Ukraine Becomes a Growth Leader in Providing IT Services: Seven Undeniable Facts That Confirm It

SAN FRANCISCO, February 25, 2019 (Newswire.com) -  IT services compete in the most saturated markets in the world. The processes within this industry are much more dynamic than, let’s say, the rise and fall of Detroit automobile manufacturing. If everything is done right, there is a good chance to grow from a home office of two people into a gigantic corporation over a relatively short period of time.

Ukraine continues its robust growth as the world’s leading provider of IT services. Although the country doesn’t stand a chance to ever outpace India in terms of export volume, it’s already ahead of many others. What are the reasons behind this success and what benefits can investors reap? Let’s take a closer look at the facts.

Fact 1. Official Statistics

The recent industry reviews show a breathtaking rise up to $3.6 billion within a year. It looks like the industry development is not going to slow down any time soon, with the number of software engineers currently estimated at 220,000.

Fact 2. Ukraine is a foothold for Lead Generation companies

To be good at generating contacts, one needs to have at least intermediate English proficiency, combined with an analytical mindset and a great deal of diligence. In the race for such talent, Ukraine is a winner with its highly skilled talent and prices below the profitability threshold. An international service business of this kind could appear in any part of the world, most likely in India, Poland or the Philippines. However, there is a reason why prominent lead generation startups like Leadium and Pilot thrive in Ukraine. It’s because of its unique talent pool in which Ukrainian specialists represent the perfect balance between qualified and cost-effective workforce.

Fact 3. Lviv has one of the country’s busiest airports

In 2018, the passenger traffic in Lviv airport grew by 48 percent and almost 1.6 million passengers passed through its terminals. Those who have been at the baggage claim this year have noticed the advertisements targeted at potential clients of IT services. More so, the city downtown is crowded with IT specialists and their business partners from Europe and North America.

With more than 70 new companies registered in the city, the office centers are overstaffed. In a tight job market like this, shrewd recruiters use Tinder to attract candidates. All of this is a sign of exponential industry growth.

A winning combination of multiple tourist attractions and a booming technology scene has played a crucial role in increasing Lviv’s potential. The city has acquired the title of the IT capital and the most comfortable place for an IT specialist to live. Overall, Lviv offers a positive work-life balance and access to European train routes for fast connection with business partners.

Fact 4. An abundance of product companies

There is an influx of product companies founded by Ukrainian specialists who have gained substantial experience while working for service companies. Having learned how to build competitive software products, they often move to Silicon Valley to run businesses from there. People with the potential to create innovative products have grown professionally in Ukraine – this fact indicates the rise in the quality of IT services. If 10 years ago a typical development team consisted of programmers and several QA engineers, today it looks more like a specialized product studio where even the smallest team includes developers with varied skillsets, a project manager, QA/manual engineers, a UX designer, a business analyst or product owner, a software architect and a DevOps. Specialists who have worked on a star team like that have gained a solid understanding of the software development cycle and tend to succeed in implementing their own products.  

Fact 5. IT services investment boom

In 2019, Ciklum, the most recognized IT services company that has shaped modern IT outstaffing, raised record investments. Other whales of the industry like Luxoft and EPAM went public or were acquired by big investors. This business is so stable and profitable that Luxoft was purchased at the price of $2 billion, which is nearly $85,000 per employer. The number itself is staggering, taking into account that the company doesn't produce any goods but only contracts the employees out to other businesses. To top it off, given that a significant share of employees belongs to the administrative non-billable staff, every software engineer is worth up to $110,000.

Investment in product companies count billions of dollars, however, it’s hard to be accurate in estimation given that a lot of companies are not officially registered in Ukraine. During the ICO boom, many Ukrainian marketing specialists and developers contributed to the creation of such products and even discreetly launched their own ICO.

Ring, a startup specialized in IoT solutions for home security, is among notable purchases of companies powered by Ukraine-based technical talent. Since 2016, the startup runs an R&D office in Kiev and was later on purchased by the American internet giant Amazon in 2018.

Fact 6. 20 percent of the world’s leading companies have offices in Ukraine

Every fifth company operating in the field of software development for mobile platforms engage Ukrainian technology talent.

• IBM Ukraine

IBM Ukraine creates excellent opportunities for digital transformations of Ukrainian businesses so companies are empowered to deliver best-in-class products and services.

• ABBYY Eastern European Headquarters

ABBYY develops artificial intelligence technologies and solutions in the field of information processing and linguistics.

• Samsung Electronics

Samsung Ukraine builds and implements solutions connected with computer vision, next-generation human-computer interfaces based on 3D graphics and recognition technologies; applications for creating new kinds of multimedia content; device-2-device and device-2-cloud convergence; information security; AI; NLP; human-computer interaction.

• Siemens Ukraine

One of the leading technology companies in Ukraine, it supplies equipment and integrated solutions for key sectors of the Ukrainian economy: heavy industry, energy, transport and healthcare.

• Huawei Ukraine

Ukrainian R&D is engaged in three areas of work – consumer gadgets, enterprise IT solutions and telecom equipment.

Fact 7. The number of AI companies is growing

Ukraine is the third country in Eastern Europe based on the number of companies that develop AI technologies. There are 57 companies operating in the AI field, half of which provide outsourcing solutions. One of the most notable deals is the case of Looksery. In 2015, Snapchat bought this startup for $150 million, which is probably the largest sale in the history of Ukrainian startups. Looksery is a mobile application that allows users to modify their appearance in real time. It can eliminate defects, changes anything from eye color to face shape or applies an animation of a cartoon or horror movie character.

To sum up

Ukraine is the sweet spot for starting a service business. Investors can earn 15% per annum profit, which is much higher than the market’s average. Investors that buy service business stocks may count on a significant profit as compared to investing in classic blue chips stocks.

You can deal with a number of problems by engaging IT services:

• to get access to highly qualified software architects and industry experts from the pool of 220,000 available engineers
• to outsource your non-critical operations to the team with a high technology competence while reducing OPEX
• to build distributed teams that will collaborate effectively due to cultural proximity
• to establish your own R&D center or hand this task over to an outstaffing firm to do it on your behalf

We’ll gladly provide you with well-rounded advice as to building a strong team of software engineers – say “hi” to us at to us at ncube.com.

Source: NCube