Ukrainian IT industry Keeps Going Despite Bombs
Photo of Ukrainian developers continued working in the shelter while bombed.
Over the years, the Ukrainian IT industry has won employers’ attention and interest far beyond Ukraine’s borders. The formula for success here is quite simple: well-trained specialists, their honesty and hard work, and low salary expectations compared to programmers from the United States, the United Kingdom, and Western Europe.
Ukrainian software developers have flooded the global market and become desirable candidates for many companies, from early-stage startups to Fortune 500 companies.
However, the war and Russian bombs have adjusted this beautiful picture. As a result, the industry, traditionally considered one of the highest-paid, most profitable and most promising, has faced hard times. In addition, many top managers of IT companies start talking about allowing IT specialists to go abroad and, at the same, discussing how it threatens the economy and may cause an irreversible migration.
We asked several experts about the current situation and new trends in the Ukrainian IT industry. They represent such companies as DAN.IT, Logos IT Academy, DataArt, Avenga, Intellias and Finmap.
How Ukrainian programmers continue working during the war
Today, Ukraine is among the top 20 countries with the best IT professionals in the world, so our developers are quite accustomed to the attention of recruiters. However, the situation in the market and in the IT community has changed since the war broke out in Ukraine. As a result, companies urgently reorganized their processes, moved or temporarily closed their offices, and switched to remote work. At the same time, the number of vacancies plummeted in March and began to grow only in June 2022.
In the first month of spring, only 10 thousand jobs were posted on the popular IT jobs platform called Djinni, which is 2.5 times less than in December 2021. The market began to recover slowly only in June. However, the number of job seekers (34,000) still exceeded the number of vacancies (15,000).
Avenga’s Tatiana Palianychka shared that the hardest part at the beginning of the war was dealing with shock, fear, and a sense of uncertainty.
“I am immensely grateful to most of our customers who did not cut Ukrainian dev teams but continued to hire more engineers, thus expressing support for our country. This has paid off. As we can see from the Opendatabot data, IT services have become the only export industry that has grown by 27% this year compared to the same period last year,” says Tetiana.
As soon as the war broke out, Avenga set up a round-the-clock headquarters to coordinate work and help specialists. In the spring, the company relocated people to the western regions and abroad, partially converted offices into shelters for employees. The company did not layoff anyone because of the war, did not cancel the hiring of new employees, and continued to work with all mobilized programmers, maintaining their compensation at 50% of normal level.
Dmytro Abramov from DataArt says that their company has always been able to work remotely, and the coronavirus pandemic has completely regulated these processes: teams are distributed, work is online. Therefore, there have been no significant changes in this aspect of work since the outbreak of the war. In general, Dmytro says the company’s specialists are incredibly strong, as in early March, the team’s availability in projects was almost 80%. At the same time, DataArt has not made any layoffs since the beginning of the full-scale war, and jobs and salaries to the employees serving in the Armed Forces have remained unchanged.
“Since the beginning of the invasion, Emergency Response Teams have been operating in every DataArt office. Members of these teams helped colleagues with any questions 24/7. The global corporate ERT supported colleagues at all levels, provided financial assistance, and helped with information. Some of the offices were transformed into shelters, the largest of which was the Lviv DataArt development center. Colleagues, their families, and pets could stay in the DataArt shelters. The offices have all the necessary things: food, water, generators, sleeping bags, and we also bought clothes, medicines, and pet food. Usually, the employees stayed in the sheltered offices for a day or two while ERT was looking for options to accommodate them for a longer period of time,” Dmitry notes.
DataArt also says that work processes are now more stable and calm than in the spring. Some specialists relocated within Ukraine, some went abroad, and some have already returned home. Clients have become more balanced as they have seen how the company and its specialists work in emergency situations. In addition, new customers have come, albeit not very large, but those who want to work with Ukrainians and support Ukraine.
Since the first day of the military invasion, many DataArt customers have supported their developers in Ukraine. Less than 10% of clients have imposed any restrictions or suspended their work, and there are only a few who have refused to cooperate at all.
Dmytro emphasizes that clients are concerned about aspects related to cybersecurity, risks of losing key people (mobilization and military operations), and infrastructure risks. Some clients are asking for new technical measures, such as additional identity checks to ensure that the computer is used by the right person, VPNs, etc.
Sofware development company Intellias admits that the IT sector has shown a high level of resilience since the outbreak of war: 85% of companies have fully or almost fully resumed business activities. Unfortunately, companies that worked exclusively on the local Ukrainian market suffered the most. The evacuation of thousands of specialists from the country’s dangerous regions was a big challenge for everyone. And those who prepared for this in advance and had an Emergency Response Team with a clear business continuity plan were able to survive the most difficult times of late February and the first months of spring more easily.
Intellias says it quickly adapted to wartime conditions by having clear and instructive guidelines for its specialists. The experience of working during the coronavirus pandemic and a detailed BCP helped.
“In just 4 days, Intellias evacuated most of the team to safe western regions or abroad, and in the first weeks of the war, we restored the operational level of delivery processes by almost 100%. At the same time, Intellias did not lay off any employees when the war started, but rather the opposite. Currently, there are more than 100 vacancies for the developers in Ukraine. By the end of the year, the company plans to hire about 700 specialists abroad and at least 300 in Ukraine,” Intellias said.
Despite the war, the company continues to expand in Ukraine and abroad. For example, a new office was opened in Uzhhorod in the spring. And in addition to the Krakow office that has been operating since 2019, Intellias has opened three new Polish offices in Warsaw, Wroclaw, and Gdansk. The company has also started working in Bulgaria and Croatia, with development centers in Sofia and Zagreb. And recently, it was announced that the company would open offices in Spain and Portugal.
Aleksandr Solovei, the co-founder of Finmap, also talks about the changes since the beginning of the war.
“It took almost three months for Finmap to ‘wake up’ and return to more or less normal performance. At the same time, it is very good that there is an industry in Ukraine that still operates and grows despite the enormous difficulties. IT outsourcing companies keep working actively, receiving money transfers from abroad and spending these funds here at home. This is a huge support for the Ukrainian economy,” says Alexander.
Aleksandr says that foreign customers are currently very attentive to the hardships caused by the war in Ukraine. They understand that there are risks, but despite this, the trend of supporting Ukraine and Ukrainians around the world is stronger than ever.
DAN.IT Education says that at the beginning of the war, there was a significant decline in new orders, as foreign companies considered the risks of attracting contractors from a country where a full-scale war was underway to be extremely high. Starting in February, startups suffered the most: some of them ceased to exist. At the same time, large and medium-sized companies have shown unprecedented resilience, often avoiding layoffs and only “freezing” the hiring of new specialists for a while.
“During May-August, we have seen a gradual recovery of the market, in particular, the growth in the number of vacancies, as companies have resumed hiring and creation of new departments in companies.”
Ruslan Shliapakov from Logos.Academy also confirms that IT in Ukraine is doing well, and it is the only industry that continues to grow during the war. He is sure that even though we are not seeing the same pace as before the war, this is temporary.
The need for IT professionals to travel abroad
In Ukraine, 75% of IT specialists are men, with an average age of 30-35 years, meaning they are prohibited from traveling abroad during martial law. In May, the government eased the ban somewhat, allowing conscripted athletes, railroad workers, and drivers to cross the border. But not for IT workers. However, sometimes the presence of Ukrainian programmers at the client’s site is necessary, for example, if they need physical access to devices.
Meanwhile, the Ukrainian IT outsourcing businesses have retained 95% of their contracts and 77% of companies have even gained new customers. These activities bring 250 million UAH as taxes to the Ukrainian budget every month. Ukraine’s IT industry generated $2 billion in export revenues in the first quarter of this year. At the same time, the volume of IT export increased by 28% compared to the same period last year, reaching $3.74 billion. Therefore, allowing IT professionals to travel abroad is critical to supporting the Ukrainian economy and thus bringing victory closer.
Aleksandr Solovei shares a similar opinion. He suggests that the government should not ban programmers from leaving, but rather make sure that IT professionals receive money on official Ukrainian bank accounts and spend it here in Ukraine.
“Developers need to leave, first of all, because the software development process is a complex and creative task that requires the right state of mind. And staying under sirens, in bomb shelters, with no time for sleep and rest, living under constant stress, it is impossible to make a high-quality product. The shock and stress of war affect the quality of the software and customer’s expectations. Therefore, the first reason that explains the desire of Ukrainian developers to be able to leave is the need for more efficient work,” says Aleksandr.
It is also worth to be mentioned that on September 1st, 2022, the government promised to launch a pilot project to allow Ukrainian IT entrepreneurs to go abroad on week-long business trips.
Ruslan Shlyapakov is confident that Ukrainian IT companies will make impact on the country’s economy wherever their offices or employees are located.
Dmitro Abramov believes that IT professionals will leave Ukraine only if there is an immediate threat to their lives and health:
“I don’t think most of the IT people will leave Ukraine under the current circumstances. Specialists have been and still remain in the country for various reasons. For example, the ratio of the salaries and prices for goods and services allows Ukrainian software engineers have a much higher standard of living in Ukraine than in other countries.”
Meanwhile, Intellias emphasizes that the security is an important factor that influences the decision to leave or stay. People are leaving Ukraine because they are concerned about their safety and the safety of their families. Now people are assessing the risks of missile attacks themselves and deciding whether they can put up with it or want to stay safe abroad.
“The tax factor should also be taken into account. If a specialist moves to another country, he becomes its tax resident and, accordingly, pays local taxes. In Ukraine, thanks to the model of individual entrepreneurs and the Diia City platform, taxes for IT professionals are significantly lower than in Central or Western Europe or the United States. At the same time, there are many patriots among IT professionals who want to stay here no matter what to support the country and bring victory closer,” says Intellias.
What IT emigration means for Ukraine
Currently, more than 230 thousand IT specialists live and work in Ukraine. However, more than half of them may leave the country as soon as the borders are opened. This is an alarming prospect, as such an exodus can cause problems that will take years to solve.
Given last year’s trends, IT export in Ukraine should grow to $8.5 billion by 2022 compared to last year’s $6.9 billion and continue to grow. But this is only possible if there is no outflow of specialists this year and in the coming years. Such a scenario is likely if US and Europe support Ukraine’s economic growth, invest in the IT industry, or if the current restrictions of leaving keep intact
If, hypothetically, 50-80 thousand IT workers leave Ukraine for other countries: Romania, Poland, the United Kingdom, the United States, the Czech Republic, Spain, and pay taxes there, export revenues will fall to record lows ($7.2-7.5 billion a year). In this case, the potential losses will be not only financial. The migration of “brains” will set back the Ukrainian IT industry for years. Moreover, the future of Ukraine’s recovery after the war and the creation of various IT products that will improve and revamp many processes are in the hands of programmers. If there is a shortage of developers, the recovery process will be slow.
Why Ukrainian IT specialists are so popular among the US and EU employers
Ukrainian software developers work for Google, Facebook, IBM, DELL, HP, SAP, Oracle, and Amazon; Ukrainian startups win international grants and are bought by global corporations; Ukrainian IT outsourcing companies develop world-class products for consumers in Europe and the United States.
A year ago, the number of IT vacancies in Ukraine far exceeded the supply of specialists. Ukrainian educational institutions graduate up to 20,000 technical specialists yearly, but the market needs at least 55,000.
In 2013, the Ukrainian IT industry ranked fourth in the world after the United States, Russia, and India in terms of the number of certified software engineers. In 2016, Ukraine was ranked 11th in the top 50 countries with the best programmers (according to HackerRank).
Every year, the demand for IT professionals in Ukraine grows by 30%, primarily due to the tremendous need for IT services.
This article was originally published in the Ukrainian language by Lily Boyko on Senior.ua.