Outsourcing to Ukraine: Resilience and Software Amid Challenges

Remember the simpler times when outsourcing software development to Ukraine was a no-brainer? A lot has changed since then: we’ve survived a pandemic, another recession, and russia’s war against Ukraine.

But do you know what hasn’t changed? The Ukrainian IT sector is still alive and well, and IT outsourcing to Ukraine is still a win-win for everyone. Clients get first-class services, Ukraine’s tech experts get to do what they love most, and the Ukrainian economy gets resources to fight for freedom.

We know that the many clients of Ukrainian software development companies understand this, and we’re truly thankful. But we also want anyone who’s on the fence to know that their business will benefit from outsourcing software development to Ukraine.

The Ukrainian IT Industry in 2024

In 2023, Gartner named the IT industry in Ukraine a thriving export sector in its Market Guide for Ukrainian Information Technology. Businesses that outsource to Ukraine get high-quality services at affordable rates and versatile tech experts who can take on complex projects. They also get tax incentives from the Ukrainian government, outsourcing vendors who are determined to mitigate any risks, and unprecedented motivation to retain existing clients and attract new ones.

Ukrainian IT Industry Statistics

• According to Statista, the Ukrainian market for IT services will hit $3.42 billion in 2024. The market is projected to grow annually by 6.11% to reach $4.60 billion by 2029, showing positive dynamics.

• In the first half of 2024, the volume of Ukrainian IT exports amounted to $3.21 billion.?
• In the first six months of 2024, computer services made up 37.9% of Ukraine's exported services, the highest percentage among all Ukrainian export industries.
• The tech industry accounts for 4.9% of Ukraine’s GDP.?
• Out of 307,000 Ukrainian technology specialists, 65,000 live abroad.
• $2,630 is the median monthly salary of Ukrainian tech specialists.
• Ukraine scored 97% in the 2022 Open Data Maturity Report. This report measures the level of open data maturity across European countries: the EU and its candidate countries, a status granted to Ukraine in June 2022.
• In 2023, there were 2,150 registered tech businesses in Ukraine. These include software development companies, technology consulting, business analysis, and other information technology companies.
• 43% of Ukrainian tech specialists work as outsourced specialists, 8% work as outstaffed specialists, and 30% of all Ukrainian tech workers work in tech-based product companies.

Do Companies Still Outsource Software Development to Ukraine?

Absolutely. The volume of Ukrainian IT exports decreased by only 5% in 2024 compared to the same period last year, which means that many businesses from neighboring countries and countries farther away still outsource to Ukraine. Companies from the USA, Great Britain, Switzerland, and Germany continue to rely on Ukraine, often via IT staff augmentation, to develop their projects.

Why? Because Ukraine is a leading supplier of tech talent with top-notch hard and soft skills at appealing hourly rates and monthly salaries. Tech talent shortages in the US and Europe are a real problem, and many businesses know that it’s advantageous to tap the vast talent pool of the 242,000 tech specialists currently living in Ukraine.

In countries where tech candidates lack the necessary expertise or experience (if there are any skilled candidates at all), passing on Ukraine as a favorable software engineering destination is a missed opportunity.

The Ukrainian outsourcing market has software developers and other tech specialists with all kinds of skills ready to fill positions at any level: over 83% have experience at the middle, senior, or lead level. Whether you’re looking for backend, frontend, full-stack, or mobile developers, data engineers, QAs, or DevOps engineers, Ukrainian outsourcing companies have your back.

Our IT specialists are ready to work on your project using the most (and least) popular programming languages, frameworks, and approaches.

Has the Ukrainian IT outsourcing industry changed?

Business is a high-stakes, high-reward game. Understandably, companies want to minimize risk when investing large sums of money. But the truth is, outsourcing software development to Ukraine isn’t much riskier in 2024 than it was in 2021. In fact, IT services exports were even slightly higher in February 2024 than in February 2021 — $518 million and $480 million, respectively.

Although 2024 may not be the best year Ukraine’s software outsourcing industry has seen, it sure isn’t the trainwreck some “experts” predicted. This is partially thanks to ongoing clients who kept working with Ukraine's dedicated teams and partially thanks to the fact that Ukrainian software vendors think on their feet.

Whatever hardships we face, IT outsourcing in Ukraine hits every curveball that comes their way.

• Whole countries were on pandemic lockdown — vendors allowed all employees to work from home.
• Russia invaded Ukraine — vendors relocated entire offices to safer places.
• Internet connections were unstable — vendors bought Starlink satellites for offices and even home use.
• Power outages terrorized the country — vendors bought power generators for every office.
• Clients became hesitant to outsource to companies located in Ukraine — vendors opened new offices outside the country.

Crisis management at Ukrainian IT outsourcing companies is very impressive: Regardless of the current situation, they make sure clients receive excellent services.

Benefits of outsourcing IT projects to Ukraine

It's easy to see why Ukraine has been a top destination for offshore development services for decades now. Here are some key reasons why Ukraine still stands out in the tech outsourcing landscape.

1. Client-focused orientation

Ukrainian software engineers and tech professionals take the time to truly understand their clients. They go beyond just following instructions, aiming to get to the heart of what the client needs to achieve their business goals. This creates a strong partnership where both sides are invested in the project's success.

This partnership is felt even more strongly by clients in the current environment. Dedicated development teams strive even harder to deliver outstanding product quality as a special thank you to clients for investing in Ukraine.

2. High quality at competitive prices

Software development companies from Ukraine offer top-notch technical skills at a fraction of the cost of Western markets. You’ll find that Ukrainian software developers have advanced degrees and are well-versed in the latest technologies, which means clients get high-quality work without breaking the bank.

Plus, Ukrainian vendors may offer additional services at a discount, like conducting a discovery phase or providing free consultations at the beginning of collaboration as a bonus. Clients are also usually not charged for project estimation and pre-sale activities.

3. Cultural compatibility

Working with Ukrainian professionals feels natural for many Western companies because of their cultural similarities. There’s a shared understanding of business practices and work ethics, which makes collaboration smooth and effective. Plus, they're flexible with work hours and communication style. So, even when clients stop working with Ukrainian software development teams, they often return after comparing the Ukrainian treatment and professionalism to others.

4. Strong startup scene

Despite the Russian invasion, Ukraine’s startup scene is the strongest it has ever been, ranking 9th in Eastern Europe, jumping three spots from 2023, and outranking Latvia — an Eastern European country that’s not currently at war.?

Although investment has understandably declined since the invasion, Ukrainian startups still received $209 million in investments in 2023. Most notably, Preply raised $70 million, making EdTech the startup sector with the most investment. Here are some comparative figures:?

• EdTech — $85 million
• IT services — $30 million
• Finance — $29 million
• Retail — $21 million
• Entertainment — $16 million
• Other (army, health care, marketing, etc.) — $29 million

Unsurprisingly, military tech has emerged as a new and rapidly developing sector, receiving $6.7 million in 2023.

It’s too soon to know the 2024 numbers for the Ukrainian startup scene, but Creatio, a no-code platform for CRM automation, has already raised $200 million in 2024. It was valued at $1.2 billion, making it another Ukrainian unicorn, along with Grammarly, GitLab, People AI, and Firefly Aerospace.

5. Wide range of services

With their technical skills and variety of services, Ukrainian outsourcing vendors continue to make a name for themselves. They excel at incorporating the latest tech like AI, blockchain, IoT, and AR/VR in the custom software they develop for client projects and offer a full range of services:

Whether developing for healthcare, finance, retail, manufacturing, education, or any other sector, skilled professionals from Ukraine deliver finely tailored solutions. Clients can choose between outsourcing, outstaffing, and dedicated or augmented teams for their projects. Depending on project requirements, they can also choose to add or subtract specialists to scale the team up or down.

Speaking of scaling, Ukrainian tech vendors often hire all the necessary team members before the project starts so clients don’t waste time on team composition.?

6. Proactive approach

Ukrainian IT specialists are known for their proactive approach. They don't just do what they're told; they think ahead, anticipate potential issues, and come up with creative solutions because this is what fuels them.

Sometimes, clients aren’t really sure about exactly what they want. In those cases, Ukrainian outsourcing vendors will offer product managers and business analysts who can provide valuable insights based on similar software projects they worked on before. Together with the client, they’ll form a project vision and keep refining it for as long as it takes to reach results the client didn’t even know were possible.

7. Tech community

Ukraine’s thriving tech community holds regular events like meetups and conferences. Events have been moved so that they occur in only safe places, but they still go on. For instance, Lviv IT Arena, the largest tech conference in Eastern Europe, was held in 2023 — one year into the invasion — and was a resounding success. The active tech community promotes collaboration, continuous learning, and the sharing of best practices.

8. Reliability and responsibility

Reliability and responsibility are core values for Ukrainian professionals. They take their commitments seriously, consistently deliver on time, and maintain the highest standards. This dependability builds trust, giving clients confidence that their project is in good hands.

Moreover, Ukrainian outsourcing typically involves more than just “three developers and a tester.” Thanks to their experience in creating software for various use cases in different industries and for all types of users, they can deliver comprehensive business solutions, not just apps.

Risks and challenges: Possible concerns companies have about outsourcing to Ukraine

If there had been no full-scale invasion, businesses would have assessed Ukraine’s outsourcing services just like any other country’s. Since the invasion, outsourcing vendors from Ukraine put a lot of effort into making sure that their clients' projects aren’t affected by the war and have been doing so for almost three years now. They’re ready for everything: a military draft, bombings, electricity shortages, and more, and they know how to manage these risks so it doesn’t affect their work.

Data security

Cybersecurity is one of the core competencies of Ukrainian IT service and product companies. So, naturally, they know how to secure their customer’s data on projects. Not to mention that the war with Russia has been going on for a decade now, and we haven’t learned of any high-profile cases of unauthorized access to client data, theft or leakage related to it yet.

Regardless of the political situation, Ukrainian software vendors have robust security measures in place, such as advanced encryption, limited access controls, and compliance with international data protection standards. Moreover, cloud data storage has become standard in many outsourcing projects, so clients’ data is usually stored on secure servers outside the country.

Infrastructure risks

The war has, in fact, taken a toll on Ukraine's infrastructure, with attacks on power plants causing blackouts and disrupting internet connectivity. But while it may have been disruptive at the beginning, in 2024, every software company (or even coffee shop down the street, for that matter) knows what to do in case of blackouts and has the means to maintain electricity and uninterrupted internet access.

Military draft

No one can guarantee that a developer won’t suddenly be drafted to serve in the army. However, experience proves this scenario is manageable. First, only about 2% of Ukrainian developers were drafted over the past three years. Second, software firms constantly negotiate with the Ukrainian government to exempt key team members from serving in the army. Third, if a team member gets drafted, the replacement process only takes a few days if the vendor assigns someone already working with the company or up to a month if they need to hire from outside the company.

The client risks only minor delays in the project timeline — just like if one of their own team members abruptly decides to quit.

Reenbit has a solid backup plan if an employee is drafted. This includes keeping some team members on standby, ensuring that project details are always thoroughly documented, and hiring some of our talent from abroad (we have an office in Poland).? We use transparent government reservation criteria to reserve critical employees.

Employee safety

People in Ukraine have learned to live, work, and even relax despite the constant threat of danger. They’ve learned to assess risk and take appropriate measures. On top of that, many Ukrainian IT companies from eastern Ukraine have moved west to safer locations like Lviv.

Why should businesses continue to consider Ukraine for software outsourcing?

The factors that contributed to Ukraine’s reputation as having a favorable quality-to-price ratio for software outsourcing didn’t disappear when the war started.

At Reenbit, we've taken robust measures to ensure uninterrupted operations. We've invested in generators, batteries, and Starlink, ensuring our office, which spans three floors, has a 24/7 electricity supply. Thanks to fiber optic Internet connections, our team can work seamlessly from the office or from home.?

But, frankly, none of this is our clients’ concern. It’s been three years, and we’ve learned to work around the inconveniences such that if clients didn’t pay attention to the news, they wouldn’t even realize we live in a country that’s at war.

This is the main takeaway of this article for clients from the EU and the USA: Ukrainian developers are just as hardworking as they were before the full-scale invasion — maybe even more so, considering how valuable each new client is to us.

You can read the full article on the Reenbit blog : https://reenbit.com/outsourcing-to-ukraine-resilience-and-software-amid-challenges/