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IT BUSINESS: advantages of Ukrainian professionals

More and more often, the leaders of IT companies who want to open outsourcing are faced with the choice: to give preference to India, Poland, Hungary, or Ukraine?

And although the “coronavirus” crisis has affected business in the field of IT technologies, and the world economy is only “digesting” the drop in GDP of China, the USA, and European countries, many IT companies, are still thinking about how to open an IT company in Ukraine. So, why is it profitable, what are the advantages of domestic professionals, and how much does a Ukrainian IT specialist “cost” on average?

“Bucket for one hryvnia” – not about Ukrainian IT specialists

The first thing to understand: oil campaigns set up oil rigs where there are oil deposits, and IT companies decide to start their own business (or buy an IT business) where there are many IT specialists. And here, the Ukrainian “deposits” show promising numbers. For example, according to a N-iX study by the beginning of 2020, there were 184,000 IT specialists in Ukraine. (And over the past four years, their number has increased by 70 percent!).

The advantages of the business attractiveness of the Ukrainian IT market are as follows:

  • number of smart heads;
  • ability to perform complex tasks;
  • good knowledge of English;
  • enormous working capacity;
  • ability to communicate clearly (in particular, say the word “no” if the customer’s request does not match the capabilities of the technology).

Due to these advantages, Ukraine already occupies its niche in the world. This niche, with an invisible “point” on the IT world map, has confidently turned into a young, ambitious “mainland,”, which with healthy impudence, drives competitors from other countries. According to the National Bank and the Association of Information Technologies of Ukraine, in 2017, Ukrainian IT companies provided $ 2.5 billion worth of services to foreign customers, in nearly $ 5,000,000,000. IT contribution to the country’s economy in 2012 was 0.8 percent of Ukraine’s GDP, and now – 4 percent!

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The ability to perform complex tasks has been noticed by everyone who works with Ukrainian IT professionals for a long time. Experts of the profile association, for example, have repeatedly noticed that it is the Ukrainian price-quality ratio that attracts employers with “a full purse”. And we should not “pick up” other people’s advertising messages. By following a borrowed path, the Ukrainian IT industry risks losing its uniqueness.

“I communicate with many customers from abroad, and I see that IT-Ukraine is often compared with India,” says Marianna Hrynyshyn, founder and head of the AboutHR recruiting agency. – This is not a good comparison. Indian IT professionals directly say: we are cheaper! But I am sure that quality should be the flag of the national IT brand.

That is why, according to Mrs. Marianna, the clients of the agency, which had outsourced in India, are often reoriented to Ukraine. And they ask the question: how to open an IT company in our country?

How important is the language

Our other advantage is a good level of English and education that is rapidly improving. And although in Poland (which is also known as one of the huge outsourcing centers), the percentage of those who know English perfectly is higher, Ukrainians confidently step on the heels of the Poles in this matter.

According to a survey of the portal of Ukrainian programmers DOU, most Ukrainian developers and testers know English at the level of Intermediate and Upper-intermediate. By the way, they know English better in Lviv and Kyiv. It is in these cities that there are educational institutions that are leaders in the quality of IT education in the country – the Kyiv-Mohyla Academy and the Ukrainian Catholic University.

However, IT specialists advise to be very careful in choosing a school, because the high demand for specialists (which exceeds the supply even in a crisis caused by the “stop of the planet” for a coronavirus pause) has led the software development departments, figuratively speaking, opened even in culinary colleges.

But still, students and graduates of educational institutions admit: in recent years there have been positive changes in IT education – the study of modern programming languages ​​has increased: Python, Java, JavaScript, C #, training programs have become more practical.

The competition in the best universities in the country in the most popular IT specialties last year amounted to more than ten people in one place. And this is not surprising, because the salary of Ukrainian developers (at least before the pandemic) ranged from 600 to 5,000 dollars.

It is beneficial for both foreign and Ukrainian IT companies to hire students. By the way, the most expensive you will have to pay a student from Kyiv National University (about a thousand dollars), the cheapest – student from Chernihiv National Technological University – 550 dollars.

Finally grew up 

IT businessOver the past two decades, IT business in Ukraine has come a way that is worthy of surprise and respect. In the “turbulent 90s” the industry began its development with outsourcing, foreign companies gave “newcomers” outsourcing simple functions that did not require in-depth expertise.

But Ukrainian IT specialists were underestimated. Very quickly, traditional outsourcing turned into an IT service, Ukrainian specialists began to take on projects to develop innovative technologies with holistic solutions and think about how to create their own IT company. In particular, they learned how to draw up a business plan for an IT company. Then we grew up to service consulting: we began to offer a comprehensive solution to the client’s business problems.

So there was a demand for business analysts, product managers, IT lawyers, sales managers, and specialists of other non-technical professions.

Now Ukrainians can create, promote, and sell IT products in global markets. Software development centers appeared – R&D centers (subdivisions of large food IT companies). Employees of these local research and development centers have the opportunity to communicate with headquarters, study, learn from the experience of colleagues from the USA and Europe.

Starting a business in the IT sector in Ukraine “from the beginning,” IT corporations are increasingly equipping our country with complete infrastructure and attracting local resources (primarily specialists).

This is beneficial for both local employees and IT companies themselves, which, working with programmers under a civil law contract, significantly save on taxes.

By the way, according to many analysts, the current economic crisis could be the beginning of the massive opening of software R&D centers in Ukraine, because this is how large corporations will be able to fully control costs, not overpay intermediary companies, save on office rents and select their own team.

In addition, we have enough specialists who will help answer the question “How to open an IT company?”.

Taxes: no need to pay more

One of the features of the Ukrainian IT market is that almost 90 percent of specialists are registered as individual entrepreneurs. According to the Unified State Register of Legal Entities and Individual Entrepreneurs, by the beginning of 2020, 173,000 IT specialists were working in Ukraine, which is registered as IE. This means that they pay the so-called single tax – 5 percent of income without VAT, or 3 percent of VAT. (By the way, a similar form of individual entrepreneurship is in Poland, but there the income tax is 18 percent).

The administration of IT companies acts as an intermediary between the customer of the services, and the contractor, for example, administers the payment of contracts and taxes. This is beneficial for companies because the employment system helps to save on taxes and compete with others.

However, foreign customers are often mistaken about how much Ukrainian IT specialists cost.

 “Often, employers think that if Ukraine is a country that is developing, it means that our programmers are cheaper,” says Marianna Hryshyshyn. – People write like that: “Hello, we need a cheap programmer.” When we tell how much Ukrainian developers really get, they are surprised. We explain that such a price is absolutely justified, that for the employer both in Germany and in Ukraine the developer will cost around 5000 euros. Only here he will receive 5,000 minus 5 percent, and in Germany, conditionally, minus 40-45 percent of taxes on income of individuals working on an employment contract. The difference is significant. And this is another argument in favor of the fact that opening an IT business in Ukraine is an excellent idea.

 

Author: Svitlana Galata