8 min read

Ukraine – hidden gem of the labor world.

Or how we opened our office in Kyiv thanks to a client project.

Kyiv IT Hub software

Why Ukraine? Let’s find out.

For two years now we have had our team in Kyiv, the capital of Ukraine. The country, making not the most positive headlines in the press, is known in the Western world more for its political instability than for its start-up scene. Many still have an outdated image of Ukraine as a poor corrupt country. But did you know that there is another side? Ukraine — a 40 million population country with a dynamic, adaptable, flexible, and multi-skilled labor market and a large share of IT professionals. A promising market with very short time to hire, easy-to-find talents, newest skills, and ever-growing potential. How did it come about that we have opened our third location in Kyiv and are also building it intensively? The answer lies in the macroeconomic data that we analyzed for a client project.

Imagine your company wants to expand, so you open a new office/plant/shared service center / whatever in, let’s say, Portugal. How did your company come to this decision? Surprisingly, we found out that often such global strategic decisions do not have a data-based or even strategically well-thought-out argumentation. Instead, they are often left to such factors as a) we know that many other competitors go there and set up their offices b) the people seem to be hard-working there and have few public holidays c) the managing director was there on vacation and he liked it.

These decisions can be costly and counterproductive, if not fatal since they have lost sight of important factors in the early beginning. For example, it is often not taken into account that the city is already overcrowded with other competitors, or there is not enough labor force with the required skills, or that employers in this country usually offer fat bonuses in addition to salary, or that the city has no good infrastructure, which makes access to the potential labor force more difficult. This list can (and should) be quite long. Depending on the country in focus, the size of a new location, the skills the new employees should bring with them and the business area, companies should ask themselves various questions in advance. The best and only answer is the data.

Ukraine IT Hub

Exactly such considerations have brought one of our customers to us. His goal was to save costs and open a new location in Eastern Europe and employ 500 people from the IT sector there for the first time. There were some countries as Romania, Poland, Hungary already on the list but the client was also interested to find a ‘hidden hot spot’ for a new location. Together with the customer we worked out a list of criteria that supported the decision (e.g. labor costs, available labor supply, competitors landscape, business environment). Based on these criteria, each location was examined and analyzed in detail. We created a shortlist of the countries that performed best according to the analyzed criteria. The analysis showed that the mentioned countries are very ‘overcrowded’ in terms of labor market competition. However, Ukraine, the country that was not originally on the list, scored surprisingly high for most of the defined criteria. Especially valuable was the ratio between the demand and supply: the labor market of the IT professionals was much higher than the number of job postings for the same positions.

Ukraine IT Hub

At that time HRForecast had strong growth potential, especially in the IT-sphere. Like for many self-funded startups, it is sometimes challenging to get the people with the required skills into a start-up, especially in Munich. That is why we immediately saw an opportunity in the interesting facts that we discovered in the Ukrainian analysis. Did you already know that:

Ukraine is the golden vein of the world IT market.

Ukraine is the 5th largest of the 25 biggest IT service exporters. Impressive but 17 tech companies in Ukraine are among the world’s top 100 outsourcers. Besides, it ranks first in the world in terms of the number of game developers Unity3D and C ++ engineers, second in the number of JavaScript, Scala, and Magento professionals and fifth when it comes to Front-End developers. Interesting is that there are also a lot of career switchers (i.e. those who studied something else and then decided to work in the IT sector because it is so profitable and future-oriented).

The nation is technically armed (e.g. contactless payment, Apple and Google pay existed in Ukraine much earlier than in Germany; ‘Diia’ mobile app as the channel of digital communication between the government and citizens; digital banking and post, e.g. the first mobile-only Monobank).

Ukraine is a hot spot for talents.

Ukraine is among the top 10 countries in the world with the largest number of students. 79% of citizens receive higher education and 80% of IT specialists speak English. In addition to that, 400 Ukrainian universities and colleges produce 36,000 technical graduates annually, being on a par with high-tech countries as Japan, Sweden, Norway, Belgium, or the Netherlands.

Ukraine IT Hub

The best ratio of price and quality.

Along with a large pool of qualified talents, Ukraine also offers more competitive tariffs for the payment for their labor than some other popular countries. Let the numbers speak: The average hourly rate for software development in Ukraine is about $ 40 for a freelancer, and the average developer salary ranges from $ 2,500 to $ 4,000. These figures are much lower than in Western Europe and, where the skills of a comparable quality cost about $ 70-100 an hour or more. Just to compare: the average annual salary of a specialist in Ukraine is $ 35,000, whereas in Germany it is $ 55,000 and in the States it is over $ 100,000. And given that most IT professionals work as individual entrepreneurs, the tax rate is also very attractive: 5% of the income that the workers must pay.

Cultural affinity.

In order to gain the best minds many companies practice outsourcing. We, for instance, did that in the beginning in India. However, the values and cultures are very different, which cannot but affect cooperation. Having cultural alignment means a smoother working environment for your team and your partner. Ukraine has similar values, and working attitudes are also close to European ones. This shared working culture brings our teams together and involves fewer risks.

No wonder we have decided to enter Kyiv. The short and frequent flights to attractive prices make traveling to our location very easy. We managed to build up our team very quickly. Amazingly, everything was happening much faster in Ukraine than it could be in Germany: recruitment times are shorter, interviews are arranged and carried out faster and the people show much flexibility. The hiring process in Ukraine from the job posting ad until hiring is under two weeks, from our experience. In Germany, meanwhile, it often takes months until the person starts working. The remote cooperation has become an advantage, besides the time difference of one hour remains unnoticeable.

Ukraine investment

What we realized about Ukraine from our projects and own experience.

  • Ukraine is open to cooperations and there are no obstacles to start a business and to enter a market
  • The country’s proximity to the European Union and the size of its domestic market gives great market advantages
  • The workforce is well-educated, skilled, and open-minded
  • The wage costs provide good opportunities to develop very high qualities fast and with fewer expenditures compared to the in-house development
  • Offices in Ukraine allow foreign companies to support clients in the local market and to promote the business

Are you interested in a new location for your company? We will help you make this decision data-driven and AI-based in a transparent and efficient way. Go here: Location Analysis and download the brochure. Curios? Then write us via info@hrforecast.de

Inspirational Ukraine.

Ukrainian carpathians
Ukrainian carpathians
Ukrainian carpathians winter
Ukrainian nature Black sea