Outsourcing to Ukraine. Country Overview. Webinar 13.01.10.

Ukrainian Hi-Tech Initiative Outsourcing in CEE. Country Overview. Ukraine Webinar “Outsourcing in CEE. Country Overview. Ukraine.” Presenter: Inna Sergiychuk, COO, Ukrainian Hi-Tech Initiative January, 13, 2010

Introduction of Ukraine
Backgrounds for Outsourcing to Ukraine
Overview of Ukrainian IT Outsourcing Industry
About Ukrainian Hi-Tech Initiative
Agenda

Introduction of Ukraine

Ukraine Snapshot
Population:
45,999, 900
Capital
Kiev
24 provinces and one autonomous republic Crimea
Languages:
Ukrainian, Russian
Time Zone
EET ( GMT +2)

Ukraine is an emerging free market, with a gross domestic product that has experienced rapid growth in recent years
Western-oriented government policies encourage partnership and close business ties with US and EU companies
In 2008 Ukraine joined the World Trade Organization
Ukraine now has the potential to be one of the region’s leaders in volume of foreign direct investment and portfolio investment
In 2007 Ukraine had the highest IT industry growth rate among Central and Eastern European countries. Ukrainian IT market ranked fourth after Russia, Poland and the Czech Republic, with almost 40 percent growth and over $3,4 billion in volume, accordingly to IDC survey
The USA, Germany, Poland, the UK, Japan, China, Russia are the main trade partners of Ukraine
Overview of Economy

Foreign Direct Investment to Ukraine

Ukraine aspires to join the European Union and NATO, and has entered into co-operation agreements with both organizations'.
The European Union's Partnership and Cooperation Agreement (PCA) with Ukraine went into force on March 1, 1998.
The final tournament of The 2012 UEFA European Football Championship (Euro 2012) will be hosted by Ukraine and Poland
International Relations

Close to Europe
Time differences with Europe are negligible
M oderately continental climate close to climate of most European countries
Cultural compatibility with European and North American countries
Geography & Culture

Citizens of the United States, European Union, Swiss Confederation, Liechtenstein, Canada, and Japan DO NOT need visas for entering Ukraine since 2005
Kyiv, Kharkiv, Lviv, Dnipropetrovsk, Donetsk, Odessa - main airports with direct links with most countries of the world
A lot of hotels and airports are being modernized, and the new ones are being built as a preparation to host Euro 2012. 4 cities are to host Euro 2012!
Traveling to Ukraine

Backgrounds for Outsourcing to Ukraine

IT Labour Market

Ukraine has a long standing reputation as major technology region, with a well developed scientific and educational base
With only 1% of all world’s population, Ukraine has 6% of the world’s physicists, mathematicians, computer programmers, and other highly educated professionals
More than 16,000 IT specialists with bachelor degree and about 14,000 IT specialists with master degree graduate from universities each year
To bridge the gap between classical education and real business and technical process, outsourcing companies have partnered with leading universities to offer additional classes and labs for students
Bologna process in higher education area.
Education in Ukraine

Office rent - from 8$ to 30$
Internet (optical channel 4 mbit) - from 50$ to 200$
PC for software development from 600$ to 1000$
Infrastructure in Ukraine

In 2007 the Ukrainian Parliament adopted the law “On the Foundations of the Development of Ukrainian Information Society in 2007-2015”. The goal of the law is to promote growth of information society in Ukraine, strengthening the basis of IT sector development.
One of the most comprehensive law on law on Intellectual property and copyright protection in the world
Non-residents at the territory of Ukraine may perform activities only through their own representative offices
Government Support and Legal Aspects of Business in Ukraine

Overview of IT Outsourcing Industry in Ukraine

Early stages of SD market development in Ukraine
1952-1970: Formation of computer calculations
1952 – first computer in Continental Europe. Computer codes.
19 7 0-1980: Usage in science, military technologies.
FORTRAN, PL1, COBOL, C
1980-1990: Usage in national economy of Soviet Union
1980 – PC appearance
1980-1990 – Automation of largest industrial enterprises of Soviet economy. COBOL, FORTRAN, PASCAL, Пальма.
History of Software Development Market

Formation of SD industry in Ukraine
1990-1999: Formation of Software Development market
1990 – appearance of the first independent software development companies. Accounting. Automated workstations for industrial enterprises. Clipper, DBase, FoxPro, С/С++.
1989 – establishment of Mirasoft
2000 problem. Tessart – 1999. 120 employees.
1999-2002: Industry growth within DOT COM boom
Wide usage of Internet
Projects for DOT COM startups
The volume of offshore projects exceeds the volume of onshore projects
2002-2003: Period of Uncertainty
Global IT market recession and focus of software development market on offshore customers became the reason of industry slowdown. Separate companies bankrupted (Novatek, Tessart, Ukrsoft)

Volume of Outsourcing Services Export

Maturity of SD market in Ukraine
2003-2006: Rapid growth of the industry at the cost of offshore projects
With the recovery of global economy, the demand for Ukrainian developers increased as well.
2006-2008: Market stabilization
Large players Luxoft, Global Logic, EPAM, DataArt, StarSoft
In 2008 – 800 IT companies with 14 ,000 employees
2008-2009: Financial recession
Slowdown of the market development
The part of resources are focused on onshore activities inside the country
Focus on development of inhouse products, service-oriented projects

IT Outsourcing Services Export Market

Number of IT Outsourcing Companies

Main Services Provided by Companies
Custom software development
Dedicated development team
Support and Maintenance, System Administration
QA and Consulting
Embedded Software
Web solutions, E-commerce
Business Processes
IT Hardware

USA
Germany
Netherlands (Benelux)
France
UK
North Europe (Finland, Sweden, Norway)
Other EU countries
Russia
Other Asia
Key Export Markets

Key Outsourcing Centers in Ukraine 75 80 4 1.8 Odessa 65 70 14 Other 75 80 8 2.0 Dnipropetrovsk 6 5 75 11 1.3 Lviv 8 0 85 20 2.5 Kharkiv 100 100 42 4.0 Kyiv Property price level relative to Kyiv, % Average salary relative to Kyiv, % Part of outsourcing industry resources, (mostly IT), % Population, millions City

Average Rates of Ukrainian Companies 25-30 27-32 more than 5 Project manager 25-30 27-32 more than 5 Team leader 20-25 22-27 more than 5 Sr Software Java Engineer 16-20 18-22 from 3 to 5 Software Java Engineer 12-16 14-18 to 3 Junior Java developer Rate on long project, (> 3 month), $USA Rate on short project, (< 3 month), $USA Experience ( years ) Type of specialists

TOP Clients of Ukrainian Software Developers
Motorola (Freescale)
Microsoft (Celenia)
TDK (GlobalLogic)
Skype (Lohika)
Deutsche Bank (Luxoft)
Sun Microsystem, MySQL –R&D office in Ukraine
UBS Bank (Luxoft)
Apple Inc. (CMK (Software Mac Kiev)
BOSCH (web100, Infopulse)
Ebay (Lohika)
IBM (GlobalLogic)

Ukrainian Hi-Tech Initiative ( hi-tech.org.ua ) – association of companies providing IT outsourcing services. The association unites more than 50 companies who employ more than 4500 IT specialists.
ITUkraine ( itukraine.org.ua ) - а ssociation of Ukrainian software development companies . The association unites 28 companies.
Developers ( developers.org.ua ) - с ommunity of Ukrainian IT professionals
JUG Ukraine ( jug.org.ua ) - Ukrainian Group of Java Developers
Professional Associations and Communities

Industry Development Trends for 2010-2012
Improvements in marketing and sales of outsourcing services
penetration into new segments of small and middle businesses
Improvements in production processes
cost saving
possibility of outsourcing in low-cost segments
Adoption and provision of services based on new technologies
RICH – technologies
iPhone, Android ecosystem
Google app ecosystem
Diversification of activities to related segments
IT support
SaaS
development of inhouse products
IT consulting

High-qualified specialists
Strong educational and scientific schools in exact sciences
Large pool of IT specialist
Mature, stable and growing market of IT outsourcing services providers
Openness of Ukrainian economy to foreign investment and international cooperation
Geographically and cultural close to European consumers
Comprehensive law on intellectual property protection
Significant ( up to 50%) savings on cost for high-qualified offshore specialists
Main Advantages of Choosing Ukraine as an Outsourcing Destination

Established in 2003
Leading alliance in offshore software development and outsourcing industry in Ukraine
53 companies which employ more than 4500 people are members of Ukrainian Hi-Tech Initiative
Association covers all regional software development centers: Chernihov, Kiev, Kharkov, Lviv, Dnepropetrovsk, Simferopol, Donetsk, Odessa
Ukrainian Hi-Tech Initiative is one of the founders of Central and Eastern European Association (CEEOA) in 2008

Market research:
Ukrainian IT Services and Products Export Market Research 2003
CEE IT Outsourcing Review 2007
CEE IT Outsourcing Review 2008
Events:
Ukrainian Outsourcing Forum 2005, 2006, 2007
Hardware Design Development in Ukraine 2006
Aaron Marcus workshop “Successful User Interface Development” 2007
Job Fair in Kyiv, Donetsk, Cherkassy
Cooperation with Government
Concept for Government Program on the development of Ukrainian Software Development industry – “UKRAINE, THE IT-FIRST NATION”
Content projects
ITOnews.eu – information portal for association CEEOA
CATALOG.ceeoa.org – directory of ITO services providers from CEE
Main Projects of Ukrainian Hi-Tech Initiative

Assistance with establishment of partnerships and business relations between Ukrainian and foreign companies
Assistance with setting up and conducting business in Ukraine
Consultations on conducting business in Ukrainian outsourcing services market
Assistance with collaboration on projects implementation
Main Services

References
“ Ukrainian IT Services and Products Export Market Research 2003” by Market Visio and Gartner
“ Ukrainian IT-export Market Review 2004” by Techinvest
“ CEE IT Outsourcing Review 2007” by CEEOA
“ CEE IT Outsourcing Review 2008” by CEEOA
Pictures by © Gutsaluk Oleg, Boyko’s Producer Centre Gallery, artboyko.com

NET Technology Center WEB100 – the Ukrainian software development company that provides offshore outsourcing services and deals with the development of IT solutions for B2B communications and business solutions based on Social Media technologies.
NET Technology Center WEB100 is an active member of Ukrainian HI-TECH Initiative since 2003.
Technology Sponsor of the Series of Webinars

Thank you!
Contact information :
Inna Sergiychuk
COO
Ukrainian Hi-Tech Initiative
Phone: +380 (44) 458-17-53
Email: [email_address]
Live С hat: http://hi-tech.org.ua/Live-chat/
Please follow up the discussion of the webinar in our LinkedIn Group :
“ Outsourcing to CEE: CEEOA Activities ”

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