By the beginning of 2022, Ukraine has become a well-known participant on the global IT market. Despite the turmoil that the country has had to face since 2014, an international business partnership was and still is one of the main economic priorities.
At the end of 2021, the world community was shaken by the news about the Russian threat at the Ukrainian borders. Is the business sector somehow affected by political factors?
In January 2022, Oleg Chernyak, Head of Business Development at СНI Software, commented on the state of the Ukrainian IT business for BBC UK:
“As a business development executive, I can assure you that the Kharkiv IT sphere is more than stable now. Our customers continue to cooperate, we progress and open new representative centers in the US and Europe, open job positions in Ukraine, and create opportunities for our people”.
Below, we’ve gathered the main statistical facts describing the state and progress projections of the Ukrainian IT market. The industry aims at growth and evolution – see for yourself.
Market Foundation: Political and Economic Factors
Let’s start with the basics: Ukraine is a Pro-European country focused on a long-term partnership with the European Union. The state government signed the EU Association Agreement (in effect since 2017), and now Ukraine is a priority EU partner.
Since the Revolution of Dignity in 2014, the country’s economy has been growing steadily. Ukrainian GDP was 91.031 billion USD in 2015 – in 2020, it already reached 155.499 billion.
Also, Ukraine is advancing towards European data protection standards. According to the Association Agreement, the country should apply the GDPR data protection measures. In this regard, a draft of the Law on Personal Data Protection was registered in June 2021.
Getting to the Point: The Profile of the Ukrainian IT Market
According to 360 Tech Ecosystem, an official government portal, there are 2235 IT businesses in Ukraine (533 service and 1702 product companies). At the same time, there are at least 4000 companies registered on the DOU portal, so the actual number is even higher.
In 2021, Ukraine was among the top 35 startup ecosystems. On top of that, a lot of worldly-known companies have opened Ukrainian R&D centers: Siemens, Oracle, Samsung, Netcracker, Boeing, and many others.
Export of IT services
Despite the COVID crisis that affected nearly all businesses and industries, the export of Ukrainian IT services continued to grow. In 2020, its number hit the record figure of 6.8 billion USD (in 2016, it was only 1.98 billion USD). The share of IT services in Ukrainian service exports reached 37%.
It’s not only export volume that makes the Ukrainian IT market prominent, but also the growing number of talents. In 2017, there were 157.7 thousand specialists in the country. In 2021, this number reached 285 thousand (IT Ukraine Association).
According to the Ministry for Development of Economy, Trade and Agriculture of Ukraine, 50% of Ukrainian IT services are exported to the US and 35% – to Western Europe (including the UK and Nordics).
This and the export volume make Ukraine the top European country by the amount of produced IT services.
What’s Waiting Ahead: Advantages and Opportunities
According to the latest report from IT Ukraine Association, the IT sector in Ukraine could reach 14.9 billion USD by 2025 in the baseline scenario (a 21.6% CAGR).
Ukraine has also been an attractive country for investments, which bring 300-700 million USD every year. The highest number of deals concern startups (Seed and Pre-seed stages), but financially large agreements are usually concluded with big companies, such as GitLab, Grammarly, People.ai, and others.
“Digitalization and development of the IT sphere are among the topmost priorities for our Ministry. We have set ourselves the goal of doubling the share of the IT sector’s GDP in Ukraine to 10% in three years. And we are moving with confidence in this direction”, – Olexandr Bornyakov, Deputy Minister of Digital Transformation for IT Development.
Ukraine has improved its international image through the years. Here are several examples:
- The country rose by seven spots taking 64th place in the Doing Business 2020 rating provided by the World Bank Group;
- Moody’s Investors Service upgraded Ukraine’s rating from Caa1 to B3 in 2020 after the country eased near-term funding challenges and announced a new financing program with the International Monetary fund;
- In August 2021, Fitch confirmed an outlook B rating for Ukraine;
- Ukraine is among the top 50 out of 132 economies in the Global Innovation Index 2021. The country’s performance is announced to be above expectations for the current development level;
- The Ukrainian economy is 1st in the science and technology category of the Good Country Index.
Finally, Ukrainian IT companies, including CHI Software, are interested in continuous working activity – for this purpose, they create detailed contingency plans. Such documents usually include several emergency scenarios of the employees’ relocation.
After the pandemic, IT businesses in Ukraine have successfully established remote work infrastructure and equipped employees with necessary tools and devices. Relocation plans and the remote culture make the IT business highly adaptable to possible risks.
Ukrainian Business Is Ready for 2022
During the last eight years, IT companies rallied to create a positive portrait of Ukraine on the international scene. The figures you’ve just seen are only the beginning of more significant progress – the whole country is striving for it, including thousands of IT companies.
Despite tensions and uncertainty, the Ukrainian IT business continues to grow even during the pandemic crisis. Successfully established remote and hybrid work infrastructures made companies more tempered in the context of political and economic imbalance.
No one knows what’s waiting ahead, but we are ready to provide the best service, increase the export volume, and join forces in the face of ambiguity.