Software outsourcing to Ukraine: A General Overview

Outsourcing is the outsourcing of a phase of the production process or service in which the company is not specialized or does not have the resources to carry out internally. An external company has its own resources and infrastructure for carrying out the required processes and tasks relating to information technology. More and more companies are outsourcing certain aspects of their business by hiring the services of specialized institutions to achieve cost savings and optimization, improved processes or simply to focus on their business strategies. From 2016 to 2018, Deloitte recorded an increase in the number of companies using the services of outsourced providers from 20 % to 49 %. According to Statista, the global market size of outsourced services is USD 92.5bn.

Software development is very complicated and involves many processes. Not everyone is in a position to employ their own development team, and in this case it makes sense to commission a third party. This option is used to place the operational technology in the hands of specialists and outsourced experts.

The implementation of an outsourcing model brings with it a number of advantages, but also certain disadvantages, the knowledge of which is of particular interest.

What are the advantages of outsourcing?

Cost reduction

This is often seen as the main reason why most companies outsource IT services. When an external company takes over the IT department or services, costs are mainly reduced in two areas:

• Reduction of labor costs. The IT agency has qualified specialists for IT management, which saves the company personnel costs in this aspect (salary, offers, refresher courses and other ancillary costs).
• Cost reduction in infrastructures. Many expenses associated with investments and maintenance in IT infrastructures are reduced by working with an external company.

However, this reason should not be perceived as decisive. Otherwise there is a risk that the quality will suffer because of the cheapness.

Technological know-how

The IT service provider has access to the latest technologies, so the company benefits from the fact that it could hardly do so internally. With IT outsourcing, there is a reduction in risks for IT management, as these are taken over and managed by the service provider.

Business processes

Software outsourcing allows the company to focus on the business and its strategies in order to generate added value and keep it at a very competitive level. Outsourcing enables the company to be more dynamic and flexible and to set new business goals. This means that companies can devote more time to the activities and services that are part of their basic structure.

Flexibility

One of the great advantages of outsourcing has to do with flexibility and adaptability. Market changes are currently happening at breakneck speed and by outsourcing certain services or processes, companies are better prepared for them.

What are the disadvantages of outsourcing?

Just as IT outsourcing has stated advantages and benefits, it is also practical to unfold the disadvantages of outsourcing.

Confidential information

Firstly, there is a greater vulnerability to the loss of confidential company information compared to internal procurement. External agencies have access to sensitive data. It is important to remember that when assigning or accessing personal data, it is essential to take into account the legal changes to data protection, so it is necessary to choose the service provider correctly and add confidentiality agreements to the service contracts to ensure data security (prevention of theft, disclosure of information and other risk situations involving company information).

Communication

Currently, communication between all parts of the company is very important. With the outsourced team, such communication can be less fluid, which can lead to a number of misunderstandings. This is why it is so important to hire a high-quality team. The problem of communication with foreign companies should also not be overlooked. To avoid misunderstandings at the language level, look for an experienced agency with specialized staff that can provide outsourcing consulting and other services at a high level.

Hidden costs

Expenses are often generated that were not previously discussed, which cause additional costs. If the IT outsourcing company is located in another country, additional costs may be incurred for support calls.

Why is Ukraine an excellent option for IT outsourcing?

In today's market, the IT department has become the core of every company due to the constant development and innovation of communication technologies. An efficient IT service can be a great competitive advantage, so outsourcing the service to a specialized company can be a big step that brings great benefits.

After looking at the pros and cons of IT outsourcing, we discover one of the most popular IT outsourcing destinations. Ukraine is among the top ten countries for software outsourcing according to various ratings. Ukrainian programmers have been rated as one of the best in the world in terms of price-performance ratio. The following factors make Ukraine an attractive partner for companies worldwide:

• Talented developers
• High Quality standard
• Mature IT market
• Favorable prices
• Favorable time zones
• Geographical location

The IT sector is one of the fastest growing segments of the Ukrainian economy. In Ukraine, there are over 1600 IT agencies offering software development services and more than 20 higher education institutions that train thousands of IT beginners every year. So you can be sure that you will find a team that meets your expectations in terms of expertise, price and desired tech stack. World-famous startups such as Grammarly, Jooble, GitLab, Depositphotos were developed by Ukrainian programmers.

Why is it worth choosing our agency?

KennerSoft is an experienced German agency with two development offices in Ukraine and Germany and sales offices in the USA and Taiwan, specializing in web development and integration. Our clients come from the countries where quality comes first: Germany, Austria and Switzerland. We create online stores, web services, B2B portals and marketplaces. We use the following technologies for individual software development: Shopware, OXID, Magento, EspoCRM, KennerPIM and others. In addition, we offer high-quality consulting and further support for your project. Our professional team takes care of the high-quality implementation of your projects with the highest standards of performance, design and user-friendliness. We create an outstanding online store for you and with you and also take care of digital marketing. Our references tell you more about us.