Global Financial Crisis Highlights Real Costs and Advantages of Outsourcing to Ukraine

Outsourcing continues to cut costs with Ukraine offering a competitive environment.

The IT Outsourcing industry continues to grow as more businesses realize that outsourcing is becoming the competitive profitability standard. Within the next 10 years, outsourcing will continue to cut at least 40 percent of costs even though the demand for IT specialists is growing rapidly all over the world, which significantly increases costs for developers.

The growing pool of Ukrainian IT specialists, low labor costs and membership in the WTO since 2008 make Ukraine a competitive and attractive destination that is soon to surpass such popular outsourcing destinations as Ireland and Romania.
We see three main factors influencing outsourcing costs and how these factors impact the real cost of having a software developer in Ukraine today.

Salary of the Developer

IT market trends influence Ukraine as much as everywhere else, so salaries for IT specialists are growing dynamically. Average salaries for mid-level software developers range from 1200-1400 euros per month.

• However, Ukraine will lower the salary level due to the following reasons: Ukraine has a BIG pool of IT specialists with annual add on of 30,000 graduates from IT related fields.
• Ukraine will not become a European Union member within the next five to seven years, so the level of prices and salaries will be at least 30 to 40 percent lower than in Europe.
• Since Ukraine is not a part of the Schengen Zone, the movement of people to work abroad is small and fairly limited.

Communication

Due to different levels of communication in outsourcing, requirements and technical assignments are often lost in translation, which costs time and money.

However, Ukrainians are very similar to Europeans in their work approach:

• They have a good grasp of the English language, both written and spoken.
• They express their opinions and ideas to contribute to development instead of simply following orders.
• They take initiative.

Investment in People

An office space and workstation is not enough for modern outsourcing. Employees have to be motivated, which requires investment in their career growth, social activities, education and more.

 Employees have to be the main asset for an outsourcing company as well as its clients. To protect and nurture this asset, outsourcing companies must provide:

• Professional development 
• Performance evaluations and development interviews 
• Social activities 
• Competency and interest groups 
• Knowledge sharing activities 
• Project Manager education program 
• Training and workgroups 
• Bonus systems and incentive tools