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Preferred IT Outsourcing Destination - India or Ukraine

As per the 2012 Forbes report titled 'Outsourcing fuels Ukraine's IT Boom', Ukraine is poised to leap ahead of its competition.

This headline makes us sit up and notice Ukraine's growth in the outsourcing arena, and if it poses any serious threat to the already popular outsourcing destination - India. Yes, Ukraine has definitely pulled up its ante in becoming a preferred outsourcing destination for many European nations, primarily due to the skills of its resources and cultural and geographic proximity. But does it fare better than India? Let's have a look at some facts and pointers and compare where these nations stand with respect to IT outsourcing.

India Leads the IT Outsourcing Bandwagon - 6 Reasons

1. Outsourcing Costs

One of the primary motivators for outsourcing is cost benefits. Though India is primarily regarded as the most cost-effective destination for outsourcing, other countries including Ukraine are also driving cost benefits to attract businesses to outsource and invest. Apart from cost advantage, Ukraine is also positioning itself as a destination for outsourcing specialized jobs, and as a nation with cultural connect to most European nations and the US.

In India, as the demand for skilled laborers is increasing, the wages are also increasing relatively, negating the huge cost advantage offered over the two last decades; however, the savings are still substantial when compared to hiring in-house resources. Even, Ukraine seems to be following the same trend now. As per the report by European Business Association (EBA), since 2010 the monthly earnings of IT specialists in the Ukraine have increased from $300 to $1,500, refuting the huge cost margins available earlier.

SourcingLine, a US based research firm, clearly places India far ahead in the cost competitiveness index for outsourcing destinations with an 8.3 index as compared to Ukraine's 6.3, due to the mutually competing cities in India offering deep cost benefits.

2. Availability of Skilled Resources

Ukraine was a major contributor to the Soviet space program with its scientific establishments. Due to these strong scientific, engineering, and mathematical skills, Ukraine has emerged as a top European destination for skilled labor. Ukraine is also among the top 10 countries with the most certified IT professionals making it a preferred outsourcing destination.

India on the other hand is credited for producing the largest number of quality engineering graduates who are ready to take up these IT based jobs, thus creating a large pool of skilled resources. And with the IT outsourcing industry in India completing 25 years, there is a natural tendency for the young engineers to be prepared for the upcoming challenges.

SourcingLine, gives India a 6 in the resources and skills index to Ukraine's 3.2, making it a distinct winner.

3. Education

With cities in Ukraine providing high quality education and nurturing capable resources to meet the growing outsourcing demand, it is holding on to its numero uno outsourcing destination tag in Europe. But there are some genuine concerns raised by Ukrainian business owners that definitely call for some retrospection. It's mentioned that students in Ukraine have poor practical skills though they might graduate with a good theoretical knowledge, forcing large companies to set up their own training centers to secure competent staff.

Some reports state that India lags behind in the education index, however, these reports consider whole of India with a population close to 1.2 billion. The problem with the statistics lies in the fact that most of the Indian population lives in villages where agriculture is dominant and not education, thus giving a comparatively low education index, The catch point here is that tier 1 and 2 cities of India, where most outsourcing happens, rank extremely high in terms of education and availability of skilled resources.

4. Infrastructure

A key aspect for outsourcing conduciveness is the kind of infrastructure provided by the host nations, and definitely Ukraine with its outsourcing friendly policies is providing high quality infrastructure for outsourcing businesses to flourish. However, power outages are definitely a problem, even in Kiev (largest city in Ukraine).

Infrastructure in India has improved a lot over the last two decades, thanks to the growing outsourcing business and number of working professionals demanding better infrastructure, however if we spare the urban population, power outages, and transportation is still a cause of concern in smaller cities.

5. English Proficiency

Command over English is one of key deciders in outsourcing work to foreign nations, and Ukraine, with its outsourcing-pro policies, is focusing on English education to make more and more natives employable.

India on the other hand is the second largest English speaking nation in the world with its massive population, especially in tier 1 and 2 cities kids are being trained in English right from the age of three. No wonder why most call centers across the world are answered from India.

6. Government

Political unrest and the conflicts with Russia is a major deterring factor for businesses outsourcing to Ukraine, though its government is assuring stability and safety to the companies; definitely businesses are a worried lot at least in the short term.

India is the world's largest democracy, and with a single political party gaining absolute majority, the government of India is more stable and development oriented in its approach. India's new government has already initiated plans to mobilize all the necessary resources and make business friendly policies to attract investments.

Conclusion

The six reasons mentioned above provide testimony to India's status as the outsourcing giant. Even, SourcingLine places India in the number one position as the most preferred outsourcing destination in the world. With huge experience and world's number one IT outsourcing destination tag, India still proves to be the best overall place to outsource, a fact being challenged by the new and upcoming outsourcing destinations.

Outsourcing companies in India are well aware of these growing challenges and keep working on various business aspects to hold onto its position as the best place to outsource. Contact Outsource2india for high-quality, timely, and affordable solutions if you are planning to outsource IT or Software projects to India. Our expert software team will be glad to assist you.

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