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Ukraine – Leading IT Valley in Eastern Europe

While Silicon Valley continues to dominate and prosper as the centre of the technology world, another leading and thriving high tech hotspot located in the heart of Eastern Europe has risen to prominence.

Out of the multitude of attractive investment and premier outsourcing locations on the global high tech map, Ukraine merits particular attention, as a country widely and rightly regarded as Europe’s hotbed of tech talent, expertise and innovation. Home to more than 1000 software companies, over 100 global R&D centres and 2000 startups, it holds gravitas as a technology epicentre of Eastern Europe. These are only a few findings that particularly stand out from a recent comprehensive and insightful research on Ukraine’s IT ecosystem conducted by technology enthusiasts. It also reveals the main trends of Ukrainian IT labour market with roughly 90,000 specialists already working in the field and 36,000 technical studies graduates joining the labour force annually. The country’s IT outsourcing market saw revenue north of $2.5 billion last year and continues to demonstrate accelerating growth. In short, with its massive tech industry boom, Ukraine has what it takes to become a ‘software powerhouse’ and a leading IT valley in Eastern Europe.

While Ukraine’s compelling technology potential is evidenced by these stats, the country is also coming up strong as a prime destination for businesses for a number of other viable reasons.

Rich Legacy

In the wake of the Soviet collapse, the now independent state of Ukraine began to take its first steps on the road to the IT industry rise, capitalizing on its decent science and technology heritage. Ukraine came to light as one of Europe’s IT providers back in the early 2000s, soon embarked on the global stage and keeps this momentum going.

Historically, Ukraine has been a country with an immense scientific potential supported by decades of research in high-tech fields during the Soviet era, such as aviation, astronautics and space engineering. Its prominent science legacy and a solid system of technical education have laid the groundwork for today’s tech sector growth. In this fast-moving market, science schools have shifted emphasis to computer engineering and IT studies. Consequently, strong tech universities are now turning out capable technology talent. However, what has still been missing in university courses is some quality hands-on training rather than mostly theoretical programs. This is where the industry takes ownership of the situation. Many software companies host their own training centres to bridge the gap between industry and academia.

Deep Talent Pool and High Code Quality

Ukrainians are indeed a nation of remarkable tech prowess. The Ukrainian-born Silicon Valley role models, WhatsApp founder Jan Koum and the co-founder of PayPal, Max Levchin, are a living proof that tech and entrepreneurial talent is in the nation’s DNA.

The human assets of the country give it a significant edge over competitors. It may have the widest pool of IT resources on the continent and is often referred to as the ‘brain basket’ of Europe. Given a large worldwide shortage of IT personnel, the opportunity for businesses to use the best tech minds out there coupled with moderate labour rates make Ukraine a leading provider of IT services and a key player in technological innovation.

Notably, a code generated by Ukrainian developers follows the best international practices and complies with established coding standards. It is easily readable, understandable and maintainable. For years numerous Western companies have been buying Ukrainian cost-competitive but high-quality coding labour and have come to trust the quality of talent, product and services.

Vibrant Technology and Start-up Scene

While outsourcing remains the most sizable and mature sector of the Ukrainian IT industry with nearly 50,000 IT specialists and 500 providers, there is also a thriving start-up scene in Ukraine.

Ukrainian up-and-coming start-ups, as well as product companies, are mostly targeted at the vast international (rather than small domestic) market. Most of them are bootstrapping themselves, but many run on foreign capital. Outsourcing holds potential to help start-ups attract investments. It makes Ukrainian technologists’ expertise known to the world. And if European and overseas founders see that the local team is truly committed to a start-up’s success and that the prospect to save their budgets is on the horizon, they are willing to invest. Many of them prefer to kickstart and market their projects by leveraging local intellectual resources rather than those of their home countries. It allows slashing costs without compromising on quality.

Lack of tech venture funds makes Ukrainian start-ups extremely dynamic and resilient in order to stay afloat and get equipped to compete. The industry harbours the most cutting-edge start-ups such as Jooble, Grammarly, Paymentwall, Depositphotos, Petcube, to name just a few. Even though most of them are legally headquartered abroad, their operations remain in Ukraine, making them by far more competitive in terms of costs.

Ukrainian IT ecosystem also boasts multiple international R&D offices set up by such global high-tech giants as Microsoft, Oracle, Samsung, Cisco, Rakuten, NetCracker, Magento, etc.

Geographical and Cultural Proximity

Ukraine has a fortunate geographic location and is only a 2-hour flight away from most European capitals. Ukrainian providers work with their European clients in a close time zone (GMT+2), which also allows for a three-hour overlap with the US east coast business day. The United States and European citizens are allowed to stay in the country for 90 days visa-free and can easily obtain a work permit for expatriates.

The pro-European orientation of the country and the European mindset of its people ensure Western understanding of business culture. Ukrainians share many similar cultural and business principles with their European and American customers. To cap it all, there is a unique quality of their national character – they mean business in whatever they do (even if it is a small and simple task) and are always ready to go the extra mile.

On a final note, Ukraine continues to establish itself as a top spot for software development and an international start-up hub, vying for a share of the market. The country presents a unique blend of outstanding IT talent, high-tech milieu, growing start-up activity, broad R&D effort, close proximity to the western world and good value for money. Bottom line, Ukraine is poised to become the next IT Valley in Eastern Europe and has many more surprises in store for the world of technology.

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