Understanding the Current Risks of Outsourcing to Ukraine
Outsourcing has grown in popularity as a means for businesses to reduce expenses, increase productivity, and broaden their market presence throughout the globe. Industry analysts predict that by the end of this year, the worldwide software development outsourcing market would have grown by a stunning 70% to a whopping $430.5 billion. But, is it worth choosing Ukraine as the go-to location for a product tech company for outsourcing its operations?
This article will discuss the advantages and disadvantages of outsourcing IT to Ukraine, as well as the reasons why so many businesses are making the switch to hiring Ukrainian software developers. By the way, if you prefer a reliable agency to take care of your recruitment needs in Ukraine, then Alcor BPO is the right company that will handle everything related to employing the top IT staff and coping with back-office duties!
The State of the Ukrainian IT Sector in 2023: Threats and Prospects
The resilience of the Ukrainian nation and the prosperity of the IT business in the area during the full-scale war impress and make more companies hire Ukrainian experts. Even in times of Internet and mobile service absence as a consequence of temporary blackouts that are no longer happening in Ukraine, local software engineers managed to deliver high-quality results on time by equipping themselves with generators, uninterrupted Internet service, and power banks. Some Ukrainian programmers moved to safer cities and towns in Ukraine and abroad, often with the help of their employers.
More and more well-known corporations throughout the world are looking to Ukrainian software development firms for help with their IT requirements. Google, Mastercard, Deloitte, Oracle, Samsung, IBM, and Huawei are just a few of the IT giants that have set up offshore R&D centers in Ukraine. They are not only flourishing, but they are also increasing their business presence in Ukraine even though the war is still going on.
The war has had a major effect on the IT outsourcing business in Ukraine, which accounts for around 4% of the country’s GDP and exports $6.8 billion in IT services annually. In reality, Ukraine’s IT sector is thriving despite the continuing war between russia and Ukraine, with IT exports projected to increase by more than 10.97% (CAGR 2023-2027) beginning this year.
70.8% of IT organisations had to make an unexpected move, with a quarter making a complete relocation because of the full-scale invasion. A total of 16.7% of businesses have relocated wholly or partially to another country. Poland, Germany, the United States, Portugal, Bulgaria, the Czech Republic, Romania, Moldova, Spain, and Canada now make up the top 10 countries where businesses relocate. With the ending of martial rule and a total cessation of hostilities, 81.5% of IT businesses that left Ukraine still want to restore their operations in the country. These numbers adequately depict the potential for growth in the IT industry in Ukraine.
Main Reasons for Outsourcing to Ukraine
Despite the country’s economic crisis, the IT industry has shown consistent growth and increased tax contributions to government budgets. Additionally, Ukraine is anticipating a boost to its position in the global IT market as a result of its collaboration with the EU, which includes coordination of the EU digital union. In June 2023, Ukraine officially joined the Council of Europe Development Bank (CEB), becoming its forty-third member state.
Entrepreneurs of the third group were allowed to pay 2% of income tax instead of 5%. And most local IT experts belong to this group, which makes it easier and more beneficial for them to continue their operations in Ukraine.
Ukraine is a viable destination for IT outsourcing requirements, and although there are still risks to be cautious of, the government’s dedication to assisting the IT sector and the country’s connections with the EU make Ukraine a promising choice.
Here are the six most advantages of the Ukrainian market that attract global businesses to outsource their operations there:
Great Potential for Success
There are already over 309,000 IT experts in the regional market, and that figure is only expected to rise. More than 27,000 college grads arrived to serve as labor in 2022.
Agreeable Conditions for Business
Ukrainian officials have recognised the importance of the IT sector and are working to foster a business climate conducive to the sector’s expansion.
Ukraine’s standard CIT rate is 18%, which attracts businesses being relatively low compared to the other European countries but with no compromise on quality and experts’ proficiency. Independent contractors in the information technology industry benefit from a streamlined taxes structure as an example. With just 5% of their revenue going to taxes and a single monthly unified social tax, working with Ukrainian developers is now an attractive option for both local and international companies.
This has made it easier for companies to outsource work to Ukraine and created a more welcoming atmosphere for investors. The Ukrainian government is setting the stage for the development of the IT sector, making the country a viable option for the outsourcing of IT services.
More Than 2,400 IT Firms
Startups and IT firms in Ukraine continue to draw interest from venture capitalists and other potential outsourcing partners. Among the many impressive startups included here are Grammarly, Jooble, PetCube, and Readdile; some of them, like Looksery and Viewdle, have already been bought by major tech companies like Snapchat and Google.
Powerful Team of IT Experts
There are a lot of young, talented, committed, and passionate individuals who share the same principles in Ukraine’s digital community (the average age of an IT professional is between 21 and 29). Virtually all IT professionals spend a considerable amount of time each year on professional development activities including training, courses, and attending industry events.
In addition, there are many tech events in Ukraine, with 60% of developers making frequent appearances at gatherings including the Agile Eastern Europe Conference, PyCon Ukraine, iForum, IT Arena, and DEV_Challenge. Small local communities, such as the Ivano-Frankivsk Ruby community or IT-Vechornytsi, are another current trend in the Ukrainian IT business since they encourage tech experts to expand their skills and participate in exciting events and educational initiatives.
All of these efforts help Ukraine build a stronger tech society and produce more skilled workers.
Excellent Command of the English Language
Almost 80% of the programming community is fluent in English. Ukrainian experts can quickly adapt to changing circumstances because of their fluency in many languages. Ukrainians are in the top 30 countries in Europe according to the EF English Proficiency Index.
Modern Western Culture
Ukrainians are kind, easy to talk to, committed to their work, and direct while doing business. Similar to the work ethic of the United States and Western Europe, projects are run efficiently and well planned out. Ukraine only has 11 official holidays each year, and many of them are not the same as their American or European counterparts.
After all, Ukrainian programmers have a track record of client loyalty and project dedication. They are more than simply talented developers; their ability to conceptualise complicated processes means they will likely offer new perspectives and rapidly grasp your demands. Thanks to Ukraine’s thriving IT scene, the country’s programmers are always pushing themselves to do better and learn from one another.
Consider the Solution Offered by Alcor BPO
Our IT recruitment firm Alcor can help you find qualified IT professionals while freeing you from the burden of handling administrative tasks. We assist you with establishing a software research and development team in Ukraine, Poland, Romania, Bulgaria, and other Eastern European countries recruiting top-tier IT professionals and providing ongoing back-office services like accounting, payroll, and regulatory compliance.
Our team will assist you in finding the best developers to fit your needs via outsourced IT recruiting. 40+ of our IT recruitment experts will manage the whole hiring process and staff your company with top talent. With Alcor BPO, you will get 5 developers in just a month. It takes us around 3-6 weeks to close the job position with the best-fit candidate.
We guarantee your satisfaction with every engineer we put on your team, and if you’re not happy with them within three months, we’ll replace them at no cost to you.
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