Saying that Ukraine is an attractive but difficult market is nothing new. Situated in the heart of Europe, it is close, big and well-educated. It is cheap and abundant in resources, both natural and human. It is industrial, agricultural and hi-tech. However, at the same time it is unstable; it is corrupt; it has contradicting laws, unjust courts and a war inside the country. It has a big and aggressive neighbour and weak state institutes. It also has a mentality that was being developed for 70 years on the other side of the Iron Curtain.
From the IT perspective one gets comparatively cheap, educated labour as a first point in favour; there are mature companies, with over 20 years of experience in IT Outsourcing and with well-established processes as a second point; and having a branch of your company just a couple of hours’ flight from your headquarters is the third.
What are the risks that you are facing?
First of all, there is a legal one: we have an unbalanced legal system, with corrupt politicians and courts. Then there is the geopolitical one: the ongoing war with Russia; the economic one: high inflation, weak local currency and, finally, the cultural one: miscommunication, different ways of getting things done and reporting problems.
It has fabulous benefits and crazy risks, but is it worth a while?
Well, everyone makes their own decisions. In business there are no right or wrong decisions, there are only the ones that bring you money and the ones that don’t. Ukraine has the ability to generate income, but this is not an easy job to do. Generally, one needs to be prepared to either spend a lot of your own time on communication and figuring out how things are done here, or to find an insider, who can help you do it. It is best if you can find a local legal company that you can trust, to cover the legal part of risks, an HR company that matches the same trust criteria, to create a good team and a local partner that will do all the local management work and communication, covering the cultural risks.
Thus, the question of finding a good partner becomes a crucial one. Usual ways of partnering are not working here. One really can’t evaluate businesses in financial terms, because most of them are in the shadow economy. Also one can’t rely on your foreign consultants, as they can be easily misled.
Let me give you an example of a multimillion contract to which a foreign company invited a foreign consultant. The company’s representative came to Ukraine and on the first night their local partners entertained him with our rich local nightlife. Unfortunately, this professional, from a very well-respected company, spent the rest of his time frivolously and forgot about why he had come in the first place. The foreign company lost several dozens of millions of US dollars on that deal.
At the same time, quite often people are not proactive at work and you really need to find a way to educate and motivate your team or partners to go the extra mile that you are probably already used to elsewhere. We have our fair share of the southern mentality of relaxing and having fun, which is intensified by our Soviet past. There were taught that nothing depends on you, you are a small detail in a big machine, so if you do nothing, maybe nobody will notice and you can relax just a little bit more.
Fortunately, the new generation is changing this trend with its proactivity and entrepreneurship. In addition, please do not forget that we cooperated with Vikings and even invited them to rule over us, so we have something of their national character as well. It is possible to get the right work/fun balance in your team, especially if you are prepared to play the long game and really spend the time and effort required to create a strong team or to choose the right company to partner with.
So once you are there, and you have found a decent partner or team, created trust, established good relationships, won the heart of your team and they have learned good practices from you — your business can become a great business. You will start benefiting from Ukrainian sincerity, generosity, teamwork, independent thinking, creativity and self-organisation, as well as all the abundance of natural and intellectual resources. Indeed we can do amazing things here.
If you want to see the new Ukraine and benefit from the best, but at the same time avoid the worst, you should definitely begin your acquaintance with the country by partnering or investing in IT.
Emerging Europe and the Global Sourcing Association are hosting a networking seminar about IT outsourcing in Ukraine on May 23 in London. Attendance is free for buyers of outsourcing services. Click on the event page to find out more.