Pros and cons of formal, informal and non-standard employment patters of Ukrainian IT specialists

INTERIM RESULS

Research fellow: Svitlana Buko, PhD. Summer School, Turin, ItalySeptember 23 – 28, 2013

Background on IT outsourcing• The research shows that in recent years, Ukraine has become one of the

most attractive outsourcing destinations in Eastern Europe. The USA and Western Europe are both well-established importers of software development services from the Ukraine.

• According to CEEOA 2010 Report Ukraine is the world’s 5th largest and fastest growing IT outsourcing services market with revenues approaching $1 billion USD;

• In the Top 10 countries with the most certified IT professions (Global IT IQ Report, BrainBench); 70% of Ukrainian IT specialists work for American and/or European customers;

Labor Demand/Supply: why Ukraine?

• proven financial advantage (cheaper labor costs) • Ukrainian vendors are claimed to provide innovative solutions

and added-value services rather than just a cheaper offering of routine processing requirements.

• Reports explain this competency the following way: This expertise is generated largely by a pool of talent educated to the highest technical standards – in Ukraine, it is a legacy of the old Soviet system which still offers clout in today's highly capitalistic environment (IT Sourcing Europe Report, 2012).

Problem focus• However, a number of these specialists in the

field do not have a formal employment and faces socio-economic consequences of low formal employment and non-standard employment.

• This population groups of talented skilled specialists often remain outside the formal labor market of Ukraine (freelancers)

Research Purpose:

• 1) to identify common perceptions about pros and cons of formal/informal/non-standard employment that IT specialists (leads) face in Ukraine

• 2) Identify social-demographic portrait of this populations group in the country.

Research design• Desk research (aggregated European and

Ukrainian reports)• Qualitative in-depth interviews with 10

registered and 10 non-registered• 3 expert interviews with IT HR specialists in

Ukraine.

Respondents• Population group (WHO): Ukrainian IT

specialists – team leads; Highly skilled, educated, well paid specialists (Bionic hill research, 2013)

• Sampling: different regions of Ukraine (Western, Southern, Central, Eastern Ukraine), man + women (25+ y.o.), (73 %) of all IT teams linked to big cities (profile universities)

Challenges/Limitations

Challenges: • 1) difficult access to non-registered (trust); • 2) mix of perceptions of respondents about

formal/informal and office/freelance/distance work.

Preliminary findings 1• Early entrance in the labor market (while at the University).

Employment patterns observed: • 1) official long term contract (office work) • 2) official fixed short term contract (office) • 3) Company contract with “entrepreneurs” – fixed tax• 4) office + distance work • 5) registered “entrepreneurs” working on project-based bases. • 6) non-registered working solo/on projects • Working culture and habit shaped within cross-cultural communication

with clients (perception of intellectual work in the international setting).

Perceptions of IT specialists

Perceived pros of formal employment:

• systems help advance, • proof to foreign clients,

stability of income, • stability of projects.

Perceived pros of informal employment

• higher salaries, • flexibility, • freedom of relocation, • freedom of client selection• invisibility on the

government/tax radar

Perceptions 2 • HR IT input: teams have observed that

productivity/output drops when specialist changes from office work to distance work (prefer not to hire).

• Challenges of information/distance work: lack of housing settings (work from home), cultural lack of the concept of “from home work”, instability of the outcome.

• Gender observations: Myth “IT is man’s job”, insights of respondents: tech writers, CQs, managers (entrance to the market via in-house tr)

Implications• The “outsourced” talent and skills of IT leaders would be better

linked to the Ukrainian official labor market trends. • The publications resulting from this work will help provide IT

specialists with positive role models and will help demonstrate how IT specialists could be better included into the formal sector of employment.

• This research will lay the ground work for future studies, which makes it even more significant. Research findings will be used to create training materials that can be used in business circles and universities/career centers .

“One of the best European programs for social science researchers!

Fellowship offers outstanding research opportunity, invitation to scientific

conferences, affiliation with a network of European researchers, professional

peer reviewed advises on the methodologies and analysis. Strongly

recommend! “

Svitlana Buko, PhD, Research Fellow 2013/2014

ERSTE foundation opens new call for Research Fellows 2014/2016 http://www.erstestiftung.org/social-research/