When looking to outsource your IT development team, the Ukraine ...

 

The IT Outsourcing industry continues to grow as more businesses realize that outsourcing is becoming the competitive profitability standard. However, one question still poses heated discussion: Where to outsource? This newsletter investigates your opportunities when outsourcing to the Ukraine. At this destination you will not only get significant cost savings but will also take advantage of the unique outsourcing model that is not offered anywhere else. Best regards, Torben Majgaard Founder and CEO

 

Technology Outsourcing Market Volume in the Ukraine has Doubled

When looking to outsource your IT development team, the Ukraine offers a competitive environment and it is projected to be the #6 outsourcing destination in 2015. The statistics prove... Read More...   The Real Cost of Outsourcing to the Ukraine

Outsourcing trends have evolved over time. However, the major motive for outsourcing remains unchanged. It is saving money. New statistics has been released to illustrate what factors influence outsourcing and prove at least 40 percent of cutting costs within the next 10 years... Read More...   Case Study: Qualiware Discovers Unique Approach to the Outsourcing with Ciklum

"Ciklum was the first that presented us with the model we had in mind," says Jacob Lund, manager at QualiWare. "What in particular attracted us about Ciklum was that we could get our own people - people who were our employees and who we could choose, train and invest in." Read More...  

Technology Outsourcing on the Rise

Yes, you know the benefits of outsourcing. Yes, words like globalization and outsourcing became engrained in the business world. Yes, you also want to reap the rewards and not lag behind. When looking to outsource your IT development team, the Ukraine offers a competitive environment. Think carefully though and reconsider your options as leading entrepreneurs and economists foresee great success for the Ukrainian IT market. In 2005, Global Outsourcing Report, published by CIO Insight, ranked Ukraine as the number 17 technology outsourcing destination in the world. Assessment of the long-term competitiveness of the top 30 future outsourcing countries projects that by 2015 Ukraine is going to be number six. This insight on the market is based on the Global Outsourcing Index (GOI) and the Future Outsourcing Rank (FOR). The GOI is a weighted index made up of three separate ratings: the costs of doing business in each top 20 outsourcing country; seven risk factors (including geopolitical, human capital, IT competency, economics, legal, cultural and IT infrastructure); and market opportunities. The FOR, on the other hand, assesses the long-term (10 years) competitiveness of the top 30 future outsourcing countries. It is determined from GDP growth, population growth, the quality of the labor pool and analysis from leading entrepreneurs, economists and other experts. Three years have passed since these predictions were made and we can already see that Ukraine is on its way to the top. Since 2005, the volume of the country’s IT market has grown an average of 77 percent per year and reached 544 million USD in 2007. At the same time, market growth rate in terms of employment has been growing at an average of 57 percent per annum. Table 1: Technology Outsourcing Market in the Ukraine 2004-2007  

2007

2006

2005

2004

Market volume, million USD

544

246

156

101

Market growth rate, (volume)

121%

57%

54%

 

Number of IT professionals

14,000

7,630

5,201

3,692

Market growth rate, (in employment)

83%

47%

41%

 

These statistics speaks for themselves. The growing pool of Ukrainian IT specialists, low labor costs and membership in the WTO since 2008 make Ukraine a competitive and attractive destination that is soon to surpass such popular outsourcing destinations as Ireland and Romania. The following reports will give you an expert idea of your future potential in the Ukraine:   

The Global Outsourcing Report: Opportunities, Costs and Risks Outsourcing Industry in Ukraine 2007 Central & Eastern Europe IT Outsourcing Review [TOP]

  The Real Cost of Outsourcing to Ukraine Outsourcing trends have evolved over time. Different companies choose to outsource for various reasons, but the major motive for outsourcing remains unchanged. It is saving money.

Within the next 10 years, outsourcing will continue to cut at least 40 percent of costs even though the demand for IT specialists is growing rapidly all over the world, which significantly increases costs for developers. So what is the real cost of having a software developer in Ukraine today? Three main factors influence outsourcing costs: 1. Salary of the developer IT market trends influence Ukraine as much as everywhere else, so salaries for IT specialists are growing dynamically. Average salaries for mid-level software developers range from 1200-1400 euros per month. However, Ukraine will lower the salary level due to the following reasons:  Ukraine has a BIG pool of IT specialists with annual add on of 30,000 graduates from IT related fields.  Ukraine will not become a European Union member within the next five to seven years, so the level of prices and salaries will be at least 30 to 40 percent lower than in Europe.  Since Ukraine is not a part of the Schengen Zone, the movement of people to work abroad is small and fairly limited. 2. Communication Due to different levels of communication, requirements and technical assignments are often lost in translation, which costs time and money. However, Ukrainians are very similar to Europeans in their work approach:  They have a good grasp of the English language, both written and spoken.  They express their opinions and ideas to contribute to development instead of simply following orders.  They take initiative. 3. Investment in people An office space and workstation is not enough for modern outsourcing. Employees have to be motivated, which requires investment in their career growth, social activities, education, etc. Ciklum considers employees to be the main asset for our company as well as our clients. That’s why we provide:  Professional development  Performance evaluations and development interviews  Social activities  Competency and interest groups  Knowledge sharing activities  Project Manager education program  Training and workgroups  Bonus systems and incentive tools Ukraine has proven to be an attractive solution for EMEA and North American companies. Companies have to spend a lot of time and resources finding and attracting the right people, paying salaries, taxes, pension funds, providing workstations, retaining and motivating employees. Usually such expenses are handled by the outsourcing provider for a fair fee which does not necessarily influence outsourcing costs growth. Outsourcing cost development is presented below.

Notes: 1. Salaries in Scandinavia are assumed to grow eight percent annually. 2. Salaries in Ukraine grow approximately 380 euros per year. 3. Scandinavia’s actual cost is higher than stated, since employers also pays insurance, administrative and other costs on top of salaries, taxes and pensions. Sources: 1. PROSA—Association of IT professionals in Denmark www.prosa.dk 2. Internal Ciklum prices and salaries statistics [TOP]   Case Study: Qualiware Discovers Unique Approach to the Outsourcing with Ciklum Active involvement in the recruitment process was the key to success, says manager at QualiWare, Jacob Lund. QualiWare was founded in 1991 and is specialized in developing and marketing it-tools for use in process development, quality management, environmental management and system development. 60 employees worldwide. Started it-outsourcing in 2005. Has currently four people employed in the offshore team in Kiev. When the Danish software and consulting company QualiWare first started looking at possible it-outsourcing solutions four years ago, they had no clear idea of how it would work in practice. But much had happened since the foundation of the company in 1991, and a need for a separate it-department had evolved. QualiWare was looking to set up a department, that would work offshore not only with development and programming, but be an integrated part of the whole company. Several options were considered before Ciklum presented its model for outsourcing to Ukraine. "Ciklum was the first that presented us with the model we had in mind," says Jacob Lund,

manager at QualiWare. "What in particular attracted us about Ciklum was that we could get our own people - people who were our employees and who we could choose, train and invest in." "And of course the fact that we didn't have to think about any practical issues such as office space and computers," adds Jacob Lund. With focus on creating a small effective team, that would not just be restricted to offshore programming, but be involved in the entire working process at the company, representatives from QualiWare flew to Kiev to conduct the job interviews with candidates found in Ciklum's extensive database. "There is no doubt, that one of the key factors that have made this a success was our heavy involvement in the recruitment process," says Jacob Lund, who together with the rest of the management carefully selected four highly skilled Ukrainians. QualiWare paid much attention to how possible cultural differences could create problems integrating the new team in the company and in the QualiWare spirit. Therefore they were invited to Denmark to experience the Danish working culture and to meet the rest of employees. "We were extremely excited to see how they would fit in with the rest of the company. But they were all very participating and it was a really good experience for everybody," says Jacob Lund. "It actually seems like they work with pleasure." Today QualiWare has an effective offshore team that can make decisions on its own and has the confidence to challenge other people in the company. "They don't just accept our ideas, but give us feedback and challenge us," says a clearly satisfied Jacob Lund. Jacob Lund Manager of Business Development Qualiware [TOP]