keeps active control over remote IT engineers, outsourcing development can be very successful. A CTO or other technical officer who takes charge of a remote development team combines the benefits of outsourcing with the positives of keeping control of the knowledge. It’s also a good solution for later updates, once there’s a strong programming architecture already in place.
Perhaps it’s time for you to take advantage of the vibrant market in Ukraine together with Payoneer’s vendor payments solution, and outsource your IT development to a Ukrainian developer.