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Why Israeli Companies Choose To Build Their Technology Solutions In Ukraine

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Vik Bogdanov
Chief Marketer

Spinning digital marketing wheels.

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Despite the global tech talent shortage, there’s no lack of outsourcing locations out there, with India, Eastern Europe, and, most recently, South America helping developed nations like the US, Israel, and Germany to bridge the talent gap. For many Israeli tech companies, Ukraine remains the #1 outsourcing destination. In terms of software development outsourcing, the two countries have very close ties: a lot of Israeli firms have Ukraine-based affiliate branches with hundreds of software developers, DevOps and QA engineers working on their technology solutions development.

In a bid to eliminate the scarcity of the local tech talent, Israeli firms have spent around $1 billion in salaries for outsourced developers from the world’s popular outsourcing locations, as revealed by a survey published by Ethosia recruiting agency. Other studies indicate, in 2018, as many as 45% of these firms have outsourced the development of their tech solutions to Ukraine. Strong financial ties are also cementing the Ukrainian-Israeli relationship. Israeli managers come to Ukraine to hire software developers, build dedicated development teams and create R&D centers, while Ukrainian outsourcing companies look for clients in Israel.

A lot of Israeli companies that had partnered with Ukrainian outsourcing providers a few years ago are now reaping the benefits. Below are some of the most prominent examples including 8allocate clients:

MyHeritage

An online genealogy platform, MyHeritage started as a privately owned venture in 2003, and now has 93 million users worldwide. Headquartered in Or Yehuda, Israel, the company has offices in Israel and USA and a dedicated development center in Ukraine (Kyiv) with PHP and Java developers working on company’s web and mobile software products. Initially known for its family tree builder, the company now offers genetic testing services, health-focused DNA screenings, tools for discovering relatives and family members, and more.

Playtech

Playtech is the world’s largest gambling software supplier providing solutions for online casinos as well as online sports betting and mobile gaming. Founded in 1999 by the Israeli entrepreneur in Tartu, Estonia, Playtech has offices and development centers in 17 countries, including Ukraine, with front-end developers, security experts, data and QA engineers working on their R&D projects in the company’s offices in Kyiv.

How IT Outsourcing To Ukraine Helps Israeli Companies Stay Ahead Of The Curve

Wobi

Wobi emerged as an insurtech initiative of Israeli leading insurance companies. Aimed at enabling clients to choose the best insurance provider by comparing products and prices, the service also allows them to buy insurance policies online. Focused on various insurance types such as travel insurance, vehicle insurance, loans, and pension insurance, etc., the company outsources React and Nodejs skills to Kyiv and Kharkiv.

Zirra

An Israeli company founded in 2014, Zirra is a market intelligence platform committed to helping its users avoid financial risks, understand trends, and find opportunities. The company has recently gained recognition for its Startup Spotlight Report for investors, entrepreneurs, and job seekers. With Ukrainian AI developers helping Zirra harness NLP and machine learning to deliver advanced data analytics, the company has been reported to have raised $2.5 million.

 

Check out our value proposition for Israeli firms.

Wix

An Israeli-based freemium DIY web development platform offering thousands of templates for web and mobile sites, web hosting services and business management, Wix is headquartered in Tel Aviv and also has a number of international offices, including R&D in Ukraine. The company has over 1,800 employees, including over 500 developers in Kyiv and Dnipro.

Why Ukraine?

Apart from lower rates, what’s so attractive for Israeli clients on Ukraine’s talent market? Despite the popular notion that lower price spells lower quality, Ukraine boasts the excellent quality of STEM talent. In fact, 18 Ukrainian outsourcing providers are listed in the Top 100 IT Outsourcing companies, as reports Unit.City.

8allocate Ranks 3rd Among Top Custom Software Developers in Israel

What sets Ukrainian developers apart from others is the knowledge of a variety of programming languages, development frameworks, and methodologies. Right now there are over 160,000 tech specialists on its job market, with 38,000 more graduating each year.

Other reasons for Israeli firms to choose Ukraine over other outsourcing options include:

Absence of language barrier

Ukraine is a former Soviet republic, and many of today’s Israelis are direct descendants of USSR immigrants or have migrated from former USSR in the ’80s-’90s. A lot of them understand Russian, still vastly spoken in Ukraine, especially in its Eastern and Southern regions. A lot of Ukrainian developers speak fluent English and can confidently communicate with Israeli clients as well.

Same time-zone

Anyone who has tried managing remote teams knows how easily the time difference can hamper the communication process and affect delivery. Having to wait for hours until your development team on the other side of the globe gets to work, inability to agree on the timing of an online meeting, messages answered when no longer relevant are some of the shortcomings of operating in different time-zones. With Ukraine there’s no such problem – the two countries share the same time zone.

Geo proximity

On top of that, a flight from Tel Aviv to Kyiv and vice versa only takes three hours. There’s a visa-free regime between the countries, so it’s easy to schedule in-person meetings and attend them in person several times a month. There are flights to Israel from other major cities of Ukraine as well: a great asset when a project requires onsite presence.

Cultural ties

For centuries, Ukraine has been a hub for many Jews. Israel’s first prime minister, Golda Meir was born in Kyiv. The founder of Hasidism, Rabin Beshta, had lived in the 17th century in the town of Medzhibiz in the territory of the present Khmelnytsky region of Ukraine. Another Ukrainian city, Uman, is a sanctuary and place of pilgrimage for many orthodox Jews. The grave of Tsadik Rabi Nakhman (Bratslavsky), great-grandson of Rabin Beshta and prominent Hasidic leader attracts thousands of Hasidism supporters into the city every year.

In terms of corporate culture, the similarities are quite significant since both Ukrainians and Israelites share the same informal approach. This reduces the long preliminary negotiation phase to a reasonable minimum and lets the parties get straight to business.

Most importantly, though, Ukraine offers a fast solution to urgent Israeli problems: tech talent shortage and lack of skilled developers. Most of the Israeli senior software devs tend to choose giants like Google, Oracle, and Amazon because of the more attractive compensation packages. This puts smaller companies and startups in a difficult situation. In 2018, the number of tech vacancies in Israel grew to 15,000 with the demand for tech workforce by far exceeding supply.

Apart from looking for qualified software development offshore, other strategies of overcoming the talent shortage include embracing diversity by attracting female developers and minorities, thoughtful resource allocation, and government-sponsored educational initiatives aimed at opening the doors of opportunity for young people who contemplate a future in STEM professions.

Clearly, though, all these solutions take time. For now, close ties between the two countries, cultural affinity, same-time zone, and the availability of high-quality tech talent are prompting many Israelites to choose Ukraine as their top outsourcing destination.

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