How Growing Of Business Process Outsourcing Will Affect Ukraine

How Growing of Business Process Outsourcing will Affect Ukraine

Ukrainian outsourcing companies are well-known around the globe. A lot of American and European companies delegate their IT processes to Ukrainian developers and get access to high-quality work at moderate rates.

However, Ukraine has a lot more to offer aside from IT outsourcing services, but the market of business process outsourcing is still incipient. Many IT outsourcing vendors in Ukraine provide BPO but don't call it that way. Hence, there is a lot to talk about and evaluate.

The State of Outsourcing Services in Ukraine Now

Ukraine, an Eastern European country, is rapidly growing its name as an IT service provider for dozens of multinational corporations, mid-size and small businesses from different parts of the world. Big players like Google, Samsung, Reddit and others have also opened R&D centers here.

IT outsourcing plays a big role in the Ukrainian economy: for example, in 2018, it was responsible for 4% of the GDP of the whole country. Ukraine also has around 200 thousand developers, and half of them are involved in outsourcing.

As a result, the market is full of companies ready to provide outsourcing services, which creates a high level of competition between Ukrainian vendors, both for clients and the talents they want to hire. In turn, high competition pushes outsourcing companies to grow, evolve, improve the quality of their work and services. Combined with lower rates, such a situation makes Ukraine the desired destination to look for outsourced or out-staffed developers in this country.

However, as we already mentioned, business process outsourcing (BPO) isn't widespread among Ukrainian companies. But it's only a matter of time: Ukraine has a lot of potentials and is showing steady growth even despite the war happening in the East of the country.

Among the main benefits of Ukraine as an outsourcing destination, it's important to highlight the next points

  • good aviation logistics: the big cities like Kyiv, Odesa, Lviv, Kharkiv, Dnipro are connected with the major airports in the world; and thanks to visa-free regime with European Union approved in 2017, more and more airlines entered the Ukrainian market and simplified international travel;
  • office infrastructure: main cities have a lot of office spaces available, and even more is in construction right now; the rent is also moderate: in Kyiv, you will 1m2 will cost$20-30 per hour, while in other cities, it will be around $14-20.
  • education: Ukraine has around 300 higher educational institutions; career paths as economists, lawyers, software developers, and engineers, are popular among the youth; hence, the country has a big potential of having a qualified labor force;
  • English knowledge: the country has 40th place in the EF English Proficiency Index, marking it like moderate level of proficiency; the youth is quicker to learn the language, as it's a part of school and university curriculum;
  • lower cost: Ukraine has lower average wages than Western European countries or the US; an average wage is around 14k UAH ($520). So, the expenses on compensations and other employee benefits will require less investment;
  • location: Ukraine is situated in a convenient timezone UTC+2 / UTC+3 (summer); it gives a great overlap in working hours with European countries and ensures short flights (up to 3 hours) from any location in Europe.

How Growing of Business Process Outsourcing will Affect Ukraine

The Future Of Bpo In Ukraine

Overall, Ukraine becomes more open and aims for integration with the EU. It pushes the government to accept and approve European policies, compliance, and requirements. The country becomes more adjusted to the global standards, which makes cooperation with local businesses easier. And it shows: a lot of international businesses open their branches here. Examples include retail giants like H&M, Ikea, Zara, tech companies like Google, Apple, or airlines like Ryanair, Wizz Air, Qatar Airways, etc.

The Future of BPO in Ukraine

The Ukrainian IT industry is booming right now: for example, it has grown by 20 percent in 2020 even despite the lockdown and pandemics restrictions. The same may be expected from the BPO industry (there are at least 55 providers on Clutch such as GBKSOFT, who position themselves as business process outsourcing firms) — it has all chances to expand and gain the same weight and value as the IT outsourcing niche.

After the drop of 2014-2015 years, the Ukrainian economy is back on track, so the concern of possible issues and instability isn't relevant. Some world-known companies have already opened shared service or business process outsourcing centers:

  • Nestle (food industry);
  • AB-InBev (food industry);
  • PwC Service Delivery Center (professional services);
  • Kostal (automotive);
  • Gruma EMEA (food industry).

Companies delegate financial services, tax management, and audit, logistic, procurement, sales and marketing, HR, R&D.

All of these aspects show that Ukraine will be only inducing the volumes of BPO export.

As for Ukraine itself, it would mean a few other positive things

  • more international companies will consider Ukraine as their location for business process outsourcing, launching shared service or research and development centers; this means huge investments into the economy and its further growth;
  • BPO sector is the one that can create additional job opportunities and improve the labor market;
  • it may push Ukrainian companies to widen their expertise while fighting competition and increasing the quality of their services, hence, the country may become a birthplace for new ideas, businesses, and startups.

In Conclusion

As you can see, the development of the business process outsourcing industry is beneficial for the main stakeholders: separate Ukrainian businesses, the country itself, and the consumers of BPO services that reach the Ukrainian market.

As for BPO clients, Ukraine can offer low prices, convenient locations, competent specialists in various industries, and good infrastructure. The Europe-oriented politics makes Ukraine easy to conduct business for companies from Western Europe and the United States.

The country itself will also benefit from the rise of BPO, and the fast growth of the IT outsourcing sector is only proof that Ukraine can be a worthy competitor among other popular outsourcing destinations. So, the perspectives seem to be great, and it's time for Ukrainian companies to start providing BPO services in a more structured and clear way.

Thank you for reading!

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