On February 24, Ukraine will break the 1-year barrier since the beginning of the unprovoked, full-scale, russian invasion of Ukraine. The invasion affected all areas of life in the country, including how local companies continue to run their businesses. The IT industry, one of Ukraine’s largest tax contributors, has also adapted to wartime conditions.
In this article, we provide a brief retrospective on the situation in the IT market in Ukraine before the war and how the market players have adjusted to the new normal. We reveal how software development companies exist and continue to work in such difficult circumstances. We share our own IT Craft’s experience of addressing the challenges caused by the war. And we take a glimpse at the industry’s perspectives in the near future.
Let’s start with the pre-war period.
The IT market in Ukraine before the war
Source: IT Ukraine Association
According to the IT Ukraine Association, Ukraine’s IT market yielded more than 4% of the country’s GDP. As of January 2022, IT services had generated $6.8 billion, with an average export increase of 30% annually.
Source: IT Ukraine Association
A pool of almost 300,000 highly skilled software developers and IT specialists produced these impressive financial results. This is the second-largest developer headcount in Eastern Europe.
Ukraine’s pre-war software outsourcing landscape included about 5,000 companies, exporting their IT services worldwide. USA, UK, Switzerland, Malta, and Israel comprise their strongest export market.
Now, let’s see how has pre-war IT services been affected by the russian invasion.
IT industry in wartime Ukraine
Even though the russian invasion forced millions of people to leave their homes, Ukrainian IT specialists overcame these trials and tribulations by relocating to safer locations within the country. In fact, the IT labor market even managed to grow slightly — currently, there are almost 309,000 talents in the sector.
Ukraine software outsourcing companies made $880 million in taxes in just the first half of 2022. The customer retention rate constituted 95%. Overall, clients have not jumped ship but have kept their trust in Ukrainian IT companies. IT experts and their employers remain highly motivated in supporting their country. Despite air raid warnings and missile attacks, they continue to work their 9 a.m. to 6 p.m. shifts, delivering stable-performing and top-quality results to their clients who continue to rely on them. Such trust has allowed tech companies to substantially support their country financially.
Korn Ferry’s 2022 study reports an uptick in the Ukrainian IT market’s median total salary. While some software companies have been forced to reduce their staff, there are still market players who are expanding their teams.
Blackouts, bunkers, and other challenges
Since the beginning of these massive missile strikes on critical infrastructure, the people of Ukraine have faced rolling blackouts. Thus, a significant number of remote IT employees must often deal with a sporadic energy supply and limited Internet and cell connectivity. However, software companies continue to adapt to these new realities and develop their business continuity plans.
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How does IT Craft overcome the challenges of the war
We at IT Craft have arranged technical and organizational remedies to ensure stable and high-quality services to all our business partners. Putting the safety of our teams first, our company facilitated a relocation process. Some of them have moved to Portugal, Canada, Germany, Ireland, and other countries worldwide. Those who stayed in Ukraine have moved to safer locations near the EU border.
The company has re-opened its office in the city of Kharkiv. The office is equipped with electric generators and a constant, secure internet connection: Starlinks and fiber-optic broadband deliver this solution.
Also, IT Craft has opened an office in Kyiv, so the local team is also with a power- and internet-charged workspace. In case of air raids and missile threats, bomb shelters in the buildings give them refuge and safety.
IT Craft has provided a free, fixed-route taxi from the nearest subway station to its Kyiv office. Employees from any part of the city can commute hassle-free.
Our company has arranged the best prevention measures to grant a stable workflow for all its employees and valued partners. At this juncture, all servers are located in secure German data centers.
To sum up what has been done to date to ensure the safety of our employees and continued business stability:
1. Equipped remote workplaces with autonomous power supplies.
2. Opened power-supplied offices for the Ukrainian team.
3. Purchased Starlinks, enabling stable and unlimited 5G internet connection.
4. Utilized secure data centers with Germany-based servers.
5. Adjusted technical and organizational prevention measures to grant safety to our team members.
Prospects for new partnerships for Ukraine IT industry
After any war ends, there must be time to recover. In the 21st century, it’s impossible to picture reconstruction without IT involvement. We anticipate IT solutions to be an integral part in the rebuilding of the Ukrainian economy. This would create a demand for IT services for the internal market.
Specifically, a dire need for military tech could emerge in the Ukrainian IT market. The government might announce numerous tenders for diverse military projects. Just as it happened in Israel.
Speaking of this current situation, when it comes to a crisis, companies prefer hiring experienced candidates. Thus, tech employers minimize staff turnover and maximize income per assigned developer. In November 2022, the share of vacancies in the Ukrainian IT market that require 5+ years of relevant experience, increased by 24% compared to 14% the year before.
Market players that adjusted to the new realities continue hiring new talents, extending teams, and looking for new projects. Potential investors expressing concerns about signing up for Ukrainian outsourcing software development teams during wartime. Thus, Ukrainian tech vendors focus on conveying that they have proven for close to a year that they can provide their services at the same pre-war level. The resilience and ingenuity of Ukrainians is a force to be reckoned with.
Ukraine will continue to integrate into the Western ecosystem even more actively as a European-oriented country. This will likely promote exporting the existing IT industry services to Western markets.
War is the toughest trial for any economy. After almost one year, the Ukrainian IT industry continues to battle for its existence because of the russian onslaught. There are myriad challenges tech providers must constantly deal with because of massive russian missile strikes on Ukrainian critical infrastructure. And they do.
Ukrainian IT companies found a way to ensure the security of their teams and give them a stable, functional workspace. They keep steadily providing high-quality services in full. A 95% client retention rate across the Ukrainian IT market is an eloquent confirmation of that.
As to IT Craft, we implemented efficient technical and organizational remedies to adapt to the new normal. The company keeps on hiring new talents and is open to working on new projects.