IT professionals on the market
of Ukrainian IT talent is being outsourced
value of the IT export in Ukraine in 2019
IT graduates annually entering the market
Size: 603,550 sq km, ranked 47st in the world by area (comparable to Texas)
Population: 43.92 million, ranked 33rd in the world by population
Time zone: (GMT+3)
Government: semi-presidential republic
Official languages: Ukrainian
GDP per capita, PPP: $13,341 (2019 est.)
Human Development Index: 0.750 (ranked 88th | high)
Currency: Ukrainian hryvnia (UAH)
Economy: mixed economy, emerging
Main industries: power generating, fuel, metallurgy, chemical and petrochemical, machine-building, forest and wood-working, construction materials, light, food
Major urban areas (over 500K people): Kyiv, Kharkiv, Odessa, Dnipro, Donetsk, Zaporizhia, Lviv, Kryvyi Rih
Ease of doing business: ranked 64th, DB score - 70.2
Digital competitiveness index: #60 out of 63 | #40 Knowledge #61 Technology #62 Future readiness
Corruption perception index: 126/198 (-6 places since 2018)
The WE Forum Global Competitiveness Report: #85, with a downward trend
A.T. Kearney Global Services Location Index: 20th
Universities: est. 280-800 HE institutions – huge discrepancies in the number depending on the source; six universities listed by QS World University Rankings® 2020 (one ranked 491, the rest >500)
The largest IT companies: SoftServe, InfoPulse, Intellias, N-iX, Sigma Software, Grammarly
IT industry market share: 4% of GDP, 1.3% share in employment, 5,600 IT companies, ca. 200,000 IT specialists
EF English Proficiency Index: 52.13 *(below average)
International Olympiad in Informatics: 88 medals, 10 gold, 32 silver, 46 bronze
Ukraine is systematically gaining weight as a go-to CEE IT outsourcing destination, mainly due to two dominant factors – a vast tech talent pool combined with low labor costs. The largest by size and population of the four discussed countries, the country has a vibrant tech community actively engaged in regular meetups, seminars, and conferences.
The Ukrainian ICT market, comprising over 5,600 companies, is the third-largest exporter of services in the country. 60% out of 200,000 software specialists work in outsourcing businesses. The gigantic pool of IT professionals is regularly expanding as, each year, about 20,000 tech students graduate from Ukrainian universities.
Renowned for its citizens' contribution to technological development, Ukraine regularly attracts foreign investment, hosting over 100 R&D centers of multinational tech giants like Microsoft, Ericsson, Siemens, and Oracle. It is also home to worldwide startups and organizations, such as GitLab, Grammarly or Template Monster.
Attractive development rates are the country's strongest outsourcing asset.
While all these factors make Ukraine an increasingly popular outsourcing destination, the country struggles with several ongoing challenges that may hamper foreign engagement.
Despite gaining independence from the USSR in 1991, Ukrainians have been continuously fighting for survival as an autonomous nation. Ukraine remains in a de facto state of war with Russia over the status of Crimea and Donbas. About 7% of the country’s internationally recognized territory has been annexed by Russia or is controlled by pro-Russian circles.
The political risk remains the most significant deterrent for foreign engagement with Ukrainian businesses and providers. Eight out of ten foreigners who have decided to pursue business opportunities admit that Ukraine is difficult to do business.
Internally, complaints persist about widespread corruption, flawed judiciary, ineffective governance, and obscure legal system. Indeed, Ukraine ranks 126th out of 198 countries for corruption, down by six places since 2018. The country also has lowered its global competitiveness index score, and scores the lowest out of the featured countries in ease of doing business. The English proficiency index in Ukraine remains below average, even though most IT professionals probably speak the language at an intermediate level.
Many Ukrainians demonstrate pro-European sentiments, hoping for closer integration with the EU. They quickly adopt Western values and work ethic, seeing them as a chance to break free from the Russian sphere of influence. The country authorities are actively seeking reforms to crack down on informal business practices and stamp out corruption. However, as long as Ukraine remains entangled in a military deadlock and political unrest, significant obstacles to international business remain.
Ukraine's huge software development market comprises over 100 R&D centers, a majority of which are owned by multinational businesses. The United States remains the country's leading partner for software consulting activities, followed by the EU and Israel.
As in Romania, in Ukraine, the export of IT services serves as an essential pillar of the country's development, contributing $4.17 billion to its economy in 2019 (a 30% growth compared to the previous year). The local IT&C outsourcing services mainly focus on finance, healthcare, eCommerce, and telecom, with the gaming industry playing an increasing role.
According to Hi-tech org, "a majority of foreign investors indirectly entered the Ukrainian market through M&As, joint R&D with an outsourcing component, or outstaffing service companies." Skype, eBay, Microsoft, Ericsson, IBM, PWC, Ubisoft, Upwork – they all chose Ukraine as one of their outsourcing destinations, either establishing regional branches or delegating projects to local outsourcing teams.
The Ukrainian authorities are regularly revisiting the state's existing fiscal regime to attract foreign investors. The main tax reform was conducted in 2017 to simplify the administration of taxes and decrease their number. Still, the Ukrainian tax laws remain relatively complex and obscure.
→ Deloitte provides a comprehensive overview of Ukraine's taxation legislation.
Determining the number of higher education institutions in Ukraine is somewhat challenging since even the official sources fail to agree on their count.
As Сегодня portal reveals, in 2019, there were 1388 institutions entered in the country's Register of Higher Education Institutions. They included public and private universities, institutes, colleges, academies, vocational schools, and other facilities considered tertiary education institutions. Significantly, about 241 of these establishments existed on paper only, with not a single student enrolled.
The proliferation of fake or substandard HE schools that lack accreditation (often set up to extort tuition, exert political influence, and provide illegitimate degrees for money) is a broadly-discussed issue in Ukraine. Finding the way to consolidate and standardize tertiary education and make schools more transparent and accountable has been on the Education Ministry's plan for several years.
Academic corruption is a prevalent issue in tertiary education in the country, negatively affecting education quality in many Ukrainian schools. Other problems troubling Ukraine's HE sector aside from bribery in admissions and examination fraud include outdated curricula, inadequate facilities, and lack of research institutions' autonomy.
These issues negatively impact the perception of Ukrainian higher education and contribute to the mismatch between education and labor market demands.
All the same, Ukraine can boast some prominent universities that are listed on global school rankings. They include the National Technical University of Ukraine, Kharkiv National University of Radioelectronics, and the Ivan Franko National University of Lviv.
Year by year, Kyiv is climbing up the Global Startup Ecosystem Ranking. In 2020, the Ukrainian capital ranked as the 32nd best city for startups, the highest of all CEE regions. Leveraging its large pools of highly capable tech talent, low service costs, and substantial market size, the Ukrainian metropolis has been developing an entrepreneurial spirit for at least a decade.
As opposed to the Polish or Belarusian counterparts, Ukrainian startups are heavily orientated towards foreign investment. "According to the Ukrainian VC Association, 90 percent of investment in Ukrainian startups comes from a foreign investor," says Dominique Piotet, the UNIT CEO.City Innovation Park in Kyiv (source: Emerging Europe).
In terms of the investment volume, it exceeded a half-billion mark for the first time in 2019, with an average deal size of $5.7 million, a 78% increase compared to 2018. 2020 was another record year, with VCs pouring over $1.5 billion in Ukrainian startups. These numbers suggest that entrepreneurship develops vigorously despite the country's shaky economy.
Kyiv, Lviv, Odessa, Kharkiv, Ternopil
SaaS, eCommerce, security, ML/AI
The State of CEE IT Outsourcing and Offshoring 2021 Report
Belarus • Poland • Romania • Ukraine
CEE countries are world-renowned for their software developers who are said to be one of the best on the globe.
There are over 1 million software developers in the CEE region, skilled in various technologies and experienced in every industry.
Software developers' hiring rates in the CEE region can be 2-3x lower when compared to the US and Western Europe.
Great English skills and vast experience in working on international projects. CEE devs have been supporting startups worldwide for years now.
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