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 is fourth after the United States, India, and Russia 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 Belarus
- Comparison of the offshore software development costs for sample project
STATE OF THE IT OUTSOURCING INDUSTRY IN UKRAINE
Thanks to the geographical position of Ukraine, other European countries find it suitable to 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 the United State companies have increasingly opened up their own offices in Ukraine (Samsung, NetCracker) while others take part in IT outsourcing to the country. The cultural proximity is also a plus for making outsourcing much easier and flexible for foreign companies besides attractive outsourcing rates.
With the increased number of IT specialists, there has been stiff competition among software development companies and developers on the labor market. Such competition has fostered the provision of high quality IT solution services and at fair prices. This has, in turn, made outsourcing rates for software development in Ukraine cost-effective 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 developing the existing IT labor to fit in 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 that 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 had 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 the senior developers.
COMPETITORS IN EASTERN EUROPE: POLAND, BELARUS
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 who want to use 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 15th, Czech Republic 16th, and Romania 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 Belarus are often named as main Ukraine’s competitors in terms of offshore software development market as all three countries located in the same geographical region, has 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 has among the biggest number of IT specialists in Europe of around 105,000 developers in the local IT market which made this country a rising star of offshore programming services. The state has over 1000 IT companies and there is an expectation of growth of 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% 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.
Half of the companies in Belarus have invested in application development while a quarter provides the outsourcing services. Belarus IT companies generate approximately 1.5% of the country’s GDP and have over 30,000 software engineers and over 970 IT enterprises both local and foreign. This is a result of the support from the Belarusian government since the residential IT companies are exempted from taxation having joined High-Tech Park.
The Belarusian IT industry boost majorly comes from the available pool of offshore developers at attractive rates, limited government interference, and affordable specialists.
Nevertheless, there is still an unstable tax system in Belarus, while the government provides its support to the industry half-heartedly and property rights are poorly defined.
In many cases, Ukraine has the same issues as Belarus. But thanks to the more flexible legal system most of the Ukrainian outsourcing software companies have branches registered in the European countries and the customers from the EU and the US can work with the contractors in the European Union legal field. Just like with the Poland companies.
Poland has around 118,000 IT professionals taking part in its IT sector and compared to Ukraine and Belarus, they are more experienced in working with global companies directly.
Ukraine has a larger number of schools of higher learning offering IT courses. It produces over 380,000 IT graduates each year which is besides other professionals trained by IT companies that offer IT-related courses. Also, other than the technical skills most of these professionals are also well versed in English among common other languages used in Europe.
However, with potential growth, the Ukrainian IT industry has, more professional IT experts are expected to meet the industry 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 to facilitate more students taking IT disciplines.
Belarus has around 54 institutions of higher learning offering IT-related disciplines that each year produce 4000 IT professionals. Also, other software development companies offer IT courses, however, the country still has a large gap to fill (between the IT professionals required in the market and that graduated IT produced).
First, 80% of the students can communicate in English which is a plus to 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 AND POLITICS
Other than the country’s location in Europe, the citizens as well have similar cultures in terms of language, virtues, social lifestyle as most Europeans. This makes Ukraine as 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 to secure reasonable IT outsourcing rates in Ukraine.
The Belarus government has been of great aid to the country’s IT sector especially having made the IT sector among the priority in the country’s economy. Moreover, the introduction of Belarus Hi-Tech Park has prompted an increase in the development of software development companies who work at relatively low outsourcing rates. The country’s HTP companies are exempted from corporate taxes such as land taxes and VAT which positively influenced outsourcing rates for software development.
Also, the country is located in Europe which makes it more favorable to outsource IT services from the EU. The peoples’, culture and lifestyle do not differ so much from other Europeans and Americans culture which eases out communication and dwelling in the country.
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, 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 the result higher outsourcing rates for software development.
We have done the research and calculate the average outsourcing rates in Poland and Belarus 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.
COMPARISON OF PROJECT DEVELOPMENT COSTS IN 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, 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 print out after the sale
- Start purchase with the reading of the barcode
- Start purchase with 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 to the development team.
Below are the calculations of how much man-hours of 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, Belarus, and Poland.
|Developer||Size of the team||Total Man-hours||US||Belarus||Poland||Ukraine|
|Lead .NET developer||1||480||105||50||70||50|
|Senior .NET developer||2||960||85||40||60||40|
|Graphics designer / UX designer||1||160||70||35||35||35|
|TOTAL COST||$227 200||$94 400||$132 800||$87 200|
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, 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. Feel free to contact us for a mutually beneficial partnership. We’re always glad to hear from you.