New Opportunities For BPO in Ukraine: Why the Country Is Called an Outsourcing Nation

Updated
2021-11-04

The Ukrainian IT market is growing even in spite of the economic difficulties caused by the coronavirus pandemic. Thus, the BRDO report says that in the difficult 2020 year, Ukraine earned a total of $ 5.06 billion in exports of IT services, which is a significant 20% more than in 2019. The growth trend continues since 2013 and during this time exports grew almost fivefold.

 

How IT outsourcing works in Ukraine

 

The structure of exports is still dominated by services, ie. foreign customers primarily seek outsourcing in the field of development and support of IT products. The key factor that ensures such dynamics of demand is the combination of educational background of the specialists and the cost of their work. According to a study by Beetroot, in Ukraine an hour of specialist work is sometimes twice as cheap as in neighboring Poland (in Ukraine - $ 25-40 / hour vs. in Poland $ 40- $ 56 / hour).

 

The same document emphasizes that more than 100 companies from the Fortune 500 list use the services of Ukrainian outsourcers, while the country has more than 100 R&D centers affiliated with the market leaders such as Google, Huawei, Samsung, Siemens. The main customers are concentrated in the USA, Great Britain, Germany, the Netherlands and Sweden. Israel is also on the list of TOP countries. In general, the Ukrainian IT outsourcing market has long been known to specialists from Israel, and some of the unicorns, such as cloud site designer Wix and game developer Playtika, have opened their offices in Ukraine a long time ago.

 

BPO is an area of ​​opportunities

 

However, there is that part of the Ukrainian outsourcing market that we talk about unfairly little. This is a business process outsourcing (BPO). Transferring of the non-core functions to the specialized companies has long been considered an effective way to reduce costs. Indeed, it is not necessary to create from scratch and maintain, for example, your own contact center, if there is a business that specializes in such assistance 24/7. However, among Israeli technology companies it is not so common to find those who have found their partner for this type of service in Ukraine. And this is the case when little-known evidence does not indicate a lack of prospects, but hidden opportunities.

 

On the one hand, Ukrainian BPO companies are not as active as their Asian competitors. But on the other hand - the quality of training and education here is at the same level (and often higher), and if we add to this the lack of time zone difference with Israel, then the country should at least look more closely. In addition, on January 1, 2021, the Free Trade Agreement between Ukraine and Israel entered into force, which greatly simplifies cooperation between the countries, and the development of the IT sector is stipulated separately in the agreement.

 

According to the Deloitte report, as of 2019, there were more than 90 BPO companies in Ukraine, and international aggregators of IT industry news compile lists of leaders in this sector, where among the customers are Apple, Google, Wizz Air, Cargill and other international giants.

 

Among the advantages of the Ukrainian market, customers traditionally note:


● Speed ​​and quality


● Pricing policy


● Integrated approach


● Systematic development of examination

 

As for the last point, it should be clarified here: gradually in Ukraine not only software development is developing, but also teams that are directly involved in the development of innovative products are creating. A clear example of the rapid response and delivery of the necessary innovative products is the development by Quantum for the precision farming AI solution. The client’s goal was to give farmers a solution for automatically detecting ripe fruits. The solution would optimize inputs, protect the farm’s economic viability and increase the productivity of orchards by preventing tree diseases. It would also gather records about the health and productivity of any individual tree at any time, over timect.

 

How Israeli companies to establish cooperation with the Ukrainian BPO business

 

One of the main reasons why Ukraine is not yet talked about in Israel is the small market of supporting companies and agents that guarantee systemic cooperation and quality of services for Israeli customers. There are individual players, but they work point by point. The existing vacuum is being filled by the Israeli-Ukrainian alliance.

 

"We see a demand for BPO outsourcing in Israel, some companies are dissatisfied with their current partners and they are looking for new options, but have heard little about Ukraine. In turn, we have expertise in this market. We work exactly for the customer's tasks and provide a comprehensive approach, - comments Anna Zharova, CEO of the Israeli-Ukrainian alliance. - Work in IT is becoming more and more popular in Ukraine, the market of specialists is constantly saturated. In 2020, the country's higher education institutions received an absolutely record number of applications for IT specialties - 138 thousand. And it is necessary to consider that it is not only Ukrainians, but also students from other countries for which native are English, French, German, Spanish. All this makes it possible to create really high-quality BPO-companies in Ukraine, capable of working globally. "

 

There are also successful examples of the management of BPO companies in Ukraine by businessmen from Israel. One of these companies is Softermii, which is represented in several sectors of IT outsourcing, including BPO. “Our offices operate in four countries and Ukraine is one of them. Here are high-quality specialists and favorable prices for international customers. At the same time, young personnel are constantly arriving, this increases competition in the labor market and work efficiency, - comments Сo-Founder and Biz Dev at Softtermii, Eddy Dave. - Our employees sometimes call Ukraine an outsourcing nation, and it makes sense, this market is really growing here and will continue its development". 


It is worth starting to work with Ukrainian BPO companies right now, when the market is taking off, and the competition between different players is high, which forces them to increase the pace and work on the service. Global companies have already appreciated this opportunity, but for Israeli business there are even more advantages (the already mentioned absence of a time difference is one of the reasons). An additional advantage is the Agreement on a free trade zone, which separately stipulates the development of relations in the IT sector. Together, these factors create favorable conditions for the start of cooperation.

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Michael Furaev

Strategic partner

Head of Quattrgroup

Visionary leader and designer of synergistic teams

Anna Zharova

CEO of IUA

Entrepreneur and International Consultant, specializes in developing, managing and launching impact projects in commercial and social spheres

Co-founder of nonprofit organization "Israeli Friends of Ukraine"

Board Member in “Pnima” - Israeli organization, uniting public and government leaders

Eddy Dave

Chairman of IUA

15 years of experience in capital markets, investments, business development

Owner of Israeli-Ukrainian outsourcing company: 400 employees, 5 years of operations, offices in Kharkov and Kiev

Managing Partner of Camalia Capital Markets, which was successfully sold to Meitav Dash 5 years ago. Meitav Dash is the second biggest investment house in Israel with more than 50b$ at the disposal

Olha Stoliarchuk

Director of IUA

LL.M., Consultant, Project Manager, Attorney-at-Law

10 years of expertise in International and Ukrainian business and corporate law, energy law and antitrust law

Member of the GS Kyiv Hub community, WEF initiative

Co-founder of investment video blogs - VC ChatrOOm

https://www.linkedin.com/in/olha-stoliarchuk/

Daniil Tsiporukha

Co-founder of IUA

Social Media, Digital Marketing and Paid Ad Expert, Entrepreneur

Skilled in PPC, Analytics, Product Marketing, Start-ups, and Product Development

BA degree in Communications and New Media Studies IDC Herzliya, MA in Law ISU Kyiv

Co-Founder at Draw Days Tel-Aviv, IUA and Echo

Eugene Proskulikov

Communication expert

Design of social, corporate, and business relations by developing and implementing long-term communication strategies and ad hoc campaigns, based on data-driven analyst, creative approach, and coherent content policy

17 years of practice in communications as a strategist, analyst, copywriter, and marketing expert. Provided services for about 200 international and Ukrainian brands in various industries

Mykyta Khodakivskyi

Co-founder of IUA

An independent international expert that has been in software development, in particular, in cross-application development projects in global e-payments, eCommerce and FINTECH for nearly 15 years

Founder of Paris-based DevteamRadar.com, he runs consultancy and software development projects to assure successful launches for new startups and SaaS businesses

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Date:

05.02 - 08.02.2019

About

As for the Export Strategy of Ukraine 2017 - 2021, presented by the Ministry of Economy and Trade of Ukraine, the IT and creative industries (services) are one of the seven key directions. Moreover, the Ukrainian Furniture market is a fast-growing segment of the economy which augments 14% annually. That is why Architects & Designers Buyers Tour was a well-time event in terms of Ukrainian Export Strategy implementation and further policy adoption.

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Purpose

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  • Demonstrate the feasibility of the Ukrainian market niche.

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Study tour“Exploring Israeli FoodTech Industry”

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29.10. - 02.11.2019

About

With expertise in biotech, food e-commerce and ingredient innovations, Israel holds its position as one of the biggest food tech communities globally. At the same time, Kormotech is the leading pet food producer in Ukraine. Therefore, we have found an opportunity for promising cooperation through sharing experiences with high-tech and family companies, innovation, and R&D сenters.

Purpose

  • Deeper insight into the Israeli market niche.
  • Discover the hottest technologies, get to know innovative approaches in production, business development and sales strategies on an international scale.
  • Expand and strengthen the network.
  • Sharing experience and learning from real successful cases.

Results/goals reached:

  • 7 B2B meetings with key industry companies in Israel;
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