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IT Outsourcing to Ukraine: Risk or an Opportunity?

Despite the ongoing unprecedented changes posed by the full-scale Russian invasion, Ukraine’s IT sector remains operational and thriving. Although the situation is challenging, the country is going through a testament to the spirit of the Ukrainians and their unwavering commitment to excellence and progress in any professional field.
Ukrainian IT companies continue to attract clients globally, offering highly skilled experts, cost-effective services, English proficiency, and a solid intent to innovate changes in the world community. Ukrainian software development companies continue introducing quality products to the market that compete globally. The secret behind this success of IT outsourcing to Ukraine lies in the technical prowess of Ukrainian professionals, their resilience, and their adaptability.

Outsourcing companies and nearshore software development from Ukraine

Quick Review of the Ukrainian Technology Market

Let’s make a review of the international technology market tendencies. As we already discussed in our research, there’s a vital need for skilled software developers in the market. So nearshore outsourcing to Eastern Europe has appeared as an answer to those compelling factors. These regions boast an inviting business ecosystem, abundant talent pools, and cultural compatibility, making them highly attractive for companies seeking to outsource software development projects. We want to offer an honest comparison of the Ukrainian IT community under war influence and other Eastern European countries.

IT Industry Revenue

The war has impacted Ukraine’s IT industry, as we may observe a slight decrease in revenue which shows around $6.7 billion of IT services in 2023 compared to $7.3 billion in 2022. Even with Russia’s full-scale invasion, Ukraine’s greatest export sector is still the IT sector. Ukrainian IT companies continue to draw business worldwide thanks to their highly qualified staff, affordable services, and cutting-edge goods.

Ukrainian IT Industry Revenue

$5.0 billion$6.8 billion$7.3 billion$6.7 billion

Source: IT Ukraine Association

Popular Programming Languages in 2024

The latest results from the annual programming languages survey reveal some insights into the preferences of IT specialists worldwide, particularly in Ukraine. With 8,250 respondents, this year’s DOU survey offers comprehensive research results.

Global Information Technology Market Programming Languages Preferences

Programming Language, globallyRankProgramming Language, Ukraine
Visual Basic9C++

Source: Tiobe Index/DOU
*The number of qualified engineers globally, courses, and outside vendors are the basis for the rankings. The Tiobe index rankings are derived from well-known websites such as Google, Amazon, Wikipedia, Bing, and over 20 other search engines.

Foreign Investments and 2,000+ Startups

Foreign investments are actively drawn to Ukraine’s IT industry to support its growth. Deals and completed transactions typically have an annual value of $300–700 million. Many transactions involve grants and investments for startups, while most of the capital goes to bigger businesses. The market is vast, and until the war, it was developing enormously. For 2023, the Ukrainian IT industry comprised more than 2,000 companies, hiring more than 30,000 experts.

Outsourcing services and software development services by Ukrainian companies

Ukrainian Startup Ecosystem

Ukraine’s software development startup field increased in 2023 and even gained 1 spot from the previous year, outranking Hungary. 5 Ukrainian cities are in the top 1000 and are ranked 12th in Eastern Europe.
Favorable business environment in tech business and outsourcing industry
Source: Startupblink

We have highlighted some successful startups that gained widespread recognition in the previous few years. Only some people know that some of the unique solutions were first created by Ukrainian developers, even though some advanced into global scalability due to the additional finance and infrastructure provided overseas. It’s also worse to note that many software businesses opened their headquarters in different cities worldwide after the war.

#1. Allset
Allset is a technology business that creates and executes software for restaurants. It has headquarters in San Francisco and Kyiv. With the Allset app, you can reserve tables, pay in advance, leave tips, and order food in advance at restaurants. Allset’s primary focus before the pandemic was scheduling in-person restaurant reservations. After COVID-19, they broadened their menu and provided contactless delivery for takeout meals. Allset is a startup with Ukrainian roots funded with $8.3 million; it creates goods in Kyiv and offers services in the United States.

#2. Depositphotos
International Photobank Depositphotos is among the biggest product enterprises in Ukraine. After its founding in 2009, Depositphotos took a few years to establish itself as the stock image platform with the quickest growth. The Depositphotos library contains millions of stock images, movies, and graphics covering every subject. Depositphotos is the best location to find high-quality, high-definition photographs.

#3. Delfast
The Delfast startup has raised $3,4 million from investors in Ukraine to build an electric bike research center in Ukraine to satisfy the rising demand and fulfill pre-orders from throughout the globe, especially the USA and Europe. The Delfast team declares its mission to fight climate change and transform transport systems by providing crossover eBikes suitable for off-road and city riding. And to produce electric vehicles (EVs) with zero air emissions and a carbon-neutral environmental impact.

#4. Viewdle
A Ukrainian-American startup, Viewdle, developed technologies for mobile devices that could recognize faces and objects. The Ukrainian team successfully used face detection and identification technologies. Google purchased Viewdle in 2012; the sale amount was not disclosed.

With a fresh round of funding, the Ukrainian has grown to a $1,1 billion market valuation. The new business offers an AI solution that gathers and examines data produced by sales managers to provide recommendations and, eventually, assist in closing deals more quickly and effectively. software can record and analyze sales managers’ phone calls and calendar entries, which can assist businesses in figuring out, for instance, how many clients are ideal for a particular vendor.

Why Outsourcing Software Development to Ukraine?

Ukraine’s IT sector benefits from its high level of technical education, fluency in English, and solid foundation in engineering and science. It’s open to sharing this pool of talented professionals, making Ukraine a tempting prospect for companies looking to outsource their IT needs.

Cost-Effectiveness: Compared to hiring in-house teams in Western countries, Ukrainian developers offer cost savings without compromising quality. This financial efficiency is one of the leading factors driving businesses towards Ukrainian IT services.
High-Quality Skills and Innovations: Ukrainian IT professionals are not just about cost-saving; they bring knowledge and creativity to various technologies and industries. The case study above shows this. From software development and artificial intelligence to blockchain technologies, Ukrainian developers have proven their expertise.
Cultural Affinity and Convenient Time Zone: European and North American companies find it easier to collaborate with Ukrainian teams due to cultural similarities and convenient time zone differences that allow for significant overlap in working hours.

What Are the Threats of Software Development Outsourcing?

Yes, there are still some threats, but not due to the situation connected with the war, it would be proper to stress that software outsourcing to Ukraine is not devoid of challenges:

Geopolitical Concerns: Many potential clients consider the geopolitical situation the primary risk for businesses considering IT outsourcing in Ukraine. However, as we mentioned above, most IT companies have offices in different EU countries and the USA.
Intellectual Property Rights: This threat concerns actually all outsourcing teams regardless of country of residence. Businesses use NDA agreements to protect their intellectual property rights when working with nearshore, outsourced, and offshore teams.
Quality Control and Communication: While these challenges are common to Ukraine, managing and communicating effectively with a team requires agile processes, good English, a level of expertise, and a reputation of the software development team.

Nearshore Outsourcing to LaSoft

LaSoft has built a solid reputation. Working for 10+ years in the software development market, our team has earned the trust and loyalty of clients worldwide. We consistently deliver software solutions to implement each client’s unique business idea.
The key advantage of partnering with LaSoft is access to a team of highly skilled and experienced professionals. LaSoft’s software developers are proficient in a wide range of technologies, frameworks, and programming languages, enabling them to tackle complex projects with confidence and efficiency. Check out our developer hiring funnel, we welcome in our team 1 out of 147 interviewed candidates.

Lasoft hires Ukrainian IT Specialists for Development team

Blue Manor Academy – EdTech Case Study by LaSoft

Blue Manor Academy (BMA), an elite educational platform based in the United States, contacted us for assistance in enhancing its existing web platform’s performance and code quality. Dissatisfied with the technical aspects delivered by its previous vendor, the BMA team sought LaSoft’s expertise to redesign its platform and introduce key improvements.
LaSoft developers focused on redesigning, updating data libraries, and conducting a thorough code review. Leveraging its expertise in software architecture, LaSoft converted the platform from a monolithic application to a more scalable and resilient microservices architecture, laying the foundation for future business growth.

Key Achievements and Features Implemented

LaSoft’s dedicated team worked tirelessly to implement a scope of new features and enhancements, including:
Comprehensive Dashboard: A user-friendly dashboard equipped with clear data visualization capabilities, empowering users to track their children’s progress effectively and gain valuable insights into their educational journey.
Innovative Peer-to-Peer Video System: LaSoft introduced an innovative peer-to-peer video system, facilitating seamless communication and collaboration among students and educators within the BMA community.
Customizable Curriculum: The platform now offers a customizable curriculum, allowing educators to tailor learning materials to meet individual students’ unique needs and preferences.
Intuitive Admin Panel: LaSoft developed an intuitive admin panel that simplifies content management tasks. It enables administrators to efficiently manage and update course materials, user accounts, and other platform components.
User-Friendly Library: BMA users now have access to a vast collection of books through a user-friendly library interface, enriching their learning experience and expanding their knowledge base.
Gamification:LaSoft incorporated gamification elements within the training modules, making learning more engaging and interactive for students while fostering a sense of accomplishment and motivation.
Migration to Microservices: LaSoft successfully migrated the platform to a new architecture, enhancing scalability, flexibility, and performance while streamlining development and deployment processes.
System Maintenance and Continuous Improvement: LaSoft continues to provide ongoing system maintenance and support, ensuring the platform remains optimized, secure, and up-to-date with the latest technologies and trends.
LaSoft offshore onshore nearshore outsourcing partner

Final Insights
Despite the ongoing conflict with Russia, Ukraine’s IT community continues to develop software products for global markets thanks to many reasons and dedication to innovation.
Opportunities outweigh the risks associated with outsourcing IT to Ukraine. even taking into account geopolitical difficulties. Ukraine’s IT industry offers top-notch expertise for companies looking for creative and professional software development services.

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