Ukraine’s IT sector has, despite all the odds, grown by around 2.2 per cent this year, according to new research led by the IT Ukraine Association.
Before Russia began its war of aggression against Ukraine in February, the country’s IT industry had become one of the largest exporters of IT services in Europe, with annual growth of 25-30 per cent. Export revenues accounted for more than four per cent of Ukraine’s GDP.
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The war might have been expected to put an end to such impressive numbers; far from it. According to forecasts from IT Ukraine Association, by the end of the year, the industry will generate 7.1 billion US dollars in exports, representing growth of 2.2 per cent compared to 2021.
“The IT industry, as with the rest of the country, has demonstrated phenomenal resilience,” says Konstantin Vasyuk, executive director of the association.
The IT Ukraine Association’s ‘Do IT Like Ukraine’ research project – of which Emerging Europe is a partner – was intended to analyse the role of the IT industry in Ukraine, its contribution to the national economy during the war, and its potential to act as a catalyst for the future recovery of the country.
“IT companies continue to work and implement projects even during blackouts, pay their taxes on time, increase their presence on the global market and attract new customers,” adds Vasyuk. “The IT industry has all the prerequisites to become the main driver of the reconstruction of Ukraine after our victory.”
Relocation, resilience
Since the very beginning of the war, Ukraine’s IT firms have demonstrated a key ability to adapt to new realities. Continuity plans were implemented, and teams relocated, either in other parts of Ukraine or sometimes abroad. Around 309,000 people are still employed in IT in Ukraine.
Indeed, the IT Ukraine Association’s research reveals that as a result of the full-scale invasion, 70.8 per cent of IT companies relocated at least partially; a quarter of them relocated in full.
Around one in six firms relocated abroad, to locations as diverse as Poland, Germany, the US, Portugal, Bulgaria, Czechia, Romania, Moldova, Spain, and Canada. The vast majority (81.5 per cent) plan to return their business to Ukraine once hostilities are over.
Stanislav Shum, CEO and founder of TopLead and a co-author of the research, says that the war has shown just how deeply the IT sector has penetrated the Ukrainian economy, “and the war has deepened this penetration,” he adds. “The sector will be an ambassador of Ukrainian business abroad. While Europe helps our country to recover, Ukrainian IT will digitise Europe.”
Like Vasyuk, Shum sees the IT industry as a driver of the recovery, a sentiment also shared by Andriy Kashperuk of UKRSIBBANK BNP Paribas Group. “Based on the Do IT Like Ukraine research, you can make a forecast about how the IT industry will help in the reconstruction of Ukraine in the future,” he says.
Help for the armed forces
From the first days of the War, the IT industry has been actively helping the Ukrainian Armed Forces and the government. In 70 per cent of companies, professionals serve in the Armed Forces of Ukraine, while a separate track is the industry’s support of the strong volunteer movement, which today is represented by the 200,000-strong IT army. Indeed, 95 per cent of companies have at least one IT professional who has joined the cyber army.
Fundraising and volunteering have also become an integral part of the day-to-day activities of IT firms. Almost all of them regularly transfer funds to help the government purchase the equipment necessary equipment to bring victory over Russia closer.
“The adaptability and productivity of the IT sector amazes our international partners and customers,” says Andrii Trofimov of EPAM Ukraine. “They are impressed by our stability, professionalism and responsibility. At the same time, the IT industry now powerfully supports the economy with foreign exchange earnings as well as with volunteer and charity projects.”
The only fully functioning export industry
The industry remains the only export branch of Ukraine that is fully operational and which was able to increase export volumes compared to last year, even as other sectors suffer from significant losses.
For example, the metallurgy sector fell by 59 per cent, the export of mineral products by 46.1 per cent, the chemical industry products by 42.6 per cent.
By contrast, IT services exports as a share of GDP increased by 51 per cent and currently stands at 5.4 per cent. According to the Do IT Like Ukraine research, 43.1 per cent of IT companies expect business growth this year, and well over 90 per cent plan to continue investing in Ukraine.
“The Do IT Like Ukraine project is a testament to the indomitability and stability of Ukrainian IT,” says Yuliya Malych, one of the project’s managers. “Based on the results of the research, we understood that in fact, IT professionals want to stay in Ukraine, and companies plan to continue investing in the Ukrainian market. We hold the economic and cyber fronts, and we head together to victory. Be brave like Ukraine. Do IT like Ukraine.”
A key factor for the further growth of the industry – even during wartime – is the synergy between business and the government, the development of joint mechanisms and initiatives that will allow the industry to make maximum use its potential.
“It is important for us to continue to head to victory together, generating new ideas, holding the economic front. Moving this way, we will be able to jointly rebuild our country very soon, transforming it into a country of start-ups, high technologies and successful digital projects,” says Natalya Denikeyeva, head of Diia.City at Ukraine’s Ministry of Digital Transformation.
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