Why Remote. Why Ukraine. Why Now.
As soon as WHO has declared world pandemic due to COVID-19 - people went on social distance to prevent the spread. But what does that mean for business? Teams can't make contextual conversations, perform meetings, be dragged into spontaneous engagement, or have a quick smoke with colleagues. The world has gone remote.
While summer gives the space to breathe and enjoy some of the social life - autumn will push people back to isolation. Companies should prepare themselves by switching operations back to the remote mode.
VP Team has already got a spike on recruitment needs from US and EU companies to find top-notch people in Ukraine to help them outsource before the virus hits back again. Proper preparation prevents poor performance, they say.
But why Ukraine, you may ask?
A penny saved is a penny earned.
Ukraine is the number one outsourcing destination in Eastern Europe, where a thousand companies already rely on its talent pool. Rigorous and exerting education style; it's-not-done-until-it-ships culture; reliable infrastructure - these pros place Ukraine among the most reliable IT professionals globally.
You can find the same in both the US and EU, so what really stands out? Costs.
The United States Taxes
Depending on benefits, state, and several layers of taxes - a business institution in the US ends up paying from 18 to 30% more than an employee's base salary.
Just for fun, let's have a look at CA and NY to make some napkin calculations, plugging in $100k as adjusted gross income (AGI).
*Numbers may be lower or higher depending on filing status, itemized deductions, IRA Contribution etc.
That being said, if an employee`s annual income is $100k - business will eventually pay $28,943 in CA or $31,796 in NY total income taxes.
European Union: Germany and Spain
Following the US example above, let’s compare different Member States - Germany (Berlin Federal State) and Spain mainly. Again, gross income: 100,000.00€
If an organization is to hire an in-house employee with an annual income as of €100k - it ends up paying almost €46k in Germany and €35k in Spain, which is higher by 7-18% then in the US.
And finally, let’s have a glance at Ukraine.
There are two ways to employ a person in Ukraine - through regular employment and creating civil legal relations through a contract between a couple of Private Entrepreneurs (PE). But let us tell you something: almost no one uses regular employment as you end up paying the same ~43% per employee as in the US or EU.
Guess how much an employer ends up paying while using the PE system?
5%. Or 6% - if you are willing to include cash withdrawal costs for an employee.
Considering the gross income of an employee is $45k - you end up paying $2700 in taxes. Sounds like an icing on the cake, isn't it? But outsourcing to Ukraine is not only about money.
Far away but still so near.
When it comes to development companies, both in-house and outsourced teams have proven to be viable methods for success — as long as the chosen method is aligned with business’ goals. Some may prioritize full hands-on control over product development, while others may be more inclined to reduce time-to-market to a minimum and maximize product quality.
However, COVID has shifted everything - in-house went remote, boosting organizations’ demand to outsource operations. While providing foreign companies with Ukrainian top-notch talents, we’d like to highlight the following pros:
- Scalability - with outsourced resources, you can have your team focused utterly on projects and not have to worry about them being distracted by ad hoc projects, meetings, etc.
- Access to talent pool - Let's face it - competition for top talents is fiercer than ever. For instance, software developers - with the Facebooks and Googles of the world throwing rich salaries and bonuses at newly minted developers, while many startups are enticing new hires with promises of costly stock options. What if you don't have either to reel in top talent? Then it's time that you expand your recruiting beyond your zip code and traditional borders, and look to fill the skills gap from abroad.
- Cost-efficiency - Resources matter. You save a lot of hiring the same qualified talent in Ukraine. We have already discussed that above.
But, with every plus, there always should be a minus - the main one would be initial training. The others would be cultural fit and communications. But again, with a good process in place, these can be easily avoided.
Who Can Relate?
Ukraine is a great talent pool to hire first-class developers as well as other professionals - that’s a fact. However, it takes a good amount of time to find and eventually hire one.
Lee Iacocca, President & CEO at Chrysler once said:
"In the end, all business operations can be reduced to three words: people, products, and profits. Unless you’ve got a good team, you can’t do much with the other two."
So make sure to equip yourself with patience, and start the search. But in case there is a struggle - VP Team is here to help! We have already assisted such great companies as:
- People.ai - SaaS enterprise growth acceleration platform which helps companies to free all customer-facing teams, including sales, marketing, and customer success through an automatic process of capturing all contacts and customer activity data;
- Smartling - SaaS company that enables customers to automate, manage, and professionally translate content without leaving familiar applications or the developer’s environment;
- Grammarly - helps millions of people to understand each other by empowering them with digital writing assistance.
- Among many others!
Ready to acquire your perfect fit? Let’s chat!