IT Outsourcing to Ukraine: Growth that Outshines the War

Outsourcing IT services has become an increasingly popular practice among businesses looking to increase efficiency, gain access to specialized expertise, and, after all, save costs. Over the past decade, Ukraine has emerged as a leading destination for IT sector outsourcing in Eastern Europe. 

Ukraine is a dynamic and productive developing economy with a young generation of IT talents. These professionals embrace change and innovation and continuously aspire to high achievements. Ukraine’s IT industry has grown tremendously in the last twenty years, with numerous international companies setting up offices and hiring local talents.

With numerous benefits apart from financial attractiveness, Ukraine has established a solid reputation as one of the most preferred outsourcing destinations. Over 15,000 IT specialists graduate from tech universities in Ukraine yearly. The country has built a thriving IT ecosystem with thousands of custom software development services providers, delivering cost-effective, high-quality solutions. Companies outsource their IT projects to Ukraine to access top-class engineering talent and the finest products. IT outsourcing to Ukraine allows companies to benefit from a wider talent pool and lower expenses.

Global businesses looking for custom software development frequently choose Ukraine. However, from February 24, Ukrainians must deal with Russia’s unjustified war against Ukraine. Despite this situation, the Ukrainian software industry is still expanding. What draws Western companies and their IT operations to Ukraine, and how have Ukrainian IT enterprises withstood these difficult times? Let’s explore it together in this article.

IT business operates seamlessly despite the war

Ukraine has suffered a heinous attack waged by the Russian Federation since February 24, 2022. However, this situation has not halted any operations in the Ukrainian IT industry, right after guaranteeing that their staff and data are fully protected in Western Ukraine (a relatively safe part of the country) or neighboring countries, software development companies, as well as American and European corporations with offices in Ukraine, continue to operate without any significant interruptions. While retaining control, high-quality services, and access to the talent pool, they have decreased and managed all business risks.

Ukrainian IT firms have shown their resiliency and ability to deliver excellent services no matter what. During wartime, the Ukrainian IT industry has displayed remarkable tenacity, moral courage, and ability to handle crises. Many IT companies ensured the safety of their employees during the early stages of the war or even before the start of the war. Multiple Ukrainian companies had launched emergency measures in advance by moving technical equipment and preparing emergency offices in safe places inside the country or even abroad, following intelligence warnings. 

The shift to a new model went smoothly, and that could be expected. Two years of Pandemics have helped Ukrainian IT companies get prepared for any circumstances.

Foreign embassies have also returned to Kyiv, suggesting the Ukrainian capital is secure enough for businesses. During crisis times, Ukraine’s IT sector has proven to be a reliable partner for foreign companies. 

Growth of IT services export

Ukraine’s export-oriented IT sector produced a record $2 billion in revenue for the first quarter of 2022, the National Bank of Ukraine (NBU) reports. The result is 28% higher than the figure for the same period of 2021 ($1.44 billion).

According to this report, the growth of the software development industry continued until the war started and reached a record monthly export – $839 million. This figure exceeds the same period in 2021 ($480 million) by 43%.

In March 2022, the Ukrainian IT industry retained $522 million, 96% of IT services exports, compared to the same period last year ($546 million). The IT sector has stabilized and quickly rebuilt its operations with the help of anti-crisis plans. Most Ukrainian IT companies managed to retain customers and the volume of their development and maintenance contracts, Forbes reports. Moreover, by the end of 2022, software development services exports showed 5.8% growth compared to pre-war 2021.

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Ukraine IT companies still hire

The DOU recruitment portal’s poll found that 90% of Ukrainian software engineers have not experienced any changes in their jobs or workload since the beginning of the war. This illustrates the trustworthiness of Ukrainian IT firms. More importantly, they hire software developers in Ukraine and abroad to support their company and the market.

The Ukrainian IT market grew tremendously in 2021

In 2021, the Ukrainian IT market showed phenomenal growth. To visualize this expansion, consider a 50% staff increase by the five biggest Ukrainian software development companies. The five giants of the software industry (SoftServe, GlobalLogic, EPAM, Luxoft, and Ciklum) have hired roughly 27,000 employees since 2020. In 2022, they counted more than 40,000 active tech specialists altogether. Recent estimates indicate that 220,000 Ukrainian programmers performed in the global market in 2021. It is the highest result in Europe and the fourth rank globally regarding capability.

The world’s top-100 IT vendors list includes Ukrainian companies

The Ukrainian IT industry is famous for providing services for EU, UK, and US companies and tech startups. Over 100 corporations from the Fortune 500 list are among the Ukrainian IT vendors’ customers.

The International Association of Outsourcing Professionals announced the top 100 IT outsourcing services providers. This rating included 12 Ukrainian software development firms and 3 international companies with offices located in Ukraine. IAOP annually selects the best software development companies based on the most relevant criteria in the industry, such as customer testimonials, certification and awards won by vendors, innovation initiatives, and social responsibility projects.

Strong positions in the US market

Clutch, the globally known US-based B2B software providers review portal, highlighted Ukrainian firms among the fastest-growing IT companies in its ranking published last year. Ukraine’s outsourcing firms are also on the list of companies with the most sustainable growth. The list of the 100 fastest-growing software development companies includes 5 from Ukraine, while 9 appear on the list of the top 100 companies with the most sustainable growth.

When it comes to IT outsourcing activities, the US continues to be Ukraine’s top partner. Roughly 45% of the IT sector customers represent US-based businesses. Ukrainian tech specialists are among the best in the world for their in-depth technical expertise, excellent English proficiency, and cutting-edge technical skills. 

Ukraine to join the EU

The EU leaders granted Ukraine European Union candidate status on June 23, 2022. The historic decision marks an essential point on Kyiv’s way to EU membership. 

All industries, including IT, will gradually converge on EU standards as part of the integration process. Access to the EU market, technological advancements, financial aid to restore vital infrastructure, and low-cost loans to restructure the economy will help Ukraine’s IT industry continue growing. Western Europe is the second biggest market for Ukrainian outsourcing agencies, and EU membership will significantly facilitate business trips for both parties.

Benefits and reasons to outsource your software development to Ukraine

Ukraine is one of the best destinations for IT outsourcing. Here, you can hire highly skilled software engineers fluent in English at reasonable outsourcing rates. Ukrainian developers and IT project managers are hard workers and have a positive stance on cultural differences.

Huge talent pool

The talent pool is young and vibrant, with brilliant developers who have continuously raised the bar of excellence despite the challenges to enable the IT sector to prosper. With more than 400 universities and a growing number of specialized advanced training programs spread across the country, Ukraine annually produces over 15,000 IT graduates. The number is one of the highest in the world. 

Also, seizing the growing need to ensure ongoing software development capabilities, a significant number of private establishments offer specialized courses in the industry. Over the last decade, there has also been a steady rise in the number of IT specialists in Ukraine. For instance, the top 50 Ukrainian IT companies hired 10,000 more professionals in the first half of 2021.

Diverse tech skill set covering various technologies

IT experts from Ukraine have a wide range of technical skills across all programming languages. More than 1,000 development centers in the country hire skilled programmers to work on various high-level software projects for global corporations like Google and IBM. About 10% of Europe’s graduates in STEM fields, including computer science, come from Ukraine. The country has become a tech hub for innovation and the origin of many popular IT products today. Ukrainian startups include Ahrefs, GitLab, Ajax Security, PetCube, and Grammarly.

Effective communication and English language proficiency

Ukraine has a large number of people speaking English fluently. Western companies do not face any challenges with the language barrier and possible miscommunication during the IT outsourcing to Ukraine process. All they need to get a perfect end product is to provide a detailed description of their project’s technical requirements.

Cost savings

Compared to software development firms in North America and European countries, Ukrainian software development services providers offer exceptional technical knowledge and creativity for competitive pricing. Compared to other markets, it is always a good idea to hire Ukrainian developers in terms of cost savings.

It is usually expensive to hire and train a group of IT specialists as well as create the necessary in-house infrastructure. Additionally, by subcontracting services, companies can significantly reduce their expenditures on hardware costs, software licenses, maintenance, etc. By lowering development costs, outsourcing software development to Ukraine gives you budget control and access to the best talent that might not be available in your in-house team.

Cost-to-quality ratio

Monthly salary is not the only factor. With highly skilled developers and effective product quality control, Ukrainian IT firms guarantee world-class quality. Given that Ukraine has a 30-year tradition of software development, there are many senior engineers. In addition, many IT graduates advance their abilities quickly since they land jobs right out of university and are mentored by highly experienced coworkers.

Strong work ethic

Ukrainians are well-known for their dedication to excellence and exemplary work ethics. Soft skills were always a decent advantage of Ukraine software outsourcing. You may count on the best outcomes if you hire developers in Ukraine. They put a lot of effort into product development and have creative minds to generate ideas for your business.

Culture proximity

Compatibility across cultures is the ultimate argument. Ukrainian IT specialists rapidly absorb Western principles and express pro-European views. Generally, Ukrainians share a very similar mindset to European residents. This translates into a solid cooperation that enables IT projects and tech startups to be launched successfully.

Geographical Proximity

Ukrainian strategic location is historically considered a crossroads of the world. Proximity to the major markets of both the West and East allows Ukraine access to these markets. Being Western-oriented economics, Ukraine has always been open to new experiences from the East. With a well-developed transportation infrastructure, Ukraine can be used as a transfer hub. Top Ukrainian outsourcing cities, for instance, Lviv and Kyiv, are conveniently located and are just one or two hours away from the EU by plane (be aware that flights are temporarily canceled because of the war). In addition, citizens of most countries can enter Ukraine without a visa.

Data security

Data security is of essential importance to global corporations. The laws of Ukraine are in line with those of the European Union. Databases and computer programs are copyright-protected under Ukrainian intellectual property laws. Ukrainian development companies are capable of protecting both sensitive client information and intellectual property rights. They provide secure data recovery techniques to deal with unforeseen data loss, in addition to compliance solutions tailored to the customer’s needs. Ukrainian IT firms also sign Non-Disclosure Agreements to protect your business ideas and confidential information.

Convinient time zones

The time zone difference makes project management and scheduling alignment simple due to the working hours overlapping with those of several North American locations. There is only a 1-hour time difference with most European countries. One of the main arguments for choosing Ukrainian outsourcing is that the working hours in the EU or the UK are nearly identical to those of the remote development team in Ukraine. 

Take benefits of Ukraine’s IT outsourcing, adapted to new realities

Every business can access highly qualified software developers by outsourcing IT services to Ukraine and getting all the listed benefits. The IT firms ensure that the dedicated team assigned to your project has the necessary skills and experience to build solid, effective, and scalable solutions. As the vendors have experience working on a variety of projects across multiple industries, they can quickly find efficient solutions to any company’s specific needs. Since businesses must keep up with the rapidly evolving IT trends, outsourcing to Ukraine can help you adopt cutting-edge tools and technology faster.

Ukrainian software development outsourcing companies continue to expand, reaching global rankings lists and winning awards. During the war, crisis management and business continuity strategies performed at their best, and Ukraine’s companies retained customers and kept projects running. The partial transfer of resources to neighboring Eastern European countries went smoothly, and Ukrainian IT firms continued providing top-level services. Ukraine’s tech sector has proven to be a trustworthy and effective outsourcing partner. 

Challenges of IT outsourcing in Ukraine

While Ukraine is a popular destination for outsourcing, businesses should also consider some challenges they may face when choosing Ukraine. While these challenges can be significant, they can also be mitigated by thorough and careful planning as well as transparent and honest communication.

Infrastructure challenges

While Ukraine’s IT infrastructure is generally robust, most infrastructure challenges stem from the state-level infrastructure. After several months of carpet bombing of energy infrastructure, many companies experienced stable power and internet connection difficulties. Numerous blackouts marked the recent heating season after the purposeful criminal acts of power plant destruction. However, most companies quickly ensured uninterrupted connection to the Internet with Starlinks and electricity with autonomous power-generating systems. Additionally, the Ukrainian energy infrastructure recovered most of its capabilities by the end of the winter of 2023.

Slow Internet

Although Ukrainian Internet providers offer one of the lowest prices in the world, the Internet quality is often questionable. During the Pandemic and the beginning of the war, a lot of workers switched to the remote mode of working, considering the security concerns. There has been considerable progress in Internet quality in recent years; however, the countryside locations still may have modest Internet speed. Most offices don’t face such a problem and have a plan B (e.g., additional Starlinks or several providers connected just in case). 

Communications disruptions

Unfortunately, most software engineers remaining in Ukraine are forced to disrupt the working process several times a month due to the risk of air bombings. Air raid sirens may sound from 10 minutes to several hours during the day and the night. That’s part of the new reality for the Ukrainian people. Although many devs have already adapted and continued to work from safe places and shelters, this factor still can impact the seamlessness of communication.

The composition of the companies changes

Numerous members of the vibrant tech community followed their hearts and devoted much of their time to volunteering activities. Some of the Ukrainian software developers joined the armed forces to defend the country with weapons in their hands. Together, these factors led to tangible perturbations in the composition of many IT companies.

Some force-major circumstances are, of course, the factors you should consider before choosing a Ukraine software outsourcing destination for you. However, Ukrainian businesses have already shown advanced skills in crisis management, and we believe nothing will change this growing trend.

Why choose ELITEX for software development outsourcing to Ukraine?

ELITEX, as a company with origins in Lviv, has left our office doors open to every employee who will thus feel morally protected or need to communicate with like-minded people. We have provided our employees with safe working conditions and facilitated the possibility of relocating abroad for those who needed it for one reason or another. Security has been a critical aspect of our business for over a year. This way, we ensure the best security for ongoing and future projects, as well as uninterrupted power and Internet connection.

Read more about the experience of the company, how ELITEX adapted to the new reality, the thoughts of our team members, and what we have been doing during the last year.

We will be happy to hear from you in case you are looking for reliable outsourcing companies in Ukraine. ELITEX is an experienced custom software development company providing solutions for businesses of all scales across multiple industries. Our priorities involve honesty, transparency, and smoothness in communication combined with highly skilled engineers with almost a decade of market experience.

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