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Behind the Headline - IT Outsourcing in Ukraine

by sourcingfocus.com

Ukraine offers much for the IT sourcing sector, from a highly skilled workforce of young professionals, a busy community of foreign investors and firms and the support of the Ukrainian government. Ukraine is the fourth largest exporter of IT products and services in the world.

Ukraine can boast of it’s fantastic education system, with around 36,000 graduates a year in technical studies, perfect for the IT industry. This is supported by a strong professional sector, allowing businesses the full range of services required to set up and grow operations in Ukraine. It’s pool of skilled technical engineers allows Ukraine to stand out from the competition in the Central and Eastern European block. It’s Ukraine’s technology heavy history that has provided such a fantastic foundation for the growth of technology skills. The government in Ukraine continues to make steps forward to improve education further, creating a long-term future for the industry. NGO’s have stepped in to help the Ukrainian technology future, the BrainBasket Foundation aims to train 100,000 new IT professionals by 2020 and to turn the IT sector into the number one export industry of Ukraine.
Ukraine has a varied but vast labour force to support business in the country, salaries are competitive and it can be a challenge to retain highly skilled workers who look to emigrate into Western Europe. The demographics of the labour pool are in Ukraine’s favour with many of its engineers being below the age of 30.

English proficiency is good in Ukraine, especially in the commercial hubs which improves the ease of doing business. Living costs are very low, easily beating competition in the Central and Eastern European region. While there are cheaper outsourcing destinations – like India, the Philippines or China – Ukraine provides a superior price/quality ratio. Ukraine is ranked 80 out of 190 on the ‘Ease of Doing Business’ report from the World Bank gaining 20 positions since 2014. The World Economic Forum ranks Ukraine 68 out of 140 in its Global Competitiveness Index, with high score in education, business sophistication, health care and innovation. It’s competitive local market also distinguishes Ukraine from some of its geographical competition.

Ukraine has a favourable tax regime, especially for the IT sector to encourage the industry to grow. When coupled with its geographic location at the edge of Europe, the low costs make Ukraine the perfect base for IT or BPO projects. Data Management and Telecommunications are the strong sectors in Ukraine at the moment with Ukrainian developers often working on mobile, software, enterprise and web projects. Continued investment in infrastructure is allowing for improved technology services complementing the existing IT industry.

Many firms and organisations have noticed the potential on offer from Ukraine. Ukrainian firms have been behind the software used at major companies such as Ford, Boeing, Volvo and Scandinavian Airlines. Ciklum was a European service provider of the year finalist for the 2016 EOA Awards while SoftServe and OBH were recognized in the European IT Outsourcing Project of the year, category for the development of the Sense360 smartphone application.

Of course, complications exist. Ukraine has experienced significant political and economic challenges after the recent revolution and geopolitical crisis in the region.  However, the military conflict was contained to only 3% of Ukrainian territory in the eastern part of the country and has left many commercial hubs untouched. The new government is working to better commerce and trade in the country by enacting business encouragement policies that are broadly supported by international bodies.

Ukraine has consistently featured in Gartner’s top 30 offshoring and outsourcing destinations for the past six years and is ranked as number one for outsourcing markets in Eastern Europe by Outsourcing Journal.

Ukraine has all the features of an attractive sourcing destination for IT operations and business process outsourcing. If you look behind the headlines, have a bit of patience and get into the facts, Ukraine is a worthwhile investment that will continue to grow.

The GSA are hosting a locations strategy panel at their annual Symposium on June the 27th focusing on global destinations for the sourcing industry. To learn more about the locations that offer the best business join the GSA this June!


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