No secret, that the salary of a skilled developer in Ukraine, Russia and other CIS (Commonwealth of Independent States, almost all the former USSR) countries is significantly lower than that in US or Western Europe. It is not as fantastically cheap as in China and has quite risen last several years, but is still 2-4 times lower than in West.

The idea is simple – having the same size/quality developer team in Ukraine lets reduce the cost of development since you save on salary. However, do not expect expenses to be reduced in the same proportion as the salary of programmers, while you save on that part, other costs (like project management, travel, communication) will increase. But anyway, savings are quite significant as a rule and the game is worth the candle.
If the stream of IT work is stable, you can be sure that you can employ at least several people I would recommend to consider such an opportunity as creating your own offshore development center. If the work is not regular, urgent or small in volume it’s better to think about finding a sub-contractor.

When you decide to create your own offshore development center you should take into account the next issues:

- legal (to establish a legal body, develop a clear but effective scheme of work from a legal point);

- finance (to develop the most effective way to finance your center activity);
- HR (to find the staff, to form your development and supporting/administrative team)

- office (to find premises where your center will be situated);

- infrastructure (to find, buy and install the equipment and the services necessary for work).

With my experience, contacts and skills you can settle all these issues much more effectively and save tons of time and money.

One example: currently in Ukraine a person can legally work for you as an employee or as a contractor-sole proprietor (while actually he or she can work full day for your tasks and in your office). The last way however provides you 100-4000% saving on social taxes, it depends on the size of salary and the city where you open the office. With the salary of $1000 (a good level for a skilled developer) on one person you save $200-300 per month ($2400-$3600 annually).