Ukrainian IT sector is gaining recognition as a significant player in the global market

Despite the challenges posed by the war, Ukraine's IT industry has displayed remarkable resilience, maintaining its operations and continuing growth. Konstantin Vasyuk, the IT Ukraine Association Executive Director shares valuable perspective on how the sector has not only navigated these challenges but also garnered international recognition and expanded its reach.

Wiktor Doktór, Pro Progressio: Ukraine's digital sector was one of Ukraine's greatest strengths prior to the war, with many experts dubbing the Ukrainian ICT industry the “emerging tiger of Europe”. How did the sector manage to maintain its excellent pre-war achievements as well as its levels of performance and efficiency? And what is its current condition?

Konstantin Vasyuk, IT Ukraine Association: That is true: before the full-scale invasion the Ukrainian IT industry grew by 25-30% annually, generated more than 4% of Ukraine's GDP and became one of the largest exporters of tech services in Europe. The reason for this is obvious – Ukraine offers a lot of high-quality education opportunities for a large number of people who want to start a career in IT. And, as all world has already recognised, the drive of Ukrainians is hard to stop: even with the war happening, thanks to the huge dedication and reactivity of the IT industry to face all upcoming challenges, last year the IT sector brought USD 7.4 billion in export revenue. This means that the Ukrainian IT sector grew by 10% compared to the last, pre-war year.

Results of Q1 2023 indicate that the situation is stable and is forecasted to remain as such for the time being. Ukrainian IT may be a discovery for some, but I’m not surprised by our resilience at all. This industry has always been prepared for different situations. Recent years, and particularly the COVID-19 pandemic, have taught us an important lesson: being ready for various scenarios and being able to adapt is crucial for success in the sector. Despite challenges, Ukrainian IT businesses have shown their ability to thrive and embrace changes.

The war has forced the IT sector to seek opportunities for growth beyond the country's borders. Which countries currently host the largest number of IT companies and professionals originating from Ukraine?

The lives of Ukrainian citizens have been profoundly affected by the war in the country. At first, families sought refuge by relocating to various regions or neighbouring nations. In 2022, almost 71% of IT companies conducted an unplanned relocation. The list of Top 10 countries included Poland, Germany, USA, Portugal, Bulgaria, Czech Republic, Romania, Moldova, Spain, and Canada.

Nevertheless, as the situation has become more stable, a significant number of people have returned to their homes. Majority of Ukraine is now enjoying a relatively normal, everyday life; except for the frontline regions. 81.5% of IT companies that relocated still plan to return to Ukraine but only when martial law is lifted and there is a complete cessation of hostilities. The forced migration means something else though: the IT industry is now becoming an ambassador of Ukrainian business abroad. I’m confident that the connections we make now, not just in the countries listed above, will last for years. For instance, 8 Ukrainian companies – members of the IT Ukraine Association – joined forces, presented their services at a single, collective stand, and thus made their debut on the Irish market at the Dublin Tech Summit. Currently, IT Ukraine Association is working on the opening of our representative office in the UK. Ukrainian companies are pretty well-known in that market, we have been partners with many organisations there and we thus believe it's the time is ripe we put ourselves on the official map over there. The geography of Ukrainian activities is expanding and that’s a clear sign our expertise is recognised.

It seems that the recognition and trust in the Ukrainian IT industry lead to success wherever it operates. What is your strategy for expanding the sector abroad? Based on what competencies/values/areas do you aim to establish long-term business relationships in the West?

Fundamentally, nothing has changed: representatives of Ukrainian IT have been working successfully with the Western partners. We are recognised for being not just professional, but extremely flexible and adaptable to any circumstances and conditions of operation as well. Last year Ukrainian IT did not lose partners and retained trust thanks to professional management and the ability to manage risks – isn’t that the best confirmation of our project implementation quality?

Currently, the IT Ukraine Association is actively developing an international direction of its effort in order to become an entry point to the Ukrainian market for companies from abroad on the one hand, and on the other hand – to help Ukrainian tech companies to properly present themselves and significantly expand their activities worldwide. This is the reason why support from our partners is vital. With the Ukrainian IT sector entering a new phase of development and gaining recognition as a significant player in the global market, it is crucial to promote its expansion. We take a two-pronged approach to this matter, because said promotion entails, on the one hand, continued investment in and loyalty towards Ukrainian businesses; however, on the other hand, our work focuses on convincing new partners to start co-operating with Ukrainian service providers. In essence, collaborating with Ukrainian companies is of utmost importance as they have taken all necessary measures to ensure uninterrupted business operations. The support of the international community is now the key to sustaining the industry and ensuring its survival.

Let's return for a moment to the realities in which companies in Ukraine operate on a daily basis. Russian invasion has posed challenges to the digital sector, including the destruction of digital infrastructure, among others. How does a sector, whose operations rely on constant connectivity, cope in conditions marked by alarms, power outages, and Internet disruptions?

Ukrainian IT industry responded uniquely and coped with what can definitely be described as one of the hardest challenges ever – that is war-time operation. The sector has been doing everything possible to ensure maximum readiness, not only limited to what you have listed but also to forthcoming, currently unknown challenges. Being on full alert 24/7, companies implemented extraordinary measures when it was urgent: the purchase of generators for the working spaces? Done. Usage of a diversified Internet providers network and Starlinks? Done. Transfer of the key systems to the cloud? Done. And we can’t do otherwise: the development of the industry continues and will continue under any conditions. So one step at a time and checking which way the wind is blowing, the companies are still constantly adapting their business continuity plans due to the day-to-day changing circumstances.

War had a profound impact on Ukraine’s IT industry and resulted in the relocation of some skilled workers to western countries in search of more stable opportunities. What steps has IT Ukraine taken to address the ensuing shortage of highly skilled IT workers in the country?

In fairness, few have left and only those who had reasons to do so. Most IT professionals stayed in the country, adapting to the difficult conditions of the war and working on implementation of the projects in companies as well as volunteering to support the country in the framework of information and cyber warfare. The Association is in constant dialogue with the authorities regarding the reserving of critically needed professionals (those who do not have specialties that are in short supply for the army).

We also work to ensure that IT specialists have the opportunity to go on short-term trips abroad to negotiate with partners and clients on current and planned projects. To ensure the single voice of the industry, last month the most influential IT clusters from 14 regions united with the IT Ukraine Association within the framework of a strategic partnership. This association will contribute to the development of information technologies in Ukraine, will help protect the common interests of Ukrainian IT companies in the discourse with state authorities, and will also promote our industry at the international level. In particular, the IT Ukraine Association will lead the joint work of the clusters on possible solutions regarding the granting of permits for temporary short-term trips of professionals abroad for the negotiations of the current and potential contracts, reserving critical IT specialists for the field of military service, payment of taxes, cooperation with state authorities, etc. We strongly believe that this decision will give all of us more power to influence the routes of development for the Ukrainian economy and will pay back very soon.

Let's pause for a moment to discuss the issue of cyber warfare. According to The Guardian, Ukraine experienced a threefold increase in cyber-attacks in 2022. We also frequently hear about numerous organisations and government institutions in other countries being targeted by hackers, with evidence pointing to Russia as the origin of these threats. Can you discuss any successful strategies or best practices that have been employed to mitigate cyber threats in Ukraine? Are there any lessons learned that can be shared with other organisations or countries facing similar challenges?

Maintaining an effective cybersecurity system is a continuous task that demands constant focus and diligence. It is an ongoing process that needs unceasing attention to effectively counter the ever-changing threats in the digital realm. To ensure the protection of sensitive data and systems, it is crucial to adopt a proactive approach by regularly monitoring, updating, and adapting cybersecurity measures. Organisations must remain agile and proactive in their defences, continuously analysing and strengthening security protocols to address emerging vulnerabilities.

In April I had the great pleasure and honour to sign the Memorandum of Understanding between our organisations: IT Ukraine Association and Pro Progressio, next to your signature. What are your expectations regarding this initiative?

I’d like to highlight three main points. First of all, we expect the memorandum to provide us with a pool of experts that will contribute to the mutual development of our organisations. Secondly, we are very interested in the development model successfully implemented by Pro Progressio and would love to learn from it. On the other hand, IT Ukraine is experienced in flexible restructuring and operating in difficult and crisis conditions – we have a great deal of expertise in this area and we would love to share it. Last but not least, we strongly believe that creating a common platform puts us on a path to jointly develop many excellent projects in the future.

Thank you for the interview.

This article comes from magazine:
FOCUS ON Business #11 July-August (4/2023)