Spotlight on Ukraine: Is software outsourcing to Eastern Europe right for you?

May 8, 2018

By Jim Marascio

Ukraine is a top country for software outsourcing that rivals India in mindshare with many North American companies. Why are there so many developers in Ukraine? On a recent trip to investigate the best software outsourcing companies in Ukraine, I discovered that college graduates have lucrative incentives in both income and tax benefits to become developers.

 

 

 

 

While visiting Ukraine, I discovered that most software outsourcing companies, our four new fully-investigated Accelerance Partners included, don’t have very many employees. That’s because most software developers in Ukraine choose to be a “Private Entrepreneur” and work under a full-time contract for a software outsourcing company. Because of this, everyone wants to be a developer. For two reasons:



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Ukraine is one of the best destinations for software outsourcing and so many college graduates become developers because of these incentives. Of course, you also have to be a good developer otherwise your contract will be terminated.

Is it safe to outsource software development to Ukraine?

Except for a brief period after World War I, Ukraine has only been an independent country since 1991. Ukrainian territory and its people have long dominated by Russia and the former Soviet Union. Although tensions between Ukraine and Russia still exist, I still felt completely safe visiting the city of Kharkiv, which is close to the Russian border.

software-outsourcing-ukraine-eastern-europe{ We got the opportunity to celebrate the Easter season outside of St. Sophia's Cathedral. These custom ornate eggs are decorated around the square to pay homage to the religious holiday. }


Ukraine continues to develop its own national identity and culture. Churches have been restored and renovated since they were repurposed or damaged by the Soviets. Many Ukrainians feel they’re part of Europe rather than identify with being in the Russian sphere of influence. Protests over corruption and Russian interference in Ukrainian politics have taken place over the years.

IMG_9046{ St. Sophia's Cathedral in Kiev, Ukraine }

All official legal documents are written in Ukrainian and it’s the language spoken by most people in Western Ukraine. Most people speak Russian in Kiev and the eastern part of the country. However, English is very widely spoken by every developer and IT professional I met in my travels. And I was told that even in Soviet days, English was taught in schools.

What makes Ukraine a good choice for software outsourcing?

With high English proficiencies, identity focused on Europe, smart developers that want to work on interesting projects -- these are all the conditions for a burgeoning software outsourcing industry serving clients in Western Europe and North America.

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Salaries for developers are high relative to other occupations in Ukraine and range between $1,300 and $3,000 per month. And a developer pays about a 5% income tax as a “private entrepreneur” compared to more that 30% for other occupations.

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Keep in mind that this range of salaries is what each developer is paid by the outsourcing company. The company provides the workspace, infrastructure and benefits to enable developers to work in a team. Naturally, the company also has to make a profit as well. Think of this before you try to negotiate your outsourcing rates or jump on a flight to Kiev to hire your own individual developers at these salaries.

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