According to new figures released by Ukraine government, the outsourcing sector of the country has grown tremendously. The figures released show a growth rate of 30-40% in the sector despite the echoes of financial crisis in European countries. Ukraine, the second largest European country in terms of territory is being largely chosen by number of US and UK companies for their outsourcing needs especially in IT services. In the opinion of industry experts, the IT outsourcing sector in Ukraine has grown over the last 10 years to reach $1 billion in 2011 and is expected to grow further in the coming 5 years.
Ukraine entered the offshore outsourcing market by providing software development services in the early 1990s. Since then, the BPO market in the country has been showing a steady growth as a result of demand from US and UK markets. While IT services remain to be the main source of revenue generation for the outsourcing industry in Ukraine, other BPO projects like, FAO, HRO and KPO have also started to generate considerable revenue for the industry.
Some of the reasons as to why outsourcing companies in Ukraine are reporting good financial growth are discussed below:
- Vast talent pool at low cost: The literacy rate of Ukraine is 98% which is much higher when compared to other offshore destinations. The country’s large pool of engineering and IT talents has always been a key factor in attracting foreign investors. Further, these talents are available for the BPO companies at a lower cost. The salaries for the BPO employees in Ukraine are slightly lower when compared to other European BPO destinations.
- Cultural and physical proximity: Ukraine shares similar culture and business values with that of US and other European countries. These prompt companies in US and Western Europe to establish outsourcing links with Ukraine BPO companies. The proximity in physical distance also makes it a favorable near-shore destination for companies in US and Canada.
- Political climate: Favorable political climate in the country is also a reason for the growth of BPO sector. Recently the government as a measure to support outsourcing sector cancelled the VAT for IT outsourcing companies and reduced their employees’ income tax to 5%. The authorities are also very keen to invest in infrastructure development activities to attract more foreign investments.
- IP security: Ukraine is a country which has a high respect for intellectual property rights. The country recently upgraded its IP laws making them in par with the laws of other developed nations.
Despite the above mentioned advantages, industry experts see poor language skills of the students in Ukraine as a hindrance to the growth of the sector. However, the authorities are taking appropriate measures to overcome the drawback by linking with outsourcing companies to impart the necessary skills for students required for the BPO industry.
Major outsourcing companies in Ukraine
- Hewlett-Packard: They have set up their IT service delivery center in Ukraine.
- Techno Park Corp: They have set up their software development center in Ukraine.
- CONTACTIS: This leading software outsourcing company has also established their software development unit in Ukraine.
- NIX solutions: They are Ukraine based software development outsourcing company founded in 1994 and is one of the biggest players in the local market.