Six Ukrainian companies made the latest Global Outsourcing 100 list released on June 2 by the International Association of Outsourcing Professionals. Information technology solution and service provider Luxoft placed 18th, the highest among its Ukrainian peers, with SoftServe, Epam Systems, Intetics, Miratech and Softengi ranking below 20th.
Moreover, Tholons, a New York-headquartered research company, ranks Kyiv as the world’s 50th most popular outsourcing destination. It’s no surprise, since Ukraine’s outsourcing market is growing five times faster than the global average, according to data provided by consultancy KPMG.
“The volume of the Ukrainian outsourcing market was around $1.3 billion in 2013,” says Volodymyr Sharov, managing director of Global Logic Ukraine, a software research and development services company. Meanwhile, this market segment employs more than 50,000 people, adds Roman Khmil, chief operation officer at Denmark’s Ciklum that outsources IT projects to Ukraine.
But with all the impressive figures and rating achievements, it is unclear whether this is a testament to the success of Ukraine’s information technology market. Those who manage outsourcing projects in Ukraine say they provide talented IT specialists with good salaries and opportunities to learn the best technologies available.
Ciklum’s Khmil thinks that outsourcing is the only way for local specialists to acquire Google-level experience.
Meanwhile, those who oppose the outsourcing model for developing the IT market, say it keeps Ukraine “enslaved” in foreign-based business projects that do not contribute much to the country’s gross domestic product and, therefore, tax revenues.
“There is outsourcing and there is creation of homegrown products, while both of them call themselves the IT sector,” says Ilia Kenigshtein, senior manager at Israel-based LR Group and investor in startups. “Outsourcing can’t be a powerful market force in the long run.”
Industry analysts say that Ukraine is home to some 30 successful startups worth $1 billion, while 10 of them conduct business globally.
Economy Minister Pavlo Sheremeta has made numerous statements in support of stimulating the country’s IT sector. He was one of the initiators of the Brain Basket Foundation project aimed to raise $1 billion to reform computer technology education in Ukraine.
“If the government will not create the conditions for development, like a special tax regime comparable to what India, China and our close neighbors Belarus and Romania have – we will export software creators instead of software,” says Viktor Valeyev, deputy head of IT-Ukraine, an industry association.
While Ukrainian universities provide the IT market with 16,000 newly-educated specialists each year, most of them are poorly prepared for top-notch work, Microsoft Ukraine chief executive officer Dmytro Shymkiv told the Kyiv Post.
Meanwhile, the most talented of these graduates usually end up leaving for greener pastures, attracted by higher salaries and more promising work environments in Western countries. Head Hunter, a local human resources company, reports that 70 percent of Ukrainian computer engineers want to work abroad.
Beginner programmers aren’t the only ones striving to reach Silicon Valley, but also established professionals with a successful track record in Ukraine. For instance, Sergiy Polishchuk, founder of the internet traffic exchange network UA-IX, left the country in 2012 for Canada.
“I studied at the department of informatics at the Kyiv Polytechnic Institute. There were 28 people in my class and seven of them left Ukraine and now work abroad. Four of them have already received citizenship in other countries,” says Dmytro Kostyuk, chief executive officer of Kodisoft, a Kyiv-based software developer.
Even if high school graduates will massively apply to computer tech schools to substitute those who left, there are not enough qualified professors to teach them, Kostyuk adds.
Valeyev of IT-Ukraine association thinks the problem of talented engineers leaving the country will not be solved soon as the demand for them will keep growing, especially in the European Union.
Kyiv Post staff writer Iana Koretska can be reached at [email protected].
