Ukraine has become one of the world’s top offshore software development hubs. Despite the war, the IT business in Ukraine continues to flourish and evolve. Ukraine maintains its strong position in the IT labor market and remains resilient to geopolitical circumstances. Some undisputed leaders bring the most revenue to the Ukrainian IT market: USA, United Kingdom, Cyprus, Israel, Switzerland, Malta, Germany, Estonia, Canada, etc.
Learn why investing in software development in Ukraine is a profitable choice for businesses looking to expand their tech capabilities. An offshore software development company in Ukraine can benefit from a highly skilled talent pool, competitive pricing, and government incentives while overcoming the challenges of this rapidly growing tech hub.
Why Is It So Profitable to Invest?
To understand the cornerstone of running the software business efficiently in Ukraine, we should start from the very beginning. Let’s discover the reasons why this country attracts new IT investors and offshore businesses to rise in Ukraine.
To begin with, Ukraine offers significantly lower labor costs compared to Europe and North America. At the same time, the IT workers of Ukraine are highly educated and provided with a high level of proficiency. For instance, IT worker’s salaries in Ukraine vary from $13,000 to $53,000 per year. The wage is similar to that of the Polish IT market, which is $19,800–$50,800. At the same time, IT professionals in Germany get from $53,800 for entry-level positions to $94,800 for masters. The USA IT employees start at around $50,000 at the beginning, and it grows to $125,000 in CEO positions.
During the war, the Ukrainian IT market faced a lot of challenges, such as mobilization of workers, threats of blackouts, constant shellings, and the ban on crossing the border. However, the high level of adaptability and extreme motivation help to overcome those risks.
Another factor that makes Ukraine’s offshore business attractive is its talent pool. While earning less than Western European colleagues, Ukrainians have expertise in various programming languages, including Java, Python, Ruby, and C++. Often, there is no need to look for another specialist because one may complete different tasks in a short period.
From a geographical point of view, Ukraine has a convenient location due to its close distance. This allows workers to communicate and collaborate with the clients easily.
Last but not least, there is a cultural similarity of the work ethic that aligns Ukrainians with Western business practices.
Steps to Find the Right Team
To choose the best offshore software development company in Ukraine, companies conduct deep research. They make an expertise and check the case studies of the projects that succeeded. Reputation and reviews play a crucial role, which is why they look for feedback and references from previous clients. While all the abovementioned criteria are appropriate, they try the team’s communication skills and discuss the tools that are convenient for reaching out with, such as Slack, Microsoft Teams, or Zoom.
One of the most common challenges when working with an offshore development team is managing different time zones. There are tips for effective communication to overcome these time gaps and work smoothly:
- Establish a clear communication channel;
- Overlap working hours (for example, if you are based in the USA and working with a Ukrainian employee, set the meeting in the early morning for the US team and the late afternoon for Ukrainian developers);
- Use project management tools (for example, Jira, Asana, and Trello, which help to keep track of tasks);
- Set clear expectations for response time (especially during off-hours).
Cultural differences can impact the success of an offshore development partnership. While Ukrainian developers are dedicated and carry strong work ethics, to overcome some misconceptions, it’s essential to consider the following:
- Communication styles (it is important to establish an open environment and honest feedback tradition);
- Decision-making (a clear description of the expectation should prevent misinterpreting of results);
- Considering holidays and work hours (Ukrainian holidays may differ from those in other countries, so it is important to add some flexibility in the project schedule on the eve of the state holiday).
How Does the Government Encourage Offshore Business Development?
In the historical retrospective, offshore appeared to satisfy the necessity of relocating the business to escape particular regulations of rigid taxational politics. Offshore practices help companies reduce costs, increase profits, and expand globally. Ukraine legislation contributes to facilitating the growth of offshore IT businesses. Here are some main ways in which Ukrainian law does it:
- A special tax regime provides the benefits of the well-known “IT tax.” It is a 5% tax on income for IT companies, which is much lower than the standard corporate rate.
- English law provisions allow companies established outside their country to operate according to the laws of England and Wales. UK, US, or Canadian offshore companies are often more comfortable using English law for their contracts and business operations.
- Simplified Business Registration and Reporting, which includes an easy-to-navigate registration process, can be done quickly through the Diia portal. Moreover, the Diia platform enables offshore businesses to interact with the government seamlessly and securely. The company can be registered online, get access to public documents and services easily, create a digital signature, etc.
- Ease of cross-border transactions provided by Ukraine’s membership in international trade agreements and integration into global financial networks. Businesses can easily repatriate profits, manage international contracts, and interact with global clients and partners.
The IT business in Ukraine contributes immensely to the country’s budget. The growing IT sector in Ukraine shows unimaginable results. Over 4000 tech companies, including N-iX, have already appeared on the IT market. Ukraine has proved to be one of the best destinations for offshore development, offering a combination of high-quality teams, competitive pricing, cultural alignment with Western businesses and attractive government encouragement advantages.
By considering key factors like time zones, cultural compatibility, and dangerous war conditions, Ukrainian adaptability can overcome challenges to invest in a successful partnership.