The phenomenal rise of the IT sector in Ukraine is explained by the country's deep tech talent pool. With 191,000 experts working in the industry, Ukraine holds a leading position at the world tech scene. And it's not all about quantity but quality as well — the country has a good reputation in the global market, being on the 20th place among the best destinations for offshore development, based on the Global Services Location Index 2019. According to DOU (the largest media in the Ukrainian tech community), 29% of Ukrainian engineers have 3 to 5 years of work experience, 17% have 6 to 10 years, and 12% have over 10 years. Furthermore, two-thirds of Ukrainian IT specialists are middle or higher, and 19% are senior level experts.
Additionally, the Ukrainian IT labor market is also rapidly growing. Ukrainian IT companies realize the importance of human resources for the software development industry and focus on upgrading the qualifications of IT specialists and nurturing young talents. Some companies set up their own academies, while others partner with universities and colleges to adjust curriculums and employ the best graduates.
Software development companies also join their efforts and unite in IT clusters to promote the engineering culture countrywide. For example, the Lviv IT Cluster has worked with IT companies to create a laboratory for the design and construction of IoT devices at Lviv Polytechnic National University. Today, such IT clusters operate in 17 Ukrainian cities.
Talent capital
The key aspect that makes Ukraine so attractive as an R&D location is the rapid development of advanced technologies in the country. Besides support for rapid growth and scaling teams, a lot of Israeli startups and companies need deep technological expertise. They decide to set up R&D operations in Ukraine to work with experienced engineers and maximize their return on investment since the Ukrainian IT industry has significantly grown and matured over the past decade.
An increasing number of software development companies are choosing their technological specialization, focusing on specific market niches, and amplifying their expertise. Having started as outstaffing providers, these companies have already evolved to the level where their experts create, launch, and support end-to-end products based on research into user needs and the client's vision.
Today, software engineering goes far beyond just coding. Considering the rising demand for proven experts in advanced tech, software development companies nurture expertise, develop industry competencies, and invest in building and diversifying value-added service portfolios. In our company, we take full responsibility for the technical solution and conduct full-scale product development, proving our maturity and readiness to cope with tasks of different complexity.
Currently, there's no strict sectoral regulation of the software development industry in Ukraine, which goes in line with global practice. Moreover, the absence of regulatory pressure positively impacts the country's competitive position in the global IT market. At the same time, companies operate within general Ukrainian legislation, and their business processes align with all relevant regulations, including those related to taxes, customs, and currency.
What matters for IT industry growth is access to professionals as much as the conditions of cooperation with them. Payments to specialists make up 80% of Ukrainian IT companies' expenses, so the industry is highly sensitive to taxation. Registered as private entrepreneurs, specialists work with Ukrainian IT companies on the basis of commercial agreements and pay a 5% tax on gross income. This model creates a favorable environment for the biggest expense line of IT companies. Regulatory field In recent years, the Ukrainian government has become increasingly involved in the development of the IT sector, using it as a part of the state's international PR program.
Established in 2019, the Ministry of Digital Transformation is a brand new, fresh institution responsible for the implementation of a digital strategy and the development of the IT industry in Ukraine. There's also a platform called the IT Ukraine Association established to create an open dialogue between IT industry representatives and public authorities. This organization actively advocates for the interests of the Ukrainian IT sector. Among its most recent significant achievements has been the simplification of procedures for importing equipment prototypes to Ukraine and for registering foreigners as private entrepreneurs.
Such enforced government support shows how determined is Ukraine on its way towards digitalization and further growth of the IT sector, both in the country itself and worldwide.
State support
Today, Ukraine is not only a provider of qualified experts but also a center for creating innovative solutions. In refining their service lines, Ukrainian IT companies create added value for clients and partners, helping them usher in Industry 4.08.