Why Israeli companies should build R&D in Ukraine

So, you validated your idea by talking to potential customers who might also become your MVP's users. As an entrepreneur, you need like-minded people, who are excited about the idea and are capable of bringing it to life.

The company might also have a limited budget or no budget at all.

The problem of finding skilled labor in Israel is not new. Yes, the level of Israeli experts is very high. This is confirmed by a strong presence of research and development offices of the high and mighty of this world (Apple, Microsoft, Google, IBM, Cisco, HP, ebay, etc.). While you are reading this, another tech giant is opening its R&D office in Israel.

In such a highly competitive workforce market, it is quite difficult for young companies to attract IT experts for positions in their cozy team, perhaps even with shares, but without any guarantees of a stable and successful future, social benefits, and other bonuses.

If you have Mark Zuckerberg or Ehud Shabtai among the co-founders, you can breathe freely and concentrate on your business goals.

There will also be fewer problems if you have excellent business acumen and you are as lucky as Steve Jobs and have a friend who is a great fit for a CTO position like Steve Wozniak.

Of course, every team has its own history. Some companies are started by the CTO themselves, and in the early stages, they do not need extra hands.

There’s an enormous amount of options for expanding the team beyond the borders of Israel, but I’ll tell you why it should be done in Ukraine because I am most experienced in this particular jurisdiction.

Let’s go directly to the list of advantages of working in Ukraine, and then we’ll break some of them down:

Ukraine is located in the central part of Europe; although it is called “Eastern Europe,” geographically it is located in the center, between Western Europe and the European part of Russia. However, the most important thing is that Ukraine and Israel are in the same time zone. The cherry on the cake is the opportunity to get to the major cities of Ukraine (Kyiv, Kharkiv, Dnipro, Odesa, Lviv) in 3 hours, via a direct flight from Tel Aviv. And yes, if you need to bring someone from the Ukrainian team to a meeting in Tel Aviv, they will be able to depart on the same day because there is no need in getting visa.

No, I’m not going to tell you that the mentality of Ukrainians is similar to that of Israelis. On the contrary, it is completely different, although it has similarities, given Ukraine’s eagerness to withdraw from the post-Soviet bloc and move towards the values of a democratic society.

The most important thing that is good to remember is that the wave of repatriation of Ukrainian Jews, which continues since the 1990s, is considered to be the most successful of all waves, bringing thousands of qualified employees to large Israeli corporations.

The best arguments towards Ukraine are the success stories. In every major city of Ukraine, there are R&D offices of successful Israeli companies. And many of them had launched their offices in Ukraine even before they became successful. All these companies managed to pass from start-up to a successful business with the help of Ukrainian specialists:

If you are Israeli, I’m sure you have friends who work in these companies, and they can share their experience of working with Ukrainian counterparts.

Ukrainian engineers are recognized even at the governmental level. In 2016, the Israeli government took unprecedented measures—a quota for 5000 work visas was granted to Ukrainians for Israel.

In order to summarize the above, it makes sense to estimate the costs required for the Ukrainian team, then to compare them with the costs of setting-up the team in Israel.

Let’s say you’re going to run another UBER or something else that requires the same set of team members, so it might look like:

You might also need an office. If you are in Israel, you would go with something like WeWork in the beginning. You have this option in Ukraine too, however you can rent a good-looking 150 sq. m. office for $1300.

Let’s see the difference between Israel and Ukraine based teams for the same set up: