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Case Study : Why We Offshore Our Software Development Work to Ukraine (www.sourcingmag.com)

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There are several strong characteristics of Ukraine, which provide benefits for an international organization, that considers dealing with software development resources from Ukraine.

Technical excellence

Ukrainian programmers possess all the needed up-to-date technical skills. Within Ukraine all the latest worldwide technical literature is available, both in English and in local versions. Over recent years Ukrainian student and school programming teams have consistently beaten their competitors from all over the world in closely watched international competitions. Ukraine is the fourth in top 10 countries with the most certified IT professionals. According to Global IT IQ Report by BrainBench, 24 000 specialists from Ukraine have got the certificates of BrainBench.

Local providers understand the meaning of keeping abreast of all developments in the field and take the requisite preparatory steps: they organize specialized technical libraries and invite leading specialists to give special lectures on the latest trends and technologies. In addition, there are a number of certification centers from Sun, Microsoft, Novell as well as independent authorities.

R&D focus

Unlike India, which is well-known for the ability of its IT-companies to undertake routine coding and do the job with a consistent and predictable level of quality, Ukrainian companies have a strong advantage in R&D. By R&D we mean not only scientific research, but also all the software development that requires creativity and strong skills in adjacent domains. Besides Ukrainian companies propose specified services and development of complex architecture.

Strong fundamental education

Ukrainian educational institutions keep producing well-qualified graduates, especially in the areas of fundamental technology sciences. Quite commonly a Ukrainian programmer gets a strong fundamental education in such fields as mathematics, physics and other domains, then switches over to computing. Ukraine has a well-educated and skilled labor force, with a 98 percent literacy rate, rate compared to 52% for India.  

Experience with complicated projects

Ukraine remains a scientific superpower. Past achievements in space and military production have left solid traditions of working through complicated projects that are IT dependent. Recently the international IT-majors have begun to realize the opportunity posed by opening full affiliates in Ukraine and engaging them in their global and complicated projects. Concentration of scientific resources in Ukraine is highest of the countries of the former Soviet Union.

Great potential

All the above factors contribute to the great potential of the Ukrainian software outsourcing industry for integration in the worldwide IT industry. Ukrainian specialists who left Ukraine to work abroad have begun trickling back, bringing with them invaluable experience in marketing and sales as well as business ties needed for the young IT-industry. Also, there has been an influx of Western managers into Ukrainian IT companies, where they usually serve in Marketing, Sales or Business Development.

The local IT-industry serving domestic clients has dominant positions in systems integration, accounting software and Web-development, where it overshadows the offices of international companies in Ukraine. These local providers are also beginning to expand into the international market.

From an expert point of view Ukrainian skilled workers' potential is of an extensive scope, comparatively the same as in India, but is of much higher creativity level and excellent technical grounding. Every year 50 thousand IT-specialists (including mathematicians) are graduated from high-education institutions of Ukraine. Two Ukrainian Universities - National Taras Shevchenko University and National Technical University of Ukraine "KPI" are among the best twenty high-education institutions of the world, which graduate IT-specialists.

Labor Costs

Although we recommend looking beyond the low cost of Ukrainian IT resources to the additional arguments in their favor, cost factors are undeniably a key consideration in any company's decisions around outsourcing. Costs for software development depend on a set of factors: needed skills, project size, commercial renown of the provider, the geographical location and experience of a provider, the provider's pipeline, fixed overhead costs whether included in the base price or not, the specific type of contract under negotiation (development or maintenance), ratio of onsite to offsite work, guaranteed workload and other factors.

Stable economic and politic situation

Today Ukraine is the country with growing economy, highly developed infrastructure, reliable banking system, low inflation and stable local currency. In the first half of 2003, Ukraine's GDP has increased by 7.5% year-on-year. According to the State Committee on Statistics, the nominal value of output stood at UAH 108.9 billion (USD 20.4 billion) in January-June.

Ukraine is one of the most stable countries of the former Soviet Union with strong commitment to ethnic and religious peace.


The majority of software development companies today are located in the capital city of Kyiv. For the US, Ukraine is 7 - 10 hours ahead of the US, 4:00pm in Kyiv means 9:00am in East coast, USA. Staggered work times allow for overlap and communications between the two locations and for the possibility to hand off work at the end of the day. In a bug-fixing mode, this allows for errors fixed during the day in Kyiv and unit tested to be handed off to QA in USA for review during their workday. Nevertheless such situation does not exclude an opportunity of on-line dialogue as call conferences, etc. 

Business Travel

This category takes into account two sides to the travel issue. One is the ability of clients or potential clients to visit Ukraine with ease, for purposes of discussing potential projects and during the project cycle as needed.

In this case, three moves have been made since the second quarter of 2000, which have eased this process. Invitation letters to obtain visas have been done away with for most countries. As of the second quarter of 2001, international visitors to Ukraine are no longer required to register when staying in Ukraine for more than three days. Lastly, with particular regard to the U.S., is the ease of obtaining long-term multi-entry visas to Ukraine. As of November 2001, three-year multi-entry visas have become easier to obtain for U.S. citizens based on a reciprocity agreement.

The other side of the business travel issue is for Ukrainian citizens to be able to travel easily to the customer location on an as needed basis. With regard to business travel to the US, members of the American Chamber have been assisted considerably.

Used "White Paper on Offshore Software Development in Ukraine" by American Chamber of Commerce in Ukraine (June, 2002)