Ukraine has received much media attention in the past 2 years. Admittedly, this is not necessarily the type of publicity that business leaders and investors in Ukraine enjoy. I’ve been asked so many times lately – What is the situation on the ground? Let’s briefly examine this grey area between reality and myth. As with many issues, perception can influence reality and I’m privileged to draw on my 20 plus years of experience in this industry.
Stereotypes are hard to break. Contrary to popular belief, there are very few physical safety concerns when traveling to Ukraine. The greatest “danger zone” in the country is currently limited to the Donbass region. As a global outsourcing provider with development centers in Ukraine’s Kharkiv and L’viv, we can attest that there are more and more clients from the US and Western Europe safely visiting our development centers and growing their businesses by leveraging Ukraine’s vibrant tech savvy talent.
Another voiced concern: there are disruptions in business causing clients to reconsider dealing with Ukraine. Risk adverse procurement and legal departments of some of the Fortune 500 clients are indeed demanding contingency plans from the providers and even trying to force them to relocate their development teams, but those radical steps are not warranted, and the absolute majority of the clients are committed to working with our Ukraine-based development teams. These relationships become rich with experience and collaboration over time. They are often deeply strategic, nimble and cost-effective. And unlike some developing countries who are new to outsourcing, technical expertise and physical network connections in Ukraine are reliable and fast, something to not be underestimated. Infrastructure in Ukraine is exceptionally strong.
Thirdly, I personally would not put too much emphasis on the rankings of global location and outsourcing destinations. These can easily be swayed by clever PR and positioning of various countries, so they are somewhat politically motivated. In other words, to get a better country ranking, government support, investment and PR agencies can often play an important role. Ukraine cannot claim any of these advantages: most of Ukraine IT promotion and evangelizing is really on a grassroots level. I am somewhat surprised that in 2016, according to the Global Services Location Index, which is compiled by consulting firm A.T. Kearney, Ukraine ranked 24th in the global outsource rating. That was 17 places up in the rankings compared to the previous year, but still below Egypt, Latvia, Bangladesh, and Sri Lanka.
However, what is exciting for all of us connected to Ukraine: technology and outsourcing industries are growing strong there. It is undeniable. Here are some numbers and stats.
The country has one of the largest IT labor forces in Europe, and in 2015 Ukraine earned approximately $2.5 billion from exports of the country’s software and IT services, with accelerating growth. The IT sector in Ukraine experiences 25 percent growth annually and has risen by 10 times on the amount it was 10 years ago. The United States is the main importer of Ukrainian software and IT services, buying close to80 percent of Ukraine’s tech exports.
According to Yevgen Sysoyev, a Ventures Capital managing partner, “The Ukrainian IT sector is still at a relatively early stage. However, it has already established itself as a hotbed of innovation, driven by the largest group of software engineers in all of Europe. So it’s no coincidence – hundreds of global tech companies have been outsourcing software development tasks to Ukraine, and have opened R&D centers here.”
Outsourcing nation or not, my belief is that Ukraine will continue to turn heads and emerge as a major player in the technology industry in the next 3-5 years.