Outsourcing Rates for Software Development In Ukraine

Ukraine is currently ranked as one of the top destinations for offshore outsourcing among European countries with numerous IT professionals and competitive outsourcing rates for software development. The country also takes the leading position in terms of the number of IT experts with over 105 000 IT professionals. In this article, you’ll learn more about Ukraine as the software development outsourcing destination, get the idea about outsourcing rates and find the comparison with the competing countries as well as the comparison of the estimated offshore development costs for the sample project.

Table of Content

• State of the outsourcing industry in Ukraine
• Average hourly rates for offshore software development services
• Competitors in Eastern Europe: Poland and Romania
• Comparison of the offshore software development costs for sample project
• Conclusion

STATE OF THE IT OUTSOURCING INDUSTRY IN UKRAINE

Thanks to the geographical position of Ukraine, other European countries find it suitable for offshore software development as they do not require VISA to cross the Ukrainian border, spend too much time on business trips, and shift working hours because of the difference in time. A lot of European and United States companies have increasingly opened up their own offices in Ukraine (Samsung, NetCracker), while others take part in IT outsourcing to the country. Cultural proximity is also a plus for making outsourcing much easier and more flexible for foreign companies, besides attractive outsourcing rates for software development.

With the increased number of IT specialists, there has been stiff competition among software development companies and developers in the labor market. Such competition has fostered the provision of high-quality IT solution services at fair prices. This has, in turn, made outsourcing rates for software development in Ukraine cost-effective and thus attractive.

In addition, due to the high demand for IT professionals in the sector, there has been an increase in the provision of disciplines in different languages, among other IT courses, in schools of higher learning. More high schools have also developed for the satisfaction of the IT market and the production of certified IT experts. In general, Ukraine is growing fresh expert talent at the same time while developing the existing IT labor to fit the required international IT standards.

AVERAGE HOURLY RATES OF THE .NET, JAVA DEVELOPERS, QA, AND PROJECT MANAGERS IN UKRAINE

Companies outsourcing to Ukraine choose to hire developers depending on their project’s requirements and framework. Nevertheless, outsourcing rates for software development services differ in terms of regions of the country, seniority, and type of technology. Here is a summary of the cost of software development in Ukraine and the fees potential customers will pay for the developers of the few most popular specialties. The outsourcing rates for software development are in USD as it is the common currency used by most clients for estimation of the budget before they invest.

One question that must have popped up is, “What is used to rank a developer in seniority?“ Well, it cannot be age as a 21-year-old developer can have more experience and a better skill set than a 30-year-old developer. Therefore the ranking is done in terms of years of experience, and the general rule of thumb is:

• Junior developers have 0-2 years of experience;
• middle developers have 2-5 years of experience;
• while developers with 5+ years of experience are senior developers.

COMPETITORS IN EASTERN EUROPE: POLAND, ROMANIA

Eastern Europe is the absolute competitor to Ukraine as it has similar attractions as an outsourcing region. The region is strategically positioned for foreign countries in Europe as well as the US and in addition to culture and language. Eastern Europe is also a favorite destination for most companies using the offshore software development model.

This region, in fact, has produced four countries in the top 20 in AT Kearney’s 2017 Global Services Location Index. They include Poland as 12th, Bulgaria as 15th, the Czech Republic as 16th, and Romania as 18th. The cost of outsourcing in this offshore destination is higher compared to regions such as Asia and Africa, but it has high quality and a great variety of developers.

Poland and Romania are often named as the main Ukraine competitors in terms of the offshore software development market as all three countries are located in the same geographical region, have a similar culture, and have comparable outsourcing rates for software development, which are our main criteria in this material. Let’s compare some aspects which may be important for the companies who are seeking offshore programming services and see if Ukraine can compete with other Eastern European countries as the destination for outsourcing.

IT MARKET OVERVIEW

Ukraine

Ukraine has among the biggest number of IT specialists in Europe, with around 105,000 developers in the local IT market, making this country a rising star of offshore programming services. The state has over 1000 IT companies and expects to grow its IT specialists to 200,000 by 2020. Junior developers in the country are mainly students at the age of around 21, an indication that even senior developers at still young.

Kyiv has the largest number of developers taking up 38%, followed by 17.2% in Kharkiv and 13.0% in Lviv. While the biggest cities in the country have hundreds of software companies, smaller regional centers like Vinnytsia or Zhytomyr also have dozens of big IT companies working on both software products and offshore outsourcing. IT market in Ukraine has grown by 150% between 2011 and 2015, and there is an expectation that by 2020 it will have hiked to $5.7 billion.

Romania

Romania is considered to be one of the fastest-growing IT markets in Central and Eastern Europe. The country has a highly skilled workforce, relatively low labor costs, and a strategic location at the crossroads of Asia and Europe, making it an attractive destination for IT companies looking to outsource or establish a presence in the region.

Software development and IT services are the most significant segments of the Romanian IT market, with companies providing a range of services, including custom software development, web and mobile app development, and IT consulting. The country’s highly skilled workforce and competitive labor costs make it an attractive outsourcing destination, and many multinational companies have established development centers in Romania to take advantage of these benefits.

According to recent statistics, the number of IT specialists in Romania has been growing steadily over the last few years, with a significant increase in the number of graduates in the field. In 2018, Romania had approximately 97,000 IT specialists, and the number is expected to continue to grow in the coming years. 

Overall, the Romanian IT market is dynamic and evolving rapidly, with many opportunities for growth and innovation. The government and private sector work together to support the development of the IT industry, and with its highly skilled workforce and strategic location, Romania is well-positioned to continue to attract investment and talent in this field.

Poland

Poland has around 118,000  IT professionals taking part in its IT sector, and compared to Ukraine and Romania, they are more experienced in working with global companies directly.

One of the factors contributing to the growth of the IT market in Poland is the country’s highly educated and skilled workforce. Poland has a large pool of well-trained and talented IT professionals, with many graduates in technical fields. Additionally, the cost of labor in Poland is relatively low compared to Western European countries, making it a popular destination for companies looking to outsource IT services.

Poland has several IT hubs, with the largest being Warsaw, followed by Krakow, Wroclaw, and Poznan. Many international companies, including IBM, Google, and Amazon, have established development centers in Poland to take advantage of the country’s skilled workforce and favorable business environment.

EDUCATION

Ukraine

Ukraine has a larger number of schools of higher learning offering IT courses. It produces over 380,000 IT graduates each year, besides other professionals trained by IT companies that provide IT-related courses. Also, other than the technical skills, most of these professionals are also well versed in English, among the common other languages used in Europe.

However, with the potential growth of the Ukrainian IT industry, more professional IT experts are expected to meet the industry’s labor needs. Therefore, the government is required to chip in more for the development of more schools of higher learning providing IT-related courses. Also, for the facilitation of the current schools facilitate more students taking IT disciplines.

Romania

The Romanian government has also implemented various initiatives to support the growth of the IT sector, including investment in education and training programs to develop the skills of future IT specialists.

Romania has a highly educated and skilled workforce, with an emphasis on science, technology, engineering, and mathematics (STEM) education. The country’s universities and technical schools offer quality education in IT and related fields, providing companies with access to a pool of highly trained and talented professionals.

Poland

First, 80% of the students can communicate in English which is a plus for the huge number of both schools and graduates in the country. About 40% of Polish people aged between 24-34 are university graduates, plus they contribute to 10% of Europe’s ICT specialists.

CULTURE

Ukraine

Other than the country’s location in Europe, the citizens as well have similar cultures in terms of language, virtues, and social lifestyle as most Europeans. This makes Ukraine a favorable destination for outsourcing software development, among other IT solutions. This is due to the ease of blending in by foreigners in terms of living expenses such as rent, communication, and infrastructure.

Despite the previous economic crisis due to political instability, the government has made efforts, such as making agreements with 63 countries to prevent double taxation in the business of outsourcing from securing reasonable IT outsourcing rates in Ukraine.

Romania

Romania’s culture is a unique blend of Eastern and Western European influences, which gives it a distinct advantage in the outsourcing industry. The country has a long history of trading and cultural exchange, which has fostered an open and collaborative business environment that positively influenced outsourcing rates for software development.

Romania’s culture also promotes entrepreneurship and innovation. The country has a strong startup ecosystem, with many young and innovative companies emerging in recent years. This entrepreneurial spirit is fostered by government initiatives, such as startup incubators and funding programs, which support the development of new businesses. Additionally, Romania is in the European Union, which allows companies to take advantage of the EU’s regulatory framework and trade agreements.

Poland

Being a member of the EU, Poland has managed to remain economically stable even during times of chaos. Poland has access to a pool of funds in which it can fight unemployment, and improve infrastructure, among other developments. In turn, the country’s economic and political stability makes it a great attraction for the outsourcing of IT services. The European Union has some consequences for the outsourcing industry, too, such as higher cost of living, higher taxes, and as a result, higher outsourcing rates for software development.

We have done the research and calculated the average outsourcing rates in Poland and Bel based on the data available at Clutch.co, GoodFirms, Glassdoor, and software development companies rate cards to create a comparison table which you can find below.

.NET Developers

Java Developers

QA Engineers

Other Specialists

COMPARISON OF PROJECT DEVELOPMENT COSTS IN THE US, WESTERN EUROPE AND UKRAINE

Let’s imagine that we need to develop and deliver software for the upcoming checkout terminals for the concession sale areas in the shopping malls. This will be our example to compare how much the offshore programming services could cost in those locations.

Checkout terminals need to have some specific functionality, such as integration with the specific payment processing system, signage feature for unused periods, and administrator interface for remote control, update, restart, and management.

Some other features that should be required from those terminals:

• Touchscreen selectable concession items via touch buttons with photos/pictures
• Barcode reading for the barcoded items via reader
• Product list during the purchase
• Non-logged in purchase
• Payment via card (payment terminal) or bonus points (partial or full via Loyalty login)
• Receipt printout after the sale
• Start purchase with the reading of the barcode
• Start purchase with the start touch button on the screen
• Auto-login during ID or Loyalty barcode scan
• Full branding and design using provided design-book
• No-ticket sales or prints

In this case, Existek as a vendor, can be fully responsible for the project management and control of the development team. A status reporting protocol will be established on a weekly basis to report progress, issues, and upcoming deliverables. According to those project requirements and circumstances, we will need to include the project manager in the development team.

Below are the calculations of how many man-hours each specialist would be needed to complete that project.  Keeping in mind the average hourly outsourcing rates for software development, let’s calculate how much this project could cost in the United States, Ukraine, Romania, and Poland.

CONCLUSION

In summary, Ukraine remains a captivating country for outsourcing software development with high quality and competitive outsourcing rates for software development. From its location, culture, high quality, and fair-priced services with no limitations to communication. Ukraine offers a complete package of offshore software development services. People who represent the country’s business and government have also made other efforts to make outsourcing in the country much easier. This has been through simplifying the registration and taxation system and increasing the state order for IT graduates for the satisfaction of the industry.

If you are a customer looking to outsource to Ukraine, identifying the perfect company in the massive pond of Ukrainian outsourcing companies could be challenging. This is due to the variety of prices and search for specific skills, among others, and that is why we at Existek are here for you. We are an outsourcing software development company in Ukraine offering among the best custom software development, dedicated development teams, software product development, and professional IT services at competitive outsourcing rates for software development.