THE FUTURE OF IT OUTSTAFFING SERVICES IN UKRAINE
IT OUTSTAFFING IN UKRAINE
In today's world, companies are sorely lacking in time. You need to constantly chase trends, innovations, development, etc. Sometimes there is no time to search for staff at all. It is because of this that outstaffing services were created not so long ago. If you understand the concept itself, then outstaffing is when employees are on the staff of one company, while working for another. The task of such services is to find a team of workers, offices, and all the equipment for comfortable remote work. With the help of an outstaffing company, the selection of a dedicated team for business becomes as convenient and fast as possible.
The global labor market for IT developers is becoming increasingly accessible thanks to personnel outstaffing. Ukraine, with its highly qualified specialists and competitive rates, is becoming a key player in this process. IT outstaffing agencies in Ukraine provide companies with a unique opportunity to assemble development teams around the world while saving resources and gaining access to global talent.
In Ukraine, such services are in their infancy and they will have a huge increase in popularity, but even now there are enough companies ready to help foreign employers in the selection of workers. Especially in the field of IT, agencies in Ukraine help to find excellent programmers and developers in Ukraine who are ready to work remotely for foreign businesses. This article will describe the main advantages of using Ukrainian outstaffing companies, and we will also delve into the nuances and features of this type of work.
HOW DOES IT WORK? (SYSTEM OF WORK OF OUTSTAFFING SERVICES)
Everything ingenious is simple. It is this phrase that can explain the work of an outstaffing company in Ukraine. A foreign business owner seeks help from such an agency and a team of professionals begins to look for personnel at the clear request of the customer. The customer can provide the most detailed requirements for the team, such as education, skills, work experience, age, etc. It is this individual approach to each client that ensures productive work and excellent results at the end of cooperation.
A company that wants to focus on its core business and not be distracted by various HR issues, enters into an agreement with an intermediary organization that provides it with staff. The latter is legally their employer and resolves all issues related to the selection, salary, and registration of subordinates. She also maintains all accounting and personnel documentation. At the same time, employees fully work in the customer's company but are on the staff of the provider company.
Mostly outstaffing is used by companies with at least 100 employees. The service is also popular among Western startups who want to quickly get the specific experts they need for development, which are difficult to find in any other way.
In essence, this is a “rent” of a specialist: they involve a person in working on a project without putting him on staff. In this case, the specialist formally remains on the team of another company.
The topic in general is not new; this model of work was invented back in the 1970s. While remaining on staff of one company, a specialist de facto works for another. Attitudes towards outstaffing changed like a spiral: here we admire the new work scheme, here we prohibit it altogether. In the post-pandemic 2020s, it turned out that for the current IT market, this model is what is needed.
In general, an IT outstaffing agency takes on the main headache and routine when looking for an employee. The most important thing for the customer is that in this way his time is saved, which can be spent on other important business processes.
THE MAIN ADVANTAGES OF OUTSTAFFING UKRAINE
According to the legislation of Ukraine, as part of the use of IT outstaffing, there are quite a lot of advantages for the customer. For example, when an employee concludes an employment contract with an outstaffing company, and not with a customer, this excludes the customer from participating in labor disputes that relate to this employee, and liability for violation of the law.
Dedicated IT services in Ukraine also simplify personnel management and personnel management. Vacations and sick days are issued by the outstaffing company. As a result, this reduces the burden on the client's accounting department and eliminates the need to provide separate social guarantees. The Tech Partner also maintains personnel records, administers business trips, draws up advance reports, and provides the necessary information to employees.
If we look at the benefits of outstaffing in more detail, we can see that it implies close cooperation between the business owner or his representatives and the IT department. This means that there is a direct connection between you and the programmers; you can actually become a project manager who controls the work. You will be able to directly assign tasks to your staff, see how much time they spent on a particular task, and also evaluate their effectiveness. Moreover, IT outstaffing companies employ experienced programmers and designers who have completed more than one project. In addition, you get a ready-made team; you don’t need to spend resources on team building.
IT recrutiment agencies in Ukraine also turn out to be more convenient due to the fact that you do not need to enter into a separate contract with each team member, as well as employ employees in your company. The staff already works and receives a salary in the agency; you only pay for their services for the project.
Minimizes the involvement of the customer in financial questions. The outstaffer calculates and pays salaries and compensations. Engaged in the payment of taxes and various fees, such as the contribution to the social security fund; optimizes taxation (deals with personal income tax, military fees, and ERUs), forms a tax credit for the customer.
WHY UKRAINIAN PROGRAMMERS? (POPULARITY OF UKRAINIAN DEVELOPERS IN EUROPE)
It's no secret that Ukrainian programmers are in great demand in the European labor market. At the moment, a lot of companies from Europe want to work with Ukrainian developers remotely.
Now in Ukraine, there are about 285 thousand developers and more than 4 thousand technology companies. At the same time, 100 companies from the Fortune 500 list chose Ukraine as one of the best countries for hiring programmers. All this speaks of the great potential of Ukraine as a market for IT outstaffing.
Ukrainian programmers are famous for their level of education and, in general, are very versatile employees who are ready to perform almost any task. Also, most of them take additional advanced training courses, which also help Ukrainian developers compete with European, Asian, and also American developers. The number of developers in the country is constantly growing. 400 Ukrainian universities and colleges annually graduate 50+ thousand specialists in fields closely related to IT. This is more than in Norway, the Netherlands, Sweden, Japan and many other countries highly valued for innovation in IT.
Another important advantage of Ukrainian developers is their excellent knowledge of English. About 85% of Ukrainian IT specialists speak English at the Intermediate level and above, and 50% have an Upper Intermediate or Advanced level. Many Ukrainian programmers studied and worked abroad.
According to their mentality, Ukrainians are very sociable and can get along well in a team. Also, many foreign managers note that Ukrainians are able not only to communicate in a team but also to lead the team as leaders. This is a huge plus, especially when working remotely when you need to make the employee the leader of the team. And of course, everyone has long been accustomed to working remotely, so this will not bring any inconvenience, and even vice versa will make work more comfortable and less energy-intensive.
MAKE AN INVESTMENT FOR THE FUTURE (DEVELOPMENT OF IT OUTSTAFFING IN UKRAINE)
Outstaffing in Ukraine is still perceived with caution. The reason for this attitude is usually a lack of understanding of what outstaffing really is, ignorance of the laws, or unwillingness to lose control over processes. But over time, people begin to understand that the main resource of a business is time and everyone is doing everything to reduce the time spent. That is why this model of cooperation has become indispensable in modern business.
At the moment, dozens of companies have opened in Ukraine helping to create and find excellent teams for customers from Europe. Therefore, this area is only at the start of its development, and much more will improve over time. The most important thing is that people continue to use the resources of such companies to help in finding staff.
Ukraine ranks first in Eastern Europe in outstaffing of IT specialists. In 2020, our country exported more than $5 billion worth of IT services. It is also one of the top three countries in the world with the best certified specialists. Giant companies such as Grammarly, Oracle, Samsung already employ thousands of developers from Ukraine.
According to a study of demand for outstaffing services conducted by the «Promotion Staff» group of companies. Important to notice, that 60% of large international and national companies in Ukraine use or have ever used such services, 30% have never resorted to outstaffing and do not intend to use this service in the future, and 10% have never used it, but intend to use personnel employment by hiring dedicated developers from Ukraine.
Surprisingly, interest in hiring software developers offshore always increases during periods of crisis and economic downturn, when companies face the most pressing issue of staff reduction without reducing the scope of responsibilities. And now Ukraine is again beginning to experience a boom in outstaffing services.
Most importantly, in this niche, many companies still have room to develop and this creates competition in the market. That is why each outstaffing company adapts to each client and will make your work with him as convenient and profitable as possible.
NOT TO BE CONFUSED WITH OUTSOURCING! OUTSTAFFING UKRAINE
Due to the similarity in name and in some aspects, people often confuse outstaffing with outsourcing. In this section, we will try to clearly define the concept of outsourcing and its main differences from hiring a dedicated team.
I would like to start with outsourcing. Outsourcing is the transfer of business functions, responsibilities, and business processes to another company operating in this area on the basis of an agreement. This service increases the efficiency of the enterprise and allows you to use the freed-up resources to develop new directions.
If we talk about the common features of both, then this is their task: to minimize risks, reduce financial and resource costs for non-core activities of companies, and optimize work.
This is where the similarities end and we can move on to the difference between the two models. Outstaffing involves providing staff with the required qualifications on a temporary or permanent basis. When outsourcing, any work or service is performed completely with a guaranteed required result and process control.
The outstaffing service is used when performing complex intellectual tasks (IT services, analytics, software development, and implementation, blockchain technologies, Big Data analytics), in the legal or accounting field. Outsourcing involves hiring an experienced specialist (or team) who offers turnkey solutions.
The main difference between the two forms of cooperation: with outsourcing, you transfer to a contractor tasks or functions that they perform on a contractual basis. For example, creating a turnkey website is a job for which you can invite developers on staff or outsource the project to be completed by another company. And she is fully responsible for the final result.
With IT outstaffing agencies in Ukraine, you do not ask a contractor to do the project for you. You receive specialists from the company who will become a team under your leadership. You can control employees, assign them tasks yourself, and communicate directly. The advantage is that you are completely freed from the legal intricacies of searching and recruiting personnel.
Thus, we can notice that although they have a common task, their functions are absolutely different.
The legal status of outstaffing services in Ukraine
To fully understand the benefits and profitability of IT outstaffing agencies in Ukraine, you need to delve into the legal component of this issue in more detail, because, unfortunately, at the moment, Ukrainian legislation is not yet very ready for the outstaffing model. Moreover, in 2018, several large outstaffing companies in Ukraine were accused of not paying taxes. Among the disadvantages of the outstaffing business model in Ukraine is its legislative uncertainty.
Firstly, neither the Civil Code of Ukraine nor the Economic Code of Ukraine contains such type of agreement as an “outstaffing agreement”. This does not mean that it cannot be laid. It is possible, but you should be guided by the general requirements for civil and civil law transactions. Also, subclause 14.1.183 of the Tax Code of Ukraine, contains the concept of “personnel provision service”.
Secondly, there is a big risk, due to an unsuccessfully drawn-up subject of the contract, the obligation of the contractor, when checking the State Labor Service or the State Tax Service, to receive a fine for not formalizing the employment relationship (30 minimum wages in 2023 - 201,000 UAH). In part, this situation is a consequence of the previous one - legislative uncertainty.
Thirdly, poorly executed acts of acceptance and transfer of completed work/services can also add “fuel to the fire”. Difficulties arise in this matter since instructions to employees are given by the customer company and this act must be drawn up based on the information provided by the customer. To do this, there must be documents that would specify the services provided and indicate their connection with the customer’s business activities.
If we summarize all of the above, then when agreeing with an outstaffing agency in Ukraine, we recommend that everyone, to minimize risks for themselves and the outstaffing company, and to avoid legal liability, should pay attention to the execution of contracts: draw up primary documentation; focus on drawing up contracts between the customer and the outstaffing company; ensure that contracts reflect actual services or work; correctly draw up internal documents of the counterparty; explain outstaffing processes to staff.
The popularity of outstaffing in Ukraine and the whole world
Outstaffing has rapidly gained popularity in the United States, as both very small organizations and large-scale industrial enterprises have begun to resort to this hiring system. Today in the United States, about 2 thousand agencies offer their personnel IT services. The total cash turnover of outstaffing agencies is approximately $80 billion per year. The share of outstaffing among similar recruitment schemes (outsourcing, leasing) is maximum and amounts to 20%. Approximately 80% of all American companies have used or are using the services of outstaffers.
In many European countries, outstaffing is used for various IT services, software development, administrative services, and many other areas. Companies can use this model to reduce costs, increase flexibility, and focus on their core business. This type of service is actively used by such foreign companies as Kelly Services, Manpower, Adecco Global, Coleman Services Ins, Ventra Employment, and UNISTAFF.
Outstaffing in Ukraine is still viewed with caution. The reason for this attitude is usually a lack of understanding of what it is, ignorance of the laws, or unwillingness to lose control over processes.
Based on all of the above, we can confidently say that outstaffing is a fast-growing area of business in Ukraine, beneficial both for companies ordering the service and for the Ukrainian economy, creating additional revenues to local budgets in the form of VAT on the services provided by outstaffing companies.
WHY YOU SHOULD HIRE AN OUTSTAFFING COMPANY IN UKRAINE
IT outstaffing in Ukraine is only gaining momentum, but the goal for the further development of this industry is already visible. Everyone knows that at the moment Ukraine is going through a very difficult situation due to the war, but European businessmen are still actively opening representative offices, as well using the services of It recruitment in Ukraine. But, at the moment, we need to pay attention to the time after the war, when the economy will grow and Ukraine will be on everyone's lips.
The main advantage of hiring labor in this way is that the employee is hired by a staffing agency and the employer only pays him for the work actually performed, without the burden of the payroll budget and extensive administration associated with a traditional employment relationship. This fact brings the company significant savings in personnel costs since personnel and payroll management is transferred to a recruitment agency with which the “leasing employee” has a signed employment contract.
In the future, we can expect the greatest expansion of personnel services in this area, including in connection with the arrival of large international companies in Ukraine. Companies are increasingly interested not only in hiring employees but also in distributing complete activities and activities that are not their core business.
In general, outstaffing is a new vision of personnel search and settling the problems associated with it. If a company does not want to bother about where to find good specialists, how to raise them, and what taxes to pay for them, cooperation with an outstaffing company ukraine. Outstaffers take on all the costs of arranging specialists, and in the meantime, the customer develops his business and begins to earn more.
The main task of such articles is to inform people about little-known services or services that raise questions from potential customers. We hope that the information presented in the article was useful and you learned more about IT outstaffing services in Ukraine.
If you have any questions or have an idea about hiring a team of professional developers in Ukraine, we would be glad to fuel your business idea with our services: contact.us@gointeractive.co.
Go Interactive is an IT outstaffing Agency from Ukraine with 13 years of experience.
