Why Ukraine?

WHY UKRAINE?

Summary

Ukraine is an exotic destination to most of the tourist / IT entrepreneurs from the Western Europe, North America and especially Asia. Typically, our country is associated with the recent Revolution of Dignity, the most beautiful women in the world and corruption. While this assessment is somewhat accurate (especially the part about the girls) over the past 20 years Ukraine has become a major IT powerhouse in terms of both outsourcing and product development.

About 10% of country’s GDP is generated in the field of IT ($5 bln USD) and this number is expected to increase to 15% by 2020. Estimated number of software developers in Ukraine is more then 130,000, and this number is growing annualy at a rate of 12-13%. The biggest share of this number is highly qualified IT personnel working in Outsourcing and Offshore Delivery Centers for largest global international software development companies (around 58% according to information from different sources).

What distinguishes Ukraine from other nearshoring IT destinations is a strong technical/mathematics background of majority of university graduates/IT professionals, comfortable geographic / time-zone location and high concentration of IT personnel in 4 major cities (Kiev, Kharkiv, Lviv and Odessa).

Another important factor, which makes Ukraine attractive is the relatively wide availability of middle / senior specialists with necessary skillset / technology stack knowledge to fill in roles for developing advanced / mature products.

As far as infrastructure goes, Ukraine is somewhat comforting in terms of the IT industry. The internet, fiber optic coverage is very inexpensive and widely available in the four largest cities. The cost of office rentals and overheads are very low, with the numbers quoted lower. The climate is also very mild and pleasant, making it easier to upkeep work / life balance.

IT Professionals Overview / Salary Statistics

In recent years Ukraine has seen an influx of American / European software development companies, both large /small entering the market. The competition for the local talent has increased dramatically, but so has the number of specialist both graduating the universities / requalifying from other technical fields (engineers, mathematicians, statisticians, physicist etc.)

The latest salary statistics can be found below. Please note that all of these number is net sallary received by workers per month in USD. These numbers are provided to give a general idea and of course vary ±15/20%.

  • System Architect – 4500USD/month
  • Director of Engineering – 5000 USD/month
  • Technical Lead – 4500 USD/month
  • Senior PM – 5000USD/month
  • Team Lead – 4000 USD/month
  • Senior SE – 3500 USD/month
  • QA Tech Lead – 2800 USD/month
  • Scrum Master – 2700USD/month
  • Senior QA – 2500USD/month
  • Product Manager – 2200USD/month
  • DevOps – 2200 USD/month
  • Software Engineer – 2000 USD/month
  • Business Analyst – 2000 USD/month

Basic programming languages salaries (Java/C#/.NET/C++) for junior/middle/senior developers are in average 800/2000/3500 USD per month.

Another important aspect to understand is, when you are opening up an office in Ukraine, you want to minimize the necessary time to put a team together, thus you should be offering salaries a little bit above the market, to lure over the developers. Once your operations are running, and you don’t need an entire department of programmers, then you adjust the salaries to the average levels and become more selective with your staff.

Common Employee Benefits / Perks

Although many of IT specialist are hired as contractors (to save on payroll taxes), its generally accepted they receive off the book benefits identical to those of full time employees.

Vacation:

24 calendar days a year. An employee is obliged take at least 14 days in a row, unless otherwise provided by employer. Vacation may be claimed after at least 6 months of employment.

Sick Leave:

Up to 21 days paid by the employer, unless other is specified in the agreement.

Medical insurance:

Reputable IT companies provide their employees with medical insurance coverage from private insurance companies. But this together with exact insurance package can be negotiable.

Compensation of Gym costs:

Typically offered in addition to the Medical insurance.

Professional trainings/workshops, trips to company HQ(abroad), corporate events:

This is one of the most important perks for the middle / senior level personnel. Often times this factor alone outweighs the other benefits a company may offer.

Business Climate

According to information by World Bank Group’s www.doingbusiness.org, Ukraine is ranked as 30th place in the world regarding ‘starting a business’ criteria. Despite the political instability since 2013, it still remains very beneficial for international IT companies to carry out development in Ukraine due to significant number of IT professionals. In terms of IT industry as a whole, the industry is pretty deregulated, and its really easy to hit the ground running from the very beginning. Important aspect to note is the lax employment rules, as most of the IT staff work as contractors, and thus can be fired / hired at will.  We can help our partners in any aspect of starting operations in Ukraine.

Taxes

Majority of developers in Ukraine prefer to work as contractors instead of employees due to high social security / income tax rates.

If brought on board as a full-time employee, the Employer is responsible for 22% social security payment and the employee for the 20.5% income tax rate, which brings up the tax burden up to 42.5% of the salary.

So for example someone with a salary requirements of $2000 net, would be expensed at the rate of $3450 to the company.

Alternatively:

Developers may arrange their own legal entities and work as contractors. Within a simplified taxation system for small and medium businesses, tax rates constitute up to 5% of the revenue generate. This way the developer receives service fee instead of salary.

So for example somone with a salary requirements of $2000 net, would be expensed at the rate of $2105 to the company.

Work-permits / residential-permits for foreigners

The immigration laws in Ukraine are on one hand very intricate, but on the other hand very lenient. As long as you follow a long string of bureaucratic steps, and engage in this process from the very beginning, receiving a renewable one-year residence permit is almost guaranteed. The grounds for obtaining the temporary residence permit is either becoming a majority shareholder of an operating Ukrainian LLC or being hired by one for a highly skilled position. Our company through a legal partner is able to assist you in order to obtain the necessary documents.

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