Agile Fuel Market Insights: How Did Ukraine Become the Modern Day Silicon Valley?

For many years, Silicon Valley was seen as the global home of tech innovation. As home to giants such as Apple, Google and Facebook, Silicon Valley was the place to be for budding software engineers and developers. It seemed as though the heart of the tech industry would remain there for decades to come. And to some degree it still is. But recent years have seen a shift towards outsourcing and outstaffing to Ukraine with many young startups - even some of those major corporations - outstaffing software development to Eastern Europe. So, how did Ukraine emerge as one of the most popular destinations for software design and engineering?

The truth is that Ukraine has a long history of tech innovation. It was a technology hub under Soviet rule and since the beginning of this century has seen a steady rise in software companies. And the industry has been supported by the Ukraine government. With so much emerging talent in the Ukrainian tech industry, it was inevitable that the innovators and forward-thinkers in Silicon Valley would eventually look to tap into that pool. The Ukrainian IT industry is now ranked in the top 5 globally due to its level of expertise in key markets such as AI, big data and blockchain.

Ukraine boasts 200,000+ software developers in outsourcing and outstaffing

The rapid expansion of tech in the west, led to a shortage of qualified talent to meet the demands of the industry. And when they began to look further afield, technical leaders saw the sheer number of qualified IT professionals ready to work from their base in the Ukraine. Remote working and distributed teams may have been highlighted by the pandemic – but we’ve been doing it for years.

In fact, Ukraine’s IT industry actually grew by 20% during the pandemic and is now worth US$6bn. And there are more than 200,000 Ukrainian developers in the outsourcing and outstaffing industries. A 2018 report by LinkedIn identified a skills shortage in Silicon Valley of 212,838 in the software development industry.

Government backing for the Ukrainian tech industry

The growth of Ukraine’s tech industry is no fluke. The government and higher education sectors were (and remain) committed to making Ukraine a force to be reckoned with across the globe. More than 36,000 graduate with IT-related degrees every year from Ukrainian universities. That’s more than some other nations that may have been more traditionally associated with innovation such as Japan, Sweden and The Netherlands. And the launch of the government-backed IT Creative Scheme  shows this drive is far from over.

In addition to government backing, the growing reputation of the Ukrainian tech sector has seen it attract venture capital from major European investment hubs including the UK and Germany. By 2018, this figure had risen to US$336.9m and it looks set to continue on its upward curve as the world emerges from the pandemic with an enhanced appreciation for the benefits of software developers and remote working.

85% of Ukrainian software developers speak fluent English

Remote working in any industry requires good communication. In the fast-paced world of software engineering and development, that’s even more important. With 85% of Ukrainian software developers speaking fluent English, communication need never be a problem.

The Ukrainian tech industry is growing year on year

In 2018, Ukraine’s tech industry grew by 29.3%. 2019 saw that figure rise to 31.4%. Even during the pandemic, it enjoyed growth of just over 20%. This is an industry on the up. With companies from tech hotspots around the world looking to leverage the best talent irrespective of location, geography has ceased to be a factor in finding it.

And it’s not as if you can pinpoint a particular specialism in the Ukrainian outstaffing markets. The expertise is wide-ranging and covers everything from web and app development, UI and UX design, testing and QA, R&D, consulting and much more. This should come as no surprise when you consider that there are over 1650 tech companies in Ukraine, and many of those employ over 6000 individuals.

IT is the number one destination for Ukrainian graduates

With so many leaving university with IT-related degrees, this will come as no surprise. But there are more factors at play here. The chance to work with or for some of the biggest names on the planet, along with above-average salaries, makes IT the top choice for the top talent in Ukraine. This level of demand increases competition and raises the bar for those wanting access to this lucrative market.

That’s why 85% of IT professionals in Ukraine read professional literature outside of working hours. They have a passion and commitment for it that outshines the attitude in some areas of the world where competition is not so high.

The skills shortage in Silicon Valley runs the risk of complacency setting in. There is no danger of that in the Ukrainian IT outstaffing industry which is far from hitting its peak and is still ultra-competitive.

Once they have a foot in the door, Ukrainian tech professionals doing outstaffed work for western companies gain a further advantage. They are exposed to diverse technologies and niche products which gives them broader knowledge of the industry in less time than many of their counterparts in other areas of the world.

Ukraine is now firmly established as the number one destination for outstaffing in the global IT sector. Government support, global investment and continued growth are set to cement its place there. If you want the top talent working on your software development, it’s time to go east.

About the company

Agile Fuel recruits and supports high-quality dedicated engineering teams based in Ukraine but working on software development for clients across the globe. They are stack-agnostic and focus on finding the right people for the specific needs of each client. By taking care of all recruitment and HR processes, Agile Fuel allows its clients to focus on direct engineering management and preserving their team culture. Find out how outsourcing to Ukraine could take your business to the next level. Get in touch today.

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