IT Outsourcing in Ukraine in 2023: Market Overview, Rates, and Benefits

Over the past 5 years, Ukraine has been rapidly becoming a leading IT outsourcing destination in Central and Eastern Europe. 

 Even despite the war, the tech industry has proven to be resilient and continues to supply talent to the world.  

As a software development center based in Ukraine, we like to share annual statistics and insights on the state of Ukraine IT industry that could be helpful for other companies.

Why Ukraine is an attractive IT outsourcing destination? IT outsourcing market overview

Ukraine’s IT outsourcing appeal is primarily driven by three key factors:  

• a vast pool of top tech talent 
• affordable labor costs
• cultural fit

Many businesses worldwide outsource their development tasks to Ukrainian developers because they are cost-effective, highly skilled, and a good cultural fit.

• Each year, approximately 20,000 tech students graduate from Ukrainian universities, further expanding the talent pool.
• The country hosts over 100 R&D centers of multinational tech giants like Microsoft, Ericsson, Siemens, and Oracle.  
• Ukraine is also home to renowned startups and organizations like GitLab, Grammarly, Jooble, and Template Monster. 
• About 85% of tech professionals have at least an intermediate English proficiency level. 
• 20% of Fortune 500 companies had remote development teams in Ukraine 
• The IT outsourcing business in Ukraine grew by 380% between 2013 and 2020.
• Gender diversity in tech: Ukrainian software developers are 25% female, versus a European average of 16%. 

The resilience of Ukrainian IT outsourcing during the war

In 2023, the software development industry in Ukraine faced challenges due to the ongoing Russian invasion that began in 2022. Despite this, Ukrainian IT companies exhibit remarkable consistency and continue to thrive, demonstrating unprecedented resilience.  

IT outsourcing firms effectively met their commitments to customers, ensuring the satisfaction of existing clients while securing new contracts. Notably, they stand out as the sole growing industry in Ukraine, with the financial capacity to fulfill tax obligations promptly.

The volume of IT services increased by a significant 13% in the first nine months of 2022 compared to the previous year, amounting to $5.5 billion, according to data from the National Bank of Ukraine. Currently, the IT sector contributes to nearly half of the total service exports. IT exports have seen an impressive growth rate of 16% in the first eight months of 2022 year, surpassing the same period last year.

These facts underscore the dedication, resilience, and industriousness of Ukrainian IT companies. Developers in Ukraine have a strong work culture, which has become even more prevalent during the COVID-19 pandemic.

This adaptability allows the industry to function effectively even in challenging situations.

As a result, the outsourcing IT sector has emerged as a pillar of the national economy and aims to consolidate and strengthen its position in 2023.

Despite the challenges faced, the Ukrainian IT market has adapted in various ways, making it an attractive destination for global markets.

Advantages of outsourcing software development to Ukraine

Ukrainian software developers have proven highly proficient in technology, language, and work ethics. They are highly motivated and possess the experience required to fulfill the demands of global clients.

1. Access to highly skilled IT professionals

Ukraine has a strong foundation in technical education, with an increasing number of engineering graduates each year. The Ukrainian IT Association’s 2022 report reveals that computer science, computer engineering, and software engineering are the most sought-after majors.  

Ukrainian outsourcing companies specialize in advanced technologies and prioritize the growth of their teams’ expertise. According to the DOU, Ukrainian engineers excel in programming languages such as JavaScript, Java, Python, C#, TypeScript and PHP.

2. Cost-effectiveness and competitive pricing

When it comes to reducing costs, Ukrainian IT outsourcing companies stand out as exceptional service providers in terms of both quality and affordability.  

In comparison to outsourcing firms from other countries, Ukrainian IT service providers offer highly competitive rates for the quality they deliver. They have made a strong presence in all categories of top companies and leader matrix reviews.

The hourly rates charged by Ukrainian companies are more reasonable than those of their counterparts from other locations. For instance, US IT development agencies typically charge $70-150 per hour, while UK IT development agencies typically charge $80-115 per hour.

You could also utilize a free value assessment tool we have prepared for you, to compare United States developers vs those located in Ukraine.

3. Cultural fit and language proficiency  

Ukrainian software developers are a cultural fit for many businesses, as they share similar work ethics and communication styles. Many global companies hire IT outsourcing companies from Ukraine because they are professional, dedicated, and committed to meeting deadlines. 

Approximately 80% of software developers in Ukraine have an intermediate or higher level of English proficiency. Many software development companies in Ukraine offer free in-house English lessons to their employees. 

These factors make Ukrainian software developers a great choice for businesses looking to hire a team that can work effectively with clients from all over the world.

4. Time zone advantage and efficient communication  

Ukraine is in the GMT+2 time zone, which is just 1-2 hours ahead of most European countries and 7-9 hours ahead of the US. This makes it a convenient time zone for businesses to outsource their software development to Ukraine, as there is often an overlap between working hours. 

Ukrainian developers are also known for their excellent communication skills, which further facilitate collaboration.

5. Strong legal framework and intellectual property protection 

The Ukrainian government has been actively working to strengthen its intellectual property laws in recent years.

Ukraine has a strong legal framework for intellectual property protection. This means that businesses can be more confident that their intellectual property will be protected if they outsource their software development to Ukraine versus other countries.

Challenges and risks of IT outsourcing in Ukraine

Red flags choosing developers from Ukraine:

1. Talent shortage and competition for skilled professionals 

   Ukraine has a large pool of IT talent, but there is also a high demand for certain senior and specialized skills. This can lead to talent shortages and competition for the best professionals.

2. Unstable political situation 

   The ongoing war in Ukraine could impact developer’s ability to work and have access to the internet. However, the last 1,5 years have shown their resiliency and ability to work efficiently even in stressful situations. Most Ukrainian outsourcing vendors are relocating their employees to Western Ukraine or abroad for these reasons.

   For example, our office is based in the Western Ukrainian city of Lviv, 1 hour from the Polish border by car. We have implemented Starlink internet, backup generators, and other business resiliency to ensure business continuity.

3. Data security and privacy risks

   There is always a risk of data security breaches when outsourcing IT work to any third-party company. It’s important to choose a company with a strong track record of security and to have clear security protocols in place. This is why we even guide our customers with compliance efforts towards SOC 2 Type 2, HIPAA, GDPR, and ISO. 

Conclusion

Ukraine is a great choice for IT outsourcing due to its combination of price, skills, talent, agility, and costs.  

Ukrainian IT companies have continued to operate and even grow during the war. The Ukrainian IT industry is agile and responsive to change, which can be a major advantage for businesses that need to get their projects done quickly. 

Ukrainian developers can be an amazing asset to your business. By working with Ukrainian companies, you can also support the local economy and help establish peace in Europe.