Do business easy! How about Ukraine?

25.11.2016 12:17 IT business in Ukraine
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Ukraine is a hub of software development all over Central and Eastern Europe and 4th biggest exporter of IT-products and services worldwide. Ukraine is one of the best countries in the world in terms of outsourcing. In 2016, out of hundreds of competitors, 10 Ukrainian IT-companies were named among the best service providers all over the world. In comparison to Europe, Ukraine still has a potential for the IT-market growth. The amount of IT-specialists working here is around 100 000 people, and around 16 000 of new specialists appear on the market every year.   

But how should foreign customers and IT-companies treat the indicators of Doing Business ranking, as well as Ukraine’s 80th place in the list of countries on favorable conditions of doing business?  

IT-market in Ukraine: engine of country’s economy

The market of exporting IT-services takes the 3rd place by such criteria as export and contribution to the GDP of the country. Despite the country’s place in the ranking, overall, the IT-market doubles annually. The industry is not affected by corruption which is claimed to be the biggest problem of the country on the whole.   

From 83rd to 80th place: tendency toward improvement

Every year Ukraine’s ranking in Doing Business improves by 3-4 positions up.  Each single point of the rating might become decisive. Increasing just only by one position may bring to the country investment worth about half a billion dollars. 

Changes in the country

According to the World Bank experts, business registration procedure in Ukraine has been simplified; the protection of minority shareholder’s rights has been strengthened; the compulsory implementation of all the clauses of the contract has been regulated by the law.   

On the other hand, it has become more difficult to obtain a building permission or to draw a credit. The conditions of international trade have become worse.   

How does improvement of the ranking next year depend on business?

90% of IT outsourcing business depends on export. This field attracts new IT players and new customers to the country. The development of the IT industry is a strategic task of the industry, which can be solved in cooperation with the state and foreign experts. For example, representative offices of such companies as Luxoft Ukraine are being visited by analysts from ISG, Gartner, Zinnov, Avasant. These research and consulting companies are working with clients from Fortune-500 list. And these customers – foreign customers – while deciding on starting a business in Ukraine, take into account many more factors than just performance rating of Doing Business.
The first thing they pay attention to is general political and economic situation in the country. The second one is the talent of Ukrainian developers. Third one is projects and solutions which have been implemented by Ukrainian representative offices of international companies. And it’s not about “time and materials”, it’s about real solutions. The fourth one is relationship with the government, which is expected to be well worked through in the IT-industry.
As for the position of Ukraine in the overall ranking in Doing Business, the IT- market responded by creating the BPO company SBT Systems Ukraine, which solves all the problems related to doing business. For example, if Google or Apple wants to open R & D for 1000+ people in Ukraine, usually they will have to cover all the way within approximately 5 years and with the help of BPO-partner – within 1 year.

Government plans on the ranking improvement

The Cabinet of Ministers of Ukraine has approved an action plan to improve Ukraine’s position in Doing Business ranking. The stated goal is the top 50 in 2017 and the top 20 in 2018. Export Promotion Office by the Ministry of Economic Development and Trade has already started its activity: the representatives of the IT-industry are participating in international forums to enhance the attractiveness of the business in Ukraine. Strategy for the development of high-tech industries (hi-tech strategy) is being developed at the state level; the Parliament is considering a number of bills, acceptance of which contributes to the improvement of the business climate in the country.

The next step?

To improve the country’s investment attractiveness, Ukrainian authorities promise to carry out a number of necessary reforms next year. Then, according to the forecasts of officials, Ukraine will be able to enter even the list of top 30 countries, where favorable conditions for business function. Time will tell. But we can doubtlessly recommend Ukrainian IT-market to foreign customers as one of the most organized. It can become an engine and an example of the changes which need to be implemented in order to increase the position of Ukraine in the ranking.