U.S. firm's 2,600 engineers in Ukraine stay busy amid turbulence

Ukraine's IT sector now employs about 25,000 and is growing by up to 15% a year, says Everest

In 1993, a few years after immigrating to the U.S., Arkadiy Dobkin, an electrical engineer trained in Minsk, Belarus, started a company that aimed to tap the IT engineering talent developed in the former Soviet Union.

Today that company, Epam Systems in Newtown, Pa., employs some 10,000 workers, including about 2,600 in the Ukraine, where day-to-day life has become precarious amid a conflict with Russia. It has a strong presence in a number of other counties, including Russia, Belarus, Kazakhstan and Poland. Very strong engineering schools are a legacy of the former Soviet Union.

The IT services firm's business model is similar to that of Indian services firms, though there are some key differences.

Instead of competing with Indian firms for application support and maintenance work, Dobkin's company initially focused on software engineering and product development for technology firms. The business has since expanded its scope to include engineering work for a number of vertical industries, including financial services and media.

Epam has contingency plans to keep the work moving should problems escalate in Ukraine, but so far the uprising there hasn't impacted operations there. Dobkin, while concerned about recent events, says isn't overly worried yet that the company will be impacted.

Dobkin has relatives and friends throughout the region -- cousins living in the Ukraine and in Russia, and a friend who has one uncle serving in the Ukrainian army and another in the Russian army. People in this region share many cultural similarities, he said.

"We are pretty sure that common sense will win in this case," said Dobkin.

The situation in Ukraine has not yet impacted IT services delivery, although "it will increase the perception of risk," said H. Karthik, a vice president at the Everest Group.

Everest, an outsourcing research and consulting organization, puts the number of people employed full-time in Ukraine's IT industry at more than 25,000. The industry is growing at 10% to 15% a year in the country, added Salil Dani, a practice director at Everest.

The largest IT employment center in Ukraine is in Kiev with 10,000 full-time workers, says Everest.

With a population of more than 45 million, Ukraine schools award about 16,700 college degrees in technical disciplines, including engineering and computer sciences, according to Dani.

Rahul Singh, a principal at outsourcing consulting firm Pace Harmon, who attended college in Ukraine and earned a degree there in computer science, says the Ukraine has a huge potential as a technical center.

Singh said knows a lot of people in the Ukraine who have earned advanced degrees in engineering, and "who are doing work outside the industry because there isn't enough opportunity."

"There just isn't enough jobs out there for the people they are graduating," said Singh.

Paul Schmidt, a partner at ISG, a sourcing consultancy, said Eastern Europe has "has for some time been one 'alternative' to India, or, more precisely, a location that's selected in addition to India to 'de-risk' the offshore portfolio."

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His email address is pthibodeau@computerworld.com.

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