Freelancer vs IT service provider: What to choose for software development?
When starting a new project, one of the crucial questions is whether to hire an individual contractor, an IT service provider or build an in-house dev team.
The Ukrainian tech ecosystem demonstrates accelerating growth year after year. By the number of software development professionals, Ukraine ranked 9th among European countries with 192,100 specialists, according to the State of European Tech 2019. The IT market is represented by software product companies and IT service providers of all sizes. According to Stackoverflow survey, 17.5% of Ukrainian software developers are individual contractors, freelancers or self-employed.
Ukraine is one of the most popular destinations for IT outsourcing. Therefore, it is not surprising that TOP5 of the largest software development companies in the country based on the number of people employed is represented by IT service providers. The reason why so many businesses worldwide benefit from IT outsourcing to Ukraine is a talent pool of tech professionals. Let us take a closer look at the Ukrainian IT talent pool.
Ukrainian IT Market Dynamics
The Ukrainian software development market has enjoyed impressive growth in recent years and became one of the key sectors contributing to the country economy. The IT service market’s export volume has increased by 157% in five years. According to the Ukraine Invest forecast, the IT industry’s market size will reach $8,4 bn worth of export.
The IT talent pool growth chart below is based on the State of European Tech reports from 2017, 2018 and 2019. Since 2016, the professional developer talent in Ukraine has grown by more than 30%. According to information from the Ministry for Development of Economy, Trade and Agriculture of Ukraine, more than 200,000 IT specialists are currently working in the country. The Ukraine Invest predicts that this number will reach 250,000 tech specialists by 2025 with an average of 4-5% forecasting growth.
Ukraine has gained an influential position in several international tech-related rankings. According to the Good Country Index, Ukraine is now number 1 in global contribution in Science and Technology. It is also ranked as the number 1 Eastern European country for IT outsourcing and R&D activities. Ukraine ranks 20th in the A.T. Kearney Global Services Location Index of the most attractive IT outsourcing destinations. Outsourcing Journal named Ukraine the number 1 digital, technology and IT outsourcing destination in Central and Eastern Europe, while Gartner named it in the top 20 offshoring destinations in the EMEA region.
IT outsourcing providers constitute the largest share (70%) of the Ukrainian IT market. North America and Western Europe remain the most important target regions of the Ukrainian IT service companies. According to the survey conducted by uSupport and Ukraine Digital News, 58% of the IT providers work with Scandinavian clients, 83% have customers in Western Europe and 78% work with North American businesses.
Many Ukrainian IT service providers pursue a diversification strategy that allows rapid growth. However, some companies prefer focusing on some particular industry. Data management, telecommunications, cloud computing, gaming and E-commerce are the most popular sectors.
Ukrainian’s role as the global outsourcing destination has grown significantly during the last years. According to A. T. Kearney Global Services Location Index, Ukraine performs well in the top 20 due to the country’s financial attractiveness, workforce skills and availability and business climate. The index tracks the offshore software development landscape in 50 countries.
Tech Education
As for education, software development professionals in Ukraine can be divided into two main groups: those who graduated from the university with degrees in technical studies and specialists who completed specialised IT courses.
According to the CEE Software Development report 2018, 83% of Ukrainian IT specialists have obtained a higher education degree, with 56% focused on programming or tech sciences.
Due to the development of the IT sector and the job prospects, Science, Technology, Engineering, and Mathematics (STEM) Education is becoming increasingly popular in Ukraine. In general, Ukraine has always had a robust system of STEM education. Moreover, local IT companies in cooperation with IT clusters have put in much effort to update engineering students’ university programmes. They teamed up to design Master’s programmes to train students in various areas, such as data science, machine learning, artificial intelligence and IoT among others.
Over 16,000 students with IT specialities degree graduate per year in Ukraine. Igor Sikorsky Kyiv Polytechnic Institute, Lviv Polytechnic National University, Kharkiv National University of Radioelectronics, National Aerospace University ‘Kharkiv Aviation Institute’, National Technical University ‘Kharkiv Polytechnic Institute’ are among the TOP 5 universities with the largest share of IT graduates per year.
Having an average of 16.2K Bachelors-graduates of IT specialities, this number remains stable over the past five years. Fifty-four per cent of students decide to continue their studies on the Master’s degree, but this share decreases every year. There is an existing tendency among students to find a workplace after their Bachelor’s graduation, obtaining practical experience on real-time projects.
Many universities and specialist training institutes have rapidly expanded their software development courses in recent years, but they still struggle to keep pace with qualified professionals’ demand.
Current projections indicate that Ukrainian universities will be producing roughly 20,000 IT specialist graduates annually by 2024. However, this figure is significantly lower than the anticipated industry requirement of 30K to 50K new specialists per year.
English Proficiency
The English level of software developers is essential for successful cooperation. Ukraine is a country of moderate English proficiency. According to the English Proficiency Index, about 85% of software development professionals have at least an intermediate English proficiency. In general, Ukrainian developers have a good grasp of English as it is a mandatory requirement for the IT industry.
Moreover, there is an apparent correlation between seniority level and English proficiency. According to the data provided by the Ukrainian digital community of programmers DOU, more than 60% of senior developers rank their level of competence as upper-intermediate and advanced English speakers compared to 38% of mid-level and 31% of junior specialists.
Tech Hubs in Ukraine
The biggest Ukrainian IT hubs are Kyiv, Kharkiv, Lviv, Dnipro and Odesa. According to the latest research reports conducted by Ukrainian IT clusters, the number of IT specialists in these five cities amounts to more than 158,000 professionals. That is 82% of the total number of IT specialists in Ukraine. Let us look at each IT hub closer.
Kyiv
As the country’s capital, Kyiv is a centre of cultural, scientific and administrative life. Many global companies outsource software development to Kyiv. According to the State of European Tech 2019, the largest share of professional developer talent (41%) is concentrated in Kyiv. It is more than 78,000 IT professionals.
Kharkiv
The city has a long-established engineering tradition and a well-developed electronics industry. The research of the Kharkiv IT cluster report states that in 2019 there were more than 31,000 IT professionals working in 485 active IT companies.
Lviv
The IT industry is the most developed sphere in Lviv, along with tourism and mechanical engineering. According to the Lviv IT Cluster report, there were 25,000 IT specialists working in 461 IT companies in 2019.
Dnipro
There are more than 16,000 specialists in Dnipro and around 378 IT companies. The number of IT specialists is expected to double by 2025 due to the high output of higher education institutions, currently educating 13,900 students in IT specialisations.
Odesa
Odesa closes the TOP5 Ukrainian IT hubs with approximately 40 IT companies in the region and 8,000 IT professionals.
Composition of the Talent Pool
According to DOU 2020 survey conducted among 12,419 IT specialists, the average age of software development professionals in Ukraine is 28 years. It might be explained by the recent influx of tech school graduates on the market due to the increasing popularity of IT professions and job opportunities.
The industry is dominated by male (75%) IT specialists, while only 25% of IT professionals are female. An average IT specialist has over three years of experience (61% of the respondents in total). 31% of Ukrainian IT specialists have more than six years of professional experience.
As for qualification level, it is crucial to consider that each IT company applies its own unique approach to determine an employee’s seniority level. Some companies on the Ukrainian market solely rely on the years of experience or use combinations of criteria.
At SSA Group, we use all criteria listed below:
- years of experience
- English level proficiency
- ability to work independently
- correspondence with technical competency matrices
- education and training
- IT specialist certifications
When it comes to the structure of the IT talent pool in Ukraine, it has the following skills distribution: 58% of software engineers, 17% of designers, 12% of project managers, 11% of QA/testing specialists and 2% of DevOps engineers.
Programming Languages
Ukrainian software developers specialise in a wide range of programming languages, technologies and tools. According to HackerRank, Ukraine ranks 11th with an overall score of 88.7 points out of 100 among the top 50 countries with the world’s best software developers. Also, it is 6th on the TopCoder rating of the best programmers.
The annual survey of Ukrainian software development professionals by DOU shows that JavaScript is the most popular programming language in Ukraine, followed by Java, C#, Python and PHP.
When asked which programming language Ukrainian software developers are planning to learn, respondents are primarily interested in mastering Python, JavaScript, Go, Java, Typescript, Kotlin and C#.
There’s a strong stereotype among Ukrainians that the primary motivation to work in the tech industry is high salaries. However, the research puts an end to this point of view — while 63% of Ukrainian developers indicate the financial perspective as one of the reasons they chose their profession, 78% state that interest in technologies was the prevailing reason to build a career in tech.
Benefits of Outsourcing IT Projects to Ukraine
- Engineering mindset and robust skillset
Today, the popularity of tech disciplines is growing in Ukraine. Ukrainian software development professionals are valued for a solid technical background and engineering mindset. Alongside the most popular coding language skills such as Java, C#, Python and the like, there are still enough professionals with knowledge of rare and emerging technologies, including C++, Scala, C, Dart, Delphi and so on. As for soft skills, Ukrainian IT specialists are quickly adopting and improving when it comes to communication, strategic thinking and project management. - Growing IT talent pool
The number of IT professionals in Ukraine keeps growing relentlessly. The Cabinet of Ministers of Ukraine has recently established the IT Creative Fund to train new tech experts and re-skill people from adjacent disciplines to increase this number. This Fund will finance three directions: 1) the launch of IT courses in line with real-world business requirements, 2) scholarships for STEM students and 3) grants for young scientists and researchers. The IT Creative Fund is expected to significantly increase the number of IT graduates and therefore improve the overall software development environment in the country. - Government support for IT market
In the last years, the Ukrainian government has implemented economic and tax reforms, encouraging businesses worldwide to outsource IT needs to Ukraine or open their own R&D centres. A positive impact on the economy is already felt. In 2020, the Ukrainian IT sector accounted for 8.3% of total exports.
Over 450 outdated laws were phased out by the Strategic Action Plan 2020 that facilitated business operations. As a result, Ukraine’s position on the World Bank’s Ease of Doing Business rankings table was improved. - Smooth communication and high English proficiency
The higher the developer’s seniority, the better his/her English proficiency. That is why companies with higher seniority level is a guarantee of successful product delivery. Besides, every project requires an experienced project manager with fluent English who can build a communication strategy and ensure the project runs without misunderstandings on the developer’s part. - Reasonable price/quality ratio
The geographical location and moderate rates are the primary reasons for foreign businesses and investors outsourcing their software projects to Ukraine. But there is always a choice between hiring an individual contractor or dealing with an IT service provider. Working directly with a freelancer can be more cost-effective at first glance. However, managing individual contractors requires more effort and does not support scalability. Having the collective experience and deep expertise, outsourcing companies can guarantee the overall project success and enable the team expansion option to support your rapid business growth.
Conclusion
The Ukrainian IT industry has been growing rapidly over a recent decade in the global tech arena. Due to its scientific legacy and solid tech education, Ukraine has gained global recognition as a premier destination for IT outsourcing. An extensive IT talent pool and deep technical expertise are the primary factors why most foreign businesses choose Ukraine for outsourcing.
We may be reasonably optimistic about the future of the Ukrainian tech talent market. For the past 6 years, it has been actively evolving and is expected to reach 250,000 tech specialists by 2025, according to the forecasts.
Thank you for getting to the end of this article. If you have any questions, please, feel free to write to us. We appreciate your feedback and will answer you in the clearest and most precise way. Consider the experienced IT consultants from SSA Group to support your software development plans and business growth.
- Author:
- SSA Group Team
