Outsourcing To CEE. Country Overview. Ukraine Webinar 13.01.10

04/11/23 “Outsourcing in CEE. Country Overview. Ukraine” © Ukrainian Hi-Tech Initiative 1

Ukrainian Hi-Tech Initiative

Outsourcing in CEE. Country Overview. Ukraine

Webinar “Outsourcing in CEE. Country Overview. Ukraine.”

Presenter: Inna Sergiychuk, COO, Ukrainian Hi-Tech Initiative

January, 13, 2010


Agenda

Introduction of Ukraine

Backgrounds for Outsourcing to Ukraine

Overview of Ukrainian IT Outsourcing Industry

About Ukrainian Hi-Tech Initiative


Introduction of Ukraine


Ukraine Snapshot

Population: 45,999, 900

Capital Kiev

24 provinces and one autonomous republic Crimea

Languages:Ukrainian, Russian

Time Zone EET

(GMT+2)


Overview of Economy Ukraine is an emerging free market, with a gross domestic

product that has experienced rapid growth in recent years

Western-oriented government policies encourage partnership and close business ties with US and EU companies

In 2008 Ukraine joined the World Trade Organization

Ukraine now has the potential to be one of the region’s leaders in volume of foreign direct investment and portfolio investment

In 2007 Ukraine had the highest IT industry growth rate among Central and Eastern European countries. Ukrainian IT market ranked fourth after Russia, Poland and the Czech Republic, with almost 40 percent growth and over $3,4 billion in volume, accordingly to IDC survey

The USA, Germany, Poland, the UK, Japan, China, Russia are the main trade partners of Ukraine


Foreign Direct Investment to Ukraine


Ukraine aspires to join the European Union and NATO, and has entered into co-operation agreements with both organizations'.

The European Union's Partnership and Cooperation Agreement (PCA) with Ukraine went into force on March 1, 1998.

The final tournament of The 2012 UEFA European Football Championship (Euro 2012) will be hosted by Ukraine and Poland

International Relations


Geography & Culture

Close to Europe

Time differences with Europe are negligible

Moderately continental climate close to climate of most European countries

Cultural compatibility with European and North American countries


Citizens of the United States, European Union, Swiss Confederation, Liechtenstein, Canada, and Japan DO NOT need visas for entering Ukraine since 2005

Kyiv, Kharkiv, Lviv, Dnipropetrovsk, Donetsk, Odessa - main airports with direct links with most countries of the world

A lot of hotels and airports are being modernized, and the new ones are being built as a preparation to host Euro 2012. 4 cities are to host Euro 2012!

Traveling to Ukraine


Backgrounds for Outsourcing to Ukraine


IT Labour Market


Education in Ukraine

Ukraine has a long standing reputation as major technology region, with a well developed scientific and educational base

With only 1% of all world’s population, Ukraine has 6% of the world’s physicists, mathematicians, computer programmers, and other highly educated professionals

More than 16,000 IT specialists with bachelor degree and about 14,000 IT specialists with master degree graduate from universities each year

To bridge the gap between classical education and real business and technical process, outsourcing companies have partnered with leading universities to offer additional classes and labs for students

Bologna process in higher education area.


Office rent - from 8$ to 30$

Internet (optical channel 4 mbit) - from 50$ to 200$

PC for software development from 600$ to 1000$

Infrastructure in Ukraine


In 2007 the Ukrainian Parliament adopted the law “On the Foundations of the Development of Ukrainian Information Society in 2007-2015”. The goal of the law is to promote growth of information society in Ukraine, strengthening the basis of IT sector development.

One of the most comprehensive law on law on Intellectual property and copyright protection in the world

Non-residents at the territory of Ukraine may perform activities only through their own representative offices

Government Support and Legal Aspects of Business in Ukraine


Overview of IT Outsourcing Industry in Ukraine


Early stages of SD market development in Ukraine

1952-1970: Formation of computer calculations 1952 – first computer in Continental Europe. Computer codes.

1970-1980: Usage in science, military technologies.

FORTRAN, PL1, COBOL, C

1980-1990: Usage in national economy of Soviet Union 1980 – PC appearance 1980-1990 – Automation of largest industrial enterprises of

Soviet economy. COBOL, FORTRAN, PASCAL, Пальма.

History of Software Development Market


Formation of SD industry in Ukraine

1990-1999: Formation of Software Development market 1990 – appearance of the first independent software development

companies. Accounting. Automated workstations for industrial enterprises. Clipper, DBase, FoxPro, С/С++.

1989 – establishment of Mirasoft 2000 problem. Tessart – 1999. 120 employees.

1999-2002: Industry growth within DOT COM boom Wide usage of Internet Projects for DOT COM startups The volume of offshore projects exceeds the volume of onshore

projects

2002-2003: Period of Uncertainty Global IT market recession and focus of software development

market on offshore customers became the reason of industry slowdown. Separate companies bankrupted (Novatek, Tessart, Ukrsoft)



Volume of Outsourcing Services Export


Maturity of SD market in Ukraine

2003-2006: Rapid growth of the industry at the cost of offshore projects With the recovery of global economy, the demand for

Ukrainian developers increased as well.

2006-2008: Market stabilization Large players Luxoft, Global Logic, EPAM, DataArt, StarSoft In 2008 – 800 IT companies with 14,000 employees

2008-2009: Financial recession Slowdown of the market development The part of resources are focused on onshore activities inside

the country Focus on development of inhouse products, service-oriented

projects



IT Outsourcing Services Export Market


Number of IT Outsourcing Companies


Main Services Provided by Companies

Custom software development

Dedicated development team

Support and Maintenance, System Administration

QA and Consulting

Embedded Software

Web solutions, E-commerce

Business Processes

IT Hardware

VictorM

Сделать маркированній список с перечнем услуг


USA

Germany

Netherlands (Benelux)

France

UK

North Europe (Finland, Sweden, Norway)

Other EU countries

Russia

Other Asia

Key Export Markets


Key Outsourcing Centers in UkraineCity Population,

millionsPart of outsourcing industry resources, (mostly IT), %

Average salary relative to Kyiv, %

Property price level relative to Kyiv, %

Kyiv 4.0 42 100 100Kharkiv 2.5 20 85 80

Lviv 1.3 11 75 65

Dnipropetrovsk

2.0 8 80 75

Odessa 1.8 4 80 75

Other 14 70 65


Average Rates of Ukrainian Companies

Type of specialists Experience (years)

Rate on short project, (< 3 month), $USA

Rate on long project, (> 3 month), $USA

Junior Java developer to 3 14-18 12-16Software Java Engineer

from 3 to 5

18-22 16-20

Sr Software Java Engineer

more than 5

22-27 20-25

Team leader more than 5

27-32 25-30

Project manager more than 5

27-32 25-30


TOP Clients of Ukrainian Software Developers

Motorola (Freescale)

Microsoft (Celenia)

TDK (GlobalLogic)

Skype (Lohika)

Deutsche Bank (Luxoft)

Sun Microsystem, MySQL –R&D office in Ukraine

UBS Bank (Luxoft)

Apple Inc. (CMK (Software Mac Kiev)

BOSCH (web100, Infopulse)

Ebay (Lohika)

IBM (GlobalLogic)


Ukrainian Hi-Tech Initiative (hi-tech.org.ua) – association of companies providing IT outsourcing services. The association unites more than 50 companies who employ more than 4500 IT specialists.

ITUkraine (itukraine.org.ua) - аssociation of Ukrainian software development companies. The association unites 28 companies.

Developers (developers.org.ua) - сommunity of Ukrainian IT professionals

JUG Ukraine (jug.org.ua) - Ukrainian Group of Java Developers

Professional Associations and Communities


Industry Development Trends for 2010-2012 Improvements in marketing and sales of outsourcing services

penetration into new segments of small and middle businesses

Improvements in production processes cost saving possibility of outsourcing in low-cost segments

Adoption and provision of services based on new technologies RICH – technologies iPhone, Android ecosystem Google app ecosystem

Diversification of activities to related segments IT support SaaS development of inhouse products IT consulting


High-qualified specialists

Strong educational and scientific schools in exact sciences

Large pool of IT specialist

Mature, stable and growing market of IT outsourcing services providers

Openness of Ukrainian economy to foreign investment and international cooperation

Geographically and cultural close to European consumers

Comprehensive law on intellectual property protection

Significant (up to 50%) savings on cost for high-qualified offshore specialists

Main Advantages of Choosing Ukraine as an Outsourcing Destination




Established in 2003

Leading alliance in offshore software development and outsourcing industry in Ukraine

53 companies which employ more than 4500 people are members of Ukrainian Hi-Tech Initiative

Association covers all regional software development centers: Chernihov, Kiev, Kharkov, Lviv, Dnepropetrovsk, Simferopol, Donetsk, Odessa

Ukrainian Hi-Tech Initiative is one of the founders of Central and Eastern European Association (CEEOA) in 2008



Market research: Ukrainian IT Services and Products Export Market Research 2003 CEE IT Outsourcing Review 2007 CEE IT Outsourcing Review 2008

Events: Ukrainian Outsourcing Forum 2005, 2006, 2007 Hardware Design Development in Ukraine 2006 Aaron Marcus workshop “Successful User Interface Development”

2007 Job Fair in Kyiv, Donetsk, Cherkassy

Cooperation with Government Concept for Government Program on the development of Ukrainian

Software Development industry – “UKRAINE, THE IT-FIRST NATION”

Content projects ITOnews.eu – information portal for association CEEOA CATALOG.ceeoa.org – directory of ITO services providers from CEE

Main Projects of Ukrainian Hi-Tech Initiative


Assistance with establishment of partnerships and business relations between Ukrainian and foreign companies

Assistance with setting up and conducting business in Ukraine

Consultations on conducting business in Ukrainian outsourcing services market

Assistance with collaboration on projects implementation

Main Services


References

“Ukrainian IT Services and Products Export Market Research 2003” by Market Visio and Gartner

“Ukrainian IT-export Market Review 2004” by Techinvest

“CEE IT Outsourcing Review 2007” by CEEOA

“CEE IT Outsourcing Review 2008” by CEEOA

Pictures by © Gutsaluk Oleg, Boyko’s Producer Centre Gallery, artboyko.com


NET Technology Center WEB100 – the Ukrainian

software development company that provides offshore outsourcing services and deals with the development of IT solutions for B2B communications and business solutions based on Social Media technologies.

NET Technology Center WEB100 is an active member of

Ukrainian HI-TECH Initiative since 2003.

Technology Sponsor of the Series of Webinars


Thank you!Contact information:

Inna SergiychukCOOUkrainian Hi-Tech Initiative

Phone: +380 (44) 458-17-53Email: [email protected] Live Сhat: http://hi-tech.org.ua/Live-chat/

Please follow up the discussion of the webinar in our LinkedIn Group :

“Outsourcing to CEE: CEEOA Activities”