Franke: Ukraine could be a second India
The director of Microsoft Ukraine believes the nation will play a big role in software development. Eric Franke has been the general director of Microsoft Ukraine since December 2007. The Dutch national has more than 20 years of information technology industry experience. No stranger to Ukraine, Franke led the development of UMC, now MTS, from a mobile phone subscriber base of 400,000 to more than 11 million between 2001 and 2005. During his interview with the Kyiv Post, Franke said that Ukraine has the potential to become a second India in software development outsourcing.
KP: What is the situation in Ukraine’s software development industry today?
EF: Ukraine is a unique country when it comes to software development. There are 30,000 to 40,000 individual software developers in Ukraine. It has huge potential and is wellplaced, close to Russia and Europe. Infrastructure is relatively OK. It could be better, but it is OK. And there is a lot of intellectual potential. From our point of view – from a sales and marketing perspective we see the potential as we’re selling them the developmental tools. A number of these developers are actually working on products for Microsoft. We have identified at least 400 developers working on Microsoft products actually writing code, integrating, supporting, localizing and adapting software. Ukraine is in an exceptional position because when Microsoft looks for developers they look to the huge countries like India, Russia, China and, of course, the United States. Compared to these countries, Ukraine is relatively small, but there are a lot of good programmers here.
KP: The universities are producing highly qualified programmers?
EF: Yes, they are producing high quality programmers. When [Microsoft CEO] Steve Ballmer was here, he was surprised by a question a student asked about robotics and parallel processing. He was astonished that the student asked a question that usually only gets asked at Microsoft labs. We have formed partnerships with the 10 core universities in Ukraine. We also opened the Microsoft Innovation Center at National Taras Shevchenko University. We supply them with development tools and provide free training to help incubate talent.
KP: How mature is the software development market in Ukraine?
EF: About 85 percent of the IT (information technology) business is in hardware. Software is still is a small slice. This shows Ukraine is at the beginning of the developmental cycle. If you look at Europe, the ratio is 5060 percent hardware the remainder in software. The IT (information technology) business is growing at about 40 percent each year. We are growing even faster. Microsoft Ukraine started with four employees in 2003, and now we have 150. The growth will not slow for at least three years.
KP: Your growth is coming from which segments?
EF: The biggest growth is from solutions sales and partners. Our main target is to increase the reach of the company by working with partners. At the moment we have over 1,000 partners.
KP: What are the outsourcing trends? Is Ukraine attracting clients?
EF: Outsourcing represents about 80 percent of software development work in Ukraine. That can be anything from integration jobs, quality assurance and conversion projects. They come because the high quality work is less expensive than it would be in the U.S. or Western Europe. Ukrainians are hard working people who know how to work towards targets. They know how to dig into the earth. They know how to do things with their own hands and, in this case, their brains.
KP: Is there a “brain drain” problem?
EF: The IT (information technology) job market is overheated at the moment. It is no longer an employers’ market. It is a job candidate’s market. We see that in our company as well. Talented people with Microsoft on their resume can get any job they like.
KP: How is the piracy situation today?
EF: It is a problem. No company would dream about launching a product here because the next day it will be pirated. The piracy rate in Ukraine is 83 percent of the installed base. Last year it was 84 percent, so it is a huge problem that is not improving quickly. We do see improvement with the big companies, but small and medium sized companies, companies with five to 50 computers, are a challenge.
KP: Where do you see the software development market in five to 10 years?
EF: While Ukraine isn’t as big as India, I think it can play a big role in outsourcing and development. Looking at the potential, looking at the 40 percent annual growth, I think Ukraine could be a second India. It has all the ingredients: huge intellectual capital and proximity to the West.