It’s not a secret that the reality of Ukraine as a country shifted tremendously once the war broke out on its full scale in 2022. But what is going on in the IT sector now, and how did the military invasion influence the business?
Let’s look at the situation around Ukraine IT outsourcing during the conflict, the problems that the industry has experienced, and the reasons why Ukraine is still a top destination for software development outsourcing. We will also talk about how Ukrainian and foreign IT businesses are helping their employees throughout the war, as well as the Ukrainian IT industry’s important statistics and what the future holds.
Rostyslav Shchepan
Country Manager, pwrteams Ukraine
Ukrainian IT Outsourcing Market Overview
Ukraine has always been a strong player in the IT world. Its reputation quickly rose for delivering high-quality services. The companies offer a comprehensive range of services, including software development, testing and quality assurance, and IT consulting. They assist clients in a variety of areas, including banking, healthcare, e-commerce, etc. The Ukrainian tech industry has grown gradually over the years. It’s known for offering high-quality software development services at reasonable pricing. With nearly 300,000 IT specialists, the country has a vast pool of highly trained IT workers. And as the number of software developers in Ukraine grows, the IT market evolves too.
Key Data About Ukraine IT Sector
Throughout the years, the Ukrainian tech industry has been experiencing significant growth. Here are some statistics and useful data that are worth attention:
- The Ukrainian IT sector experienced significant growth in 2021, with exports increasing by 36% from 5 billion USD to 6.8 billion USD. During this period, the number of IT specialists in the country also increased from 244,000 to 285,000.
- According to the 2022 Coursera Global Skills Report, Ukraine is on the top list, ranking 8th globally in terms of its level of cutting-edge technical knowledge. Additionally, Ukrainian developers are among the leaders in Europe in two key areas: technology and data science.
- As of January 1, 2023, the IT industry had contributed UAH 32.2 billion in taxes to Ukraine’s consolidated budget. This figure is by UAH 4.4 billion and by 16% more than of the previous year.
- Ukraine’s IT sector is now the most steady and thriving business. It is also the only industry that has seen an increase in its indicators, with a 46% share of total service exports.
- Ukraine is home to over 210,000 IT workers, with a total of over 250,000 predicted by the end of 2023. The IT industry contributes around 4% of the country’s GDP and increases at a rate of 21% each year.
- By the beginning of 2023, the Ukrainian IT industry had provided $7.35 billion in computer services exports, a 5.8% increase over the previous year.
- What about the programming languages most commonly used by software developers? JavaScript is at first place, followed by C#, Java, and Python.
- The top five most-used frameworks in the Ukrainian IT industry are React.js, Node.js, Angular.js, .NET, and Spring.
Ukraine IT Industry Before the War
Prior to the war, Ukraine had a flourishing IT industry that was quickly expanding and drawing global investment. The Ukrainian IT market volume hit $3,6 billion in 2013. The country’s IT workforce surpassed more than 50,000 people, with 500 Ukraine outsourcing service providers in IT with nearly 50,000 specialists being involved. Ukrainian programmers were well-known for their technical knowledge, inventiveness, and problem-solving abilities, making them a great asset to organizations wishing to outsource their software development.
Later on, before Russia’s aggressive actions against Ukraine in February 2022, the IT sector of the country had established itself as a major exporter of IT services within Europe, with an annual growth rate ranging between 25% to 30%. The revenue generated through these exports constituted more than four percent of Ukraine’s Gross Domestic Product.
Ukraine IT During Russian Invasion
The conflict hampered the movement of goods and services, making it more difficult for Ukrainian businesses to export their goods and recruit new customers. Due to the insecurity induced by the conflict, many international corporations were also unwilling to invest in Ukraine at first.
However, before the war broke out in 2022, all business owners and stakeholders in Ukraine already took their time to assess the risks of possible conflict and formulated contingency plans upon analyzing the situation. The predictions of an impending war had raised red flags among the businesses long before.
As a result, businesses had started gearing up to implement their emergency and business plans in case of a conflict escalation. Even though no one was sure that the full-blown war would happen, each Ukraine IT company was quick to respond to the changing landscape and adapt their operations accordingly.
According to the results of a DOU study performed in April 2022, a remarkable 91% of IT professionals returned to work soon after the war began. This shows that the Ukrainian IT industry has been able to maintain its production levels, therefore emerging as a potential accelerator for the Ukrainian economy’s growth.
The ongoing conflict in Ukraine has certainly had some impact on the economy, which includes the IT industry. However, IT outsourcing in Ukraine in wartime still manages to keep improving. Despite all the possible limitations that could stagnate the industry, IT companies are not only operating at their full potential but also proving their great power by thriving even in the darkest days. The Ukraine IT outsourcing sector is full of talent. The IT industry is resilient thanks to the efforts of IT service providers. Businesses care about their people as well and then put them in positions to continue performing their software development regardless of where they work: in another part of Ukraine, another country, or remotely at home. All that while helping and supporting the country in its battle against the war.
When the pandemic started a few years ago, IT companies learned how to fight through the stressful situation, showing their adaptability and perseverance. That’s why IT firms knew how to react this time as well, and when the war began, they already followed a similar mindset. They adapted to the new reality by investing in remote work infrastructure and strengthening customer ties. To alleviate the impact of the conflict on their company, some corporations began focusing on domestic initiatives such as e-government solutions. The fearless spirit of the industry is shown in everyday challenges, as Ukrainian programmers continue working while bombed, managing to find new ways of staying effective and productive. Great projects are being completed and delivered even when the electricity outages occur.
What helps to do this successfully is proper time management and teamwork. The leaders often share their experiences describing a range of coping strategies they adopt. To help them deal with the trauma caused by the war and carry out obligations to their staff, they had to create an environment which is both supportive and positive. Also, businesses get electricity generators, helping them have electricity even during blackouts. More than half a million generators have been sent to Ukraine since the start of the conflict.
Research conducted during wartime has shown that a majority of IT companies, specifically 85%, are able to maintain their performance. Additionally, 96% of contracts are successfully secured and maintained, while 77% of IT providers are able to attract new clients. Finally, a significant portion of companies, 56%, expect annual growth between 5-30%.
How IT Firms in Ukraine and Abroad Support Ukrainian Employees
The conflict in Ukraine has had an impact not only on the commercial side of the IT sector but also on the lives of its employees. The support for them is as important as ever, and it’s good to see that it’s provided. Several initiatives have been made by Ukrainian and foreign IT businesses to help their staff throughout the war.
Many corporations gave additional perks to their employees and their families, such as relocation, healthcare and insurance. Others let employees work from home or provided transportation to and from work. People and businesses from all around the world are now assisting the country in a variety of ways, making IT outsourcing in Ukraine in wartime more accessible to everyone. These initiatives include assembling teams, raising cash, offering sanctuary to refugees, and assisting with medical and educational services.
Many IT specialists join the volunteering movements to help the country and its people. This is a strong force that provides huge support to Ukraine and a large portion of donations. All these efforts are focused on supporting the Armed Forces of the country, as well as helping evacuees from the “hot” spots to stay safe and have all the necessary things.
How pwrteams Is Supporting Ukraine
pwrteams, a subsidiary of Nortal, has provided substantial support to Ukraine through various projects launched under the Nortal Fund for Ukrainian Society. These initiatives have made a significant contribution toward supporting Ukraine during difficult times.
- One of the main projects is the purchase of simulation equipment for the Department of Pediatrics and Neonatology of the Danylo Halytsky Lviv National Medical University. The equipment will help more than 500 medical professionals practice emergency care and resuscitation of newborns and infants.
- Another major initiative launched by the Nortal Fund was the establishment of a Long-term Cybersecurity Program in Ukraine. Under the program, Nortal purchased 120 RangeForce Enterprise (Educational) annual licenses for the Ivan Franko National University of Lviv. The program grants university students access to a cloud-based cyber skills platform consisting of over 820 modules.
- In addition to these projects, Nortal has established the Nortal Fund for its employees and their families in Ukraine. The fund aims to provide financial resources to cover transportation and logistics costs, accommodation, medical treatment, personal property renewal, psychologist consultations, and humanitarian aid for those affected by the war. And the Nortal Winter Kit project was launched in December 2022 to help employees purchase essential winter items such as generators, heaters, portable charging stations, and blankets.
What’s Going On With Salaries and Hiring in Ukrainian IT Now
The number of online applications has increased by nearly 100%. IT job candidates are now more open to new offers regardless of the location or type of work. The average compensation of a software developer in Ukraine has not changed a lot and stays on average around $2,000 per month, according to DOU, a Ukrainian IT recruitment portal. 84% of people work in IT. 40% of these specialists want to search for a new project to work on after 2022—both in Ukraine and internationally. While another 13% of qualified workers were left without jobs and are also actively seeking.
Top 7 Reasons to Outsource Your Software Development to Ukraine
Even throughout the war, software development outsourcing in Ukraine remains popular for many businesses. Here is a list of the main reasons to outsource software development in Ukraine:
Technical Expertise
Ukrainian programmers are well-known for their technical proficiency and problem-solving abilities. After many full-stack technical assessments, Ukrainians keep on proving their knowledge in the area. By comparison, during technical expertise tests, Ukrainian experts perform 8.58% better than their American opponents.
No Issues With a Language Barrier
Most of the time there will be no barrier when it comes to business communication. Especially with the younger generation. In schools and colleges, English is highly promoted and in some places even mandatory. As a result, any misunderstandings between the client and the Ukrainian developer can be easily solved. IT talents often possess intermediate to advanced levels of English.
Good Education
Ukraine has an excellent educational system that creates highly proficient IT experts. The conditions for inspiring young people are very favorable and create a supportive space for raising new talents. There are 217 educational institutions that offer a comprehensive technical curriculum. The educational system of Ukraine places a great emphasis on STEM subjects. And as a result, numerous students in engineering fields undertake internships toward the end of their academic programs. That’s the main reason why international businesses can find so many skilled professionals in Ukraine.
Huge Talent Pool
There are approximately 285,000 highly-qualified experts in Ukraine, and the number keeps on increasing. Outsourcing to Ukraine opens the door to a huge talent pool. The expansion of the IT business and the rising number of IT professionals might be viewed as a good development that may lead to more innovation, employment opportunities, and economic prosperity. It’s important to note the potential growth of 80,000 minimum IT specialists in 2022-2025.
Simplified Tax Policy
Considering the importance of the information technology industry in keeping the economy running during the conflict, the Ukrainian government is dedicated to helping it. The Ministry of Digital Transformation is aggressively developing and expanding Ukraine’s IT industry. The simplified regulations in Ukraine allow both local and international technology companies to operate with ease, subject to a distributed 10% tax, and following the provisions of English law.
Cost Effectiveness
Following a brief pause, there has been a comeback in the employment of small international startups and major multinational firms in Ukraine. The key driver of this development is the cost-quality balance for services provided by qualified experts in the region. Significantly, in comparison to other European nations and the United States, Ukraine provides considerably lower pricing for IT services.
A Ukrainian software developer, for example, earns roughly USD 41 per hour. This rate is much lower than the rate in the UK (USD 93), the US (USD 51), and Germany (USD 61). Furthermore, the low cost of living in Ukraine should also be considered. Opening an office in towns like Kyiv and Lviv will be significantly less expensive than in global IT hubs like San Francisco, London, and so on.
Fast Hiring
Ukrainian specialists adapt quickly to any situation and work right away. It is usual in Europe for employers to demand candidates to work for up to three months before completely commencing, which may not always be viable for organizations with urgent hiring needs. Candidates in Ukraine, on the other hand, often begin their new employment within 2-4 weeks of accepting the offer.
The number of job applicants increased significantly during these years too. It’s possible to find many people ready to work on Djinni/DOU; the statistics show that the increase was 32% from the previous year. In 2022, about 59,000 new candidates registered and activated their Djinni accounts. The candidates also started accepting job offers faster and became less picky about the offered position.
High Motivation
During hard times, everyone wants to make an impact and help their country. People’s motivation in Ukraine is higher than ever as the country fights for its freedom. A good economy is a key component to winning, so everyone puts tremendous effort into working as much as they can. At the same time, they are looking forward to donating to and supporting their motherland.
The Future of Ukraine IT Outsourcing
Despite the ongoing conflict, the Ukraine IT outsourcing businesses are ready to work hard for their future. The industry is likely to stay resilient, fighting through its challenges as much as possible. There will be many Ukrainians willing to work, adapting to the circumstances. Despite the difficult situation, the IT sector as well as the whole country will continue getting a lot of support from the global leaders.
Ukrainian IT firms are also broadening their offerings and entering new industries, such as cybersecurity and artificial intelligence. Ukrainian developers are already used to working remotely, so they will more likely continue showing amazing results. Most companies will continue to effectively implement business plans and complete projects.
The industry predictions are not bad because of the motivated and resourceful people who are willing to put in the effort. The businesses that will outsource from Ukraine will not only get a chance to collaborate with talented people but also receive decent results at a lower price if their budget is tight. All while contributing to the world’s democracy and the protection of peace.
Final Word
Ukrainian programmers are well-known for their technical knowledge, inventiveness, and problem-solving abilities, making them an invaluable asset to businesses wishing to outsource their software development. The Ukrainian conflict has posed several problems for the IT industry. Nonetheless, the sector’s tenacity has allowed it to continue attracting clients from all over the world. Despite the interruption created by the conflict, IT outsourcing in Ukraine during the war is still working effectively.
Clients from across the world are still proud of Ukrainians and, with pleasure, recruit IT talents for their businesses. All the support has a tremendous influence on the country’s economy and its ability to fight through the challenges of war. Today’s international community regards Ukrainians with affection and respect, helping in all possible ways. In return, the international clients receive a list of benefits and successful IT projects.
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