IT OUTSOURCING CLUSTER IN UKRAINE
Alicia DerezaOlga Dyachenko
Ukraine And IT
• 4th place after USA, India and Russia• Largest cluster in Europe• More than 2 000 companies• More than 25 000 IT specialists• One of the Highest salaries in Ukraine• Best conditions for work in Ukraine• The only cluster that didn’t suffer
during crisis
Basic facts about UKRAINE
Location Eastern Europe
Borders Russia, Belarus, Poland, Hungary,
Slovakia, Romania
Territory 603628 km2
Population 44854 thousand people
Language Ukrainian, Russian
Capital Kyiv
Independence 24 August 1991
Economic performance of Ukraine
• 56th economy in the world• GDP per capita $ 7600• Growth of GDP 5.2%• Debt 93.5% of GDP• Average salary 2500 hryvnias/month• Unemployment rate 8.5%• Inflation rate 3.7%• Export-oriented (50% of GDP)• Budget revenues $ 53.07 billion
expenditures $59.58 billion
Composition of Ukraine’s economy
• Mineral resources• Fuel and energy complex• Metallurgy complex: export-oriented
ferrous and non-ferrous metallurgy • Machine building complex: export
oriented heavy and agricultural machine building, instrument-making and machine-tool construction
• Chemical complex • Agriculture: farmer lands – 42.4 mill
hectares (70% of the territory)
Business environment of Ukraine
Proximity to both the EU and Russia
Large quantity of consumers
Membership in WTO
Free-trade agreement with EU
Main barriers of business development in Ukraine
Key barriers for business
Profile of the cluster
Government
Consumers – 70% American or European customers
Educational institutions
Legislatures
InstitutionsBusiness
Regional state administration
Local government
Core of the cluster:National and
international IT outsourcing companies
Telecommunications
Professional Associations and
Communities
Telecom, Internet, Rent
Internet Retail Banks Auto industry Etc
Number of companies and IT Specialists in the cluster
IT Outsourcing Companies
IT Specialists
Economic performance of the cluster
The volume of provided IT outsourcing Services from 2003-2011
Snapshot
• IT outsourcing cluster growth rate 2011–20 %• More than 2 000 IT outsourcing companies• 25 000+ specialists involved in the IT
outsourcing cluster• Ukraine has more than 800 universities and
colleges• Majority of Ukrainian IT specialists (est. 70 %)
work for American or European customers• A number of government initiatives introduced
to support and promote the Ukrainian IT cluster
Why IT cluster in Ukraine?
Factor (input) conditions
• Inherited IT achievements• Large pool of highly-skilled specialists,
top-notch technology talent • Strong educational system• Lower costs, including labor cost• Good command of English language• Travelling to Ukraine conditions
Context for strategy and rivalry
VAT relief for IT sectorHigh competitionGood conditions for start up
– Still low governmental support
– Low country development
Related and supportive industries
• Professional Associations and Communities– Ukrainian Hi-Tech Initiative– IT Ukraine– DOU
• Telecom Infrastructure • Cost of Internet• Office Space
Demand conditions
TOP Clients of Ukrainian Software Companies
Recommendations forthe country
• Improve business environment of the country: taxation, permits, inspections, regulation of export, etc.
• Develop education system, first of all - secondary education.
• Workforce development and, in particular, the increase of computer literacy.
• The establishment of industry clusters in the field of information technology.
• Promote the development of innovative research in IT industry.
Recommendations forthe cluster
1. To develop human resources, increase the level of competence in the field of IT for all categories of labor resources in the region:• Conducting foresight studies to identify the
most important and promising areas of the cluster.
• Development of the joint educational projects by companies and universities in accordance with the priorities of the IT cluster.
Recommendations forthe cluster
2. To improve cooperation between the participants of all regions where IT clusters were established :• Create a database of products and services of
the IT cluster, distribution business offers of the cluster’s members among the potential customers
• Build a strong brand for the Ukrainian IT cluster.
• To attract new companies to participate in the working group of the IT cluster.
Recommendations forthe cluster
3. To improve the infrastructure in the cluster:• To create science parks and business
incubators to search for new talents and development of new innovative companies in the field of IT.
• To develop technical infrastructure to provide broadband Internet access throughout the area, the introduction of high-frequency mobile connection to the Internet and digital television.
Thank you
for your attention!
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