The latest trends in electric, connected, and autonomous vehicles have made software the main differentiator of success. Find out why outsourcing automotive software development to Ukraine is an excellent idea.
Outsourcing has earned a lousy reputation. Though companies have been using it for decades, outsourcing is still associated with the struggles of choosing a vendor, organizing processes, and keeping everything under control. However, as automotive technologies advance, the stakes are rising. With autonomous driving coming to the scene, modern vehicles require advanced software, deep expertise, and multiple testing cycles. Outsourcing can provide all of that.
But where should you look for an experienced vendor? How can you choose wisely and not risk your customers’ safety? These are questions the majority of automotive companies are facing.
The total estimated outsourcing engineering services revenue for 2020 is expected to be USD 416 billion. Of this, around 50% is projected to be generated by offshore activities.
The nature of engineering services has changed dramatically in the past decade, as has the role of third-party providers. They have now become important partners of car makers and directly affect the success of products. Simply put, advanced vehicles with self-driving capabilities require software expertise traditional automakers do not possess.
The uniqueness of connected and autonomous driving calls for new partnerships. Car manufacturers turn to automotive outsourcing companies to save money and free up in-house employees. However, they also look to outsourcing companies for:
- Expertise in building AI-based solutions, cloud computing, AR/VR software, and other technologies that are vital for self-driving cars.
- Experience in full-cycle system development. Manufacturers can’t use their traditional approaches for advanced technologies.
- Agile practices, as autonomous vehicle systems require multiple testing cycles. The agile approach optimizes development through short sprints and transparency.
Outsourcing Automotive Software to Ukraine
India, China, and Malaysia are common choices for offshore IT outsourcing.However, time and cultural differences create additional challenges for US and European automakers. That’s why many well-known manufacturers vendors turn to Eastern Europe – particularly Ukraine.
Outsourcing automotive software projects to Ukraine has pros and cons.
- Ukraine has the most extensive technical talent pool in Europe. There are expected to be about 200,000 IT specialists in Ukraine by 2020. Additionally, many software companies offer IT academies (nine in Lviv alone) where they train students in cutting edge technology.
- Ukraine has the most C++ engineers in the world. Plus, it’s in top 3 countries for Scala Developers, which is used for writing back-end and big data systems.
- Automakers partner with Ukrainian companies to deliver a variety of software. From cybersecurity systems, to advanced AI-based software, infotainment systems, IoT parts for connected vehicles, and many other things, Ukrainian teams have loads of experience. Therefore it is no surprise that vendors including Ford, Kia, Renault, Bosch, Saab, Volvo, and Porsche, have partnered with Ukrainian automotive software teams.
- Thirteen of the world’s top 100 outsourcing companies are based in or have development centers in Ukraine.
- Despite having the largest talent pool in Europe, Ukraine still has relatively low rates for software development. This is largely due to the moderate cost of living compared to other European countries. For example, setting up an office for ten people in the capital, Kyiv, will start at around $2,000 per month. However, the price is somewhat lower in other Ukrainian IT hubs like Lviv, Kharkiv, Odesa, and Dnipro.
Despite the competitive rates, IT specialists in Ukraine earn significantly more than the average Ukrainian. Therefore, the industry remains one of the top choices among young adults.
Despite these advantages, there some disadvantages that automotive companies should know about before partnering with Ukrainian automotive software vendors. Of course, the main concerns is the conflict with Russia and the occupation of some Ukrainian territories. Indeed, Russian aggression cut Ukraine off from one of the top tech hubs – the city of Donetsk. Yet, the majority of IT specialists from that region have moved to areas not affected by the war. Furthermore, rest of Ukraine has not experienced any obstacles to doing business. Even during the most hectic months of 2014-2015, leading companies reported uninterrupted delivery of services to their customers. Today, the situation is quite stable.
While some of Ukrainian industries suffer from bureaucracy, the situation in the IT industry differs significantly. Low taxes and government support allow the IT industry to grow fast, leaving no room for bureaucracy. Moreover, Ukrainian companies focus on Europe and the United States. So improving the country’s business climate and making international partners feel comfortable doing business in Ukraine is a top priority. Many Ukrainian software companies also have offices in Europe and overseas, which simplifies cooperation.
Additionally, a few more challenges exist. These include weak support from the government, corruption, and bureaucracy. There are many legal loopholes in commercial, financial, and technological industries. For instance, IT companies and startups don’t enjoy tax breaks. Still, Ukrainian companies have learned to deal with internal challenges successfully. Typically, international partners usually don’t feel any difficulties with the Ukrainian government. Also, many Ukrainian software companies have offices in Europe and the United States, which simplifies cooperation.
What to Look For
Automotive outsourcing requires specific expertise. Development companies must comply with certifications including ISO 27001/9001, ISO 26262, AUTOSAR 4.0, A-Spice, and proprietary navigation data standards. Of course, companies should be able to meet international standards in addition to having general technical competence. Also, manufacturers should look for vendors that work according to agile practices. Security and compliance with requirements for automotive system design and software development are other issues to consider.
Luckily, there are quite a few Ukrainian-owned and Ukraine-based vendors that can offer high-quality automotive software services to auto companies. Here are some of them:
Intellias provides automotive software to companies from Germany, Japan, the UK, and South Korea. They build navigation and infotainment systems, cloud-based solutions for connected vehicles, ADAS, self-healing maps, and more.
Innovecs has experience building logistics software, supply chain management solutions, and transportation management systems.
Qubit Labs has offices in Ukraine, Estonia, and Canada. Qubit developers leverage big data to build smart logistics solutions for shipment tracking, asset management, customer service management, and more.
Sigma Software is a Microsoft Gold Certified Partner. They provide systems for diagnostics and repair assistance, vehicle tracking, fuel monitoring, fleet management, and more. They work with Volvo, Scania, and Knorr Bremse.
These are just a few of the great automotive software companies in Ukraine. The complete list is much longer and can be found here. And though outsourcing in the automotive industry might seem challenging, many great partnerships exist with Ukrainian vendors.
Ukraine has experienced developers, expertise in the field, and few language and cultural barriers. No visa is required for the majority of European countries, and Ukraine boasts attractive development rates, making Ukraine an excellent choice for automotive disruptors.
Related: Is it Safe to Outsource to Ukraine?