Why Nordic Companies Choose Ukraine For Software Development

The Nordic IT market is praised for its open-mindedness, wide innovation adoption, and favorable business development environment. All tech sectors in the region are developing rapidly — so much so that the local tech industry is predicted to grow at a steady 3.6% rate until 2022

That’s why emerging challenges, such as talent shortages or high tech infrastructure implementation costs, might come across as a surprise to local business owners. Similar to most European countries, the entire Nordic region also has to deal with an increase in an aging population and lowered birth rates. 

To empower businesses and startups, companies start to look beyond the border for skilled and reliable tech talent. Out of all the destinations available for outsourcing, a fair share of business owners choose Ukraine. You might be wondering why Nordic countries are partnering with the country so closely. We’ll examine this phenomenon deeper in this article.

Nordic Tech Market Landscape

Although Nordic countries are known for their powerful tech presence, the latest statistics have uncovered some worrisome tendencies. For one, business owners and startup managers are often limited in terms of tech talent, mainly due to the following reasons:

  • Supply doesn’t meet demand. The Nordic region is one of the leaders in research and development activity. In addition to empowering the region’s home-based corporations — Novo Nordisk, Pharma-Nord, and others — Northern European markets supply their tech talent to Spotify and other major tech players. As a result, the number of job openings doesn’t match the amount of available talent — in Sweden, a deficit of 70,000 digital roles is estimated by 2022
  • Tech specialists are looking for opportunities abroad. Most Nordic countries struggle to retain tech talent, attracted by more lucrative offers coming from overseas. Sweden, for instance, had to face the second-highest emigration peak in the country’s history in 2015 — with over 55,000 people leaving the country that year (most migrated to North America). As for Norway, the number of emigrants grew from 23,615 to 34,382 over the course of the last decade. Among the emigrants, there are plenty of tech specialists that are in high demand by top-notch American companies. 
  • More skilled professionals are employed at R&Ds of global companies. Nordic tech talent is in strong demand among powerful international corporations. Since highly skilled developers, data scientists, and other IT professionals work at R&D centers for Spotify, IBM, Microsoft, Google, and other large companies, SME and startup owners simply can’t compete to make an offer that would attract skilled yet affordable talent. Due to talent distribution challenges, business owners with no international backing have started to look for their workforce abroad. 
  • The low number of STEM graduates. Although Nordic countries are known for well-rounded technical education, the number of millennial Ph.D. holders is now as low as it used to be 30 years ago. Although local governments roll out initiatives to increase the number of tech formation institutions and have tried to make STEM education more attractive to high school graduates, seeing these changes through to fruition will take years.

Why Ukraine is a Perfect Outsourcing Destination For Nordic Companies

As local markets become over saturated with job openings, Nordic business owners become more open to outsourcing their projects. Among the destinations business owners consider, Ukraine enters the discussion as a soon-to-be leader.

There are plenty of reasons why the country will lead the way as a reliable partner for Nordic business owners — cultural compatibility, geographical proximity, and many more. For those wondering why SME and startup founders look for tech talent in Ukraine, here are the main benefits:

1. Affordable rates

Ukraine is known for its tech talent with affordable software development rates. According to an annual survey conducted by DOU.ua (the country’s largest online IT community), the median salary of a Ukrainian programmer is as follows:

  • Software engineer — $1,900/mo
  • QA engineer — $1,200/mo
  • Team lead — $3,400/mo

To put things in perspective, an average software developer in Sweden makes over $4,000 per month. This difference has to do with the cost of living in Ukraine. Here, a developer can live comfortably with a $1,000-1,500 monthly salary — which is why software development rates are more affordable here, too. The savings a business manager can get from outsourcing development to a Ukrainian team can be as high as 50%. 

2. Facilitated travel policy — Visa-free

Unlike other Eastern European outsourcing destinations like Belarus or Russia, Ukraine is relatively easy to visit. Since Ukraine is a Visa-free country, meeting with local developers face-to-face is not a challenge for Nordic businesses. Travel is convenient and efficient, as well — it takes about two hours to get from Stockholm to Kyiv. 

Thanks to simplified travel procedures and relatively low ticket costs, it’s easier to collaborate with Ukrainian developers, making the speed of project development generally higher.

3. High level of English proficiency

Since Ukraine is one of the countries that absorb Western practices and values, there have been major developments in language education. It’s now a prerequisite for local developers to have at least intermediate English proficiency (including a good command of domain-specific vocabulary). 

A report released by the British Council states that an average Ukrainian college graduate speaks English on an intermediate level or higher. Such language proficiency allows local tech specialists to express themselves confidently both verbally and in writing, understand project managers, and avoid miscommunication. 

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4. In-depth command of new technologies and programming languages

The Ukrainian IT market is highly versatile. Although leaders among software developers are fairly predictable — JavaScript, Java, C#, PHP, and Python — local developers are eager to learn new technologies to build IoT and AI-based solutions. 

Intelligent innovations have already penetrated the B2B market, as well. Moyo, a popular Ukrainian retailer, uses AI for logistics automation, while PrivatBank leads the way in finance, and other notable developments are seen in healthcare and education. 

Increasing penetration and growth of AI and IoT implementation among local businesses is proof that the country is not short of skilled talent in the field — Nordic companies can get their next-generation projects built from the ground up here. 

5. Wide talent pool

Ukraine is one of the most rapidly developing IT markets. There are over 4,000 active IT companies that employ over 185,000 specialists. By the end of 2020, industry revenue is estimated to surpass $5.4 billion. There are 150 active universities in the country that offer tech programs and degrees. 

Most Ukrainian software developers are middle or senior-level professionals. According to the same statistics, 17% of IT professionals have 6-10 years of experience, and 10% of programmers have careers of 10 years or longer.

6. Nurturing business development environment

For the last 2-3 years, Ukraine has been improving tremendously as a business and startup development hub. The country’s government has reviewed over 1,300 legislations, removing outdated policies and adapting the landscape inside the region to the ever-changing business environment.

In addition, the centers for SME development support have been established all over the country. The government also aims to simplify and digitize tax administration, in order to help business owners manage paperwork effortlessly.

As a matter of fact, Ukraine was considered as one of the most time- and cost-efficient places for founding SMEs by the Doing Business report, with the following scores:

  • Time efficiency — 94/100
  • Cost-efficiency — 99/100
  • Paid minimal capital — 100/100
  • Procedures — 71/100 

Collaborating with a Ukrainian Contractor will not be challenging, as the country is business-friendly and has one of the lowest tax rates in Europe. A business owner will not have to spend a lot of time and money on paperwork, either, which is a big benefit. 

7. Small time zone difference

Other than affordable developer rates and cultural compatibility, Ukraine is easy to work with for Nordic business owners, as both regions operate in roughly the same time zone. Sweden, Denmark, and Norway are all located in the GMT+1 time zone, while Ukraine is only one hour ahead in GMT+2. 

As such, startup founders and project managers will not find it difficult to schedule conference calls with developers during their business days, allowing them to connect in-house teams and outsourcing staff in real-time.

Ukraine vs Denmark: Software Development Market Comparison

Although outsourcing tech services to a third-world country with affordable developer rates like those in Ukraine is a convenient way to reduce the cost of to-market delivery and increase development speed, business owners in Nordic Europe are still wary when it comes to moving part of their operations abroad. 

To see a distinct difference in cost and convenience between building an entire project at home and relying on an international workforce, take a look at the comparison between developers in Ukraine and one of the most promising Nordic tech markets — Denmark.

Number of developers185,000111,000
Hourly software development rate (avg)$25-35*$50-100**
Taxes and legislationsPersonal income tax rate — 18%VAT — 20%Personal income tax rate — 56%VAT — 25%
Developers communityFive major talent hubs — Kyiv, Kharkiv, Lviv, Dnipro, OdessaThe bulk workforce is concentrated in Copenhagen
Time zoneGMT+2GMT+1

* — According to Kellton Tech

** — According to Cleveroad

bvblogic Outstaffing — Find Skilled Ukrainian Developers For Your Project

If you are looking for developers to join your software team and are struggling to find available, skilled, and affordable talent at home, you should turn to international markets. Outsourcing does not necessarily mean having to look for talent in a different continent or dealing with huge time zone differences and collaboration inconveniences. 

Ukraine is one of the most promising software development markets. Here, you’ll find well-educated and affordable tech talent that’s just a short plane ride away. To hire a skilled Ukrainian developer as a part of your team, opt for bvblogic Outstaffing services. We offer outstaffing services to help you find the right software developer for your project, collaboration coordination, and we ensure business owners can bring the best products possible to the market.

Here’s why bvblogic Outstaffing is among the leading outstaffing services providers in Ukraine:

  • Over ten years of professional experience
  • In-depth industry knowledge
  • Connecting you with the right talent in 48 hours 
  • End-to-end project management assistance
  • Selective hiring process — onboarding only top-notch software engineers. 

Build an innovative project in no time with bvblogic Outstaffing — contact us today to connect with professional software development teams from Ukraine!

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