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Why Dutch Tech Companies Prefer Ukraine for Software Development Outsourcing

Nataliia P. - April 27, 2023 - 0 comments

Ukraine is famous for its rich cultural heritage, stunning natural landscapes, delicious cuisine, and historical landmarks. However, there is one more thing that attracts foreigners to Ukraine – the skilled IT workforce and favorable business climate.

According to a recent report, the volume of computer services exports in Ukraine reached $7,35 billion in 2022, which is 400 million more than in pre-war 2021. Incredibly, IT services export is one of the few industries that are still thriving in Ukraine despite the armed aggression, and this proves the high reliability and professionalism of Ukrainian software development companies.

Given the above, it is not surprising that Dutch tech companies consider Ukraine one of the most attractive offshoring destinations. In this article, we will dive deeper into the topic and answer the question: ‘Why outsource to Ukraine?’

Reach talent pool

Ukraine is widely recognized as having a rich talent pool in the field of IT. The country has a long history of excellence in mathematics and science, which has contributed to the development of a highly skilled workforce in the tech industry. Ukraine’s IT specialists are renowned for their expertise in software development, cybersecurity, artificial intelligence, and other emerging technologies.

According to Statista, the number of IT specialists in Ukraine is 285 million. And according to the IT Ukraine Report, the number of IT companies in Ukraine is 8,7 thousand.

It should be noted that 

  • 80% of Ukrainian IT specialists have intermediate or higher command of English 
  • 60% of Ukrainian IT specialists have 3+years of experience in the industry
  • the majority of Ukrainian IT specialists have higher specialized education 

Kyiv, Kharkiv, Lviv, Dnipro, and Odesa are the biggest Ukrainian IT hubs where the largest number of IT companies, specialists, and investors are concentrated.

It is worth mentioning that most Ukrainian IT organizations have successfully continued their operations despite the ongoing war. Companies from the eastern regions of Ukraine timely moved their offices and employees to the west side or abroad. Thus, the clients of Ukrainian software development providers continued to receive high-quality IT services even at the most critical moments of war.

IT talents in Ukraine
Ukraine has extensive resources of IT specialists

Strong education

Ukraine is widely renowned for its strong IT education, granting students access to some of the top technical and engineering programs in Europe. It has a variety of formal academic institutions, such as universities and institutes, alongside non-formal educational organizations providing specialized IT training. 

Notable universities in Ukraine, such as Taras Shevchenko National University of Kyiv, Lviv Polytechnic National University, and Dnipro University of Technology offer high quality educational programs in computer science, software engineering and cybersecurity. These universities work together with prominent tech companies to equip students with practical experience on real-world projects and give them an edge in the job market.

Apart from formal education options, Ukraine’s IT sector has a robust infrastructure of non-formal educational organizations. Examples include IT Step Academy, GoIT, DAN.IT, Mate Academy, Hillel School, and more. They all provide specialized training in various areas like programming, web development, project management, and other IT-specialized fields. These organizations cooperate with industry experts and tech firms to guarantee their courses remain up-to-date and pertinent to current market demands.

High education in Ukraine
Ukraine has a high-quality educational system

Favorable business climate

Ukraine has been undergoing a series of changes lately, which have made it easier to do business and attract foreign investors. These include tax simplification, a reduction in bureaucratic processes, and protection of intellectual property rights. What’s more, Ukraine and the European Union entered into free trade agreements that give Dutch tech companies access to the entire EU market. Furthermore, Diia City, a special legal and tax regime, was created to encourage IT business growth while offering investors additional benefits.

To sum up, Ukraine is making it easier for companies and international partners to open businesses there. Additionally, its geographical situation – spanning the continents of Europe and Asia – makes it easily accessible and convenient for Dutch tech firms looking for international expansion opportunities. Another bonus is that the time zone in Ukraine is just an hour ahead of the Netherlands, so communication with offshore teams is much easier to manage.

Diia city taxes
Example of tax calculation in Diia City

Cost savings

According to a recent report by Numbeo, Ukraine has a cost of living index of 25.6, which is significantly lower than the Netherlands, with an index of 68.6. Additionally, the average hourly rate of a software developer in Ukraine is approximately €45, which is at least one-third less than the hourly rate of €68-€80 in the Netherlands.

It is also notable that Ukraine has more attractive software development prices compared to other countries in Eastern Europe. For example, the developers’ hourly rate in Ukraine is lower than that in the Czech Republic or Poland. With all that, Ukraine has an easier tax system and a more simplified way of doing business compared with other countries in the region. 

This combination of lower living costs, competitive hourly rates, and a favorable business environment makes Ukraine an appealing destination for Dutch tech companies looking to save costs while maintaining high-quality software development. By offshoring to Ukraine, Dutch companies can access a highly skilled workforce, with a more attractive cost structure than other nearby countries, allowing them to remain competitive in the global market.

Cost of living in Ukraine vs. Netherlands
Netherlands vs. Ukraine cost of living

Focus on innovation

Ukraine has a strong culture of entrepreneurship and innovation, which has led to the emergence of a vibrant startup ecosystem. The most known Ukrainian IT startups are GitLab, Grammarly, Petcube, MacPaw, Ajax Systems, RefaceAI, Netpeak, and others. Such startups operate in various industries, from DevOps to marketing to translation, and have millions of users all over the world.

Additionally, there is a growing number of software development companies in Ukraine that do not have a proprietary product but implement software projects on behalf of other businesses. Such companies develop healthtech, edtech, fintech, automotive, gaming, wellness, hospitality, and other software solutions and cooperate with startups and enterprises alike.

The thriving IT sector in Ukraine is supported by modern co-working spaces, accelerators, and incubators. This allows foreign partners, including the Dutch ones, access a range of resources and networking opportunities and run their businesses with high comfort and a Europe-like attitude.

Ukrainian IT startups
Best Ukrainian IT startups

Similar mentality

The average age of a Ukrainian programmer is 28 years. This indicates that the Ukrainian IT sector is mainly staffed by young people with pro-European views and modern approaches to conducting business relations.

Ukrainian developers are open to new opportunities and are not afraid to take initiative. They frequently attend international tech conferences, meetups, and other events and are well-integrated into the European IT community. 

Additionally, many Ukrainian outsourcing companies have offices in Western Europe and the USA, so the clients can meet the companies’ representatives in person and discuss partnership conditions and project details.

For example, we, at Softensy, are proud to have an office in Amsterdam, the Netherlands. This allows us to establish more trustworthy relationships with our Dutch partners and avoid miscommunication.

Softensy at the Amsterdam Fintech Forum

Final thoughts

To wrap up, Ukraine is an appealing place for Dutch tech firms hoping to move their software development abroad. It boasts a sizable and capable IT workforce, an advantageous business atmosphere, and a great geographical spot in Europe. On top of that, the relatively low prices of living and operating make it an economical alternative for Dutch tech companies with an eye on reducing expenses without compromising quality.

At Softensy, we have 8+ years of experience in partnering with foreign businesses and delivering top-quality software solutions. We have expert knowledge in fintech, e-commerce, real estate, edtech, CRM, BPA, and other software development fields. If you are looking for a reliable technology partner in Ukraine with established business processes, don’t hesitate to contact us. We will be happy to discuss your business idea and turn it into a soaring success story.

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