Legal Aspects of Doing Business with Ukrainian IT Outsourcing Companies

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@galynkaHalyna Vilchynska

Marketing Lead at DevCom - Software Development Company

IT Outsourcing in Ukraine is now a viable alternative to in-house development of software and IT products. Outsourcing offers some distinct advantages compared with building your development team stateside. Currently, 30% of global IT projects are undertaken offshore. If you are considering IT outsourcing in Ukraine, this article will help you learn more about the local IT landscape legal aspects of doing business with local companies.
Additional Reading: Dedicated Development Team: a Winning Approach to Outsourcing
Currently, IT companies in Ukraine operate under the general legislative field of Ukraine, as there no sector-specific regulation for the IT industry. The Ukrainian government actively supports the IT industry through laws on taxation.

Who will you work with?

A significant number of IT specialists in Ukraine work with companies under the private entrepreneurship model.
Your contractor (LLC, Operation company in the USA or EU) normally cooperates with private entrepreneurs. The project team normally works at the contractor’s office, being provided with all necessary equipment and required to comply with all data security rules. The contractor shall have general agreements with Private entrepreneurs providing scope of the services, NDA, NSA, NCA, data protection, IP rights transfer, etc. Transfer of the results and IP rights is confirmed by the act of transfer and acceptance or paid invoice.

What should be included in the contract with the outsourcing company?

  1. Service agreement.
  2. Pricing and billing.
  3. IP rights transfer.
  4. Data protection regulations.
  5. Sanctions and losses recovery.
  6. Warranties.
  7. NDA.
Fell free to ask your contractor about its agreements with the project team to determine if all sensitive provisions are reflected in such. The client can always ask to amend such.

How To Get The Most Effective Collaboration

For software development, IT outsourcing in Ukraine makes total sense for companies across the globe. So, when you’ve decided on an offshore team, there are two things that will help you to get the most out of this cooperation:
  1. Understand the software development process. What are your and your vendor’s responsibilities? Are there any specific quality expectations and acceptance criteria?
  2. Protect your intellectual property and confidential information. If outsourcing vendors cannot rely upon to protect trade secrets, then the risks of an offshoring development may outweigh its potential benefits. Hence, it is critical to review the intellectual property policy and NDA, which is needed before any development work. Besides, each developer can sign a personal NDA with the client on demand.
  3. Document the terms and conditions of trade in the contract. Make sure your dedicated development contract gives you clear answers to the following questions: rates for development work (including detailed breakdown if different rates apply for iOS, Android, Back-end, etc…), available volume discounts, protocols for invoicing & payment, credit limits and credit periods, warranty periods.
Summing up, the legal aspects of IT outsourcing to Ukraine are rather typical to contracting engineering jobs. Therefore, to get started with Ukrainian IT companies, you need to sign a pack of usual agreements:  Service Agreement, IP License Agreement, NDA.
Author: Halyna Vilchynska, Marketing Lead at DevCom

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