Ukraine

Outsourcing to Ukraine
Outsourcing index: 
5
Rank: 
26

Ukraine's achievements in information technology are impressive. It was the first to create the semiconductor-based computer in the USSR together with the automatic control systems used in the Soviet space project. Ukraine was a major contributor of the space industry for Soviet Union, and its Ukrainian National Academy of Sciences contributes more than 40 percent of all Soviet research. Kharkiv, the second largest city in the country, grew from a small defense outpost to one of the biggest scientific business and industrial hubs of Ukraine. It also became the location for most IT outsourcing service providers and sub-sectors of reputable western IT companies, with services that include database applications, system and low-level tools, games, and mobile systems.

The country has been dispensing software development services since the early 1990's. Its strength comes from a refocusing of its highly educated scientific workforce after the fall of the Soviet Union. Ukraine's IT market has surpassed its counterparts from the Central European and CIS countries. It even surpassed Russia’s growth rate.  It currently has around 4,000 IT companies operating in its offshore development centers in Kharkiv, Kyiv, and other Ukranian megalopolises, with a market volume of about $2.2 billion.

Companies situated in Ukraine excel in the areas of scientific and creative research and development. The advantages of investing in Ukraine are minimized travel costs and communication time; cheaper project costs because it is not a member of the EU; and cultural adaptability, particularly with Europe the United States.

Some of Ukraine's investors include Mittal Steel, GE, KPMG, Delloitte, Kraft Foods, Siemens, Ericsson, Johnson & Johnson, and Hewlett-Packard. Due to its relatively small workforce, Ukraine outsourcing industry is predicted to merge with other companies. An example is the Norwegian IT company EDB, who bought two local software development companies in Ukraine.

The global financial crisis has significantly impacted Ukraine’s economy, shrinking it to only 14 percent per year. Its Real GDP growth dropped from 7.7 percent in 2007 to 2.1 percent in 2008. However, its outsourcing industry remained stable despite this, only decreasing slightly in the second half of the global financial crisis.

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