Violin Memory, SimilarWeb, ProSiebenSat.1: how Western companies open R&D in Ukraine

UAnet experts believe that for the development of IT in Ukraine and the economy as a whole, IT companies from America and Europe should open their own R&D centers in Ukraine. And they do, although these are predominantly not stand-alone development centers, but offices on the basis of outsourcing companies in Ukraine. Another such project was the launch of an R&D of a Californian company Violin Memory on the basis of GlobalLogic in Kyiv.

Violin Memory provides integrated enterprise hardware and software solutions for data storage based on flash memory. The company employs over 260 employees globally and is headquartered in Santa Clara, California. Their core staff of developers is also there, while sales managers work in regions of South America, as well as Europe and Asia.

Now about 50 specialists in Ukraine will join the Californian company’s developers and engineers. In Ukraine, the company plans to develop software for its solutions.

According to Ebrahim Abbasi, СOO of Violin Memory, in addition to software development, the Ukrainian team will also handle QA. “We will begin with 50 developers in Ukraine and their number will increase as our products grow,” he explained to AIN.UA, adding that they do not plan to relocate Ukrainian employees to California.

This is how Abbasi explained the choice in favor of Ukrainians: “Firstly, Ukraine is in the top five most educated countries worldwide and developers here are in abundance. That’s why it is a suitable destination for tech companies. Before making a final decision in favor of Ukraine as the place for creating our remote R&D, we evaluated many places, including Romania and India. We paid attention to demographics, level of education, availability of resources, and most importantly, the willingness to go an extra mile. As a result, GlobalLogic in Kyiv became our best choice.”

Developers of Violin Memory in Ukraine will work as consultants of GlobalLogic and will be housed in the R&D center of GlobalLogic in Kyiv. Abassi calls this cooperation a “hybrid model”, without mentioning the working conditions of Ukrainians. “Cooperation with GlobalLogic will allow us to utilize a hybrid model where internal and external resources will allow us to scale on the market in a shorter time,” he says.

In contrast, SimilarWeb has upped the ante in Ukraine. Recently it became known that the global giant of web-analytics has been having its own team of developers in Kyiv for about a year now. Moreover, it is called the official office of SimilarWeb in Ukraine, although it has existed on the basis of Kyiv’s own Ciklum during all this time.

According to AIN.UA’s source in SimilarWeb, Tel Aviv, it all started as a partnership with Ciklum, but currently, all employees of its Kyiv office (15 people) are full-time salaried employees of SimilarWeb. “The office was founded in June 2015 with the goal of rapid strengthening and expansion of development resources. Kyiv team is involved in developing of all key elements of the product in sync with the teams located in Tel Aviv (for example, main website development team, mobile application analysis development team),” said Pavel Tuchinsky, Marketing Analyst of SimilarWeb.

SimilarWeb is not the only partner of Ciklum who hires Ukrainian developers according to such a model. The opening of R&D centers on the basis of outsourcers is not a novelty for Ukraine, there are quite a few similar cases, but rarely companies are ready to announce it openly and most of the projects are strictly confidential. However, R&Ds in Ukraine are also opened by Western customers on the basis of smaller outsourcers.

On July 28, 2016, the first R&D center of the European media platform glomex (part of the German media holding ProSiebenSat.1.) was launched in Kyiv. The office was created on the basis of Ukrainian IT company Team Technologies with headquarters in Lviv. Ukrainian team of glomex has over 20 developers working in various directions: Machine Learning, Big Data, Android, iOS, Ruby, PHP, and JS. The company plans to expand its Ukrainian office.

“Ukrainians participate in the development of a new product, which was presented by  German ProSiebenSat.1, one of the key players of the European media industry, in April 2016. It is a glomex media exchange platform, which has gained wide popularity on the territory of German-speaking countries, particularly, Switzerland, Austria, and Germany,” Team Technologies shared with AIN.UA.

So far, cooperation with outsourcers is more convenient and profitable for Western companies than opening their own full-fledged R&Ds in Ukraine. Igor Beda, managing Director of GlobalLogic in Ukraine, explained the reasons why international companies prefer to enter Ukraine through outsourcing:

“Ukraine is interesting to international companies with a large number of talented engineers and good expertise in R&D for a broad spectrum of business areas. However, the unfavorable investment climate and changing business rules slow down the emergence of many international players in Ukraine. Partnership with us not only minimizes these risks but also gives customers access to the necessary engineering expertise, reduces the time of bringing new products to market, promotes the qualitative transformation of their business, for example, through the use of our experience in software development.”

Some companies go the other way – they acquire their IT partner along with their entire team. That’s what Ericsson did. It has been present in Ukraine for over 100 years, but it did not have its own R&D centers before the acquisition of the Ukrainian-Polish IT Company Ericpol. Now Ericsson has its own development center with 120 developers.

[Editor’s note: The original article was published on August 10, 2016, and information contained therein is valid.]