Ukraine: your new Shared Service Centre destination | KPMG | UA

Ukraine has become attractive for foreign-shared service centers (SSC)

Ukraine has become attractive for foreign SSC

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.


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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 is in the possession of the modern digital communications infrastructure meeting all requirements of the investors.
  • Visa-free regime for the citizens of the USA, EU countries and several other developed nations.
  • In Europe, Ukraine ranks No.4 in terms of number of graduates of higher education establishments: Ukraine has more than 1.6 million students attending more than 500 university-level institutions, producing about 400,000 graduates per year
  • Ukrainian students are bilingual (native Ukrainian and Russian) and have a good command of other foreign languages. More than half of them speak English (mandatory in school for the kids starting from the age of 7 years), German, French and Polish languages.
  • The country spends on average 6.2% of its GDP (2014-2016) on education, which is higher than the OECD average of 4.8%. The average monthly wage of USD 220 is the lowest in Europe.
  • The economy recovered 2.3% in 2016, with economic growth continuing at a robust pace, boosted by 4.8% GDP growth in October-December 2016.
  • In 2017-2018, the inflation indicator is expected to be a one-number digit.
  • Kyiv is the cheapest city in Europe according to Worldwide Cost of Living Report 2017 The Economist.
  • Commercial office spaces are offered in all major Ukrainian cities at the rates significantly lower than in the neighboring countries.
  • In 2017, Ukraine occupied the 80-th and the 20-th position among 190 countries according to the rankings of the ease of doing and launch of business, respectively (World Bank’s Doing Business Report).
  • In 2017, Ukraine ranked No.2 in terms of pace of growth of its outsourcing attractiveness, according to A.T. Kearney (17 positions up).

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.

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