Ukraine: an Emerging Software Outsourcing Destination

prepared by Softheme™

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Ukraine at a Glance Fast Facts:

• Second-largest country in Europe after Russia

• Population: 44.3 million (2014 est.)

• Workforce: 22.1 million (2011 est.)

• Situated in the heart of Europe: strategic position between Europe and Asia on the intersection of major transport and trade routes

Political and Economic Environment Favorable Political Environment:

• Western-oriented government policies favorable for US and EU companies

• Member of the World Trade Organization (WTO) since 2008

• Not a member of the European Union: positive influence on outsourcing rates which are lower than in the EU countries

Favorable Economic Environment:

• Signed the Free Trade Agreement (FTA) with the European Union

Political and Economic Environment • GDP (PPP): $373.1 billion (2014 est.), GDP per capita: $8,240 (2014 est.)

• Foreign Direct Investments: $6.6 billion (2014 est.)

• Ranked 63rd on the 2014 Legatum Prosperity Index of 142 countries, ahead of Mexico, Philippines, Russia, Indonesia, and Turkey

Sources:

State Statistics Service of Ukraine

The 2014 Legatum Prosperity Index

Whitepaper: Outsourcing and Offshoring in CEE, by Colliers International

• EE/CIS region undertook positive business reforms in 2013, is ‘simpler and more cost-effective’ to establish and run a business with than with such regions as East Asia / Pacific, South Asia, Latin America, Sub-Saharan Africa, Middle-East, and North Africa.

Political and Economic Environment Other Factors:

• Moderate wage growth

• Attractive IT outsourcing rates

• Modest infrastructure costs: office rent and communications

• A fixed added value tax at just 4% for businesses working in the IT sector: serves as a significant relief and a boost for the industry development

Ukrainian IT Outsourcing Ukraine is an attractive Emerging Outsourcing Destination, due to:

• Growing pool of qualified human resources

• Strong Scientific Legacy

• European mentality

• English language proficiency

• Competitive outsourcing rates

Ukrainian IT Outsourcing Ukrainian Outsourcing Facts:

• Ukrainian IT outsourcing companies have been providing software development services since the early 1990s

• Outsourcing accounts for more than 75% of software development work in UA

• Ukraine is the #1 among 16 countries in Central and Eastern Europe (CEE) in regards to:

IT outsourcing market value ($1.1 billion)

Number of IT outsourcing companies (1,050)

Number of employees involved in IT outsourcing industry (25,000+)

Sources:

CEE IT Outsourcing Review 2008, 2009, 2010

UKRAINE: More than just another outsourcing destination, by Alex Golod, Intetics

Exploring Ukraine. IT Outsourcing Industry 2012 , by Ukrainian Hi-Tech Initiative

Ukrainian Outsourcing Facts:

• Ukraine is included in Gartner’s TOP 30 Outsourcing Destinations since 2007, with one of the best cost and IT education quality indexes

• Ukraine was nominated as the “Outsourcing Destination of the Year” by the European Outsourcing Excellence Awards in 2011

• Ukraine is included in TOP 50 Countries for Locating Outsourcing Services according to Global Services Location Index

• Ukraine is 11th among 20 leading countries in the area of IT Outsourcing and High Tech Services

Sources:

Gartner’s 30 Leading Locations for Offshore Services

2011 European Outsourcing Association Summit and Awards

A.T. Kearney Global Services Location Index 2011

The 2010 Global Services 100 list

Ukrainian IT Outsourcing

Ukrainian Outsourcing Facts:

• Ukraine was ranked among the 10 TOP countries with the most certified IT professionals, just after the US, India, and Russia

• Ukraine was ranked 8th in the Gaming Industry’s TOP 12 European Countries

• Ukraine was ranked the 49th best country in which to live by Newsweek Magazine

• Kyiv, Ukraine’s capital, is included in the Tholons’ TOP 50 Emerging Global Outsourcing Destinations

• The Ukrainian city of Lviv was named a TOP 30 emerging destination for outsourcing according to the report “Exploring Global Frontiers” by KPMG

Sources:

Global IT IQ Report

Global Gaming Industry Network 2009

Newsweek Magazine, World’s TOP 100 Countries

TOP 50 Emerging Global Outsourcing Cities, Tholons 2009

Ukrainian IT Outsourcing

Ukrainian IT Outsourcing Ukrainian Outsourcing Facts:

• Steady growth of IT outsourcing market in the past 10 years

• Ukrainian outsourcing rates are among the lowest in CEE

• Ukraine has higher financial attractiveness as an offshore destination than such popular outsourcing locations as China, Chile, Mexico, Brazil, Argentina, Czech Republic, and Poland

• The closest location to Europe out of those countries not part of the EU

• Large number of small outsourcing companies: low rates for medium and small businesses

Sources:

Central and Eastern Europe IT Outsourcing Review 2008

A. T. Kearney Global Services Location Index 2009

Global IT Report, Factbook

IT Education in Ukraine Ukrainian Education Facts:

• Ranked 42nd in Education on the 2014 Legatum Prosperity Index of 142 countries, ahead of Argentina, Malaysia, Costa Rica, Romania, China, Chile, Philippines, Indonesia, Turkey, Brazil, India, Egypt, and other popular outsourcing destinations

• Out of 144 countries, ranked 41st in ‘Higher Education and Training’ and 30th in ‘Quality of Math and Science Education’ on the 2014 Global Competitiveness Report

• Ukraine is 5th in 'Postsecondary Education' in Bloomberg's 2015 list of Top 50 Most Innovative Countries

Sources:

2014 Legatum Prosperity Index

The Global Innovation Index, Bloomberg 2015

The Global Competitiveness Report 2014-2015 – World Economic Forum

Exploring Ukraine. IT Outsourcing Industry 2012, by Ukrainian Hi-Tech Initiative

IT Education Relevance:

• IT and Software Development occupations are becoming more and more popular in Ukraine among university students, as a good way to build a successful career, due to:

Growing market demand

Challenging projects

Higher than average salaries

IT Education in Ukraine

Sources of IT employees in Ukraine:

City Population (mil) Part of outsourcing industry resources,

number of IT specialists

Kyiv 2.8 10 000

Kharkiv 1.7 4 750

Lviv 0.9 4 000

Dnipropetrovsk 1.2 1 750

Odesa 1.1 1 000

Crimea cluster 1.5 750

Other - 2 750

Total 9.2 25 000

IT Education in Ukraine

IT Salaries: Ukraine vs. USA

Salary Comparisons Across Various IT Positions:

Position Ukraine

min/year USA

min/year Ukraine

max/year USA

max/year

IT Manager $31,200 $91,000 $60,000 $130,750

Project Manager $15,000 $79,000 $42,000 $117,250

Programmer $14,400 $78,250 $27,600 $119,500

Quality Engineer $10,200 $80,250 $19,200 $107,000

Sources:

DOU (www.dou.ua) – a community of Ukrainian IT professionals

Robert Half Technology, IT Salary Guide 2012

About Softheme Company Fast Facts:

Core Services:

• Software development

• Software re-engineering

• Enterprise-level application development

• Salesforce development and integration

• Web development

• Mobile development (iOS, Android, Windows Phone, etc.)

• Software maintenance & support

• Independent software testing & QA

• Dedicated development teams

• Remote system administration / security audit

• Internet marketing, SEO, marketing automation

• Founded in 2006 in Kyiv, Ukraine

• More than 1,000 successfully delivered projects

• ~400 developers and testers

• 80% of clients selected Softheme basing on customer recommendations

• 30% certified specialists (MS .NET, Oracle Java, Salesforce)

• Customers in the USA, UK, Japan, Western/Eastern Europe

Application Domains: • ERP / CRM / Document management

• Website / blogs / e-commerce / social networks

• Data analysis / data security

• Finance / Insurance

• Healthcare / Medical

• SaaS, and more

Technologies: C# .NET, Java, C/C++, ASP.NET, PHP, Ruby, Python, Delphi, Oracle, MS SQL, mySQL, JS/Ajax

Terms of Engagement: • Cost-free project quote

• Confidentiality / IP rights reserved

• Fixed price, fixed team, time & materials cooperation models

• Rates starting at 15 USD resource/hour

• Flexible cancellation policy

Softheme Mission: Softheme mission is to create better applications for a better world.

Softheme does not save on specialists and equipment but rather optimizes process and operations, applying profound industry experience and knowledge.

Testimonials: “We selected Softheme basing on: (1) Softheme's experience in conducting Data Mining projects, their experience in previous implementations of algorithmic components, rule based and real-time expert systems, data query optimization, (2) Understanding of our SOWs, (3) Human resources and infrastructure.” Mark F. on his experience with Softheme’s C# developers

“Over time we had completed several projects from start to finish with Softheme. From the initial analysis of the project scope to detailing the required functionality to implementation and on-time delivery, Softheme required our input mostly on the changes to the initial design and pretty much took care of the rest.” John S. on his experience with Softheme’s Web/Mobile, C#/C++ and QA units

About Softheme

About Softheme Softheme® is a trademark of Software Outsourcing House Int., an international group of companies dedicated to investing in Ukraine’s IT outsourcing industry. We provide cloud, desktop, web, and mobile software development; along with independent software testing and QA, remote system administration, and Internet marketing outsourcing. We are recognized as the Technical Talent Company that knows how to hire and retain prominent IT specialists.

Contacts

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