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Outsourcing to Ukraine: What to Expect?

Risky or profitable - which of the two characteristics out-weights in outsourcing to Ukraine? Ukrainian Outsourcing Forum (UOF) 2006 has uncovered the most burning questions in order to find the right answers.

As Eastern Europe gathers pace as IT outsourcing direction, Ukraine is becoming an important industry's player. The country's outsourcing turnover grows by 200-300% annually. Progressively more foreign customers choose to outsource their IT projects to Ukrainian companies. Still both customers and outsourcing service providers realize that a number of problems are to be solved. At UOF - one of the most important outsourcing events in Eastern Europe - the most burning problems were uncovered and discussed. Ukrainian outsourcing company TechnoPark Corp. made a presentation on the most urgent problems and suggested the solutions.

Decentralization of Outsourcing Industry
UOF 2006 showed that Ukraine tends to decentralization of outsourcing industry. One of the Forum's sections was devoted to regional outsourcing companies. Along with the country's capital, Kyiv, there are some powerful outsourcing regions in Ukraine: Kharkov Region, Odessa Region, Donetsk Region and Dnepropetrovsk Region. Representatives of regional companies as well as customers discussed the problems and potential of IT outsourcing in these locations.

TechnoPark Corp.'s presentation, devoted to integration of customer-driven model, became the core of the section and provoked a heated dispute. So, here are some ideas on outsourcing IT projects to Ukrainian regional companies based on the report presented by TechnoPark Corp. - IT Outsourcing Company based in Dnepropetrovsk.

First of all, who are the actors of Ukrainian regional outsourcing market? In each outsourcing region, 10-50 software companies operate. There are no big companies. The average staff is 50-100 employees with only a few companies employing 100+ personnel. Naturally, there are no big customers. Traditionally, medium and small businesses outsource their projects to regional companies. Obviously, most regions are far below their potential yet. The figures show that there are 6 high schools and 3 IT-education companies providing about 1500 graduates annually in Dnepropetrovsk. The figures are similar for most outsourcing regions of the country.

Process
"Availability of high-class programmers doesn't assure high quality of project implementation. Well-organized process is what every company needs for success," says Anna Stetsenko, HR Director at TechnoPark Corp. By way of discussion all participants agreed that organization, planning and phasing are vital for offshore IT outsourcing.

Anna Stetsenko spoke about the TechnoPark Corp's experience: "This year we have implemented RUP-based development process. With RUP we are on the same wavelength with our foreign customers and they are happy to understand our process."

According to TechnoPark Corp., good process includes communication skills (language skills and business etiquette), culture of collaborative work, dissociation of roles within a project, good modeling skills and quality assurance. "We are working over each of the issues. Still all of us have a lot of things to do. Now it is easier for us as we see the goal and see the hurdles," - Anna Stetsenko adds up.

Process has long been a problem for most Eastern European companies. The UOF 2006 indicated the positive shift: Ukraine starts to employ the world-recognized practices and methodologies thus becoming more attractive for customers.

Customer-Driven Model
Customer-oriented model is probably the only way for regional companies to compete with big Kyiv outsourcing service providers having greater staffs and marketing opportunities. TechnoPark Corp. presented their ideas about customer-driven process.

Customers' expectations are mainly about quality: quality of process, quality of relationship, quality of deliverables and quality of price. According to the presentation, focusing on these issues must be the main target of regional companies while working over projects.

Some practices which have been successfully implemented by some Ukrainian companies were highlighted during the discussion: the establishment of local policy and standards either within a company or within the whole region; internal testing and certification; training for employees; corporate culture.

Along with the process, customers are interested about prices. Budgets for outsourcing projects in Ukraine are much lower than those in India, China, Russia and other outsourcing leaders. Recently head-hunting was on the verge of drawing a price-raising. In order to lure high-class engineers away, companies had to offer higher salaries. Thus, the thread of increase of project costs occurred. UOF 2006 assured that customers have nothing to worry about.

The idea of creation of Anti-hunting Lawbook in order to fight off the unfair HR activities was accepted enthusiastically. Forum participants believe that it will help to keep prices down and assure stability of companies' operation.

Ultimately
Ukraine is no more a dark horse for global outsourcing industry. Since 2000 when the first pilgrims had tried Ukrainian software development services - and some had failed, companies have gained much experience in both project implementation and customer relationship.

Because of the lack of companies with large staff, Ukraine is not a country for time-consuming projects. Instead, due to powerful intellectual potential the country is focused on small and medium-size R&D projects.

Now customers should pay attention to the Ukrainian regional IT outsourcing companies which go overboard to attract customers. They have good chances to become competitive players in the nearest time as long as they offer low prices sticking heels in the quality of deliverables.

Contacts
TechnoPark Corp.
http://www.technoparkcorp.com
Victoria.malinovskaya@technoparkcorp.com

TechnoPark Corp. is an outsourcing IT company with headquarters in USA, Florida and R&D center in Ukraine, Dnepropetrovsk.

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