On January 28, 2021, Andrew Wrobel, Emerging Europe’s Founding Partner spoke with Taras Krykun, the Minister-Counselor for Economic Affairs at the Embassy of Ukraine to the United Kingdom, Kerry Hallard, the CEO of Global Sourcing Association and chairwoman of the Global Technology and Business Services Council, as well as representatives of various IT companies from Ukraine —AltexSoft, Sigma Software, Innovecs, GenovaWebArt, Avitar, Corefy, and Tebin.
The online session was part of the Ukrainian Trade Mission to the UK, organised by Sigma Software Group, with the support of the USAID Competitive Ukraine Programme, which aimed to strengthen business connections and to find new opportunities between the two countries.
The UK-Ukraine agreement
Taras Krykun, the Minister-Counselor for Economic Affairs at the Embassy of Ukraine to the United Kingdom, gave a brief overview of the new partnership agreement, which came into force on January 1, 2021. As Krykun said, the UK-Ukraine political, free trade and strategic partnership agreement strengthens and secures the political and trade ties both countries have. It brings its relationship to a new strategic level and is a starting point for even further liberalisation. He also pointed out that this deal is the largest bilateral treaty agreement Ukraine has with one country.
“One of the key points of the agreement is cooperation in the tech sector. Both countries agreed to liberalise establishment and trade in IT services. The deal eases market access for Ukrainian companies when entering the UK market (and vice versa), and it secures the fair treatment of these suppliers like their own. The agreement should help to build awareness and trust between tech businesses in the UK and Ukraine,” said Krykun.
The UK has always been one of Ukraine’s biggest partners. In 2019 trade between the UK and Ukraine was worth 1.5 billion UK pounds.
The UK tech industry in turbulent times
According to Kerry Hallard, the CEO of Global Sourcing Association and the chairwoman of the Global Technology and Business Services Council, the number one issue of the UK’s tech industry is the lack of talents, something which Brexit has accelerated. That is why UK organisations need to take a look at the global talent pool to enable digital transformation.
“There’s a feeling that we should become very protectionist and nationalistic in our employment approaches since unemployment has already reached an all-time high. But the reality of that situation is we don’t have anywhere near enough skilled workers to do the work that we need to do in the digital transformation space,” said Hallard.
The UK has always been a very avid user of offshore delivery destinations. It’s always partnered with different countries around the world. That is going to continue unabated. And one of these countries is Ukraine.
Despite the global crisis, trust and partnerships have strengthened during the Covid-19 pandemic. In 2020 the industry grew by one per cent. Hallard predicts a positive future for the industry and indicates its growth by three to five per cent in 2021.
Hallard also pointed out that digital transformation happened overnight. UK companies didn’t just have to keep the lights on for their customers but actually, keep the wheels turning. Moreover, projects that UK businesses have been planning to execute for three to five years were suddenly expected to be implemented immediately. And now they have a huge appetite to drive even more innovative developments. It is the so-called tech acceleration period.
As for Brexit, Hallard claims it was not good news for the UK’s tech industry. “We did a poll across our membership base: 80 per cent of our community wanted to remain in the EU. There remains a disappointment that Brexit did happen,” she said.
The Brexit negotiations with the EU were focused predominantly on goods. The services sector remained largely untouched. “Given the size of the industry, it’s almost farcical that they’ve done very little with it,” said Hallard.
The importance of building a strong country brand for Ukraine
Hallard emphasised that a strong country brand is crucial for building partners relations.
“You need to build your brand profile for the technology work that you actually do. I’ve been to Ukraine and I was impressed. I know there are some great companies. But I still don’t think Ukraine makes enough noise about its potential to deliver technology services to UK companies,” she said.
Also, Ukrainians need to be more involved in the global context if they want to succeed.”
Alexandra Govorukha, Head of international PR at Sigma Software, agreed with Hallard about the importance of having a good reputation and a proper PR profile. She believes that broadcasting the changes is as important as the changes themselves.
“We have to be bold and brave to speak about our changes and opportunities, what we offer to the world. Here are a few facts about our potential. 11 Ukrainian IT service companies are on the 2021 Global Outsourcing 100 list. We have more than 220,000 (!) top-notch tech talents. The Ukrainian start–up ecosystem ranks 29th among 202 countries according to StartupBlink, the world’s most comprehensive start-up ecosystem map. Ukraine also ranks 45th among the 131 economies featured in the Global Innovation Index 2020. That is why such projects and initiatives as the Ukrainian Trade Mission to the UK help build a new positive image of Ukraine,” she said.
The opportunities for Ukrainian IT companies in the UK
Hallard believes that Ukraine offers tremendous opportunity as it is a talent-rich and cost-effective destination. Ukraine is also nearshore and has every potential to increase its trading relationship with the UK for technology and business services.
Govorukha envisions great opportunities for partnering with the post-Brexit UK tech market and new ways of cooperation since people in Ukraine have a similar mindset and strong ties with western culture as a whole.
“Our tech ecosystem started shaping in the early 1990s. So, now it is quite mature. We have the necessary experience, both hard and soft sets of skills, good language knowledge and a high level of compliance to work with European partners. That’s why working with us is easy and we are ready to shift your expectations.”
Maria Skakun, a senior associate and a head of business development at Avitar Group, also thinks that this is the perfect moment for the partnership. “Ukrainians have always been very creative. Our legal firm is interacting daily with Ukrainian IT companies and we see that the level of entrepreneurial skill sets is continuously increasing,” she adds.
Pete Smith, VP Sales Europe at Innovecs, echoed all those comments and believes that there are no obstacles since any problem today can be fixed remotely.
“People in the UK feel far more comfortable dealing with Ukrainian companies than they would somewhere that’s in a totally different time zone”.
According to Smith, it doesn’t always come down to price. It’s more about the quality of service and professionalism. He emphasised that the level of professionalism in Ukraine is far higher than in companies from other countries.
Den Melnykov, a co-founder and CEO of Corefy, states that the trade agreement as a framework is bi-directional. “It’s not only about the talents and IT services. It’s about helping UK companies to scale in other markets. Ukraine also could be a proper gateway for the UK to Eastern Europe.”
According to Aleksandr Nikitin, the CEO of engineering and construction company Tebin, it is a challenge to digitise construction and building sectors in the UK. His company is ready to contribute to the UK’s industrial strategy with the help of Ukrainian tech talents, as it already does in Sweden.
Ukraine’s main feature
Ukraine is home to a lot of world-renowned companies, including Grammarly, Petcube, Readdle, MacPaw, Depositphotos. The services that Ukrainians create are used by millions of people around the globe every day. So what makes Ukrainian products and services that good?
Artur Korniyenko, the founder and the CEO of Genova Web Art, believes that quality is a trademark of Ukrainian companies. “Our internal market is very competitive, so a lot of companies provide really good quality.”
Ukrainian service and consulting IT companies don’t just provide strictly defined services. Some of them provide more value to their customers by helping them to connect to partners, investors, or even customers.
According to Alex Blishun, a director of client engagement at AltexSoft, the great talent pool that Ukraine has can bridge the gap between the need of UK companies for skilled workers as well as the competitive price. Moreover, he believes that Ukrainians can successfully compete on quality with popular offshoring destinations like Asia or Latin America. “Our developers have strong technical skills, vast experience of dealing with complex international projects and last but not the least we have almost the same time zone, which creates a great communication overlap,” he added.
“The work that I’ve seen delivered by Ukrainian companies has been incredibly positive. Stick with the quality. That’s a key message for Ukraine,” Hallard concluded.
Watch the online session below