Software Development Outsourcing to Ukraine: Main Reasons and Benefits

Software Development Outsourcing to Ukraine: Main Reasons and Benefits

Did you know that 65% of companies outsource at least some of their development processes? And the popularity of outsourcing is only growing. If we look at its expected market share, we’ll see that its size is predicted to reach $98 billion by the end of 2024, showing that businesses actively switch to hiring remote teams.

Outsourcing has become popular for a number of reasons, the main one being the lack of local talent. Many specialists simply can’t keep up with the pace of development of modern technologies, which deprives companies of the opportunity to innovate and deliver faster and better solutions. 

Outsourcing addresses this particular issue. In fact, you have no limit whatsoever as to what specialists to hire, as it gives you access to a broad pool of talent from all corners of the world. However, before you start wandering your eyes around the map in search of an attractive location, we suggest you consider Ukraine as the next outsourcing destination. 

Why Ukraine? What is so special about specialists from this country? What are their strengths and weaknesses compared to software developers from other popular locations available for outsourcing? How much do they charge? Keep reading this article, where we’ll answer these questions and then some in detail.

Top Revealing Stats About Outsourcing in Ukraine 

Ukraine is home to more than 200,000 IT specialists and over 1,600 software companies, placing it first among Eastern European countries, followed by Poland, Romania, and Bulgaria. It also has one of the best education systems in terms of IT. Among 443 available institutions, the vast majority offer IT-related programs, which allow students from Ukraine to get a decent IT education and become top-class professionals in the field. This means that the Ukrainian market is not only rich in tech talent but also can boast highly skilled specialists who can tackle projects of any scale and difficulty.

Here are a few more numbers you’ll find interesting:

  • The software engineering workforce in Ukraine is increasing rapidly. In 2021, there were over 200,000 specialists. In 2024, this number is expected to reach 250,000.
  • Only in Kyiv there are over 76,000 IT professionals involved in outsourcing.
  • Besides Kyiv, Lviv and Kharkiv are two other hubs for IT that employ 15% and 14% of highly skilled engineers in Ukraine, respectively. 
  • There are over 67,000 front-end developers in Ukraine’s IT outsourcing sector, and more than 200,000 IT specialists on a whole, which brings Ukraine on par with some European countries like Poland, Sweden, and Italy. 
  • Since 2018, the value of software outsourcing in Ukraine has been steadily increasing. Over the span of 4 years, the sector has witnessed a substantial 51.1% surge in exports, escalating from $4.5 billion to $6.8 billion. This growth shows the heightened appeal of Ukraine software outsourcing companies to a global clientele and sets a positive trajectory for the Ukrainian outsourcing industry. 

These are just a few of the numbers that vividly speak of the country’s prowess in delivering high-quality IT services. And that’s not even touching upon any examples of how software development outsourcing to Ukraine has helped large companies achieve their remarkable milestones. So, sit back, and let’s embark on this journey together. We’ll give you compelling reasons why Ukraine is the best location for IT outsourcing. 

Technical Achievements of Ukraine 

Although Ukraine isn’t the only country that international companies turn to to hire developers, it’s, without doubt, one of the most popular ones. In fact, Ukraine ranks first on the list of the Global Sourcing Association as the top place for hiring IT talent, putting it a step ahead in the outsourcing market.

Most likely, you’ve heard of all the grandiose inventions in the aerospace industry. But did you know that many of them have actually become possible thanks to the contribution of the leading software teams from Ukraine? For example, Sigma Software Group, along with ELEKS, is known for creating cutting-edge accounting systems and incorporating advanced technical inspections that have helped save hundreds of millions of dollars. 

Even without such large-scale solutions that can be found in portfolios of many top software development outsourcing companies, Ukraine teams have many achievements to show off. The company Ring is a case in point. Now a famous company around the world, owned by Amazon and producing a titular line of smart doorbells, security cameras, and alarm systems, it was created by a Ukrainian software development team and sold to Amazon for $1 billion

We should also mention GitLab, the first Ukrainian unicorn that raised $268 million and acquired a following of 30+ million users worldwide, making it one of the most popular open-source platforms for team collaboration. 

All told, the country boasts a long track record of successful collaborations with tech companies from all over the world and, as can be seen from the current trends, doesn’t lose its success-hungry software engineers ready to take on new challenges.

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Advantages of Software Engineers in Ukraine

Most likely, you’ve been told about Ukraine’s tech talent. There’s also a good chance that someone has already advised you to look into hiring a development team from Ukraine for your next project. But what makes them so great? And why do so many clients, including Fortune 500 companies, keep opening new offices in Ukraine and hiring software developers from overseas? To answer these questions, let’s look at the strengths of Ukrainian developers. 

Skilled workforce

First and foremost, Ukrainians are talented developers. From the moment they started to participate in international projects, they have been continuously rewarded for their contribution to global IT endeavors and won many software development competitions on an international level. For example, not long ago, Ukrainian coders scored 88.7% on HackerRank Challenges, proving that Ukraine is home to top-tier tech specialists in the IT field.

Education system

Of course, software engineers aren’t just born with extraordinary skills. To become professionals, they go through a long journey, which usually begins in school and then continues to a college or university specializing in science and technology. After graduation, most of them continue to improve their skills by taking additional courses and participating in various seminars, conferences, and forums, offering ample opportunities for development and knowledge sharing.

Every year, Ukraine graduates over 20,000 IT specialists, and a quarter of them secure positions in the top 50 IT companies, demonstrating their high levels of literacy and technical skills. Speaking of which, the literacy rate in Ukraine is 99.8%, which is simply impressive. In fact, Ukraine is one of the few countries in the world that has an 83% graduation rate, with 56% of students graduating from information technology and tech science programs. This is considerably higher than in the UK or France, where the percentage of young people attending universities is 22.6% and 43% respectively. No wonder the USA, the UK, and Western Europe are the main markets for Ukrainian technology companies. 

Technical proficiency

Considering the number of graduates from tech-related disciplines, the diversity of skills of Ukrainian developers is quite impressive. Here, you won’t be short of specialists, no matter whether you’re looking for popular programming languages like PHP, C#, Java, or Python, or some advanced technologies like machine learning or blockchain. 

For example, if you’re looking to hire back-end developers, Ukraine has over 26% of software engineers working with Java. Are you in search of a developer proficient in C# or Python? There are 15% of C# professionals and 8% of Python gurus in Ukraine. Other technologies and frameworks widely used in Ukraine are JavaScript, React, Angular, Node.js, and PHP.

Besides popular coding languages, Ukrainian software developers are skilled in rare technologies, such as Ruby, Scala, Dart, Unity 3D, Magento, Golang, Odoo, Xamarin, and the like. They are also great game developers. You must have heard of S.T.A.L.K.E.R. or Cossacks, two epic video games that have won over the hearts of thousands of gamers. As you have guessed, these are the gems produced by software developers in Ukraine. 

All in all, Ukraine software engineers boast an extensive range of technical skills that span both mainstream and niche technologies, allowing them to bring value-added contributions to any projects they work with. 

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English fluency 

Another reason making IT outsourcing to Ukraine an attractive venture is that IT specialists here have a fairly high level of English language proficiency. Most coders, developers, and QA specialists have at least an intermediate level of English, while key people like PMs and managers are usually fluent enough to express themselves freely and make the collaboration between the team and the client smooth and hassle-free. 

Interestingly, if you go on DOU (Ukraine’s largest portal for IT specialists), you can find a correlation between the seniority of a developer and their English level. 60% of senior developers in Ukraine possess an advanced level of English, while 40% of mid-level and junior coders rank their knowledge of the language as intermediate. This level of English makes Ukraine an ideal software development outsourcing partner. Moreover, since 2023, English has officially become the country’s business language, showing the tendency towards a more English-friendly business environment. 

Cost efficiency

If you were told that labor in Ukraine is cheap, you may have been misled. This was the case a few years ago when Ukraine was not yet widely known and was fighting for leads. Now, the situation is different. Software engineers from Ukraine not only made a name for themselves around the world but many of them have been hired by large IT corporations and now charge nearly as much as developers from the USA. At the same time, the cost of hiring software engineers in Ukraine is still relatively lower than in the United States and Western European countries. Moreover, you don’t have to commit to running a whole team when there’s not much work to do, and you can only hire specialists for a certain period of time. 

Competitive labor costs

While developer hourly rates can vary depending on their tech stack, seniority level, and experience, the average salary on a reputable job search website should give you an idea of what you may be charged for the work. 

We’ve used DOU to compare salaries for all posted tech jobs. Here are our findings:

  • The average salary of a middle software engineer is $2,600 per month. Top specialists with years of experience can already qualify for a salary of $6,000 – $9,000 per month. 
  • System architects, on average, earn around $6,500 per month. 
  • A Team Lead can expect to get from $4,500 to $6,300, depending on the experience, project, and the composition of the team.
  • The monthly salary of a QA specialist usually falls within a bracket of $800 to $4,000. The exact amount largely depends on the complexity of the testing tasks, the industry, the tools, and the level of expertise required. 
  • UI/UX designers earn from $1,000 to $2,800 per month. 
  • Machine learning engineers are paid around $2,825, while the average amount that goes for big data engineers averages $3,500.

These numbers aren’t fixed and may vary based on a number of factors, including the complexity of the project, the exact location of the product development team, and the specific requirements of the client. Despite this, prices for software development services in Ukraine are very competitive both for Western Europe and the USA. 

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Bruce Mason

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Cultural compatibility

Another advantage that tips the scales in favor of Ukraine when it comes to outsourcing software development is mentality. Most developers currently working in IT are people born after the collapse of the Soviet Union, creating a huge gap between the older and younger generations. Today’s engineers are different. They are proactive and open to communication, which makes it easier for them to build long-term relationships with partners. For example, it’s been at least five years since Google, Apple, and Microsoft started to outsource software development to Ukraine, and this partnership is highly likely to continue. 

Western-oriented mindset

Ukrainian engineers, especially from Western Ukraine, demonstrate an increasing interest in the culture of the West. Many of them have been to Europe or the USA, while those who haven’t, in their vast majority, share cultural values with European, the UK, and North American countries anyway. The work culture of Ukraine aligns with that of its Western counterparts, too. Moreover, Ukrainians don’t have any customs preventing them from speaking their mind, so you can expect them to be quite honest and direct about their work.

Time zone advantage 

Perhaps the biggest challenge businesses face when choosing the right outsourcing decision is time difference. Many of them are concerned that having a partner several hours apart can make it difficult to keep in sync with the project. However, Ukraine, in this regard, is an attractive software development outsourcing destination. It’s only 1-2 hours ahead of Europe, and there are at least 3 hours that overlap with the working day in the USA, allowing both software development outsourcing companies and clients to work comfortably.

Other Reasons to Outsource Software Development to Ukraine

In addition to skilled Ukrainian software engineers, there are a number of other reasons that make IT outsourcing in Ukraine a compelling choice. Let’s go over them to get a full picture of why Ukraine stands out as a preferred destination.

Government support

The government supports the IT industry, creating a more favorable tax environment. For example, many IT specialists work as individual entrepreneurs hired for specific projects, and “umbrella” companies cover their taxes. The tax-relief program now allows them to pay twice less in taxes (2% instead of 5%) than before. It enables companies to offer better prices to their end clients without compromising on quality.

Deregulation also plays an important role — over 450 outdated regulations were canceled in the last two years.

Resilience

The IT market of Ukraine is resilient, and the first months after the outbreak of the full-scale war served as proof. Ukrainian IT companies not only avoided closing down, as many thought they would do, but they were actually among the few that survived and paid taxes forward, keeping the economy of the country afloat. According to the National Bank of Ukraine, in the nine months of 2022, the volume of IT services increased by 13% compared to the same period in 2021 and amounted to 5.5 billion US dollars. 

Blooming IT sector

Ukraine’s startup scene is rapidly expanding. There’s probably no one who hasn’t heard of Grammarly and PetCube. These are two startups founded and launched in Ukraine that have reached the unicorn level. Aside from that, Ukraine invented a number of prominent products, such as DepositPhotos, GitLab, Jooble, CleanMyMac, Ahrefs, and Preply, that have become popular in the international IT arena. 

Ukraine’s startup market has always been interesting for investors, and though nobody expected a lot during the war, in 2022 and 2023, it continues to receive funds and grants from international partners, making it a strong player on the global scale. According to StartupBlink, Ukraine’s startup ecosystem saw an increase in 2023, jumping from 50th to 49th spot in the world and taking 12th place in the Eastern Europe scene. 

Beyond that, Ukraine is home to over 110 research and development centers (R&D) for tech giants such as Microsoft, Amazon, Oracle, Apple, and Sitecore. These centers contribute to Ukraine’s reputation as a hub for innovation and cutting-edge research. 

Solidarity

Investing in Ukraine is a great way to show your solidarity with the country during these difficult times and help software companies stand for their economy and preserve their workforce. The IT sector actively supports the Armed Forces of Ukraine. To give you the gist, during the first ten days when the war started, software development companies paid 6.3 million dollars of taxes in advance, allocated 6.1 million dollars to the Armed Forces, and donated 12.1 million dollars on humanitarian purposes. So, you can rest assured that the money invested in tech companies for outsourcing services won’t go to waste and will be spent on the right things. 

How to Find an Outsourcing Software Development Partner in Ukraine?

If you’ve made up your mind to outsource IT to Ukraine, make sure not to skip our next section where we discuss in detail how to find your perfect software development team.

Step 1. Consider prices

One of the main reasons why foreign companies find outsourcing to Ukraine so attractive is the prices. As mentioned earlier, hiring a Ukrainian engineer is much more affordable than, for example, hiring a software engineer in the USA. However, this doesn’t mean that prices there should be cheap. In fact, if someone gives you a fairly low quote, this should raise your suspicion as in most cases it means two things:

  1. Either the service is of poor quality;
  2. Or you may be drawn into a deal that involves hidden costs.

Step 2. Research potential vendors

According to IT clusters operating in Ukraine, Kyiv, Lviv, Kharkiv, Dnipro, and Odesa are the biggest IT hubs. In these five cities alone, there are over 158,000 specialists, making them the best places to start your searches. 

Furthermore, decide on the type of partnership that best fits your needs. Do you have a flow of projects and are looking to augment your team? Or is it a small, one-time project that you need help with? Depending on your particular case, it may be best to opt for a software company, assemble a team to tackle a project for a certain period of time or turn to freelancers. 

At this stage, it’s important not to rush things. Take the time to explore the websites and reviews of the chosen vendors. Obviously, you won’t find a lot of negative reviews there, as they simply wouldn’t post them, but you can certainly dig out something valuable from industry forums like Clutch, Glassdoor, or LinkedIn. Any industry recognitions or certifications could serve as evidence of their capabilities, too. 

Step 3. Evaluate expertise and specializations

The next step is to evaluate the expertise of potential partners. While they may have an extensive portfolio of projects to showcase, you should focus on the tech stack to ensure it aligns with your project requirements. Consider the programming languages the development team is adept at and whether they have experience working with projects like yours. Also, consider the complexity of projects to get an idea of the scale of work they can perform.

Step 4. Assess communication skills

Another vital step before outsourcing software development in Ukraine is to assess the communication skills of the team members who will be involved in your project. Outsourcing providers should have a good command of English to avoid misunderstandings and enhance the overall success of the project. 

Step 5. Evaluate cultural compatibility

Even though you aren’t going to be in the same office, it always helps when the people you work with share your values, work ethics, and communication styles. This can be particularly important if you expect a remote team to work alongside your in-house development team as an extra set of hands. Moreover, resolving any issues that may arise during the course of development is usually easier when a partner has a similar cultural mindset.  

Step 6. Discuss project management and workflow

Make sure to discuss their project management approach and workflow with the outsourcing partner. You need to know what methodologies and tools they use and how they communicate with each other to ensure smooth project coordination and timely project delivery. For example, you may choose to take part in their daily meetings, get on a call a few times a week, or track the progress of the project using any other form of reporting that you find most convenient. 

Additionally, the team should have robust security measures in place to protect your sensitive data and intellectual property. Inquire about their data protection policies. They need to have an NDA and ensure compliance with industry standards. 

Step 7. Decide on the collaboration model

Once you’ve chosen the outsourcing partner, negotiate the collaboration model that best suits your needs. In general, there are three common types, though some companies, including ours, distinguish four business models. Here they are:

  • Fixed Price;
  • Time and Material;
  • Dedicated Team;
  • Hybrid (or Fixed Plus).

Ideally, a team should offer different conditions so you can choose those that best align with your project requirements. Fixed price, for example, is ideal for small-scale projects that have limited budgets and a minimum chance of changes down the line. The dedicated team pricing model, on the other hand, works best for dynamic projects that are designed to scale and/or may change over time. 

In addition to the collaboration model, discuss other important contract terms like project milestones, deliverables, and payment schedules. This will help prevent conflict situations and ensure everyone’s on the same page regarding expectations. 

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Why Consider QArea as Your Best Outsourcing Partner in Ukraine

If you’ve just started your search for the best software companies in Ukraine providing outsourcing services, QArea should pique your interest. Our company was founded in 2001, and since then, we’ve always been striving to deliver the highest quality, maintaining a customer-centric approach. 

This dedication to providing customers with a top level of satisfaction allowed us to win a number of prestigious awards and achieve industry recognition. In 2022, we got a CMMI-DEV Level 3 appraisal, which confirmed the team performed at the highest level. In 2023, we collected a number of awards. One from Clutch that marked us Fall Champions, another one from TechBehemoths, which brought us on the list of industry leaders, and another one from Aciety, making us one of the top 10% of 2,000 European companies. And while we don’t usually make a lot of fuss about awards, we think they are the best proof to confirm our team’s commitment to following the highest development standards and never failing to meet customer’s demands.