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The Real Cost of Outsourcing to the Ukraine
Outsourcing trends have evolved over time. Different companies choose to outsource for various reasons, but the major motive for outsourcing remains unchanged. It is saving money.
Within the next 10 years, outsourcing will continue to cut at least 40 percent of costs even though the demand for IT specialists is growing rapidly all over the world, which significantly increases costs for developers.
So what is the real cost of having a software developer in Ukraine today?
Three main factors influence outsourcing costs:
- Salary of the developer
IT market trends influence Ukraine as much as everywhere else, so salaries for IT specialists are growing dynamically. Average salaries for mid-level software developers range from 1200-1400 euros per month.
However, Ukraine will lower the salary level due to the following reasons:- Ukraine has a BIG pool of IT specialists with annual add on of 30,000 graduates from IT related fields.
- Ukraine will not become a European Union member within the next five to seven years, so the level of prices and salaries will be at least 30 to 40 percent lower than in Europe.
- Since Ukraine is not a part of the Schengen Zone, the movement of people to work abroad is small and fairly limited.
- Communication
Due to different levels of communication, requirements and technical assignments are often lost in translation, which costs time and money. However, Ukrainians are very similar to Europeans in their work approach:- They have a good grasp of the English language, both written and spoken.
- They express their opinions and ideas to contribute to development instead of simply following orders.
- They take initiative.
- Investment in people
An office space and workstation is not enough for modern outsourcing. Employees have to be motivated, which requires investment in their career growth, social activities, education, etc. Ciklum considers employees to be the main asset for our company as well as our clients. That’s why we provide:- Professional development
- Performance evaluations and development interviews
- Social activities
- Competency and interest groups
- Knowledge sharing activities
- Project Manager education program
- Training and workgroups
- Bonus systems and incentive tools
Ukraine has proven to be an attractive solution for EMEA and North American companies. Companies have to spend a lot of time and resources finding and attracting the right people, paying salaries, taxes, pension funds, providing workstations, retaining and motivating employees. Usually such expenses are handled by the outsourcing provider for a fair fee which does not necessarily influence outsourcing costs growth.
Outsourcing cost development is presented below.
Notes:
- Salaries in Scandinavia are assumed to grow eight percent annually.
- Salaries in Ukraine grow approximately 380 euros per year.
- Scandinavia’s actual cost is higher than stated, since employers also pays insurance, administrative and other costs on top of salaries, taxes and pensions.
Sources:
- PROSA—Association of IT professionals in Denmark www.prosa.dk
- Internal Ciklum prices and salaries statistics
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