Ukraine presents a massive opportunity for today’s tech companies, especially those based in relatively nearby nations such as Israel.
The Eastern European nation is home to a massive labor pool of educated and talented IT workers, and wages are far lower than in many other developed countries. By making the decision to open an R&D division in Ukraine, companies in any vertical can give themselves a major boost in innovation and productivity.
Of course, establishing operations in a foreign country isn’t quite as simple as that. Firms hoping to leverage this new opportunity need to understand the benefits and risks of nearshoring to Ukraine. They also need to understand not only how to properly set up the center, but how to manage, maintain, and best use the new resource.
Here are some potential challenges and decisions to keep in mind during the planning process. Most of them boil down to “human concerns”, which are easy to lose track in any large undertaking.
Pick the Right Spot
As with many business ventures, location is key. Ukraine is a very large country, nearly 30 times the size of Israel. To those unfamiliar with its geography and cities, knowing where to start can be a daunting task.
Kyiv is generally regarded as the best area for software R&D centers. The city is home to over half of the country’s exported R&D work, and is located far away from the “danger zone” at the nation’s eastern border.
Other popular cities for IT work include Dnipropetrovsk, Lviv, Odessa, Kharkiv, and Vinnytsia.
In general, the primary deciding factors (aside from being able to locate the talent you require), should be safety, stability, and the presence of an airport. All of the cities listed have airports and are a safe distance from potential armed conflict.
Odessa is geographically closest to Israel, but even Kyiv at the northern edge of Ukraine is only about a 3-hour flight from Tel Aviv.
Ukrainian R&D is Not a Panacea
It’s clear that opening R&D in Ukraine is a fantastic way to supercharge productivity while keeping costs low. Like any nearshoring, though, it is not a “fire and forget” solution, and it is not a magic bullet for every situation.
A geographically displaced R&D center, whether in Ukraine or anywhere else, can quickly lose sight of its parent company’s vision. It’s crucial to maintain good communication and collaboration between the local and remote teams, or you may begin to feel less like a manager and more like you’re herding cats.
One good practice is to set up a product manager at your local office, as well as a team lead in Ukraine. The product manager can serve as the interface between the Israeli office and the Ukrainian, and ensure that the remote team is on track with its current goals. Clear communication will ensure that both offices are effectively working as a unit, and a single point of contact is the best means to achieve it.
The team lead, meanwhile, manages the individuals that comprise the Ukrainian team, and keeps them operating smoothly and efficiently. A team lead who is in a different office than the rest of his team will find management difficult, as countless horror stories of “absentee bosses” have proven.
Have Your Local Team Ready
In the Israeli office, the product manager and VP of R&D should maintain a keen awareness of the strengths and weaknesses of the nearshore team. The Ukrainian R&D center essentially becomes a tool on the VP’s belt. It’s up to the VP to know when to use it and what to expect.
What this boils down to is the need for a certain amount of software development expertise in the local office. Local personnel should be familiar with modern software development methodologies, such as Agile. We’ve found that 3-week Agile sprints lead to very fast results and an excellent collaboration between local and nearshore offices.
Of course, this is all doubly important if the local office is maintaining a software development team of its own. Ensuring that the Ukrainian and Israeli developers can seamlessly work together, learn from each other, and leverage each other’s expertise should be the top priority for the management team.
Fortunately, modern productivity software is geared towards effective remote work. There are countless collaboration software suites available, all designed from the ground up to make teamwork feasible across vast geographic distances.
Free or “freemium” products like Slack and G Suite (formerly known as Google Apps) are adequate to keep teams on track day-to-day, but be sure to hold regular meetings as well. Ideally, these should be conducted via video conferencing, which has been proven to be more effective than old-school phone calls.
A weekly status update, in which team leads report their progress, successes, and challenges, will keep everyone on the same page. An occasional (perhaps twice a year) visit from the local product manager will also do wonders for both morale and efficiency.
As in all aspects of management, clear communication is key. Avoiding misunderstandings will reduce errors and wasted work, and ultimately increase productivity.
The Human Element
Aside from the nuts and bolts of making a Ukrainian R&D center work, it’s important to keep the employees involved and happy as well.
Although the workers at a nearshore center may be employees of your company, they’re still located hundreds or thousands of miles away. It can be all too easy to them to start feeling like a vendor and not like an integral part of the company. That in turn leads to lower morale, higher churn, and ultimately a loss in productivity.
There are some things management can do to help keep remote workers engaged and involved.
- As mentioned above, frequent video conferences and in-person visits.
- Make time to address concerns and suggestions from the Ukrainian team.
- Keep the remote team updated on milestones and major events like product launches. The goal is to have everyone interested in results, and not just the immediate task at hand.
- Encourage a good team culture through non-work related communication. A “social” Slack channel or similar can help knit together geographically disparate workers.
- Recognize and thank individual accomplishments. The team lead can nominate people for this.
- Keep an eye out for more ways to engage remote workers. Even simple things emailed birthday wishes can do wonders.
Opening a nearshore R&D center in Ukraine or anywhere else isn’t a simple task, but the benefits typically far outweigh the investment in time and resources.
Wages in Ukraine are such that the center can pay for itself within a relatively short period, and the sheer amount of development talent the country means that a firm in any vertical can give itself a major boost in innovation and productivity.
That said, companies in nearby nations such as Israel can take advantage of a massive opportunity in Ukraine, given the appropriate planning and investment. The time to do so is now. IT expertise was Ukraine’s third largest export in 2015, and the industry is only growing.