Financial Times: Ukraine's IT Services Boom

KYIV, Ukraine, August 23, 2012 /PRNewswire/ --

Ukraine's IT outsourcing sector has boomed over the last 10 years, reports the reputable British news source Financial Times  in its blog post "Tapping Ukraine's IT Potential". According to the post, the Eastern European country earned over USD 1 billion on its IT services export in 2011 alone.

http://blogs.ft.com/beyond-brics/2012/08/22/tapping-ukraines-it-outsourcing-potential/#axzz24LybZpeU

The latest export figure marked the nearly tenfold increase in the last ten years. Ukraine demonstrated a 30-40 percent annual growth since 2008, reads FT.

Comparably, in Romania the IT outsourcing exports are estimated at USD 586 million, in Poland - USD 451 million,    according to Central and Eastern European Outsourcing Association. IT outsourcing market volume in the neighboring Hungary roughly equal USD 475 million.    

Ukrainian IT market still greatly benefits from strong science schools founded in the time of the Soviet Union, reports the Financial Times. The scientific institutes that used to produce rocket scientists, under current market conditions, have switched to producing programmers, commented the author of the post. Remarkably, an estimated 16,000 IT specialists graduate each year in the country of some 46 million.

The country boasts the largest pool of engineering resources in Central and Eastern Europe with around 25 percent of the regional IT offshoring market, stated a CEO of a US-based outsourcing company that employs 1,900 specialists in Ukraine. Ukrainian software market demonstrates the highest ratio of research and development (R&D) to IT services.

Moreover, starting January 1, 2013, and up until January 1, 2023, enterprises producing software are exempt from paying value added tax on software supply operations in Ukraine. VAT relief will apply to the supply of operating systems, regular computer programs, system administration, encryption software, websites, online services, testing and consulting in the area of IT, etc. The law also reduced the IT companies' employees' income tax rate to a symbolic five percent.

Notably, almost 1,000 outsourcing companies are registered in Ukraine. They provide services to numerous international companies including Microsoft, HP, IBM, Cisco, EBay, etc. Apart from that, many IT industry leaders employ Ukrainian specialists; some 700 Ukrainians work in the Seattle office of the world's top IT corporation Microsoft.