2020 has been a tough year. Businesses, governments, and individuals — everyone got a significant portion of challenges and overall uncertainty. As for business, it’s no doubt that some companies have been affected more than others — and we’ve recently talked about 5 industries that suffered the most during the pandemic. But one thing is clear: 2020 has left no stone unturned.
It has been a year of crazy changes, and the IT outsourcing industry is no exception. IT outsourcing companies in Ukraine — from small to large ones — have undergone unpredictable changes in both customer demand and tasks. Want to know what the IT outsourcing industry will look like in 2021? Let’s dive into it and discover how IT outsourcing companies in Ukraine may and should react to the recent trends in the software outsourcing industry.
IT outsourcing in Ukraine has seen tremendous growth in both the number of IT outsourcing companies and the quality of the final product. According to the Ukrainian balance of payments for 2019, the export of computer services exceeded $4 billion in 2019 (30% growth), which is more than the country got from its wheat exports. Ukrainian software developers are well-known for their high tech skills and experience — and, of course, their cost-efficiency.
To better understand the projected situation of IT outsourcing in Ukraine in 2021, let’s differentiate the companies by their size and focus.
The pandemic forced small companies to significantly cut their costs, and they are surely less likely to spend much in the near future. IT outsourcing companies that work with startups and individuals — Idealogic is a bright example — were able to witness the change in spending priorities first-hand. Unless such IT companies in Ukraine shift their focus, they are to expect difficult times in 2021. Despite the fact that it’s almost impossible to change a niche when you’re small, it would be important for boutiques to review the list of target areas and try to work with outstaffing.
Middle-size businesses had to cut almost all innovative initiatives until 2021, Q1, and are more focused on keeping their current teams. Those businesses that have previously worked with IT outstaffing and outsourcing companies are likely to pay more attention to the outstaffing model as outsourcing is generally more expensive. And businesses are and will be prone to using the cheapest model possible to stay afloat during the hard times.
In times of the pandemic, even seemingly resilient large enterprises were severely hit by the sudden decline in demand. Just like small and medium companies, they had to rethink their priorities in terms of spending and significantly cut the expenses. With a focus on cost-efficiency in mind, IT outsourcing companies in Ukraine are less suitable for them than hiring developers through an outstaffing vendor. The latter is what they are likely to focus on in 2021. That’s why even market leaders such as EPAM Systems and SoftServe are expected to specialize in outstaffing, just like most of the other IT outsourcing companies in Ukraine.
To sum up, just like this year, 2021 is not going to be a sweet one for IT outsourcing companies in Ukraine. Clients have to significantly cut their costs, and it directly affects their choice of software developers. Since embarking on outstaffing is cheaper, IT outsourcing companies will continue to suffer from hard times.
Indeed, there is no one-size-fits-all advice in this case. Still, we think that IT companies in Ukraine should either look for new niches that have been successfully weathering the pandemic or focus on outstaffing or dedicated teams. In any case, companies should move forward and not wait for manna from heaven.