IT Outsourcing in Ukraine: Open for Your Business

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Posted on March 25, 2020

IT Outsourcing in Ukraine is now a viable alternative to in-house development of software and IT products. Outsourcing offers some distinct advantages compared with building your development team stateside. Currently, 30% of global IT projects are undertaken offshore. If you are considering IT outsourcing in Ukraine this article will help you learn more about the local IT landscape the most attractive outsourcing destinations.

Now, let’s continue our deep dive into outsourcing development proses. In this article, we are going to discuss the following topics:

  1. Why IT Outsourcing in Ukraine Is so Popular Among EU, UK, and US Companies?
  2. Software Engineer Rates and Salaries: USA Vs EU Vs Ukraine
  3. Picking the Perfect IT Outsourcing Company in Ukraine
  4. How to Ensure That the Developers You Hire Are the Best Fit For You
  5. Legal Aspects of Doing Business with Ukrainian IT Outsourcing Company

Why IT Outsourcing in Ukraine Is so Popular Among EU, UK, and US Companies?

An increasing number of businesses are considering Ukraine as a primary location for outstaff / outsourcing their software development needs.

Ukraine’s $5 billion IT industry did not happen overnight. Software development companies in Ukraine offer high-quality technical services including software engineering, custom web development, software testing, cloud, and app development, to name but a few. Plus, there is a large number of developers with different expertise and skills from which clients can choose from.

It is a well-known fact that Ukraine has repeatedly ranked as a top IT outsourcing destination in numerous sources, the facts speak for themselves:

  1. The country ranks fourth in the world by the number of tech workers after the United States, India, and Russia.
  2. Ukraine is among the top 20 offshore locations in EMEA.
  3. The Ukrainian IT industry is expected to reach $10 billion in value by 2020.
  4. It’s IT workforce is expected to surpass the 200.000 marks by 2020.

For software development, IT outsourcing in Ukraine makes total sense for companies across the globe.


Additional Reading: Dedicated Development Team: a Winning Approach to Outsourcing


Software Engineer Rates and Salaries: USA Vs EU Vs Ukraine

The critical factor which makes software development more expensive in Europe and the USA compared to Ukraine is salaries.
Let’s see the average salaries of software developers in the major European states and the US.
This information may give a hint to businesses looking to hire tech specialists to understand where to search for cheaper talent and without losing the quality.

  • How Much Does a Software Developer Make in the US?

Quite predictably, the country which pays the highest tech salaries in the US (According to Indeed) — Software Developers in the US made a median salary of $101,790 in 2018. The best-paid 25 percent earned $128,960 that year, while the lowest-paid 25 percent earned $77,710.

*To figure out how many hours are in a “work year,” multiply the number of work hours in a week by the number of weeks in a year. In other words, increase a typical 40-hour workweek by 52 weeks. That makes 2,080 hours in a typical work year. Thus, the median rate of a software engineer = $48,9375 per hour.

  • How Much Does a Software Developer Make in the EU?

EU states differ in terms of economic well-being, which affects the range of salaries offered to software developers in their markets. Here is a quick snapshot of the average annual wage by country (according to Payscale):

  1. The average software engineer salary in Switzerland is close to $83K per year, which puts the country in second place.
  2. The median developer salary in Norway is around $72K.
  3. The next country is not far behind—the median pay for a software engineer in Denmark is $70K a year.
  4. Annual developer salaries in Germany, Sweden, and Israel range between $53K and $64K.
  5. Software engineers that live in Australia, the Netherlands and Canada earn slightly lower salaries — around $48K.
  6. Finland, New Zealand, UK, and France software developers can expect the lowest salaries— $44K yearly and below.
  • Ukraine’s Outsourcing Rates

To put this into perspective, let’s look at the tech market in Ukraine, where we build and retain cross-functional development teams for our clients.

The average hourly rate for software development is within the $25–50, with the average annual software developer salary varying between $24,000 and $ 48,000.

However, this data is very approximate. IT expert is a well-paid profession all across the world. Nevertheless, web developer salaries (in Ukraine as well as in any other part of the world) differ widely depending on the candidates’ years of experience, tech stack, seniority level, and the language of programming.

  • The True Cost of Hiring an In-House Software Developer

Each in-house employee costs the sum of his or her gross wages. This is in addition to other employee-related expenses, including:

  1. Recruiting expenses.
  2. Basic salary.
  3. Employment taxes.
  4. Benefits (insurance, health coverage, paid time off, and meals).
  5. Space and office maintenance.
  6. Other approaches.

Thus, before looking for a developer in Ukraine, you should analyze the needs of your project and your available budget for successful outcomes. So, how can the hiring process be made easier and quicker? Here’s the solution – hiring a vendor of IT talents.

Picking the Perfect IT Outsourcing Company in Ukraine

Regardless of which country you chose for the development of your next project, picking the right outsourcing development agency may seem challenging. Even in Ukraine, not all software companies are the same. 3rd party ranking sites, marketplaces, and listings, such as Clutch.co or GoodFirms provide a list of the top agencies in the area along with reviews from real customers. By reading the reviews, you can learn more about how satisfied past clients were. That will help you find the perfect web development agency in Ukraine.

  • Clutch.co

Clutch allows applying various filters to get the list of the companies that suit you most. Including but not limited to location, average hourly rate, and the number of employees, industry, technology focus, hourly rate, and client reference.
The advantage of using Clutch.co is that the information made available to the client is collected from the company’s customer. Therefore, the results are a recommendation for their requirements.

Standard preview of the software company’s profile at Clutch.co shows a short company description and general information. By opening the full profile, you will get access to the complete texts of all reviews, portfolio items, list of industry domains, etc.

Here are the links to rankings and reviews of the top development companies in Ukraine.

Other than being a research platform, GoodFirms offer reviews of software development companies. The availability of the reviews enables clients to choose the best software design and development services.

Top Software Development Companies in Ukraine

  • Google Search

Another recommendable source of outsourcing software companies in Eastern Europe is from Google. At the first look, this recommendation looks pretty obvious, but even a simple Google search can be done in many ways. Before approaching search on Google, ask yourself a couple of questions about the ideal company you want to find.
What are my primary evaluation criteria: price, experience, location, or experience in a specific domain?
Which contract model you are looking for:  fixed-price contract, time & material, our dedicated team?

Maybe you need to work with the outsourcing company that leverages a dedicated software development team model instead of the project-based approach. Use your answers in the search queries and get results that matter to you.

How to Ensure That the Developers You Hire Are the Best Fit For You

After you determine the top agencies that you would potentially work with, reach out to them to request a quote and learn more about their company and services.
The values of a company and the personality of its top managers can make a relationship. If the goal is to stay long-term partners with your agency over the life of your project – make sure that you enjoy who you’re going to work with. Ask many questions to ensure that the developers you hire are the best fit for you.

  1. Do you have experience working with businesses in my industry?
  2. Do you have examples of your past related projects?
  3. What is the expected timeline?
  4. Who will be the main point of contact for me throughout the development process?

Asking questions now will provide peace of mind that the company you choose is the best fit to work with your business. After you receive quotes and ask any questions to address your concerns, you should have an idea which agency is best for you to hire.

Legal Aspects of Doing Business with Ukrainian IT Outsourcing Company

Currently, IT companies in Ukraine operate under the general legislative field of Ukraine, as there no sector-specific regulation for the IT industry. The Ukrainian government actively supports the IT industry through laws on taxation.

Who will you work with?

A significant number of IT specialists in Ukraine work with companies under the private entrepreneurship model.

Your contractor (LLC, Operation company in the USA or EU) normally cooperates with private entrepreneurs. The project team normally works at the contractor’s office, being provided with all necessary equipment and required to comply with all data security rules. The contractor shall have general agreements with Private entrepreneurs providing scope of the services, NDA, NSA, NCA, data protection, IP rights transfer, etc. Transfer of the results and IP rights is confirmed by the act of transfer and acceptance or paid invoice.

What should be included in the contract with the outsourcing company?

  • – Service agreement (specification, development process, testing, success metrics, timing).
  • – Pricing and billing.
  • – IP rights transfer (an exhaustive list of IP rights, authorship payment).
  • – Data protection regulations.
  • – Sanctions and losses recovery (insufficient performance, non-timely delivery, IP rights violation, breach of non-disclosure provisions).
  • – Warranties.
  • – NDA (non-disclosure of confidential information, the essence of confidential information, liabilities, duration of the agreement, governing law, etc).

 

Fell free to ask your contractor about its agreements with the project team to determine if all sensitive provisions are reflected in such. The client can always ask to amend such.

Summing up, the legal aspects of IT outsourcing to Ukraine are rather typical to contracting engineering jobs. Therefore, in order to get started with Ukrainian IT companies, you need to sign a pack of usual agreements:  Service Agreement, IP License Agreement, NDA.

Afterword

Ukraine is on its way to becoming a leading IT outsourcing destination in Europe due to its booming tech ecosystem, immense talent pool, and robust education. Ukrainian developers are reputable among IT professionals globally thanks to their substantial technical expertise, high English proficiency level, and knowledge. No wonder a growing number of international giants hire Ukrainian developers to build cutting-edge software solutions.

 


We at Devcom provide our clients with a full range of enterprise software solutions, from custom web-based development, professional IT services to software support and consulting.

If you think there’s some way we can help, contact us now.

Contact DevCom - custom software development company


Written by: Halyna Vilchynska, Marketing Lead at DevCom

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