Author : Nick Krym

Offshore Destinations: Ukraine

ukrainiansIt’s no surprise that I have a strong predilection towards outsourcing to Ukraine – both my parents were born in Ukraine, my wife grew up in a Ukrainian city, and many of my friends have Ukrainian roots.

My own experience in working with development teams in Ukraine along with what I learned from my friends and family proved to me that Ukraine is an attractive IT outsourcing destination. I am not the only one to think this way as according to the analytics data recently released by top$dev, Ukraine takes the leading position on the IT outsourcing market of the Eastern Europe. At the moment, Ukraine takes 33% of the market, Russia is on the second place with 21.8% and the last of the top three East European outsourcing countries is Romania with 9%. Just a few years ago Ukraine was named the “Outsourcing Destination of the Year” by the European Outsourcing Excellence Awards.

Of course the recent political crisis and ongoing military operations in the eastern part of Ukraine raised a lot of concerns across business community.   But even a cursory look at the situation in the country shows that the crisis did not negatively impacted the outsourcing industry. On the contrary, this situation presents you with a lot of opportunities, for example a chance to employ qualified professionals for a lesser cost. The difficulties that Ukrainians face at the moment make them more eager to work for stable foreign companies and ready to accept lower salaries.

Personally, I am convinced that Ukraine remains a great outsourcing destination and with that let me share with you some of my personal knowledge and the information I’ve gathered through my network.

Ukraine: Infrastructure

Ukrainian Internet providers offer stable connectivity and high network bandwidth (up to 100 Mbps) in every city. There are also plenty of qualified Sys Admins available for hire, so you will be able to find someone to help manage your team and keep you informed of their progress.

IT talent pool in Ukraine is rather large and over 60% of the available specialist work in outsourcing, so you will have no difficulties in creating a team for your ODC, regardless of how many people you need to employ. Here you can recruit the staff and set up a small office or a full scale R&D center.

Internet connectivity providers are available in every city. The most popular of them are Ukrtelecom, Triolan, Kyivstar, Volia, etc. You can easily find their offices through a simple Google search. Median cost of internet connectivity per month is about $10-15.

Cell coverage is good in every region. The largest players in this market are Kyivstar, Life, and MTS. Median cost for corporate clients is around $15 per month.

Ukraine: Operating Environment

Over 70% of IT professionals are gathered in the three tier one cities. In the middle of 2013 the statistics were as follows:

  1. Kyiv – 46.2%
  2. Kharkiv – 16.8%
  3. Lviv – 8.9%

Due to the recent events, the majority of the IT specialists from the eastern regions relocated to these cities in 2014. This is one of the reasons as to why outsourcing to Ukraine is low risk even despite the conflict.

According to the data offered by WageIndicator, median cost of living in Ukraine ranges from $310 to $560 a month. The highest costs are in Kyiv, Kharkiv, and Lviv.

Getting to these cities is easy as each has an international airport. The cost of hotels, food, and transportation is considerably lower when compared to Moscow or major European capitals and business centers.

I hear that the crime rate in these regions is rather high and as an unsuspecting traveler you better avoid walking alone at night. Then again, one can hear these rumors about every major tourist destination, and Ukraine attracts plenty of tourists.

Median cost of living in tier two cities is a bit lower, and some of them also offer highly qualified IT pros. The locations you should focus on are:

  1. Dnipropetrovsk
  2. Odessa
  3. Chernihiv
  4. Zaporizhzhya
  5. Mykolaiv
  6. Sumy
  7. Kirovohrad
  8. Vinnytsia
  9. Ivano-Frankivsk
  10. Khmelnytskyi

One of the best IT universities in the country is located in Dnipropetrovsk and Odessa your best bet to find the specialists who understand the intricacies of business related to naval navigation.

The infrastructure of the country is well-developed. There is a speed rail connection between the tier one cities. In fact, you can reach almost every city in the country by train. Buses are available even in remote locations.

Ukraine also offers several reliable national delivery services. International delivery companies, such as FedEx and DHL, have a few of their offices around the country, so you will be able to receive or send out packages from almost any location.

You should know that not every store in Ukraine accepts credit cards, so you better always keep some cash in the wallet.

Visitors from the Western countries don’t need visas to travel to Ukraine. You will only need a valid passport to get into the country.

Ukrainians, on the other hand, do need visas in order to go abroad (with the exception of a few rather remote countries). However, the recent crisis sped up the process of Euro integration for Ukraine. According to the news, the Ukrainians who have a biometric passport which meets the EU standards will be able to enter the Schengen zone without visas starting with May 2015.

Like all the post-soviet countries, Ukraine faces the problem of corruption. However, it is currently being dealt with. The officials whose crimes are proven are replaced and the work of the government and civic services is made more transparent.

The positive side in this situation is that the issue of corruption has little effect on outsourcing as you don’t have to interact with the government officials or get any special permits in order to employ Ukrainian IT specialists.

Note that you need to be careful if you want to establish some kind of local business enterprise when you travel to Ukraine. In this case, you are bound to encounter some issues due to the complexity of legislation. You might also face difficulties communicating with officials because very few of them speak English. Therefore, it’s usually better to employ the services of a qualified attorney and interpreter for any official business.

Ukraine: Staff and Skills Availability

The vast majority of qualified Ukrainian IT specialists work in outsourcing. The number of such professionals in the country grows constantly as about 30,000 of them graduate every year. This is not enough to meet the level of demand on the market, but the dynamics is positive because there were only 16,000 IT graduates in 2011.

In Ukraine you can find IT professionals of different specializations. The most common skills available here are:

  • C++
  • .NET
  • Mobile development (both Android and iOS)
  • Java
  • PHP

Not all the specialties are represented equally well. For example modern skills that are difficult to find include:

  • Ruby
  • Groovy
  • CoffeeScript

The easiest and most efficient methods you can use to hire Ukrainian IT specialists are:

  • Employing the services of outsourcing companies.  These firms specialize in outsourcing only and should be able to meet your needs, but not all qualified professionals are registered with them.
  • Using popular freelance marketplaces.  There are quite a few sources you can explore, see 25 Best Places to Find a Freelancer. However, the number of Ukrainian pros who have accounts on these websites is limited.
  • Hire direct.  In order to do this, you will need to either hire a Ukrainian recruitment agency, or post an ad about your vacancy at one of the national job sites. The most popular employment hubs in Ukraine are work.ua and rabota.ua.  Please note that you may not be able to study the CVs already available on the websites as very few of them are in English. Employing the services of a local recruitment agency might be more effective in this case. You can find these firms through the same websites.

Ukraine: Cultural Compatibility

ukrainians-2I personally find working with Ukrainians very easy but I am afraid that it doesn’t mean much. With Russian roots and Ukrainian family I would not make a good crash test dummy. (I am not in this picture!) While I believe that most Ukrainians are easy to deal with, hospitable and open Americans who get their views formed by movies like “Italian Job” may think of Ukrainians as rude and intimidating.

What makes a huge overall difference in reducing cultural barriers in working with Ukrainians is that Ukraine is a country of educated people. Over 75% of its residents have higher education.

Nevertheless whether it’s language and food preferences, balance between team work and individual contribution, or attitude towards government or the role of women in the society you find some differences. They won’t be a showstopper in working with your offshore team.

Take a look at a couple of thoughts in my older posts – Offshore Destinations: Russia and Oh, Those Russians.

Ukraine: English Skills

English is a mandatory subject for IT specialties in universities. The vast majority of Ukrainian IT specialists can speak at least some English, so they should be able to understand the requirements of the assignment and discuss it. However, their conversational skills outside the professional jargon might be lacking.

Ukraine: Provider Rates

Rates of Ukrainian R&D and IT specialist are pretty consistent regardless of the location because the vast majority of them live and work in the tier one cities. The total cost of outsourcing is relatively low, which explains why this destination is so attractive.

The crisis also served to cut down the rates as people became more eager to find employment and their requirements lowered.

Median salaries for IT professionals in Ukraine vary depending on the amount of experience and specialty. Some of the numbers you can consider are:

  • Junior software engineer for C++ $825/ month
  • Junior software engineer for Flex/AIR/FLASH $575/month
  • Software engineer for Ruby/Rails $1950/month
  • Software engineer for PHP $1300/month
  • Senior engineer for Java $3200/month
  • Senior engineer for PHP $2300/month

Ukraine: Resource Turnover

Resource turnover in Ukraine tends to slightly rise every year. At the moment, the rate is around 13%, which is still much lower than that across the outsourcing industry. The unstable situation in the country makes people hold onto their jobs, especially if they are hired by foreign employers. So, there is a chance that this number will get lower in the near future.

Bottom Line

Today I can see Ukraine as a promising IT outsourcing destination with skilled and talented specialists. The IT industry of the country continues to grow despite the crisis. All the changes caused by the current situation bring Ukraine closer to the European Union and open new opportunities for business.

Do you have experience in working with Ukrainian teams? Do you find them easy of difficult to work with? Care to share your experience with the audience? Please, share your thoughts and experiences or ask any questions you might have. I will try to answer them to the best of my ability.  Please leave a comment or email me krym2000-po@yahoo.com.

4 thoughts on “Offshore Destinations: Ukraine”

  1. Nice read. Outsource industry of certain area itself may generate huge amount of motivational information but it still subjective. Thanks for sharing your experience as a service consumer.

  2. Hi Nick!
    In spite of funny pictures at your post (for me as I am Ukrainian and live in Kiev), the general overview and details you provided are true. Yes, on the eastern part of Ukraine we have war with Putin’s mercenaries (and I have a big hope it will be stopped coming days), but all the IT staff from this area relocated to western part of Ukraine and for the moment there are more options to find the required engineer in Kiev for example, that it was before.
    What I can add also that our new government made a bit lower tax rates for the small business starting from this year, and as a lot of (most of) outsourcing companies work as small businesses forms, it again an opportunity to get lower rates. And if you need some specific standalone engineer – it is a great way to find and hire a good professional (working as a private entrepreneur) in Ukraine and sure it will be cost effective.

    1. Alexey, thank for the thoughtful and helpful comment. I did not know about new tax laws, that’s a great news. Thanks, nick

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