The document provides an overview of the Ukrainian IT outsourcing industry and reasons for outsourcing to Ukraine. Ukraine has a large, well-educated IT talent pool and lower costs compared to Western countries. The Ukrainian outsourcing industry has grown rapidly since the early 2000s and now includes hundreds of companies providing services to clients worldwide. Key outsourcing hubs in Ukraine offer attractive conditions for software development while maintaining cultural and geographic proximity to European markets.

1. 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

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

3. Introduction of Ukraine

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

5. 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

6. Foreign Direct Investment to Ukraine

7. 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

8. 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

9. 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

10. Backgrounds for Outsourcing to Ukraine

11. IT Labour Market

12. 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

13. 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

14. 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

15. Overview of IT Outsourcing Industry in Ukraine

16. 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

17. 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) History of Software Development Market

18. Volume of Outsourcing Services Export

19. 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 History of Software Development Market

20. IT Outsourcing Services Export Market

21. Number of IT Outsourcing Companies

22. 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

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

24. 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

25. 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

26. 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)

27. 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

28. 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

29. 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

30. About Ukrainian Hi-Tech Initiative

31. 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 About Ukrainian Hi-Tech Initiative

32. 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

33. 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

34. 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

35. 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

36. 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 ”