In late August the European Business Association, a leading business association in Ukraine, organized the Seattle Tech Days, the first Ukraine-US tech business forum of its kind. The event was supported by the consulate of Ukraine in Seattle.
A key city on the US tech map, Seattle hosts the headquarters of Boeing, Amazon, Expedia, Microsoft, CostCo, T-Mobile and other American business giants.
The event highlighted the growing importance of the software industry in the global economy and Ukraine’s role in meeting the growing demand for software engineers.
“There are roughly 3.6 million software developers in the US and there are 18 million worldwide. You cannot survive without going worldwide. For me the challenges are not about software or hardware – it is about people. So software is difficult and how do you get teams to work efficiently, at scale, as you grow, working across multiple countries, time zones, and with constantly changing technology. I spent a huge amount of time just trying to figure out how to get great talent on board,” said Michael Hyman, Senior Vice President at AOL.
Arya Barirani, Chief Marketing Officer at GlobalLogic, added that, “in the United States, the demand for software talent will be over 5 million engineers for the next five years and in that five-year period the USA will produce 500,000 engineers, so that’s going to create a significant gap in terms of supply. So that’s why countries like Ukraine can contribute to closing that gap.”
With more than 90,000 IT professionals in 2015, Ukraine has the largest and fastest-growing number of IT professionals in Eastern Europe, putting aside Russia. Its IT engineering work force is expected to double to over 200,000 by 2020, according to a recent industry report by Ukraine Digital News and AVentures Capital.
Calling Ukraine “a technology epicenter of Eastern Europe,” the local Puget Sound Business Journal noted after the forum: “Ukraine can help support Seattle-area companies. Hundreds of Ukrainian universities train a combined 15,000 technology graduates each year. The cost of living and doing business is lower in Eastern Europe than the Seattle area, so local companies could potentially benefit by sending technical work to countries including Ukraine.”
The benefits and risks of offshoring
The risks related to offshore software developments were also discussed frankly at the conference.
Outsourcing engineering work might not be a good strategy for companies whose core business is technology. These need to keep tight control over their technology and avoid any IP rights issue. But “if technology isn’t your business’ core product, you should absolutely outsource,” believes Seattle angel investor Joshua Maher, as reported by Puget Sound Business Journal.
For startups with managers in the USA, hiring developers from Ukraine is “a lot more dynamic,” Maher was quoted as saying. “They have the advantage of having the management team next to investors and the ecosystem, while having engineers raised in the great universities (in Ukraine).”
However, outsourcing may also affect a startup’s ability to attract capital. Investors want the founding team to care about the growth of the company, Maher said. Outsourcing is still an option provided that founders ensure engineers are truly invested in a startup’s success — for example, through stock options.
IP-related risks are undeniable — in Ukraine as anywehere else — but many outsourcing firms are aware of the issue, and working to bolster protections for customers’ intellectual property.
Max Gurvits, an angel investor based in Bulgaria, said that he hasn’t seen engineers from Eastern Europe blatantly steal intellectual property. However, some have created products inspired by a former employer’s intellectual property, Puget Sound Business Journal reported Gurvits as saying.
- These and other related issues are analyzed in details in “IT Ukraine from A to Z,” a study about the country’s software development and IT outsourcing industries released earlier this year by Ukraine Digital News. Click here to download your free copy.
