Ukraine it Outsourcing Tops in Eastern Europe
Source: kyivpost.com
Ukraine has become the most attractive destination for IT outsourcing in Eastern Europe, according to a study published June 2007 by Global Offshore Associates Limited, an IT-outsourcing consultancy.
The country’s relatively low-cost software development industry earned about $246 million in export contracts in 2006, 47 percent more than in the previous year, the study concluded.
Other estimates suggest the business was worth significantly more last year, but exact figures are hard to come by, as a significant portion of earnings are not declared in efforts to avoid tax payments.
Ukrainian Hi-Tech Initiative, an alliance that unites Ukrainian offshore IT outsourcing providers, estimates the size of the Ukrainian software outsourcing market at about $600 million in 2006.
According to the alliance, Russia exported around $1.2 billion worth of IT services in 2006, while the world’s leading software services vendor, India, received around $18 billion last year for exported IT services.
These figure show that Ukrainian software exports are only a tiny fraction of the world’s top export-oriented software development business. However, industry insiders expect Ukraine to continue developing more software for foreign clients in the next several years, steadily earning its fair share of the global software export business.
Global Offshore Associates Limited (GOAL), which provides companies in Europe and North America with outsourced personnel from Russia, Ukraine, Bulgaria, Belarus and Latvia, singled out Ukraine as the most attractive outsourcing destination in Eastern Europe.
With the second largest population after Russia, a legacy of Soviet science and success-hungry entrepreneurs, the country boasts the fastest-growing software development industry, the company said in its survey.
According to GOAL, Ukraine boasts more than 7,500 software developers. The outsourcing industry growth rate in terms of available IT professionals in 2006 was just under 50 percent in year-on-year terms.
While salaries for IT professionals are steadily rising, they remain significantly lower than those offered for comparable work performed in developed countries. And while salaries are higher abroad, the lion’s share of Ukrainian software programmers remain on home turf due to the difficulty in acquiring permission for work and residency in developed markets, such as the European Union and US.
The relatively lower cost of living compared to EU member-states is expected to keep salaries for software developers in Ukraine competitive, in turn attracting more outsourcing work to the country.
While the number of computer science graduates in Ukraine is relatively high, at over 30,000 annually, the real number of qualified software developers available is limited due to a declining educational system that fails to prepare young professionals with the newest technologies and methods in a fast-moving technological age, the survey says.
According to GOAL, the software development outsourcing business is best established in Ukraine’s capital city Kyiv, where over 50 percent of software developers are employed. However, GOAL’s study also recognizes the industry’s rapid development in smaller cities backed with strong software development universities, including Lviv and Kharkiv. Lower salary requirements in these cities can offer software development labor at a discount to Kyiv, according to the study.
Taras Vervega, executive vice president for sales, marketing and business development at SoftServe, a Lviv-based offshore software development company that employees more than 200 programmers, said IT outsourcing is one of the most dynamic sectors of Ukraine’s bustling economy.
“Although domestic customers still often cannot afford ordering big IT projects, Ukrainian informational products are becoming more and more recognizable and demanded in the West,” he said.
“In the past several years the Ukrainian brand [of software development products] has significantly risen on the world software market,” he added.
According to Vervega, the main importers of Ukrainian software development services are Western Europe and the US. On the whole, the annual growth rate of outsourced software from 2000 to 2005 was around 50 percent. Due to mounting demand from Western companies, the growth rate should remain high again this year, he added.
We are a team of Online marketing and SEO professionals. For more information visit softwaredevelopmentblog.com">http://www.softwaredevelopmentblog.com">softwaredevelopmentblog.com
Article Source: ArticlesBase.com - Ukraine it Outsourcing Tops in Eastern Europe