Industry quarterly, July 2011: growth continued
Executive overview of the outsourcing and software development industry in Ukraine, April-June 2011.
Big outsourcing companies are getting bigger
Outsourcing companies continue to grow at a brisk pace.
Our estimate is that TOP5 companies are adding between 250 and 400 employees in total each month, all locations.
About 70% of these new employees are coming from smaller and less successful outsourcing companies.
Salary survey findings: wages are up
Tax code changes
Starting January 2011, Ukraine’s businesses work according to a completely new tax code. The legislation was hastily put together and has lots of glaring omissions that are being fixed.
On July 1st another legislation change returned a rule by which software companies selling to local market have to add VAT of 20% to their services (they’re freed from VAT since January 1st 2011). Exporting software development services still enjoys 0% VAT.
There is a frantic activity going on to pass legislation tailored specifically for outsourcing business, lobbied by IT Ukraine. Rumors say that the government officials gave unofficial deadline till the end of 2011 for the companies to find a “proper” way to employ their workers and pay “fair” taxes.
Political crisis in Belarus
Ukraine’s troubles with tax code changes are nothing compared to what’s going on in nearby Belarus. Devaluation of local currency led to political activism and struggles between citizens and the state.
Consequences for IT industry in Minsk and Kiev remain to be seen but no doubt there will be some. We wish all the best to our friends and collegues in Belarus!
Thanks for reading. Next issue will be out October 1st.