The 2020 global outsourcing survey by Deloitte states that cost reduction is back in vogue among the top reasons for IT outsourcing. Companies are looking to optimize their IT processes without spending a fortune on it. Therefore, they explore the most vibrant IT outsourcing destinations, such as Eastern Europe, trying to find a reliable IT outsourcing vendor. As one of the most thriving IT outsourcing destinations, Eastern Europe is recognized for its impressive diversity of tech professionals, developed infrastructure, and strong educational background.
With this in mind, we’ve decided to compare some of the leading software development destinations in the EE region – Ukraine and Belarus. The article explores:
- IT market growth and development;
- Biggest IT hubs in Belarus and Ukraine;
- The current state of the business environment;
- And technical education in these countries.
Offshore software development in Belarus and Ukraine: Market overview
The exports of Belarusian IT services have been steadily growing over recent years at an annual pace of 10%. The total production and sales revenue of its IT sector amounted to $3.1B in 2019. On the country-wide scale, outsourcing of software development in Belarus accounts for 5.7% of the country’s GDP.
Belarus has attracted such tech companies as Viber, Fitbit, Playtika, IHS, Yandex, WorkFusion, and Juno, to open their R&D centers. Moreover, the success stories of Belarusian product companies like Wargaming, Apalon, Masquerade have also stimulated the development of the local IT ecosystem.
IT is one of the most dynamic sectors in the Ukrainian economy. It reached $4.5B in 2019 and its growth pace is getting faster every single year. Ukraine is continuing to gain traction in terms of IT industry development with a big number of multinational companies setting up their R&D facilities here. For instance, 100+ R&D centers of global companies [4] such as Microsoft, Samsung Electronics, Apple, Boeing, Skype, Wargaming, eBay, Siemens, IBM, etc. are located in Ukraine.
Tech talent in Belarus and Ukraine
Belarus is home to 55,700 IT specialists. In terms of software development, Minsk gathered the highest number of IT specialists - 85%. Gomel houses nearly 9.4%, and Grodno and Brest account for 2.7% and 2.9% of labor respectively. Around 60% of developers in Belarus work for IT outsourcing companies.
Around 200,000 specialists are involved in the Ukrainian IT sector, which is one of the biggest numbers in Eastern Europe. The majority of the Ukrainian software developers live and work in the big cities such as Kyiv (44.2%), Kharkiv, (14.5%), and Lviv (12.8%). More than 56% of all developers in Ukraine work for IT outsourcing and outstaffing companies.
Custom software development companies in Belarus and Ukraine
Clutch lists around 250 IT service companies in Belarus. Over 85% of these companies are small vendors. Software development companies have clients in more than 50 countries all over the world and approximately 45% of them are from the USA and Canada, and 30% are from Europe.
What’s more, some of the Belarusian IT companies were included in the Software Magazine’s Software 500 ranking of the world's largest software and service providers and were recognized by the International Association of Outsourcing Professionals (IAOP) as The Global Outsourcing 100 companies.
Clutch lists around 850+ software development companies in Ukraine. Around 50% of the clients are from the USA, 35% are from the UK, Western Europe, the Nordics, 8% from Canada, and around 5% from the Middle East and Asia. Ukrainian companies provide a wide array of services in various industries like insurtech, hospitality, healthcare, fintech, telecom, media & entertainment, etc. Additionally, 13 Ukrainian IT companies, including N-iX, have been featured in the list Global Outsourcing 100 in 2020 by the International Association of Outsourcing Professionals (IAOP) as top IT outsourcing providers.
Business environment in Belarus and Ukraine
During recent years, the Belarusian IT sector received governmental support as one of the top-priority economic sectors for future development. The emergence of Belarus Hi-Tech Park stimulated IT sector development and provided a special business environment for local IT companies. Around 800 IT companies from Belarus are residents of the High Tech Park bringing together 65,000 tech professionals. Moreover, the HTP resident-companies are exempt from corporate taxes, including VAT, profit, real estate, and land taxes. In 2020, Belarus was ranked 49th country in the World Bank’s Ease of Doing Business, 14 positions higher than in 2014.
Some experts believe that the Belarusian political crisis of 2020/2021 will affect not only the offshore software development in Belarus, but also the economy in general [6]. Offshore software development Belarus is already highly affected by the the current political situation
Ukraine is on the path to its integration with the EU and is introducing a number of business reforms. Now, starting a business is much easier due to the simplification of the taxation system and improvement of registration procedures. As of 2020, the country is 89 positions higher in the World Bank’s Ease of Doing Business compared to 2014. Moreover, according to the 2019 A.T. Kearney GSLI [3], Ukraine ranks 20th out of 50 most attractive business locations in the world.
Local authorities recognize the need to support the development of the Ukrainian IT industry as a strategically important area for the country’s progress. That is why they increased the state order for graduates in technical specialties and adopted the law on the simplification of export services. And this is just a minor part of governmental incentives for the local IT market growth and development.
Technical education in Ukraine and Belarus
The Belarusian tech talent pool is growing with around 4,000 new software engineers graduating every year. Around 55 higher educational establishments provide courses in computer science and other IT-related disciplines. Moreover, large IT companies in Belarus actively collaborate with higher education institutions. It allows students to acquire practical skills in different technical areas. Besides, some software development companies in Belarus offer their own courses that help those who are eager to start their career in the IT sector. Nevertheless, the country is still behind its regional counterparts in terms of educational innovations.
Ukraine boasts strong technical education with more than 16,000 ICT and 23,000 engineering students graduating every year with certificates in technical disciplines. More than 450 educational institutions are located in Ukraine and many of them maintain IT-related educational programs. The most popular tech institutions are Taras Shevchenko National University of Kyiv, National Technical University of Ukraine “Kyiv Polytechnic Institute”, Lviv Polytechnic National University, etc. Ukrainian universities have also launched a number of IT-related courses in Artificial Intelligence, Data Science, IoT, etc.
The majority of Ukrainian developers have a good command of the English language (around 49.7% has fluent English skills and 35.1% – intermediate level) and the country holds the 43d place in EF English proficiency index 2019, which is improving year by year.
Response to the coronavirus impact
Belarus faced severe criticism for the lack of response to the coronavirus pandemic early in the 2020. Despite the measures taken by the government, there is no information about actions taken by the software development sector in Belarus. On the other hand, Ukraine was able to take precautionary measures soon. Ukraine acted fast and within two weeks after the first confirmed case, both the authorities and businesses took drastic but necessary actions to prevent the speed of the disease. Ukrainian IT companies were the first to react to Covid-19 pandemic.
Read more: How Ukrainian IT companies respond to the coronavirus impact
Wrap up
All in all, IT outsourcing in Eastern Europe is one of the most dynamic sectors, providing new and attractive opportunities for offshore leaders. Ukraine remains one of the leading forces in the region, due to its solid talent pool, strong technical education, and well-developed business infrastructure. This IT outsourcing destination was recognized among the top 25 IT services exporters and attracted a myriad of multinational companies. Now, the main challenge rests in finding the best IT outsourcing provider to help you allocate a strong team for fruitful cooperation.
Why choose N-iX as a software development partner?
Here are several reasons to consider N-iX when outsourcing your software development:
- We have extensive technical and industry expertise. Our company offers custom software development, cloud solutions, DevOps, Big Data, Data Science, BI, Machine Learning & AI, and other services to companies in telecom, manufacturing, retail, fintech, healthcare, and other industries.
- N-iX has over 1,200 experts aboard working in delivery centers in Ukraine, Poland, as well as offices in the US, Sweden, and Malta.
- With almost 20 years in the market, we have shaped many long-term, strategic partnerships with companies from the USA, UK, Western Europe, Nordic countries, and other locations.
- N-iX is a certified AWS partner, a Microsoft gold certified partner, a Google Cloud Platform Partner, an Opentext Services silver partner, and a SAP partner.
- We are recognized as a trusted vendor by IAOP, GSA, Zinnov, ISG, Inc. 5000, Software 500, Clutch.co, and others.
If you have any questions about IT outsourcing, make sure to contact our experts.
References:
- 2019 State of European Tech
- Doing Business 2020
- 2019 A.T. Kearney Global Services Location Index
- Software development in Ukraine, Poland, Belarus, and Romania
- Covid-19 repository of policies: EBRD policy comparator by European Bank
- Research on the Belarusian commercial sector perceptions and its perspectives by Civitta
