Outsourcing in the Ukraine: benefits and drawbacks
The Ukraine offers highly skilled IT specialists at a low cost for companies looking to develop projects within Europe. But while the honesty of its people appears to be a key selling point, problems of corruption and the possibility of social unrest remain.
When UK companies consider the option of offshoring, India tends to be the first port of call, due to its technical expertise and the cultural ties between the two countries. But that could be changing, with nearshore locations such as the Ukraine vying for a share of the market.
The country’s outsourcing software development alliance, reveal the Ukraine’s outsourcing industry is estimated to have grown by 20% in 2010.
It looks set to face India head-on, with software development the most popular outsourcing service, followed by software testing and application maintenance.
However, growing technical expertise and demand for developers has led to increasing labour costs. According to the European Business Association (EBA), the monthly earnings of IT specialists in the Ukraine has risen by $300 to $1,500 since 2010. In 2005, monthly pay was just $500.
With increasing demand for developers, wages are likely to continue to rise. And wage reduction is not an option as it could lead to a brain drain abroad. According to figures from EBA, the Ukraine currently has a shortage of 6,000 jobs for IT professionals. All of which could lead to the Ukraine becoming a more expensive destination of choice in the next five years.
With highly skilled labour that is still far cheaper than in Western Europe, he says there are big rewards for companies looking to do business in the Ukraine: “You have to be really resilient in business to make it here, but it’s the same case in a lot of emerging economies.”