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Eastern Europe Outsourcing Insights: Ukraine

To keep pace with a rapidly changing software development ecosystem and monitor different software marketplaces, SourceSeek has collected data from hundreds of software houses in Eastern Europe and generated a comprehensive intelligence report to assist with informed decision-making regarding outsourcing destinations, cost of bespoke solutions, and cultural fit with remote/dedicated teams.

In particular, the report addresses the following criteria: technical expertise, industry experience, price, IT education, tech ecosystem, government support, culture, and logistics.

Looking at Eastern Europe as a whole, over the past 15 years the region has emerged and solidified its position as a technology powerhouse which competitive advantage consists of the following factors:

  • Proximity to Western Europe (i.e., perfect for nearshoring);
  • Significant cultural and mentality alignment with North America and Western Europe;
  • Labor/currency arbitrage (a lot of developed nations are suffering from massive tech talent shortages and high costs of in-house technology development, which is a well-known fact);
  • The strong educational system and well-developed STEM skills

Compared to Asia or Latin America, Eastern Europe is not a cheap outsourcing destination; however, it’s a cost-effective region that provides a much better price/quality ratio and value for your money.

Since we run 2 R&D Сenters in Ukraine, we’d like to share with you the most interesting and thought-provoking findings on Ukraine as a leading software development outsourcing location.

Average Software Team Composition in Ukraine

According to research by SourceSeek, the average software development team in Ukraine is comprised of 50+ specialists (software engineers, programmers, QA and testers, BAs, PMs, tech leads, and more) with 8+ years of the average experience. This is a sure sign of a mature IT ecosystem. Since many international companies including Microsoft, Samsung, Daewoo, Uber, IBM, and many more have set up and expanded a local footprint in Ukraine, the country’s IT has become rather enterprise-focused and can offer a good ratio of junior to senior developer resources.

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Average Software Development Team Composition in Ukraine

Although Ukraine has a lower level of the average developer experience compared to Romania and Hungary, the range of industries and technologies covered is dramatically broader.

“In Ukraine, for example, the average team age is much lower, but startups can find engineers skilled with newer technologies much more easily.” SourceSeek

Technical expertise and industry specialties in Ukraine

While South Asia offers a broad variety of skills, it still focuses more on mainstream tech like PHP, MySQL, and WordPress. Converse, Eastern Europe leans toward more advanced technologies like JavaScript, Ruby on Rails, Python, Golang, etc. These skills are essential for the development of cutting-edge solutions that leverage AI, machine learning, deep learning, NLP, and other Web 3.0 technologies. Ukraine, in particular, is rich in advanced tech skills and is home to many AI-based and cybersecurity solutions.

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Industry specializations by country

Top 3 industries that outsource the development of their solutions to Ukraine are FinTech, security, and real estate.

Software development outsourcing prices in Ukraine

The Report by SourceSeek determines an average hourly rate in Eastern Europe as $39, which is 18% higher than the average across other outsourcing destinations. However, it’s still dramatically lower than in North America and Western Europe, so Eastern Europe still offers a sizeable cost advantage.

“Eastern Europe is able to command a premium price because of its reputation for quality services, and there is barely enough supply of developers to keep up with demand. As a result, employers struggle to hire and retain quality developers as competition increases in the region.” SourceSeek

Of all Eastern European countries, Ukraine has the largest tech talent pool that’s currently assessed at over 185,000 specialists; of them, around 40% are employed in the outsourcing industry.

Again, of all Eastern European countries included in the research, Ukraine offers some of the lowest rates (on average, $30/hour) followed only by Moldova ($20/h) that has a very limited talent pool and a sluggish economy. All other countries charge a higher average price for custom software development.

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Average hourly rate by country

IT ecosystem and work culture in Ukraine

The research finds that Ukraine has the best developed IT ecosystem in the entire Eastern European region.

“Ukraine, Poland, and Belarus have the strongest ecosystems, which is the result of their hard work and years of effort to build a strong IT culture in those countries.” SourceSeek

Among others, Ukraine, Poland, and Belarus demonstrate the strongest culture when it comes to servicing clients from North America and Western Europe. By culture, the research authors mean general workplace communication style, problem-solving capabilities, English proficiency, freedom of speech, perceived and actual effort and productivity, ability to transcend the organizational chart and other factors.

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IT Ecosystem by country

We encourage you to check the report to learn more about the outsourcing potential of Eastern Europe as a whole and Ukraine in particular. This will help you make the right informed decision before embarking on the outsourcing journey and making the first investments.

Disclaimer: all images and data are courtesy of SourceSeek.

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