Outsourcing software development to Ukraine: A comprehensive guide for 2024
10-minute read
Published 27, Dec 2023

IT outsourcing to Ukraine allows you to reduce costs, accelerate time-to-market, and boost scalability. And many industry leaders, including Bosch, Pandora, Samsung, and others have benefited from this outsourcing destination.

Learn out from our guide why global leaders choose Ukraine, how to find a reliable software development company, and how to establish an efficient, long-term partnership.

Methodology in brief:

To create this ultimate guide and help you make well-grounded decisions, we’ve analyzed such sources of information as A. T. Kearney, Glassdoor, IAOP, ITUkraine, ITClusterLviv, Sequoiacap, DOU, and more.

How you can benefit from outsourcing software development to Ukraine

Outsourcing software development to Ukraine offers a compelling combination of technical expertise, cost efficiency, and cultural alignment. The destination emerged as a tech powerhouse, attracting attention for its skilled workforce, competitive rates, and vibrant tech community.

Around 100 global tech organizations — according to the Ukrainian Tech Ecosystem Overview — have their R&D labs in Ukraine, including Oracle, Samsung, Vimeo, Rakuten, Dell, and BlaBlaCar. Additionally, many Fortune 500 have benefited from software outsourcing to Ukraine.

This comes as no surprise, as outsourcing software development to Ukraine can allow businesses to:

  • reduce costs by up to 60%, while ensuring in-house level of quality and delivery speed;
  • find strong tech talent faster and get access to highly qualified engineers with high cultural compatibility and strong work ethic;
  • ramp up and down their software development teams painlessly;
  • accelerate time-to-market and ensure engineering excellence.

Now, let’s take a closer look at the Ukrainian tech market.

Software development outsourcing to Ukraine: A complete market overview

Based on the Ukrainian Tech Ecosystem Overview, the number of IT specialists is expected to reach 450K from the current 240K. This isn’t farfetched, as the same source states that Ukraine is #1 among European countries by the number of tech graduates. According to the Digital State Report from United24, there are around 5,000 IT companies, half of which provide outsourcing services. Ukraine’s computer services exports have reached a 27.3% CAGR as of 2022, as mentioned in the Incredible Tech Investor’s Guide to Ukrainian IT, and all things considered, it will continue to grow.

Strong and Diverse Talent Pool

Ukrainian developers are known for their high-quality work and proficiency in various technologies. Many Ukrainian IT professionals have experience working on international projects and are familiar with industry best practices. The top popular programming languages among Ukrainian specialists are JavaScript, C#, Java, and Python. However, the list doesn’t end there.

At the same time, Ukrainian engineers work for world-known Ukrainian companies.

Resiliency of the Ukrainian tech ecosystem

Ukraine’s IT industry has grown steadily through the pandemic and full-scale invasion, reaching 27.3% CAGR as of 2022 in computer services exports.

According to the information in Atlas, Sequoia’s interactive guide to Europe’s tech talent, more than 85% of specialists kept working full-time despite the war, and only 2% of IT companies had to shut down.

Outsourcing software companies in Ukraine have implemented several solutions to ensure business continuity during the war. These means include facilitating employee relocation to more stable locations, diversifying talent recruitment globally, equipping offices with generators, independent internet solutions, and Starlink connectivity with over 18K satellites.

Companies have also secured co-working spaces with autonomous power sources, provided employees with portable workstations and independent power supplies, and transitioned key tools to the cloud with data duplication in European data centers.

Despite the challenges, Ukraine’s IT sector is recognized for its resilience and ability to deliver high-quality services, making it a top choice for outsourcing in 2023 and beyond. According to The 2023 Kearney Global Services Location Index, Ukraine ranks 42nd globally in outsourcing locations and is a top destination in Europe. The country’s recognition is further underscored by 12 Ukrainian IT providers featured in The 2023 Global Outsourcing 100 list by IAOP.

Cost efficiency of IT outsourcing to Ukraine

Due to the economic conditions in the country, the taxation system, and other factors, the hourly cost of an engineer is lower than in the US and Western Europe. This makes hiring a software outsourcing company in Ukraine more affordable than doing so locally while keeping the in-house quality level and delivery speed, if you find a reliable technology partner.

Let’s compare the average yearly salaries of a few categories of IT professionals. Information from Glassdoor, Reed, and DOU suggests the following figures:

Tech education of Ukrainian engineers

Ukraine puts a strong emphasis on STEM education, producing a workforce that is not only technically proficient but also innovative and adaptable to the latest technologies.

IT education also gets support from the government. Ukraine’s Ministry of Digital Transformation aims to involve 6M Ukrainians in acquiring digital skills via its Diia Osvita project. The ministry also aims to scale the IT education project for more Ukrainian specialists.

Business climate, cultural compatibility, and work ethics

The Ukrainian government has shown support for the IT industry, implementing policies and initiatives to promote its growth. This support creates a favorable environment for outsourcing software companies in Ukraine.

Ukraine shares a similar work culture with Western countries, making communication and collaboration more straightforward and efficient. Many Ukrainian developers are fluent in English, and the time zone difference is convenient for real-time collaboration.

What’s more, Ukraine’s geographical proximity to European markets is advantageous for companies targeting both the U.S. and European clients.

Data security and compliance with regulations

Ukrainian IT companies reinforce cybersecurity through compliance with standards, a robust business continuity plan, cloud utilization, and additional security measures:

  • ISO 27001 – an international standard for establishing an effective information security system. It allows organizations to protect data, improve cyberattack resilience, and promptly respond to evolving threats.
  • GDPR – an EU law that lays out the terms for collecting, using, and storing personal data. It calls for any company’s transparency and accountability toward using data.
  • HIPAA – an international standard for transmitting US citizen personal health data. It’s an alternative to GDPR for collecting, processing, and storing medical data.
  • CCPA – another GDPR alternative that upholds data protection for California citizens.
    Maintaining data security is also possible thanks to the CERT-UA organization. It constantly monitors the ongoing and evolving threats to provide companies with relevant information that helps protect data from hacker attacks.

Convenient time zone

The time zone difference between Ukraine and the U.S. allows for a significant overlap in working hours. This facilitates real-time communication and coordination, making it easier to manage projects effectively. What’s more, the time difference allows for continuous development cycles, enabling your team to work on projects around the clock, leading to faster development and delivery times, as well as 24/7 support.

How to partner with a reliable software development outsourcing company in Ukraine

Ukrainian IT companies and professionals adhere to high-quality standards in software development. Many organizations follow internationally recognized methodologies such as Agile and Scrum, ensuring efficient project management and the delivery of top-notch solutions. However, certain criteria can help you choose the most appropriate one.

How to choose the most suitable software development provider

Here are top 6 criteria you need consider:

Established employer brand and efficient recruitment practices

This ensures that they can attract and acquire the right talent swiftly and painlessly. Global hiring capabilities further enhance their ability to assemble diverse and skilled teams, providing a broader talent pool to meet specific project requirements.

Focus on long-lasting results and strategic partnerships

Look for a provider with a proven track record of cultivating long-term, strategic partnerships. Examples of successful, enduring collaborations demonstrate the provider’s commitment to delivering consistent, high-quality results over time. Long-term partnerships also indicate a provider’s ability to adapt to evolving project needs and ensure client satisfaction beyond initial engagements.

Flexibility of cooperation models and tailoring services to your changing needs

A reliable provider analyzes your requirements thoroughly and suggests the most suitable cooperation model, whether it’s an offshore development center, team extension, or managed delivery. This tailored approach ensures that you receive the most effective and customized solutions for your unique business objectives.

Investing in professional development, retention, culture, and diversity

A forward-thinking software development provider invests in the professional development and retention of its talent. This includes fostering a positive company culture and promoting diversity. A commitment to ongoing learning and development ensures that the team stays at the forefront of industry trends, enhancing their ability to deliver innovative and cutting-edge solutions.

Company and people rooting for your product’s success

A proactive approach, when experts ask questions, seek to understand your short-term and long-term goals, and actively offer improvements, demonstrates a genuine commitment to your project’s success. This collaborative mindset fosters a strong partnership and contributes to the overall success of the software development process.

Transparent processes and communication

A reliable provider maintains open lines of communication, providing regular updates on project progress, challenges, and milestones. Transparent processes ensure that you have visibility into the development lifecycle, enabling you to make informed decisions and address any concerns promptly.

How to select the right collaboration model

Opting for the appropriate collaboration model is pivotal for successful product development. Here are three distinct models tailored to specific needs:

Offshore Development Center

This model is ideal for those seeking smart, self-sufficient offshore teams to handle a portion of their product development. Focused on long-term cost-efficiency, we assist in swiftly building and seamlessly integrating tech teams into your delivery process. This model ensures full transparency, painless scalability, and flexibility.

Team Extension

If you aim to rapidly augment your in-house team with skilled software engineers, the team extension model is the way to go. This approach facilitates easy scaling up and down, saving costs and time by eliminating recruitment, HR, and administrative overhead.

Managed Delivery

Opt for managed delivery if you have a groundbreaking idea and wish to have a dedicated team committed to your product’s success. From concept to a fully developed solution, we guide you at every step, minimizing risks, reducing costs, and aiding in future-proof decision-making.

What legal aspects you need to consider

Regardless of the chosen contract type, it is crucial to consider specific legal aspects to mitigate risks. These include:

  • defined deadlines for invoicing and payments,
  • liability clauses,
  • warranty clauses for service quality,
  • notice periods for project kick-off and team scaling,
  • data protection rules,
  • client ownership of code,
  • and agreement on the governing law for international contracts.

How to establish a successful knowledge transfer plan

Underestimating the importance of knowledge transfer can result in unnecessary costs in IT outsourcing projects. Whether transferring knowledge from a client to a vendor or between vendors, a structured knowledge transfer plan is essential. Starting with a demo and investigation, the process concludes with setting up environments, taking over business-as-usual, and achieving the first successful release.

A robust knowledge transfer plan ensures that the vendor comprehensively understands the product, its operations, and the individuals responsible for specific tasks, guaranteeing a smooth and secure journey throughout the outsourcing engagement.

Featured success stories of IT outsourcing to Ukraine

Helping Pandora drive retail digital transformation

In 2021, Pandora started its Digital transformation to improve its consumer personalization capabilities and develop a scalable platform to support the company’s Phoenix growth strategy.

So Pandora needed to find a solution that would help to:

  • Reduce latency and increase data accuracy
  • Increase scalability
  • Eliminate data duplication and usage of extra memory and processing resources
  • Reduce maintenance costs and complexity
  • Make the efficiency and correctness of data exchange more trackable
  • Eliminate operational and analytical data discrepancies
  • To solve these problems and build a solid foundation for digital transformation, Pandora decided to develop a scalable integration hub based on Event-Driven Architecture and Kafka.

ZoolaTech Approach

We analyzed the legacy system and its limitations as well as investigated the current and upcoming needs of Pandora. With a precise focus on Pandora’s business needs, we helped our client choose the most suitable tech stack and architecture for the platform to reduce maintenance costs, withstand high load, and mitigate risks. And we provided Pandora with a strong engineering team to deliver the solution.

Value delivered by ZoolaTech

The product created a digital foundation for integrating all business processes and operating in a digital manner end-to end. It helps our partner to:

  • Ensure seamless integration, facilitating fast, efficient, and accurate data exchange between multiple Pandora’s systems.
  • Significantly reduce latency from 36 hours to milliseconds, enhancing data accuracy.
  • Unlock the value of real-time data analytics, offering visibility into all business processes.
  • Build a robust foundation for implementing Advanced Data Analytics and Artificial Intelligence.
  • Provide omnichannel user experience.
  • Increase fault-tolerance to enhance system reliability.
  • Enable more efficient management of logistics and transportation.
  • Ensure future-proof scalability to accommodate growing business needs.
  • Reduce maintenance costs and complexity for improved operational efficiency.

Helping optimize cloud costs for a leading fashion retailer

The company is American fashion retailer with more than 10K employees and a wide range of goods offered. The challenge it faceed was to redesign a critical service to increase its durability, scalability and efficiency.

ZoolaTech approach

Zoolatech played a pivotal role in transforming the company’s service architecture, streamlining the development process, and seamlessly transitioning to a new version with zero downtime. The overall outcome was a more efficient and reliable critical service, translating into increased customer satisfaction and improved business performance for the partner company.

Value delivered by ZoolaTech

  • The upgraded service demonstrated a 7x increase in speed, enhanced robustness, and scalability.
  • We eliminated the dependencies on services slated for deprecation, and replaced the legacy service successfully without disruptions. This transition led to a substantial reduction in costs, as three pods of the new version equaled the performance of twelve pods of the old version, resulting in approximately a fourfold cost reduction.
  • We optimized cloud resources and maintenance costs with a focus on incident analysis and ongoing development expenses.
  • We also reduced memory consumption, identified and resolved several issues in the client’s upstream data.
Why choose ZoolaTech
  • ZoolaTech is a global software development company with offices in Ukraine, Poland, Mexico, Turkey, and the USA.
  • Flexibility of cooperation models: ODC, Team Extension, Managed Delivery, or mixed
  • 96% – client retention rate
  • 60% – senior software engineers
  • When starting cooperation, we provide you with a team of experts with 5+ years of experience
  • Trusted by Fortune 500 companies.
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