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Ukraine Shows Strong Growth In Outsourcing

Research group GoalEurope reported a 47% increase in sales of Ukrainian IT services last year.
India isn't the only country benefiting from the boom in offshore outsourcing. Ukraine saw a 47% increase in sales of IT services last year, according to a research group.

Market watchers at GoalEurope said Ukraine's sales of IT services hit $246 million last year, according to a report issued Thursday.

Ironically, GoalEurope said that Ukraine's lack of integration into the European economic system has helped fuel the growth, as the country's currency has been insulated from the rising Euro. IT professionals in the country also have a harder time immigrating to Western Europe.

While Ukraine is still dwarfed by India's multibillion outsourcing industry, the country is gearing up for continued expansion of its IT services capabilities. According to GoalEurope, Ukraine is producing 30,000 IT graduates per year.

Kiev remains the center of outsourcing in Ukraine, with more than half of all software developers located in the city. But secondary cities such as Lviv and Kharkiv are also emerging as popular outsourcing locales, GoalEurope noted.

Still, Ukraine's outsourcing industry will likely need to consolidate around a few, larger vendors if it's to continue to expand significantly. Of the 70 service providers surveyed by GoalEurope, only seven employed more than 300 workers.

In general, Western businesses tend to outsource to service providers that can provide large numbers of workers, as well as specialized industry knowledge.