The IT outsourcing industry in Ukraine

The IT outsourcing industry in Ukraine has shown considerable growth during the last decade. Recent studies indicate that currently Ukraine holds its position among the most attractive outsourcing destinations and is surely moving towards the top of the list.

Thus, according to Annual Global Outsourcing Industry analysis GS100, Ukraine is on 11th place in the Top 20 list of the largest global delivery centers in terms of number of people deployed. Ukraine is the first among Central and Eastern European countries ahead of Russia, Belarus and Poland in this list.

Similar result are shown in the catalogue of IT outsourcing providers from Central and Eastern Europe – (the project of Central and Eastern European Outsourcing Association – According to the 2007 and 2008 CEE IT Outsourcing Review, Ukraine holds the first position among CEE countries in terms of market value, number of IT outsourcing companies and number of professionals involved in IT outsourcing services.

  Top 20 Locations

Country Total
1 India 514157
2 Philippines 97740
3 United States 42808
4 China 34672
5 Canada 32690
6 England / United Kingdom 23494
7 Brazil 10213
8 Germany 9269
9 Australia 8544
10 Mexico 8412
11 Ukraine 5816
12 Russia 5113
13 Belarus 4534
14 Chile 3572
15 Sri Lanka 3317
16 Argentina 3241
17 Malaysia 2868
18 South Africa 2855
19 Singapore 2833
20 Poland 1963
Note: Figures are based on data from over 150 companies

For the last decade the market value of IT outsourcing services in Ukraine showed constant growth, except for the last couple years, where due to the global uncertainties of the economy IT outsourcing activities remain sluggish.

Besides the global uncertainties of the economy, the Ukrainian IT outsourcing industry is greatly affected by the economic and political situation in the country.
Many other countries who are competitors of Ukraine in IT outsourcing have established special tax policies for outsourcing providers thus placing them in more favorable position and promoting industry growth.

For example, India, China, Brazil, Russian Federation, and Romania have several times lower tax rates for software vendors than Ukraine. Belarus has a special Government program for the stimulation of the software development industry.
The Belarus Hi-Tech Park in Minsk provides a comfortable business environment for the IT business with its special taxation conditions which are unprecedented for European countries.

Рейтинги популярности языков программирования

Какие языки программирования будут популярными в будущем, а какие устаревают?
Предлагаем ознакомиться с несколькими рейтингами:

Знакомимся языками программирования, технологиями,  базами данных, платформами и т.д.

Языки программирования -
Java и Oracle - это очень просто

Ukraine Ranks 1 in Central and Eastern Europe By the Number of Software Developers

According to the GS Top 20 Locations List (2010), the world’s leading countries by the number of software developers employed are: India (514,157 developers), Philippines
(97,740 developers), USA (42,808 developers) and China (34,672 developers). Ukraine ranks 11 globally and 1 in Central and Eastern Europe by the number of employed developers (5,816). By this parameter it leapfrogged Russia (5,113 developers), Belarus (4,534 developers), Poland (1,963 developers) and other Central and Eastern European countries.

The Ukrainian IT / software sector currently enjoys much attention from the Danish side.  
Danish IT companies see Ukraine as an opportunity to ensure that competent programmers at prices significantly below the Danish costs, and not located several time zones away from Denmark. It is not only wages, but just as far as the amount of well educated, making Ukraine interesting and an attractive alternative to India. It trained 10,000 programmers from universities every year, but the figure will grow to 25,000 in 2008/2009. To the ICT industry as a whole trained there approx. 30,000 a year currently.
The great popularity not only come from Denmark, has meant that the IT industry starts to experience some of the same problems as in Western Europe. The biggest challenge Ukrainian IT / software companies now face is the recruitment of qualified personnel and retaining the skilled employees. In contrast to most other sectors in Ukraine have almost all IT companies in Ukraine's own HR department, since employees are considered as the critical factor for success. In 2006 and 2007, wage growth around 25-30% annually. Increase fares expected to be the same for 2008 but will over time probably fall to 10%.
Pressure on resources has led to many IT companies have begun to focus on other cities than just Kiev. In addition to Kyiv, there are four other large cities in the country and it is in these cities that IT companies are expanding. Kharkiv, Dnipropetrovsk, Donetsk, Odesa and Lviv is the country's other development centers.
"Cost Drivers" - what does it cost?
Basically, a Danish IT company only save costs on wages. All other costs are either on the same level as in Denmark or higher. The price of computers and licenses are the same in Ukraine as in other countries, while office rent and communication costs / Internet are higher. Office Expenses can easily sneak up on 30-40 USD per m2 per month.
A comparison of Danish and Ukrainian running looks like this

Cost Items
DK = index 100
Telephone / Internet

The above table is only interesting if you plan on running his own company in the country. Most companies choose, however, to pay for the programming work on an hourly basis.
In the procurement of programming services, there is a price range of between 20 to 25 Euro per billed hour. The actual pricing depends primarily on the competence requirements and volume. With a high and steady volume of projects it can be done to get the price below 15 euros, although in Kiev. Some companies offer prices around 11 Euro per hour, but the purchasing entity must so even stand for example. training of employees, equipment purchases, payment of office facilities or the like. 17 to 23 Euro seems to be the fairest pricing. As in all other sourcing exercises it is important to activity base its costs, so the actual savings can be assessed.
As a rule of thumb you can achieve a cost reduction of 50% at a volume of 6,000 hours over 12 months compared with the project in Denmark. With these prices, you as business to very large volumes before it is worthwhile to establish own ODC rather than buy services from local businesses. An educated guess is that you must at least be able to employ 15 people full time before his own development company is an economic advantage over traditional outsourcing.
It is also not an inconsequential consideration whether we as a Danish company sees its activities in Ukraine as an extension of its business or a relocation of activities (IT sector is currently expanding and do not cut down). If the alternative is the expansion of activities in Denmark, the saving is greater than the above, taking as further assume new capacity costs.
There are mainly four Danish operators in the market which stands out, and each with their own benefits and each with their positioning offers their programmers to other companies. These are Celenia, Ciklum, Kring and Mondo. The first three companies are primarily located in Kiev, and all three have the Danes sitting local to the servicing of client group. Mondo has its branch in the city of Kharkov in northeastern Ukraine.