Even Ukraine’s overall economic scenario during the pandemic wasn’t as devastating as some other countries. In 2020, as COVID-19 began its global rampage, Ukraine’s economy fell marginally. The National Bank of Ukraine only expected a 4.4% decrease in real GDP in 2020 and was confident that Ukraine would make up for those losses in 2021.
Those promising rebounds from potentially catastrophic challenges were impressive. However, when tragedy struck again in 2022 in the form of the Russian invasion, the world watched with dread and bated breath to see how Ukraine’s resilience would hold up. In a remarkable display of strength, the country’s tech sector continued to keep growing and aiding the economy.
The story behind Ukraine’s tech industry is truly fascinating. There’s plenty to be learned from it. But to truly understand what’s happening in Ukraine’s tech space, it’s important to understand its history, context, and all the whirlwind complexities it has had to deal with in the past few years. This is a case study for the world.
To those familiar with the history of technology advancements in Ukraine, the current success of their tech sector wouldn’t be too much of a surprise. Ukraine has always been a hub for technology and innovation. A lot of the USSR’s initial technological successes were born out of Ukraine. For the most part, Ukraine’s technological achievements have gone under the radar.
The Kharkov Institute of Physics and Technology was home to the USSR’s very first atom split way back in 1932. Since then, the last 90 years in Ukraine have seen the production of the USSR’s first computers, electrostatic generators, linear accelerators, electron generators, advanced aircraft, modern blast furnaces, steam turbines, and robust radio-technical tools.
Ukraine is also the birthplace and worksite of numerous IT, science, and innovation pioneers. The works of these pioneers are the foundation of Ukraine’s modern technological successes. While a lot of early technology arose out of the 19th Century in Ukraine, it was in the aftermath of both World Wars that the country dramatically accelerated its progress.
Amongst the horde of pioneers coming out of Ukraine is the founder of IT in the Soviet Union – Victor Glushkov. Alexey Ivakhnenko, the father of deep learning, founded the Group Method of Data Handling in Ukraine. And Leonid Levin, a contemporary computer scientist from Ukraine, was responsible for the Cook-Levin theorem, a landmark in modern computer science.
The innovations of these great minds laid the foundation and provided a strong springboard for modern tech companies to take off in the 21st Century. While admiring the tenacity of Ukraine’s tech sector, it’s important to ruminate for a moment about its origins and vibrant history.
Within the diverse tech sector, Ukraine’s IT industry is currently the main protagonist. The primary IT hotspots in Ukraine are the urban centers of Kyiv, Lviv, Dnipro, and Kharkiv. It’s keeping the overall economy afloat but only just. Unfortunately for Ukraine, with every passing day of the war, their economy’s hopes become dimmer. Their GDP went down by 30% in 2022.
But it’s not all darkness just yet, especially if we narrow our focus to the IT sector. Pre-war, Ukraine’s IT businesses were amongst the bigger exporters of services in the entire continent. A 2022 report by the IT Ukraine Association shows that the IT sector was growing by around 30% every year before the war. It was responsible for over 4% of the whole country’s GDP.
The IT Ukraine Association goes on to state that in the months after the war began, the IT industry brought in between $6 and $7 billion in export revenue. There is no other service other than IT being exported out of Ukraine at the moment, which further highlights the significance of their IT sector.
As of January 1, 2023, the amount of taxes and fees paid by the IT business to the consolidated budget of Ukraine was UAH 32.2 billion ($870 million), which is 16% more than in 2021.
The Ukrainian IT industry underwent rapid reform during the war, with most companies managing to develop and implement effective anti-crisis plans for business continuity support (BCP). This allowed them to quickly transition to flexible working models, diversify offices both domestically and abroad, as well as equip office premises with generators for back-up power supplies. Companies also adapted their infrastructure by installing key systems in the Cloud and diversifying their networks of Internet providers through the use of global satellite systems such as Starlink.
In addition, IT professionals have actively supported government and military efforts. A powerful volunteer movement has emerged among Ukrainians in tech, which formed the IT Army of Ukraine; up to 15% are employed in Cyber Forces while 3% are actively defending the country in the Armed Forces. The remaining 82% continue to contribute and volunteer, helping to support the economic front of the state with donations from the sector amounting to over $500 million.
The industry’s efforts have been enormous and demonstrate their commitment to ensuring that Ukraine is as ready for any course of events as possible.
So how is the IT industry surviving?
Considering what Ukraine’s going through at the moment, it would be nearly impossible for an industry to grow from scratch. Ukraine’s tech sector’s pre-war ecosystem and growth trends were strong and on the rise. Therefore, their challenge was more to adapt to a post-war world. They continued on the path that brought them previous success, riding on existing momentum.
During the time of the war, there were already approximately 5000 IT companies in Ukraine, housing more than 300,000 highly skilled tech workers. Amongst a long list of surprising statistics about the Ukrainian tech industry, perhaps the most startling is that only 2% of those companies ceased operations after the war. The rest of the existing ecosystem is thriving.
The Ukrainian government has shown tremendous faith and trust in its tech sector. And this isn’t merely in the form of rhetorical support. A series of government initiatives have created a healthy symbiosis between its politicians and its tech ecosystem. One of the most well-known initiatives by the government is Diia City, an entirely digital city infrastructure for IT companies.
President Volodymyr Zelenskyy has stated that Diia City will be an immense startup ecosystem for not just Ukrainian IT companies but also those from around the world. The goal is firmly and uncompromisingly to make Ukraine the largest IT hotspot in Europe. The allure of Diia City comes in the form of low taxes and comfortable and uncomplicated regulation.
IT Generation is a project that has sprouted from the minds of The Ministry of Digital Transformation of Ukraine as well as the Binance Blockchain Ecosystem and the Lviv IT Cluster. The project provides completely free IT learning and training opportunities for Ukrainians between 21 and 60, making them digitally empowered and highly employable.
According to a United Nations Development Programme press release in 2022, the IT Generation project will provide classes that run between 2 and 6 months. This means that in less than half a year, thousands of Ukrainians can potentially join the country’s robust tech sector. Initial estimates suggested that 60,000 Ukrainians could benefit from IT Generation.
We live in a world where charitable decisions become geopolitical talking points. Certain companies have taken an explicitly pro-Ukraine stance and have walked the talk by providing injections of support into Ukraine’s economy and infrastructure. A lot of this support is funneled in via Digital4Freedom, a donation portal by the Ukrainian Ministry of Digital Transformation.
Binance and Meta are some of the major companies that have aided Ukraine and its tech space. So is Amazon. Amazon’s contribution came in the form of Amazon Web Services technology. Amazon helped the Ukrainian government migrate to cloud-based environments. This digital transformation protects the country at a time when its physical infrastructure is being battered.
While relocation isn’t a permanent solution for the problems that Ukrainian IT employees face, it has certainly helped to keep the country’s IT sector running strong. Some companies, both indigenous as well as foreign, helped their employees relocate from big cities (which were prime targets for attacks) to more remote locations where they could live and work safely.
Many IT companies with operations in Ukraine, including Rinf.tech, moved their workforce to safer parts of Ukraine or abroad, helping save the tech sector and its talents.
Geopolitical complexities, an infrastructure literally under attack, and being under the shadows of a neighboring enemy are brutal challenges. But Ukraine’s tech sector can see rays of hope and has every reason to believe that things can change for the better.
The country has been inundated with Starlink terminals and power generators, enabling tech specialists to continuously deliver despite outages.
The majority of IT companies in Ukraine deal with cloud-based architectures and AI-powered technology. This means that they are less reliant on physical infrastructure and are fully capable of functioning at the highest level, even with limited resources and entirely digital infrastructures. It’s fair to say that remote work in Ukraine has been a success.
Ukraine’s tech talent pool, existing clientele, mobile digital infrastructure, good regulatory environments, government support, and global reputation are weapons in their own right. These are exactly what a sector needs to succeed in today’s complex and convoluted political world. Ukraine’s tech sector has exceeded everyone’s expectations. They will continue to do so.
The Ukraine tech sector is booming despite being in the throes of wartime. There are numerous reasons why the industry is doing so well. There are just as many challenges that the industry needs to be aware of as they continue their resilient fightback. However, the most impressive feature of Ukraine’s tech sector during these times is the unrelenting quality of service.
None of the country’s challenges are being used as apologies for substandard IT services. No business that the Ukraine tech sector receives is out of charity, even if choosing to hire a Ukrainian IT company might be due to political alliance. Ukrainian IT companies are hired because they are amongst the very best in their field. And they have been for a while.
Rinf.tech’s Ukrainian teams have been hard at work and delivering high-complexity software solutions at an immense quality and capacity.
No one knows what the future of Ukraine might hold. But one thing is for absolutely certain. There is no limit to the country’s resilience. Their tech sector is proof.
Ukraine is home to one of the world’s most robust tech industries. The industry was doing well before the war. And now, it’s not just surviving during the war. It’s flourishing. Our new article looks into why.
In this article, we share how our Ukrainian teams help ensure our business continuity despite war against Russia.
rinf.tech recaps a detailed analysis of the Ukrainian IT industry 2021-2022 by IT Ukraine Association: IT exports volume, size of the tech talent pool, investments climate, and more.
