IT Outsourcing - Ukraine

Ukraine

Revenue in the IT Outsourcing market is projected to reach US$1.09bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 9.68%, resulting in a market volume of US$1.73bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$55.94 in 2024.
In global comparison, most revenue will be generated in the United States (US$197.30bn in 2024).

Key regions: Netherlands, United States, Japan, Germany, Italy

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Market

Region

Region comparison

Currency

Analyst Opinion

Ukraine, a country in Eastern Europe, has been emerging as a popular destination for IT outsourcing services in recent years.

Customer preferences: One of the reasons why Ukraine is becoming a preferred destination for IT outsourcing is the availability of a highly skilled workforce at a relatively lower cost. Ukrainian developers are known for their expertise in software development, data science, and artificial intelligence. Additionally, the country's geographical location and cultural proximity to Europe make it an attractive destination for European businesses.

Trends in the market: The IT outsourcing market in Ukraine has been growing steadily over the past decade, with an increasing number of companies outsourcing their software development needs to the country. The demand for IT outsourcing services in Ukraine is primarily driven by the need for cost-effective and high-quality software development services. The country's IT outsourcing industry is dominated by small and mid-sized companies, which cater to the needs of businesses in various industries, including finance, healthcare, and e-commerce.

Local special circumstances: Despite the growth in the IT outsourcing market, Ukraine faces some challenges that could hinder its growth potential. The country's political instability and ongoing conflict with Russia have created an uncertain business environment, which could deter foreign investors from investing in the country. Additionally, the country's IT infrastructure needs improvement, which could limit its ability to compete with other emerging IT outsourcing destinations.

Underlying macroeconomic factors: The Ukrainian government has been taking steps to promote the growth of the IT outsourcing industry in the country. The government has implemented various measures to support the development of the IT industry, including tax incentives, grants, and subsidies. Additionally, the country's membership in the World Trade Organization (WTO) has opened up new opportunities for Ukrainian businesses to access global markets.In conclusion, Ukraine's IT outsourcing market is poised for growth due to the country's skilled workforce, cost-effectiveness, and proximity to Europe. However, the country needs to address its political instability and improve its IT infrastructure to attract more foreign investment and compete with other emerging IT outsourcing destinations.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.