Cost of Hiring a Development Team: Israel vs. Ukraine

Programmer working in a software developing company

When making any big business decision, the common concern is estimating the budget. If you decide to work with a dedicated team of developers, it is no different. It’s vital to estimate the cost of hiring a development team and the effort required for a certain project, compare different solutions and offers. 

Obviously, the goal is to find a team that will deliver a high-quality result for a reasonable price. The perfect solution for Israeli companies is partnering up with IT-specialists from Ukraine – this is a collaboration that will pay off on many levels.

Comparing Costs

For Israeli businesses, working with dedicated teams in Ukraine has a lot of perks. Geographical proximity eliminates problems like time difference or long traveling times. Cultural and historical similarities help to communicate easier – not only English but also Russian can be used for correspondence. On top of all this, the skillset of Ukrainian IT-professionals has been landing them top positions in numerous global IT-related ratings over the past few years. But let’s discuss another issue that needs attention. The money.

Different places have different standards of living and different prices. Compared to Israel, Ukraine has lower living costs and lower wages. Which means, Israeli companies can hire top-notch Ukrainian professionals and still save money. To get an idea of how big of a difference we are talking about, see Table 1.
cost of offshore development team

If you want more precise information, check tables 2 and 3 that show average salaries of key specialists in Kiev and in Israel. As you can see, there is quite a large gap.
cost of offshore development teamcost of offshore development team

How Do You Build A Dedicated Team Or an R&D Center in Ukraine?

If you decided to hire a development team in Ukraine or even open an R&D center, there are several ways to do so.

  • Option 1: You can open an R&D center yourself. In this case, the first thing to do would be to get in touch with a local HR agency specializing in hiring IT-professionals. It is necessary to find people for the key vacancies. At this stage, you will have the following expenses:
    – Agency fee equaling 15-20% of a specialist’s yearly salary
    – Office rent from $10/sq.m. per month
    – Purchasing furniture and equipment
    – Staff hiring and salary
    – Further expenses may include traveling costs, and your IT-specialists will have to find the time to conduct interviews with future members of the development team.
    – One other vital element of the whole process is supervision. Be sure to control expenses, efficacy, and KPI of the development team or the R&D center.
  • Option 2: Employing the services of an IT-company specializing in putting together and maintaining development teams and R&D centers in Ukraine. This is a simple and reliable way to get a custom picked team or launch an R&D center with minimum effort and expenses. The IT-company takes care of interviewing and hiring candidates, provides office space and all the necessary equipment, etc. This way, your company can concentrate on work without having to deal with all sorts of preparations. Mediating companies like these usually have a fixed fee from 30% and up to 60% of the team’s payroll budget.

You Win Either Way

If you are still not sure, what option suits your company best, take your time to consider. But the truth is, no matter what choice you make, you win. Either way, you get to work with world class Ukrainian professionals whose work will exceed all your expectations, and all this without overspending your company’s money! Moreover, by working with Ukrainian IT-specialists, you will be able to cut down expenses and invest this money into your company’s further development.