Outsourcing Software Development Team: Ukraine vs Poland

Do you have a lot of priority tasks and not enough resources to complete them in time? You might have heard about outsourcing. It gives you the possibility to transfer some of your business processes (payroll, call centers, software development, QA, etc.) to another company.

The most popular outsourcing destinations among European countries are in Eastern Europe. Today we are going to compare the IT industries of two neighboring countries – Poland and Ukraine. We aim to provide a better understanding of outsourcing in this region to choose the best vendor to suit your needs.

Popular locations for nearshoring (one of the types of outsourcing together with onshoring and offshoring) in Eastern Europe are Belarus, Bulgaria, Croatia, The Czech Republic, Hungary, Poland, Romania, and Ukraine. Having dedicated software development teams in these countries is convenient and has a range of advantages: high proficiency and expertise of developers, large talent pool, lower salary rates than in western Europe, proximity to financial centers, time difference of 2 hours or less, similar cultural values and possibility to get additional services (QA, UI/UX design, DevOps, management, etc.).

In this article we are going to look into the fast-growing IT markets of Poland and Ukraine in the following categories:

Economy

Poland is one of the leading IT markets in Europe. Its economy is healthy and growing. Poland was ranked 4th in the World’s most attractive emerging market in 2018 by Bloomberg, 33rd in Ease of Doing Business’ 2019 ranking by World Bank, 2nd in FDI (Foreign Direct Investment) inflow destination in Central and Eastern Europe region in 2017 by CIA World Factbook.

The IT market accounts for 3.3% of Polish GDP (Gross Domestic Product) and it is expected to reach 3.5% in 2021. Software development has the largest share in ICT (Information and communications technology) market – 35% of its value.  IT services sales were showing stable growth. In 2018 the country’s IT services market reached $4.62B with a growth rate of 5.9% CAGR (Compound Annual Growth Rate) with expectations to reach EUR 14B in 2022.

In the legal environment Labour contract, with the 59% share, was the most popular type of contract in 2019 according to the Polish IT Community report. Labour contract was followed by Business to business contract – 29%, Order contract – 6.8%, Contact for performance of a specific task – 2.2%. 3.3% of specialists were employed on the basis of at least two types of agreements. 4

 Poland provides benefits for companies operating in Special Economic Zones (SEZ) areas. Among them are Income tax exemptions, Preferential tax allowances for R&D centers, etc. 1

 

Ukraine was ranked 1st in 2017 Offshoring Destination list by Global Sourcing Association, 24th in Global Services Locations by ATKerney, and 7 years in a row has been among Top Outsourcing Destination by Gartner. 1

According to the PwC report, Ukraine is ranked among the top 25 IT services exporters worldwide. Ukraine’s IT industry export volume is growing from year to year. According to State Statistics Service, the export of Ukrainian IT service made up $2.43B in 2019.

Most Ukrainian IT companies hire 90% of IT employees as Independent Contractors / Private Entrepreneurs. This structure facilitates the avoidance of a number of formalities and risks associated with employment relations and reduces the tax burden for all parties. 1  Other entity structures include outsourcing / outstaffing, involvement of an intermediary, and permanent representative office. In 2019 more than 70% of IT specialists worked and paid taxes as Private Entrepreneurs.

Recognition and Ranks

Eastern European developers are not only rich in number, but in quality too. They are listed on the tops of various rankings. According to SkillValues 2019 Report, based on 550+ technical assessments, developers from Poland are ranked 3rd and from Ukraine – 5th among the best developers in the world.

HackerRank rates Polish developers third and Ukrainian ones – eleventh. According to TopCoder country ranking, Poland and Ukraine nabbed spots No. 4 and No. 6 respectively.

From the Clutch research we find out that Polish and Ukrainian developers and outsourcing companies are presented among leaders and often climbing the top spot in the following categories:

These results indicate a high proficiency level of developers, including VR&AR, IoT, and Blockchain technologies, and opportunities to deliver various technical solutions by IT companies in Poland and Ukraine.

What about the position of Polish and Ukrainian IT companies on the world outsourcing market? The International Association of Outsourcing Professionals (IAOP) releases a ranking of global outsourcing companies across all industries. In 2020 Global Outsourcing 100 list of outsourcing services providers 13 Polish companies and companies with offices in Poland, and 13 Ukrainian companies and 8 companies with offices in Ukraine are presented.

The Association annually selects the best companies according to four criteria: customer references, certification and awards received by the company, programmes for innovation, and corporate social responsibility projects. This year, the 2020 Global Outsourcing 100 includes not only outsourcing service providers but also advisors (Deloitte, KPMG).

What about education and a talent pool?

Ukraine, together with Poland has the largest engineering talent pools in Central and Eastern Europe according to StackOverflow.

About 80,000 Polish students major in IT and IT-related fields, 15,000 of them graduate annually. More than 90% of ICT students speak English. Pre-college students from the whole world compete in International Math Olympiad every year. In 2019, Poland was ranked 10th, 9th in 2018, 22nd in 2017.

The talent pool in Poland comprises for more than 280,000 experienced developers. The biggest tech hubs are Warsaw, Krakow, Wroclaw, Poznan, and Gdansk.

More than 500 companies (280+ among them presented on the Clutch) provide software outsourcing services.

Annually Ukraine has 16,000 graduates with strong technical education. It was provided by 150 universities in 2017. Ukraine was ranked 11th in International Math Olympiad in 2019, 4th in 2018, 14th in 2017. Ukraine’s extracurricular IT education becomes popular because of the demand for junior professionals. As a result, the number of IT schools in 2018 was growing with 43K+ graduates per year. 1

The biggest IT cities are Kyiv, Kharkiv, Lviv, Odesa, and Dnipro. There are 14 IT clusters in Ukraine, with 20 members averagely. The biggest IT cluster is in Lviv.1

More than 1,600 IT companies offer their services, including 320+ outsourcing IT companies,  employing 183,000 of skillful developers with expertise in various technologies.

Revenues of Companies

Software development companies with offices in Poland are presented across all main industries. The biggest share in revenue structure of Polish IT companies make up financial services (59%), retail & eCommerce (47%), healthcare & life sciences (32%), telecom (30%), and insurance (22%).

The majority of revenues of these companies come from providing web application development (90%), software testing services (66%), architecture & technical design (65%), mobile application development (59%), user experience and design (30), and big data & analytics (24%).

Revenue by industry vertical comparsion

Meanwhile, Ukrainian IT companies report1 that majority of revenues are from software / high tech (73%), financial services / fintech (31%), healthcare & life sciences (23%). The largest amount of revenues comes from such services as web application development (78%), mobile application development (64%), UX & design (43%), architecture & technical design (23%).

Revenue by activity areas comparsion

As we can see from the diagrams, both countries specialize in Financial Services and Healthcare and Life sciences. The largest part of the companies’ revenue comes from the web application development.

Stack and Rates

In 2019, JavaScript, Java, and SQL were top 3 programming languages used daily by Polish developers, with the shares of 43%, 33% and 29% respectively. 4

 

According to Google trends, the most popular programming languages in Poland in 2019 were Java, SQL, and JavaScript. A lot of companies use Python, PHP, C++, Scala, Ruby, TypeScript,  and Kotlin. Polish IT specialists are known for their high QA and usability standards and offer strong MS stack expertise.

When Polish developers were asked about their favorite tools/ technologies used at work, answers were the following:

In Ukraine, JavaScript has become the most popular programming language in 2020. JavaScript is used by 18.4% of respondents on their projects. It is followed by Java (15.4%), C# (13.7%), Python (13.2%), and PHP (10.8%). The biggest growth is seen among JavaScript, Python, TypeScript, and Kotlin.

The number of Unity3D game developers and C++ engineers in Ukraine is the biggest in the world. Ukrainian IT professionals are known for a sincere thrive on innovation –  Kotlin and Go (recently released programming languages) have already entered the list of the most used programming languages.

When asked about which language they will use for a new commercial project, Ukrainian developers said:

As we can see, developers of both countries are on the same wavelength with the world trends – Java, JavaScript, and Python are, as well, among the world’s top programming languages. Thus, Polish and Ukrainian IT specialists are up to date with the best and latest practices developing cutting-edge technologies.

Knowing a technical stack used in the countries we can have a look at hourly, monthly, and annual rates. Effective management of a salary budget for an outsourced software development team, in comparison with an in-house team, is one of the instruments to reduce project costs.

Data may vary depending on sources and research methodologies. The average hourly rates are $40-$56 in Poland and in $26-$43 in Ukraine, which is less than in Western Europe.

As well as hourly rates, monthly rates in Poland are higher than in Ukraine. Average month salaries of Polish IT specialists in 2018 were:

  • Junior – $1,447
  • Middle –$2,533
  • Senior –$3,859.

 

In December 2019, the average salary rates of Ukrainian Java developers were the following:

  • Junior – $768
  • Middle – $2,200
  • Senior – $3,800.

 

The annual rates for in-house Java developers in Poland and Ukraine are significantly lower than in the US and UK 6,7,8 as of June 2019:

  • United States: Junior – $39,000, Middle –$102,699, Senior –$202,000.
  • United Kingdom: Junior – $19,673, Middle –$69,454, Senior –$149,510.
  • Poland: Junior – $8,000, Middle –$84,000, Senior –$152,000.
  • Ukraine: $15,000, Middle –$32,000, Senior –$49,000.
  • Romania: $12,000, Middle –$18,000, Senior –$50,000.

 

IT markets of both countries provide specialists with expertise in a wide range of technologies, including the latest ones. Without a doubt, being a part of your project these developers will increase its quality and reduce its cost.

Stack and Rates

People are the biggest value for any company. We think it is reasonable to look at the background of potential employees. In the review we use the data from the Polish IT Community Report 2020 (4,754 IT professionals and 800 people preparing to work in the IT field)  and from DOU.ua with 9,387 respondents (2020).

Age & Sex

The majority of Polish and Ukrainian IT specialists age between 21-30. Poland has a bigger share of 40+ years developers, while Ukraine has more developers under 20.

Both countries have more male than female developers – 90% in Poland and 76% in Ukraine.

Experience in IT

Polish IT specialists are more experienced – more people have been in IT for 6-10 and longer than 10 years. In both countries, the majority of specialists have worked in this industry for 3-5 years.

Title

We can see from the diagram, that Middle developers outcome in number in both countries. There are more Seniors than Juniors (34% vs 23%) in Poland and in Ukraine (32% vs 29). In Poland, more than 70% of IT specialists have higher education, and in Ukraine – 84%.

Perfect employer

Businesses are looking for perfect employees. And what do developers dream about? Answering the question ‘What motivates you to stay at your current job?’ Polish IT specialists said:

  • Good atmosphere – 53%
  • It pays well – 42%
  • Flexible working hours – 40%
  • Technical growth opportunities – 28%
  • Freedom of action – 21%
  • Friends at work – 19%
  • Possibility to work remotely – 17%
  • New technologies – 10%.

 

The most valuable point at work for Polish IT industry workers is ‘professional development’ (38%). It is followed by ‘money’ (25%), ‘people’ (21%), and ‘a quiet job’ (16%).

When choosing a new job, Ukrainian specialists pay attention to:

  • Salary and bonuses – 78%
  • Interesting tasks – 63%
  • Professional growth opportunities – 61%
  • Comfortable working conditions and office settlement/facilities – 28%
  • Flexible working hours – 23%
  • Possibility to work remotely – 14%
  • Office location – 9%
  • Company image – 5%.

 

78% of them choose this industry because they like technologies, 63% – high salaries, 54% – professional growth possibilities, 42% – remote work or flexible hours, and 29% – possibility to relocate.

Together with SharpMinds you can provide these opportunities to your nearshoring software development team, making them feel inspired, motivated, and appreciative.

These were several criteria and features of software development markets in Poland and Ukraine. The IT markets in both countries provide expertise in various technologies. If you want a high-quality project for a reasonable price – try Ukraine. Set your requirements, choose an outsourcing vendor, and enjoy benefits from your dedicated development team.

Contact us for more detailed information.

Sources:

1. Software Development in Ukraine, Poland, Belarus and Romania in 2019. (The report is based on the analysis of software development companies with 50+ employees)
2. 2020 HackerRank Developer Skill Report
3. DOU.ua
4. BULLDOGJOB.com
5. Clutch.co
6. Indeed.com,
7. Glassdoor.com
8. Payscale.com
9. Upwork.com
10. AIN.ua