IT Outsourcing to Ukraine — Brief Country Overview

So, let’s talk about outsourcing today. Although you are probably aware of what it is, we still feel the need to briefly explain what we are talking about. Simply put, outsourcing is hiring third parties to perform services or produce goods. 

This practice is not new in business; however, in the last 15 – 20 years, this word has been mainly associated with IT services. Like anything else, outsourcing IT has pros and cons (to be discussed later). Because of its advantages, numerous companies have opted for outsourcing. 

One of the most popular IT outsourcing destinations was and is Ukraine. As of 2024, market research showed that Ukraine was home to 7,977 IT companies. Together, they generated $6.4 billion in exports, representing a 4.2% decrease from 2023. In the last four years, the export volume has doubled. It grew by an average of 27% each year before the full-scale Russian invasion.

So, should you choose to outsource IT services to Ukraine? Why or why not? What are the challenges and advantages of hiring Ukrainian developers for your project? We will try to find the answers to these questions in our article. 

Advantages of IT outsourcing to Ukraine

If there were no clear benefits, US and European firms would not outsource their IT projects to Ukraine. Let's delve into the undeniable pros.

Cost-effectiveness

Cost optimization is essential in any business. That is why digitization and automation are current trends for any industry. Another way to save money is by delegating development to countries where the cost of services or the production of goods is lower.

The first advantage of outsourcing to Ukraine is high-quality, low-cost development services. Thus, according to the data of the annual salary survey of the dou.ua portal, the median salary of Ukrainian developers is as follows:

Also, to avoid being verbose and not bombarding you with numbers, let's compare the average prices for senior developers’ services in Ukraine vs different countries (according to Glassdoor.com data).

As you can see, outsourcing to Ukraine makes sense for

• optimizing costs and finding the best option
• ensuring quality and price ratio.

Availability of Skilled Professionals

As of 2024, the number of IT specialists in Ukraine was approximately 302,000. And yes, this figure is smaller (based on the number of specialists per 100,000 population) than in European countries and the USA. However, up to 13,000 specialists graduate from Ukrainian universities yearly. Also, many university and IT company courses let non-professionals retrain and work as developers or testers.

The five most popular programming languages among Ukrainian developers are:

1. JavaScript,
2. C#,
3. Java,
4. Python,
5. PHP.

Finding developers in Ukraine who know less common languages, like Elixir or Scala is also possible.

It is worth noting that in Ukraine, approximately 73% of adults reported having a higher level of education. This indicator is accurate for countries as Sweden, Belgium, France, Portugal, and Latvia. This number is even higher for those who work in IT — 87% of them have higher education.

Cultural Similarities and Multilingual Skills

After looking at the first two advantages of outsourcing to Ukraine, you might already be convinced that this is a good idea. However, we still feel the need to dispel doubts caused by the common perception of the IT market in Ukraine.

What we mean are possible cultural differences and language barriers. Let’s start with the latter. Approximately 85% of tech professionals have an intermediate or higher level of English proficiency. All IT companies in Ukraine offer language courses to their employees. So, Ukrainian developers are improving their language skills. You don't have to worry about language barriers.

Regarding the cultural differences or differences in mentality, the situation is similar. An average IT specialist from Ukraine is a 29-year-old who lives in a big city, is married, and has worked in IT for about five years. So, a Ukrainian IT professional is like their European peers. They share similar lifestyles, values, and work ethics.  

Challenges of IT outsourcing to Ukraine

To be fair and impartial, we must also consider the possible disadvantages and challenges of outsourcing to Ukraine. Let's consider reasons that may hinder your cooperation with Ukrainian software development companies.

Wartime Instability

It is time to address the elephant in the room. Wartime and the unpredictability of subsequent events, as well as power outages associated with russian terrorist attacks, cause quite natural doubts among Western companies that choose an outsourcing destination right now.

The year 2022 was likely the toughest for Ukraine. This is true for business as well. However, Ukrainian IT quickly recovered from the war's early shocks and continued to work. In 2024, IT service exports from Ukraine totaled $6.4 billion, representing a 4.2% decrease from 2023. Companies strive to retain existing clients and attract new ones, despite air raid alarms and terrorist attacks.

The Ukrainian IT industry succeeded for several reasons. First of all, companies actively evacuated workers even before the invasion began. Unfortunately, one of the largest IT hubs of Ukraine, the city of Kharkiv, is suffering greatly because of the war. However, many specialists moved to the Western part of Ukraine and Zakarpattia oblast and continued to work.

20% of the total number of IT workers evacuated abroad, but even now, many of them continue to work for Ukrainian IT companies. There are fewer jobs than candidates in Ukraine. So, the chances of finding a specialist are very high.

If you're worried that power outages will interfere with a stable workflow, we should also reassure you here. Ukrainian IT companies promptly equipped their offices with Starlinks and generators. In addition, the IT specialists themselves have similarly organized their home work spaces. So, a Ukrainian developer is very unlikely to miss a meeting or botch a release due to a power outage.

Another step to overcoming the crisis was the opening of foreign offices. The largest Ukrainian IT companies opened their representative offices in Poland, the Czech Republic, Romania, Germany, Bulgaria, and Hungary.

It is also impossible not to mention the contribution of Ukrainian software developers to the fight against the occupier. Over the past year, Ukrainian specialists presented military developments in the fields of drones and army software.

Everything written above demonstrates the antifragility and adaptability of Ukrainian business to any realities. Even to war.

Time Zone Proximity

After the previous point, this one seems really minuscule and unimportant; nonetheless, we will address it as well. 

Work on an IT project is almost always a team effort. If the team members are on different sides of the ocean, it may cause inconvenience. The time difference between Ukraine and other European countries is 1–2 hours. This minor difference does not create any problems in organizing the work process and holding meetings.

The situation with the USA is different. The time difference between Ukraine and the USA is 7–11 hours (due to the multiple time zones of the USA). Still, teams on both sides find the time for calls. The fact that 40% of Ukraine's IT service exports go to the USA proves the point.

If you compare the time difference between the States and EU countries and other popular outsourcing destinations, we will find out that:

• the difference between India and the US is 10–12 hours;
• the difference between India and European countries is 4–5 hours;
• the difference between Argentina and European countries is 4–5 hours;
• the difference between Argentina and the US is 2 hours.

As you can see, when it comes to time zones, some are very convenient, and some call for flexibility. However, the benefits outweigh minor scheduling issues. So, they are not a valid reason to avoid Ukraine as an outsourcing destination.

How to Choose an Outsourcing Partner in Ukraine

We hope you are now convinced. Outsourcing to Ukraine is a great idea that will meet all your business needs. We must now briefly inform you about the search for an outsourcing partner in Ukraine in 2024.

Researching Potential Partners

As mentioned, the Ukrainian market has around 5000 IT companies and 346,000 specialists. Main IT hubs before the war were situated in the biggest cities — Kyiv, Dnipro, Lviv, Kharkiv, and Odesa. As of 2021, among Fortune 500 companies, more than 100 turned to Ukrainian IT companies for services at some point.

In recent years, our country has gained popularity as an outsourcing destination and even ranked at the top of the countries for choosing offshore software product development companies. Despite the war, by October 2022, the IT industry of Ukraine exported half a billion more services than in the same period of 2021. 

This proves, once again, that the Ukrainian IT market not only survived but also grew during the war. It helped the economy despite the daily uncertainty.

So, if you are ready to look closer at Ukrainian companies in a search for an outsourcing partner, pay attention to these factors:

• Size of the Team —do you need a couple of developers with a specific tech stack? Or perhaps a team of ten specialists, including backend and frontend developers? Outsourcing is a fantastic opportunity to fill in the human resources gaps. It also saves you time and money, because you don't need to train your staff.
• Scope of Projects — if you're a small startup owner, you may need to expand your team if your employees can't handle the workload. In such a case, IT outsourcing is a great option. You can hire an outsourced team for a project or specific tasks. Sign a contract for a defined period of cooperation without expanding the in-house team.
• Cost Efficiency — the remuneration of developers in Ukraine is lower than that of specialists of the same level in the USA or the UK. Plus, outsourcing relieves you of many routine tasks related to maintaining a team. For example, the outsourced team provides accountants and HR services. This not only saves money but also saves time for you to focus on more critical business questions.
• Compliance — obviously, compliance with the regulations and laws is a prerequisite for any business relationship. Both parties must ensure that their rights are protected and that all parties comply with the laws of their respective countries. We will tell you more about this in the next portion of the article.
• Quality Monitoring and Level of Expertise — competition in the outsourcing market is constantly growing. Companies constantly monitor the quality of their services and invest in developers' skills. So you can set quality standards and be sure the outsourced company will meet them.
• Communication — building an honest and trusting relationship between the parties is not a matter of one day. However, during the initial talks, you can assess if the outsourced company's work ethic and communication match yours. We've mentioned before that the work culture in Ukraine is like that of Europe and the US. So, you will rarely face communication issues.
• Culture — this factor might seem the least important during the initial stages of the cooperation process. But it really does matter in the long run. Ensure the outsourcing company's management, attitude, and employee requirements match your vision. Simply because it directly affects the productivity and efficiency of the outsourced team. Keep in mind that almost every company in Ukraine has an HR specialist. Their main task is to connect the business with employees and meet their workplace needs.

It is necessary to add that these factors are relevant not only when one is considering outsourcing to Ukraine but in general when choosing an outsourcing partner in any part of the world.

Legal Considerations of Outsourcing to Ukraine

Last but not least, we will briefly touch on the question of law and compliance. Although it is the last part of the article, it is actually one of the most important questions to discuss and should be one of the first on the table during the negotiations. 

The Association Agreement between the European Union and Ukraine was signed in 2014, and since then, Ukraine has taken steps to make the country's legal system align with the legal standards of the EU. 

Moreover, through the years, Ukrainian laws were reformed to improve working conditions and simplify the legislation related to the field of IT. For example, there is a single tax for IT specialists. Also, the state initiates special programs, like Diia.City, which are also aimed at improving the atmosphere and encouraging the growth of IT business.

The Law of Ukraine On Personal Data Protection is the primary document protecting personal data. It was changed to adhere to GDPR, PSI, and ISO laws, so Ukrainian data protection legislation now corresponds to the EU Data Protection Directive. 

Conclusion

Summing up everything written above, we would like to reiterate once again that outsourcing to Ukraine is an excellent choice for your business. Even in the most challenging times, the Ukrainian IT industry proved its stability and reliability.

By hiring Ukrainian outsourcing companies, you are getting top-notch quality services for a reasonable price and supporting the country that, right now, is fighting the most brutal battle with the oppressor. IT outsourcing to Ukraine will only get more popular each year, so take the first step right now and begin cooperating with Ukrainian companies.

If you need more proof of the brilliant job Ukrainian IT is doing, check our case studies by following the link.