Choosing the best location for crossborder investments is never easy, given the lengthy process of weighing the pros and cons of each place. Site selectors admit unanimously that a lot depends on access to an educated labour force and how much it will cost to employ them. Ukraine has both of these bases covered.
The eastern European country has a 22 million-strong labour force and an education system to be proud of. It not only has a literacy rate of almost 100%, but also ranks highly when it comes to the number of residents with higher education diplomas and those who are enrolled in university.
This year, as many as 517,000 students started post-secondary education in the country, and, according to Unesco’s 2011 Global Education Digest, Ukraine is one of the top countries in central and eastern Europe (CEE) when it comes to access to higher education and enrolment in technical studies. "Young Ukrainians are very eager to study and are very determined to be competitive in the job market,” says Oleg Pawlishche, investment adviser at Medvlast, a company that assists foreign companies in setting up their operations in Ukraine.
Thanks to a strong network of universities, Ukrainian students can choose from a large pool of educational institutions. There are nearly 900 universities and technical institutes in the country and academic activity is not confined only to Kiev, the country’s capital. University hubs can also be found in cities such as Dnipropetrovsk, Ivano-Frankivsk, Kharkiv, Lviv and Odessa. "It is not all about Kiev," says Igor Tsependa, deputy rector at Prykarpatski University in Ivano-Frankivsk. "Everything depends on the sector that matters [to the investor]. For example, the best experts on metallurgy can be found not in Kiev, but in Dnipropetrovsk."
The proliferation of academic institutions and a large number of students with university degrees are not the only reasons for Ukraine to be content with its post-secondary education system. Many Ukrainian universities have already gained recognition as internationally renowned research institutions. For example, Kharkiv’s Institute for Physics and Technology was the place where the first detailed pictures of the atom were taken. Such an achievement, which would generally be deemed as more likely to come from a wealthy European or US R&D centre instead of a cash-strapped state institution in the CEE region, proves that Ukraine's post-Soviet heritage of a strong technical curriculum is still paying dividends.
It also demonstrates that Ukrainian universities can act as partners for Western research institutions. “Right now we are putting a big emphasis on foreign co-operation. It is a great opportunity for our students to gain additional experience and then put it in practice upon returning to Ukraine,” says Mr Tsependa, who adds that his university has recently signed a number of memorandums of co-operation with universities across the EU.
Although Ukraine is not a part of the Erasmus Programme, the EU's higher education exchange project, and the number of placements under its equivalent for non-EU countries programme are limited, some foreign institutions have spotted an opportunity to benefit from co-operation with their Ukrainian counterparts already.
“Ukraine may be overlooked, as many people are not aware of [the country's] great academic tradition. We see the post-Soviet countries as a good place to co-operate with, especially given the number of ambitious young people eager to study abroad,” says John Shaw, pro vice-chancellor, international, at the University of East London. For the past two years, Mr Shaw’s university has been co-operating with The Sevastopol Institute of Banking, Mariupol State University and in the run up to football's European Championships co-hosted by Ukraine, placed its students in work experience placements at Shakhtar Donetsk football club. “That kind of co-operation makes us stand out from other universities,” says Mr Shaw.
Speaking their language
While these newly minted foreign partnerships are increasingly popular among Ukrainian students, they are still out of reach to many, given that the country’s GDP per capita is only $3600. Yet, thanks to a mix of historical factors, domestically educated Ukrainians quickly adapt to working in foreign enterprises. “Our country was ruled for centuries and influenced by its neighbours, so it is quite natural for us to speak multiple languages. Among the most popular are Russian, Polish, English and German, but you can also find many Turkish speakers,” says Mr Pawlishche at Medvlast, who himself can speak four languages.
This, combined with a post-Soviet heritage of a strong focus on engineering studies, as well as a workforce that gets paid relatively low wages, definitely plays in Ukraine’s favour when it comes to crossborder projects revolving around software and IT product developments and services and business process outsourcing services.
Ciklum, a Danish company specialising in software development and nearshoring, has benefited from the supply of Ukraine’s IT specialists for almost a decade. Back in 2002, when the company founder Torben Majgaard was seeking a main site for the operations of his company, he set his sights on eastern Europe. After narrowing its choice to just Ukraine, Lithuania and Russia, he eventually picked Ukraine.
“Lithuania had a smaller pool of software engineers, and labour costs were higher in Russia, where on the top of everything else the experts were spread all over the country,” says Roman Khmil, chief operating officer at Ciklum.
In the past four years, the company’s revenue has increased nearly six-fold to $61.5m and it currently employs more than 2000 people. Over the years, Ciklum has opened software development offices in Belarus and Pakistan, but the six offices across Ukraine still constitute the core of its operations.
"Ukraine is a strategic destination for Ciklum and our presence here has enormous potential to grow further. The educational system here produces thousands of IT professionals each year," says Mr Khmil. "These people not only have necessary skills, but also the R&D mentality and are highly motivated to become successful."