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IT BUSINESS: advantages of Ukrainian professionals

There comes a time when owners of IT companies working on outsourcing projects are at the crossroads: to give a location preference to India, Poland, Hungary, or Ukraine?

Although the “coronavirus” crisis affected IT business big time, the world economy is only “digesting” the drop in GDP of China, the USA, and European countries, many IT companies are still thinking about opening a subsidiary in Ukraine. So, why is it profitable, what are the advantages of domestic professionals, and what is the average cost of an IT professional in Ukraine?

“Buy 1 get 3” – not about Ukrainian IT specialists

The first thing – make sure you’re digging in the right place. Those who start (or buy) an IT business in Ukraine can rest assured they will not run out of outstanding minds. Ukrainian “deposits” of IT staff show promising numbers. For example, according to a N-iX study by the beginning of 2020, there were 184,000 IT specialists in Ukraine (the number has increased by 70 percent since 2016)..

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 (communicating with customers clear and giving sound judgements upon request).

So, it comes as no surprise that Ukraine is gradually gaining a name in the world of IT. Ukraine’s reputation already works as a magnet attracting great international companies and has no mercy to competitors. 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. IT contribution to the country’s economy has risen from 0.8 percent of Ukraine’s GDP in 2012 to 4 percent in 2020.

how to open it company

The ability to perform complex tasks has been recognized by everyone who works with Ukrainian IT professionals for a long time. Some experts have repeatedly pointed out the Ukrainian price-quality ratio that attracts employers with “a golden card”. We should not necessarily “pick up” the way of doing business after others. That way 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 frankly say: we are cheaper! But I am sure that it is the quality that should be a brand name of the national IT industry.

That is why, according to Mrs. Hrynyshyn, clients, who have previous experience with India tend to move to Ukraine. That’s when the question arises: how to open an IT company in our country?

Language

As a cherry on top – Ukrainians have a good level of English and the education that is rapidly improving. According to a survey of the portal of Ukrainian programmers DOU, most Ukrainian developers and testers know English at Intermediate or Upper-Intermediate levels.

By the way, Lviv and Kyiv are in the lead of that statistics. The reason for that is simple – top IT educational institutions the Kyiv-Mohyla Academy and the Ukrainian Catholic University are located there. Speaking about IT education, it is becoming more and more popular among Ukrainians, so the market responds very quickly, often at a cost of the quality, so it is very important to choose the right place to study. 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.

Last year the competition in the best universities in the country in the most popular IT specialties reached more than ten to one. And it is not surprising, the salary of Ukrainian developers (at least before the pandemic) ranged between 600 and 5,000 dollars.

It is beneficial for both foreign and Ukrainian IT companies to hire students. By the way, students from Kyiv National University are the most expensive ones (about a thousand dollars), students from Chernihiv National Technological University ask for a bit less– 550 dollars.

We’ve grown up

IT businessOver the past two decades, IT business in Ukraine has come a long way. In the “troublesome 90s” the industry started its development with outsourcing, foreign companies gave “us” only 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 started offering a comprehensive solution to the client’s business needs.

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 on global markets. Software development centers appeared – R&D centers (subdivisions of large 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 scratch”

IT corporations are increasingly equipping our country with complete infrastructure and attracting local resources.

This is beneficial for both local employees and IT companies, which, working with programmers under a civil law contract, save some significant amounts 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 way large corporations will be able to fully control costs, not overpay intermediary companies, save on office rents and select their own teams.

In addition, we have enough specialists who can 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, who were 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, there is a similar form of individual entrepreneurship in Poland, but the income tax is 18 percent there).

The administration of IT companies acts as an intermediary between the customer, 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 by the cost of Ukrainian IT specialists.

 “Often, employers think that if Ukraine is a country that is developing, it means that our programmers are cheaper,” says Marianna Hryshyshyn. – People write something 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. Employers both in Germany and in Ukraine pay the same amount for a programmer – let’s say 5000 euros. A Ukrainian programmer receivs 5,000 minus 5 percent, and a German programer 5000 minus 40-45 percent. 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