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Top Norway-based IT company announces expansion plans in Ukraine

Following shortly after its entrance onto the Ukrainian market this year with the acquisition of two small-sized Ukrainian software developers, leading Norway-based IT company EDB has decided to greatly expand its operations in the country.

EDB, a provider of a wide range of IT-related services to businesses in the bank and finance, public service, retail, industry, and telecom sectors, announced on Sept. 11 plans to recruit over 500 new employees in Ukraine.

With a total of 3,800 employees, it would be EDB’s largest recruitment campaign in its 40-year history, according to a statement released by the company.

EDB’s advance also marks the first big push by a major European software developer into Ukraine, a country which has in recent years established itself as a leading hub for cost-cutting software development.

EDB works in Ukraine through its subsidiaries Infopulse Ukraine LLC and Miratech Ukraine LLC, having acquired 60.1 percent of the share capital of each company in January and July of this year, respectively. EDB expects to finalize a formal takeover of the two companies by the end of this year. The purchase prices were not announced.

Already boasting over 600 employees in Ukraine through the two recently acquired Ukrainian subsidiaries, its ambitious expansion plans would nearly double its current size.

The two companies presently operate out of locations in Kyiv, Zhytomyr, Odessa, and Kharkiv and have significant customer bases in the US and Europe, in addition to Ukraine.

Infopulse, one of the largest offshore software development companies in Ukraine, was founded in 1992. The company currently employs 350 software development professionals. The company’s main activities include IT consulting and business analysis, as well as tailor-made software development and enterprise application integration services.

Established in 1989 and employing 220 experts, Miratech provides software engineering, outsourcing, and consulting services to leading companies in 20 countries worldwide. Its major customers are corporate clientele located in the US and Western Europe.

EDB plans to maintain its current Ukrainian management, working closely with them in the recruitment.

According to EDB CEO Endre Rangnes, they are planning to expand the current locations in Ukraine and considering opening new locations, “in order to ensure access to the expertise and capacity we are looking for.”

EDB wants the two companies to continue developing their current customer bases and markets. In addition, the companies will also play a strategically important role in EDB’s plans for further growth in Nordic and Eastern European regions.

“Both Infopulse and Miratech report a positive trend, and we want the companies to continue to develop their current markets,” a press release quoted Rangnes as saying.

“Both companies have developed a broad customer base with banks and financial institutions, as well as other industries. The companies will continue to develop these customer relationships as well as carry out assignments for EDB,” Rangnes added.

The press release noted that EDB was experiencing strong growth in demand for its products and services in the Nordic region, its largest market. At the close of the first half of 2007, the group’s order backlog was at a record high of $2.25 billion.

“In order to ensure our continuing growth in the Nordic region, we intend to strengthen our delivery capacity by making use of the expertise offered by Infopulse and Miratech,” Rengnes said.

A study published in June by Global Offshore Associates Limited identified Ukraine as one of the most attractive destinations for IT outsourcing in Eastern Europe. The study concluded that Ukraine’s relatively low-cost software development industry earned about $246 million in export contracts in 2006, 47 percent more than in the previous year.

Other estimates suggest the business was worth significantly more last year, but exact figures are hard to come by, as a significant portion of earnings are not declared in efforts to avoid tax payments.

Ukrainian Hi-Tech Initiative, an alliance that unites Ukrainian offshore IT outsourcing providers, has estimated the size of the Ukrainian software outsourcing market at about $600 million in 2006.

For comparison, Russia exported around $1.2 billion worth of IT services in 2006, while the world’s leading software services vendor, India, received around $18 billion last year for exported IT services.