Ukrainian IT Industry Overview: New Reality

Since the beginning of the COVID pandemic, businesses worldwide have encountered multiple issues. For those organizations that could switch their operations to remote, the situation has been difficult yet stable. However, the companies that had to shut down completely entered into a major crisis. Multiple transformations, as well as revisions of the existing policies, have been made so these businesses could survive. Today, a lot of efforts are put to rehabilitate the global economic state and address the main issues that resulted from the coronavirus spread. Still, according to McKinsey & Company research, only 32% of organizations have developed or incorporated the strategies that allow their staff members to effectively operate while staying at home.

The Ukrainian economy is also going through the tough phase of combating COVID and its consequences. The software development industry is the one that managed to swiftly adapt to the new normal, switch to remote, and return to their pace amidst the first. This gave an impetus for growth and improvement as well as revealed the sector’s flexibility to work in a critical condition. The increasing demand for the services of the local IT companies shows that the industry is on the right track.

IT industry increases its share in the national export

Earlier this year the National Bank of Ukraine updated their external sector statistics, according to which the IT services export surpassed the $5 billion turnover mark despite the overall reduction in other spheres.

This achievement increased the share of the tech sector services in the national export share to 8.3% although the total number nationwide dropped by 4.6% last year. The second half of 2020 and the first quarter of 2021 are considered major for the Ukrainian IT market. With $853 million, the industry’s share grew by 20%. Even with the pandemic and issues it entailed, the positive dynamic has been preserved.

A growing number of vacant positions: demand exceeds the supply

Analyzing the number of open positions in the market, it is understandable that the industry is rather short-handed and current demand exceeds the supply. Engineers share that it has become normal to receive about 5 to 10 vacancy offers from recruitment specialists. According to DOU, there are almost 10 thousand open positions and this number is constantly growing.

Compared to the second quarter of 2020, the number of applications responded has dropped significantly by 3 times. In April last year, a position could receive over 15 applications, whereas this April it’s a bit over 4.

At the same time, professionals in various directions are in demand as well. Especially, QA Automation and Marketing. Hence, this is a great opportunity to apply and get your dream job.

The percentage of most sought-for open positions is the following:

• QA Automation – 13.5%
• JavaScript engineers – 10.4%
• Java engineers – 9.3%

As per experience, 17% of vacancies are for Junior/Trainee positions, 37% for Mid-level specialists, 33% – Seniors, 13% – Leads.

Increase in salaries and variety of bonuses

Since the demand for Ukrainian engineers today is higher than their supply, the rates, hence, the service costs are also growing. This year the salaries for the Ukrainian engineers have grown drastically compared to 2020 and, in some cases by 75% to 100%. The main increase is considered when it comes to hiring specialists for the Senior and Lead jobs.

Talking about technical positions, the average rates for the software development professionals (SE) are

• Junior SE – – $1200-1500
• Middle SE – $3500 and $4000
• Senior SE ~ $5500

The difference between Junior and Middle SEs rates is double, hence, more and more young specialists are training harder to grow professionally and reach the expected payment level.

To hire a DevOps with ~2 years of experience, a company will have to pay up to $3000; around 4 years of experience will cost $4500+. Team/Tech Leads or System Architects are paid about $6000-7000.

QA engineers’ rates also increased and vary, based on skills, experience, and type of testing (Manual or Automation).

Manual QA engineers’ salary is around

• $600+ for Junior QA;
• $1800-2000 for Middle QA;
• $2500-3500 for Senior QA
• $3500+ for QA Lead

Automation QA engineers’ rate ranges are

• Junior QA – $750
• Middle QA – $2000+
• Senior QA – $3500+

The Project Manager’s rates depend on the background, whether it is technical or not. A non-technical PM’s rates are $1500 for Junior PM, $2500 for Mid, and $4000+ for Senior. Whereas for the Project Manager with a technical background, these numbers are growing by around 30% to 50%.

The salary ranges for Business Analysts would be

• $800+ for Junior BA
• $1800-2500+ for Middle BA
• $4000+ for Senior BA

Thus, the overall situation explains why the companies have to raise their costs. To provide high-level service and withstand the market competition, this is a forced measure as well as another step to prevent the loss of valuable specialists and their outflow abroad.

Rating of usability of programming languages, frameworks, and libraries

Having a lot to offer to the clients is one of the key things when it comes to the businesses that want to outsource their software development to Ukraine. Cultural and geographical proximity, level of English, and excellent service are the traits that are valued. Moreover, the pool of technologies and solutions tech companies have on their stack is immense.

When it come to the tech scope, based on multiple research amidst the Ukrainian software development specialists, JavaScript, Java, and C# are leaders in the programming languages ratings. For the first time, JavaScript outruns Java as the main language for 18% of the engineers, and 40% use it as their second one.

When it comes to the use of different frameworks and libraries, their distribution among the industry experts is as follows.

The trend for tech education and most popular institutions

The Ukrainian tech sector used to be concentrated mainly in the TOP 5 cities: Kyiv, Lviv, Kharkiv, Odesa, and Dnipro. However, within the past years, the number of companies opening their offices in other cities grew. Amidst the most popular destinations today are Ivano-Frankivsk, Chernivtsi, Vinnytsya, Cherkasy, Mykolaiv, Mariupol.

Around 16 thousand specialists are graduated from Ukrainian universities, academies, and schools. According to the State Register of Classifiers of the Economic Activity, almost 30 thousand specialists joined the industry during 2018 and 2019. This number comprises both the graduates as well as career switchers.

To fully satisfy the market demand, the software development sector has to be fueled with about 50 thousand specialists annually.

Among the most popular higher education institutions that prepare industry-related professionals are Ukrainian Catholic University, Taras Shevchenko National University of Kyiv, Lviv Polytechnic National University, National University of Kyiv-Mohyla Academy, Ivan Franko National University of Lviv, National Technical University of Ukraine “Ihor Sikorsky Kyiv Polytechnic Institute”, Sumy State University, Kharkiv National University of Radio Electronics, V.N. Karazin Kharkiv National University.

Except for the aforementioned institutions, there are multiple STEM programs provided by private schools and tech companies. This has become a common practice to arrange internships in-house, where IT companies train the professionals they need, hence, it is beneficial for both parties. Young specialists get the teaching they are looking for, and businesses can hire the students right after they finish the courses.

Political impact on the Ukrainian software development industry

Many experts praise the success of the Ukrainian IT market as it has been developing rather independently without both support and interference from the state. Yet, things can’t stay the same with all the positive dynamics in the sector. There have been multiple attempts to introduce changes from the governing authorities to have more control over IT. One of the recent initiatives adopted by the Ukrainian Parliament called Diia City aims at transforming the industry with a variety of regulations. As to the authors of the Diia City, the bill will

• Guarantee free business conduct and no intervention from the state;
• Simplify the process of becoming a resident of the regime;
• Ensure presumption of eligibility;
• Not be mandatory to join;
• Secure the tech companies and startups and their employees;
• Transform the documentation part of the industry by changing the regular agreement to “gig-contracts” considered as an extra step in intellectual property rights protection; etc.

The industry representatives are rather skeptical as to the whole notion of the Diia City as it is viewed as the instrument to control and impose larger taxes. Yet, the Minister of Digital Transformations explains that adoption of the regime will help grow the share of It in the national GDP by 10% and reach a $16.5 billion turnover.

Summary

The events caused by the severe COVID pandemic helped to rearrange businesses, their internal policies, and their vision for the future. To bounce back, companies have to follow the recent trends and adapt to the new conditions the market dictates.

Despite the recent shortage of engineers, the software development industry in Ukraine manages to grow and strengthen its positions as the leading one. The positive dynamics in the current economic crisis allow seeing a full picture of what the future of the IT industry looks like. The demand for Ukrainian engineers is high which proves the level of service international clients receive. Such interest in the seasoned professionals, of course, led to the increase in the service cost.

If your company is looking for a reliable software development service provider, contact the Agiliway team to answer all your question regarding the Ukrainian market to get the best solution for your business.

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