IT Strategy

Why American Companies Should Outsource Software Development to Ukraine in 2020 and beyond

When it comes to technology, the United States is the undisputed industry leader. However, to maintain this momentum, tech companies need to hire top tech talent. In a job market where demand far outpaces supply, this is not going to be an easy task.

While tech behemoths like Apple and Google have the financial muscle to attract and retain the best minds in the business, the rest of us are left to deal with a fiercely competitive environment when it comes to talent.

This is where Ukraine comes in to fill the gaps. In fact, this Eastern European country has become the darling of IT outsourcing. Let’s find out why.

Ukraine Boasts a Large Pool of IT Professionals

According to a recent study conduct by the DOU, the number of IT specialists employed in the country now exceeds 160,000. This reflects a 26% increase from the previous year (while the IT industry itself has grown by 60% over the last two years).

The IT outsourcing business within Ukraine has been growing steadily over the last 19 years and is worth approximately $4.5 billion (a 20% increase from 2017). This suggests that the industry is poised to have the biggest impact on Ukraine’s national GDP.

A large number of tech talent available in the country can be attributed to the nation’s focus on STEM education. The quality of education is at the top, while costs are substantially low. This has lead to an extensive pool of highly educated individuals.

According to SkillValue’s 2018 rating of countries with the most talented developers, Ukraine came in eighth place. Ukrainian developers also had an average score index of 91.26%.

Over the past year, job openings posted on the DOU alone rose from 3,111 to 4,606 a month. At the same time, the number of application grew by 23% from 270,000 to 330,000.

Although there’s some negative press coverage (every now and again) about instability in the region, this reflects the fact that the country is still quite safe, and business continues to go on as usual.

The most sought after skills last year are as follows:

These three jobs combined accounted for as much as 31% of all vacancies posted in 2018.

Cultural Similarities and English Proficiency

As Ukraine is in Europe, the country shares a lot in common with the western world. 

Even though its located in the former Soviet Bloc in Eastern Europe, as much as 80% of software developers speak advanced or upper-intermediate English (with about 40% falling in the fluent category).

Most software engineers in the area learn the English language as it can boost their remuneration packages.

Ukraine Is an R&D Hub

You can be sure that Ukraine is far from a high-risk zone (when it comes to software development outsourcing) because several multinational tech giants continue to operate over 100 R&D centers across the country.

Some of the companies include the following:

  • Ericsson
  • Oracle
  • Samsung
  • Siemens
  • Violin Memory Inc.

While it might be the number one IT outsourcing destination in Europe, Ukraine is also home to some cutting-edge products and world-class companies like the following:

  • Depositphotos
  • GitLab
  • Grammarly
  • Jooble
  • Readdle
  • TemplateMonster

Software Development in Ukraine Is Highly Cost-Effective

Companies who decide to outsource their software development projects to Ukraine stand to benefit from significant savings. This is partly due to the fact that Ukrainian developers with similar expertise will command less than half of what a software engineer will be paid in the U.S.

However, average tech salaries in the country have risen by 15-20% over the last year. For example, Ruby on Rails developers benefitted from a 27% increase (by over $800) while junior QA specialists saw a 25% increase in their wages (from $400 to $500).

A Ruby on Rails developer in Kyiv earns approximately $42,000 annually while their counterparts in Chicago commanded as much as $93,167 per year.

Salaries also varied significantly based on locations within Ukraine. For example, a project manager based in Kyiv earned twice as much as project managers in Lviv. At the same time, junior Java developers made more in Odessa while mid-level Swift developers earned more than their colleagues in Kyiv.

Despite political turbulence over the last few years, Ukraine continues to dominate the IT outsourcing industry. As academic institutions keep producing highly qualified graduates, the country doesn’t show any signs of slowing down.

Compared to the U.S., Ukraine only has approximately one-seventh of the population. However, it continues to produce almost half as many software engineers every year.

Check out how one of our clients benefited from our offshore IT staffing services.

To learn more about offshoring your next software development project to Ukraine, reach out to one of our in-house experts.

IT Storyteller and Copywriter
Andrew's current undertaking is big data analytics and AI as well as digital design and branding. He is a contributor to various publications with the focus on emerging technology and digital marketing.