KPMG experts believe that Ukraine is an attractive state for the investors looking for a place to accommodate new shared service centers (SSC) or intending to launch business processes outsourcing (BPO) operations.
Central and Eastern Europe has enjoyed dynamic growth and attracted a lot of attention from those seeking to set up SSCs. Growing numbers of investors recognize the benefits provided by the western-style business culture on offer, while at the same time not being too far from their home headquarters. Eastern Europe is thus considered an optimal location for SSCs primarily focused on the EMEA (Europe, Middle East and Africa) region (UTC+2).
Despite being one of the largest countries in terms of territory and people in the region, along with its abundant resources, Ukraine has often lagged behind more mature markets like Poland or the Czech Republic. However, these countries are becoming more expensive.
”Ukraine's key advantages in terms of establishment of an SCS include its geographical position and ability to offer significant resources of young and highly qualified labor force. Ukrainian labor is one of the cheapest in Europe. Investors search for the places where the labor costs are and will remain controllable in the mid-term perspective,” – said Roman Koutsak, Director of Audit at KPMG in Ukraine.
KPMG analyzed 6 towns that are the most attractive for SCS and BPO activities, including Kyiv, Lviv, Odessa, Kharkiv, Dnipro, and Ivano-Frankivsk. Lviv and Ivano-Frankivsk recognized the most attractive destinations in this ranking given availability and low cost of the qualified labor force, existence of developed infrastructure, real estate market and convenient geographical position.
According to the results of the research, KPMG experts highlighted the following additional advantages:
Ukraine has already turned into the country of choice for IT outsourcing: more than 500 outsourcing companies and 100 global R&D centers launched their operations in the country.
Notwithstanding the continuing political turmoil, a large number of international companies have preserved significant presence in Ukraine (including through SCSs) obtaining benefits thanks to lower costs with the same level of quality.
As regards the relatively high political risks affecting businesses in Ukraine, they are partially offset by the implementation of the governmental reforms seeking to improve the competitive position of the country. In addition, the depreciation of the UAH caused significant reduction in the tax and regulatory costs in Ukraine, thanks to which the country moved 17 positions up in the rating.
The goal of this report is to provide an overview of Ukraine as a potential location for a SSC or business process outsourcing (BPO) center. In this report, we are providing general information about Ukraine and its benefits for investors. We hope it will assist investors who are considering potential locations for their SSC/BPO. We have provided the essential information for investors planning to set up an accounting or finance, internal audit, IT or R&D SSC.
For those already operating in Ukraine, this report should be helpful when it comes to evaluating the options for expanding operations. We have also covered the main information on legal matters relating to doing business in Ukraine.
We urge any company interested in setting up a SSC/BPO operation in Ukraine seeking for additional information to contact us.
KPMG would be delighted to provide you with more detailed information.