In the internet age, companies that can do all of their business online now have unprecedented freedom in choosing the ideal place to locate the physical part of the enterprise – offices, servers, computers and workers.
For Dutchman Pieter Kinds, that place is Ukraine.
Kinds, 40, first came to Ukraine in 1998 and served as commercial director for the Kyiv Post. Four years later, as the online business boom began, he helped rebrand his father’s old-school logistics company into a high-tech online freight auditor called ControlPay. And, taking advantage of Ukraine’s skilled yet low-cost workforce, the company located its biggest office in Ukraine.
ControlPay is a service provider in freight auditing – the bureaucratic business of tracking, processing, checking and paying invoices for cargo shipments. It offers its clients an online solution that allows the auditing to be done almost completely electronically, via the internet.
“It’s pretty much virtual,” Kinds, ControlPay’s director, told the Kyiv Post in an interview in April. “It’s like IT outsourcing. All you need is a computer and a person who knows how to use it.”
The company eliminates paper wherever legally possible, moving documentation online, and automating the freight auditing, registration and payment process. While the computers that do the work and the people that maintain them are physically located in Ukraine, ControlPay’s customers can be based anywhere in the world. And the business is growing.
“We’ve been growing in double digits for the last two years,” Kinds told the Kyiv Post, estimating revenue at $2 million a year. “That’s healthy growth.”
The bulk of his company’s employees work in its Kyiv office. ControlPay has 140 workers in Ukraine and plans to add another 60 workers by next year.
ControlPay’s customers enter their freight contracts into the company’s online repository, along with all the required data to manage their own shipment and trucking, check numbers and sums, and make sure they pay “the absolutely correct amount of money for transportation.”
The efficiencies gained from this allows companies to save up to 5 percent on transportation costs, Kinds said.
ControlPay’s customer base now includes companies such as Siemens, Bridgestone, Procter & Gamble, Johnson and Johnson, and Schlumberger.
Kinds said his company was more flexible and quality driven than its competitors, and able to provide services that are tailor-made for a particular client.
Companies “don’t need to handle this sort of thing anymore – instead, they can focus more on the optimization of their business,” Kinds said.
Based largely in Ukraine, with a mainly Ukrainian staff, ControlPay is committed to the nation, Kinds said: As Ukraine suffers almost daily attacks by Russian-backed forces in the eastern Donbas, ControlPay has become an official partner of the United Nations Children’s Emergency Fund, or UNICEF, in Ukraine.
“We do feel it’s very important to give something back,” Kinds said. “We want to be affiliated with international projects. UNICEF has the kind of profile we want to be associated with.”
Outsourcing nation
While it has three physical offices – in the Netherlands, the United States and Ukraine – ControlPay works only in the European and U.S. freight markets: the Ukraine office is simply the place from which the outsourcing services are provided.
According to Kinds, the Ukrainian market is still not mature enough to use the services his company provides.
“We really focus on companies that don’t just operate domestically,” Kinds said.
Instead, his clients are companies that regularly do business with up to 200 suppliers in dozens of countries. With operations as complex as that, it makes sense to outsource them to a company like ControlPay. As of yet, there are no such companies in Ukraine, Kinds said.
Key to success in Ukraine
But foreign companies who decide to set up shop in Ukraine can’t just import their own practices wholesale, Kinds warned: local conditions have to be taken into account, and worked with.
For that reason, ControlPay is an example of a “hybrid” company, exploiting a mixture of Dutch and Ukrainian know-how, Kinds said.
“You have to have the will or the knowledge to understand what part of yourself, as a foreigner, you need to leave behind or take with you,” he said. “You can’t just say ‘we’re going to westernize the whole thing.’ You need to find out how things work here.”
Need for logistics education
Kinds is also looking to set up a logistics academy in Ukraine. His experience has taught him that workers in Ukraine have a low-level of knowledge about supply chains, transport and other logistical issues.
“We give logistics courses to our employees,” Kinds said. “In general the level of logistic knowledge in Ukraine is gained by experience, not by institutes, universities or courses.”
He thinks it makes sense to set up courses for novices in logistics or for those who just want to gain more expertise. Another tendency, according to Kinds, is that people, who apply for a job in logistics after graduating from universities’ logistics departments, tend to have very poor level of knowledge.
Therefore, the plan is to offer the paid courses to companies that seek to improve the skills of their employees. There are dozens of examples of good logistics universities in Europe and America, he said.
Ukraine is ready for a breakthrough here.
“Logistics is very important in Ukraine if you want to grow an economy,” Kinds said. “If the waterways are clean, tariffs are abolished, ports are reinvigorated, agricultural exports pick up more, and there’s better transit in Ukraine, it’s going to be more booming. It has a good position for logistics.”
Pieter Kinds
Age: 40
Citizenship: Dutch
Position: Global Business Development Director at ControlPay
Family: Married with four children
How to succeed in Ukraine: “You have to have the will or the knowledge to understand what part of yourself, as a foreigner, you need to leave behind or take with you.”
Kyiv Post staff writer Denys Krasnikov can be reached at [email protected]. The Kyiv Post’s IT coverage is sponsored by Beetroot, Ciklum, Steltec Capital, 1World Online and SoftServe. The content is independent of the donors.
