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14 June 2024
12 min
The last two years have been a time of significant change and upheaval for the whole world, especially for Ukraine and the Ukrainian tech market. But is the Ukrainian tech industry still facing challenges, or is it turning into the world’s tech R&D lab with more than 2,300 active tech companies, perfect for nearshore software development in Ukraine?
I’m Dmytro Ovcharenko, CEO at Alcor, a software R&D center solution provider and IT recruiting agency in Ukraine, other Eastern European countries, and LATAM. At Alcor, we can build an offshore software development team from 0 to 100 skilled software developers for you within a year.
In this article, I will discuss the current state of the Ukrainian tech market, the main trends, and the benefits of nearshore outsourcing in Ukraine for Western product companies. Also, buckle up to learn about a ready-made, simple alternative to nearshore software development outsourcing to Ukraine!
State of the Ukrainian Tech Market in 2024
russia’s full-scale invasion of Ukraine in February 2022 significantly changed the Ukrainian IT market. However, despite pessimistic forecasts, it quickly recovered. In 2022, exports of IT services accounted for almost half of Ukraine’s total exports of services – 45.5%, with a total economic effect of $7.3 billion. In 2023, Ukraine exported $6.7 billion of IT services and $2.1 billion in the first four months of 2024. Overall, exports of IT services account for 13.2% of Ukraine’s total exports, making it one of the most significant export segments of the country.
Ukraine’s tech potential
Out of 346,000 IT specialists, 65,000 are currently residing abroad. Although the number of developers moving to other countries has increased compared to 2022, most still stay and work in Ukraine, making a vital contribution to the Ukrainian economy. Due to relocation to safer regions, the number of IT specialists has grown significantly in the northern and western parts of Ukraine. Today, they are about 66% of the total number across Ukraine.
Ukrainian IT clusters
This dynamic has also significantly affected the activity of Ukrainian IT clusters. Due to the relocation of software developers, the number of specialists in Kyiv, Lviv, Dnipro, and Odesa ІТ Hubs increased. We can also notice a trend toward opening new clusters, which differ in location and functional focus. This includes the Transcarpathian IT Cluster, which hosted about 30,000 IT professionals from other regions.
Another example is the first defense tech cluster, BRAVE1, launched on April 26, 2023, at the initiative of the Government of Ukraine. This is a single platform for cooperation between companies, the state, the military, investors, and everyone who develops defense tech projects in Ukraine.
International companies in the Ukrainian market
Neither does the situation frighten global international companies which had their R&D centers in Ukraine or opted for IT outsourcing to Ukraine before 2022. After February 24, 2022, most of them resumed their work and continued to benefit from high-quality software development at reasonable prices in Ukraine. Thus, after a short pause, Google, PepsiCo, Deloitte, Mastercard, Oracle, Samsung, IBM, and Huawei continue to actively hire Ukrainian software developers and expand their businesses in the country.
Reservation of IT specialists
Since January 2023, local and foreign companies have been able to reserve up to 50% of their employees if they are classified as critical enterprises. To attain this status, companies must meet at least three of seven criteria, including being residents of Diia City, having no overdue unified social tax payments, and paying salaries equal to or above the regional average as per State Statistics Service data from Q4 2021. Currently, 368 IT companies are recognized as critically important to Ukraine’s economy.
Nearshore Software Development to Ukraine: Top 6 Benefits
To make an informed decision about your intentions to nearshore team in Ukraine, check out the benefits of this tech market for product companies:
1) Large & well-versed tech talent pool
Ukraine is the 2nd country in the CEE region after Poland regarding the number of IT developers. According to the Power of Ukrainian IT research, as of 2023, 62% of Ukrainian developers work in middle and senior positions, and 14% have the status of Lead/Head specialists. In turn, proficiency in JavaScript, Java, C#, Python, PHP, Typescript, Swift, Xamarin, and other programming languages allows our clients to easily and quickly find a nearshore software team and highly skilled professionals in Ukraine.
2) Cost-effective nearshoring
Creating your in-house team or onshoring IT professionals in your country can often be expensive due to high labor costs, including high software developer wages, taxes, and office rent. That’s when engaging a nearshore team that can deliver high-quality work at a lower cost becomes an effective solution.
If we look at other countries in the region, such as the Czech Republic, Poland, or Slovakia, a Team Lead developer’s annual salary is $79,000-84,000. In Ukraine, it is, on average, $75,000. This means that the price tag for the service is one of the lowest in the European market, and the quality of execution is one of the best.
| Average Gross Annual Software Developer Salary | |||
| Country | Middle | Senior | Team Lead |
| USA | $109,000 | $129,500 | $144,000 |
| Canada | $111,000 | $130,000 | $148,000 |
| Germany | $71,500 | $84,500 | $97,000 |
| UK | $59,000 | $81,000 | $100,000 |
| Czech Republic | $54,000 | $76,000 | $84,000 |
| Poland | $47,000 | $65,500 | $82,000 |
| Slovakia | $42,000 | $59,000 | $79,000 |
| Ukraine | $41,000 | $63,000 | $75,000 |
What is more, Ukrainian software developers who are registered as independent contractors or private entrepreneurs (FOPs) are required to pay only 5% of personal income tax, making Ukraine a European country with the lowest PIT tax.
3) High-quality STEM education
Ukrainian students receive technical education at the best universities in the country, including the National Technical University of Ukraine “Igor Sikorsky Kyiv Polytechnic Institute,” Taras Shevchenko National University of Kyiv, V. N. Karazin Kharkiv National University, Lviv Polytechnic National University, National Technical University “Kharkiv Polytechnic Institute,” which are among the top universities in the world, according to QS World University Rankings 2025.
However, special educational courses are becoming increasingly popular despite classical university education. Thus, 79 IT schools have trained an incredible number of students over the past year – more than 620,000 specialists. The largest of them today are Laba, Hillel IT School, ITDVN, GoIT, and Mate Academy, which help Ukrainians start their way in IT and become highly qualified employees of the tech industry. Unveil the competitive skill sets and perks of nearshore software development teams in Ukraine by delving into the details below!
4) Barrier-free communication
According to DOU, about 55% of IT professionals know English at the Upper-Intermediate and Advanced levels, which is 8% more than in 2019. Such a high level of English proficiency among Ukrainian developers allows you to build effective communication with your in-house team and a crystal-clear understanding of your tasks and feedback. According to the Importance of English Language Fluency in Digital Business Communication Research, when team members are fluent in different languages, especially English, it improves internal and external communication, promotes innovation and creativity, and facilitates smoother interactions.
5) Corporate cultural compatibility and shared values
The ability to work effectively as part of a team or to perform assignments independently, high responsibility and attention to detail, perseverance, and transparency in task discussion and delivery are essential components of the work ethic of Ukrainian tech specialists. In addition, quick adaptation to the working conditions, adjustment to your time zone, readiness to work even in stressful circumstances, and meeting all deadlines despite power outages can be competitive advantages when considering Ukrainian programmers for nearshore software development in Ukraine.
6) Geographical proximity
Ukraine’s proximity to other European countries and minimal time zone differences allow you and your international team to work more efficiently. Quick responses to messages, easy scheduling of online meetings, and seamless compliance with deadlines that coincide with those of your European team allow you to build real-time work.
On the other hand, if you are an American or Canadian company considering nearshoring software development to Ukraine, the time difference will allow you to create full-time and flexible work on your projects. When Ukrainian developers finish their workday, you or other team members will have the whole day to check and prepare feedback on the completed tasks.
Main Tech Trends in 2024-2025: Ukrainian Edition
When considering nearshoring to Ukraine, you should also take into account the latest trends that can positively affect your business and allow you to get the most out of working with or outsourcing Ukrainian developers:
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DefenseTech, MedTech, and AI
For example, while in 2022, there were only 20 DefenseTech companies in Ukraine, this number increased to more than 200 in just one year. This growth, driven by the conditions of the russian war, puts Ukraine at the forefront of defense technology in Europe.
MedTech has been an extremely active field in recent years in Ukraine. In 2023, the revenue of the Medical Technology market in Ukraine reached $843.10 million, and forecasts suggest that by 2029, the market size will grow to over $1,2 billion. Due to the full-scale war, the need for medical innovations is growing, with prosthetics, burns, and wound treatment becoming the most popular and priority areas.
Not to mention that Ukraine is taking leading positions in trending Artificial Intelligence. Deep Knowledge Analytics recognizes the country as #3 in Europe by the number of AI companies. Moreover, over the past year, the number of Ukrainian AI engineers has grown from 4,200 to over 5,500 in the local tech market. These factors make Ukraine attractive for investors and employers in AI technology development and make it a promising destination for nearshore IT outsourcing.
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Women in tech
In recent years, one of the most positive trends in the Ukrainian IT industry has been the rapid increase in female developers among IT professionals. While in 2011, only 7% of employees in tech companies were women, in 2023, according to IT Research Ukraine, this figure skyrocketed to 33%. So today, every 5th IT specialist in Ukraine is a woman. This gives quite promising forecasts for the future and allows you to nearshore skilled specialists in one of the most gender-equal IT environments in Europe and the world.
The data on the positions held by women in the tech industry also shows encouraging trends. There are 8% of women among developers, 36% in Testing, and 39% in Management. The largest share of women is currently present in HR/Recruiting with a rate of 92%, Customer Success – 73%, and Analytics – 43%.
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Students and switchers in IT professions
Another trend in the Ukrainian IT market is the constant growth in the number of students and specialists in computer technology. As per Digital Tiger: the Power of Ukrainian IT Research, in 2023, 31.5 thousand students graduated with IT majors. Comparatively, in the 2021-2022 academic year, only 16.8 thousand students received a bachelor’s degree in IT specialties. This significant growth of the local tech workforce guarantees foreign employers a large selection of educated talent and greater diversity in skills in the Ukrainian tech market.
Top Industries for Software Development Nearshoring
Are there any particular trends turning foreign tech companies to Ukraine for software and application development? Let’s see:
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Business productivity software
With 234 companies constituting 14% of the total in 2023, this segment is the #1 in Ukraine. One example of such a company with a branch in Ukraine is People.ai, a tech product business that develops a platform for optimizing team management, marketing, and sales with AI and machine learning. With the help of Alcor, they set up their software R&D office in Ukraine in just one month and, in a year, got a team of 25 talented developers, fully backed with all the needed operational functions.
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Fintech
There are about 167 companies in this segment, and about 14% of Ukrainian developers and IT professionals work in the fintech sector. The brightest example of such a company is monobank, the first online bank in the country that doesn’t have physical branches, unlike traditional banks. With an estimated value of more than $1 billion, monobank has also facilitated over $1 billion in donations, including to the Ukrainian Armed Forces, since the beginning of the russian full-scale invasion in February 2022.
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HealthTech & Wellness
As of 2023, this sector accounted for 7.1% of the total structure of IT companies. On October 3, the Ukrainian Startup Fund (UST) announced the launch of a competition for investment support of up to €12.5 million for HealthTech startups, which indicates a strong interest and demand for HealthTech development. Innovative businesses such as Tonic Health, a Silicon Valley-based company specializing in developing a platform for collecting patient data, are making a real impact in the HealthTech & Wellness industry today.
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E-commerce
With 113 companies in this field, the total market volume of e-commerce in Ukraine amounted to ₴151 billion in 2022, and in 2023, it increased by 21%. Among the key players with a team in Ukraine is BigCommerce, a tech product company renowned for its exceptional e-commerce solutions that drive brand success and positive change in the e-commerce industry.
Can You Safely Nearshore Software Development in Ukraine in 2024?
If you’re interested in offshore or nearshore software development to Ukraine, there is a good solution — creating your software R&D center. With Alcor’s help, this software nearshoring model to Ukraine becomes a breeze.
Our team can quickly help your tech company to attract and hire nearshore or offshore programmers in Ukraine or any other CEE and LATAM country and set up your offshore development center. As with our clients Velory and ChromaWay, we offer you a full range of tech staffing, Employer of Record (EOR) services for your own R&D center, and 360° operational support.
As an established IT recruiting agency in Ukraine, we help with the full recruitment life cycle of experienced software developers in Poland, Romania, Bulgaria, Ukraine, Colombia, Argentina, Chile, Mexico, and Uruguay. From sourcing specialists and making offers to working with rejections and counteroffers, we take care of the end-to-end recruitment process for your company. The outcome? 4 out of 5 candidates that we introduce to our clients are invited for an interview, and the developers we hire stay with them for an average of 2.5 years, indicating a high customer retention rate.
With our Employer of Record service, you won’t have to open your legal entity in Ukraine, thus eliminating the need to navigate complex legal requirements or manage payroll and compliance. Alcor will help you save time and resources and ensure seamless expansion into other destinations.
By cooperating with Alcor, you can get tech recruitment, EoR, and full operational support in one place. Our team can provide everything from office negotiations and lease and equipment procurement to visa support and stock options assistance. Want something extra? Just say it, and we’ll go the extra mile for you!
Want to see how it works in practice? For our French client, a hardware wallet technology company, Ledger, we hired 10 QA engineers in 6 months and almost doubled the team in 1 year of collaboration. A fast process, high-quality communication, and tangible results – a “wow” effect and opportunities for further optimization of Ledger’s work.
Our unique offering at Alcor sets us apart from other software R&D center solutions vendors. We operate without any upfront or hidden fees.
Considering IT nearshoring to Ukraine? Let Alcor handle all the operational and administrative R&D processes while you focus on what matters most – your product.
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It includes the salary ranges and availability of the requested developers in Poland, Romania, and other countries in EE (as well as time-to-hire metrics and other KPIs for your case).