Konstantin Vasyuk, Executive Director of IT Ukraine Association
More than 80% of relocated IT companies plan to return from abroad
27.02.2023 15:45

Ukrainian technological companies develop innovative solutions that are used all over the world. In the following years already, our country had all the chances to become one of the leading players on the world market in the IT segment. However, the massive War made its adjustments. Nevertheless, even in the conditions of constant electricity shortage and massive shelling, Ukrainian IT companies were able to adapt to new realities, demonstrating growth. In this Ukrinform interview, the Executive Director of the IT Ukraine Association Konstantin Vasyuk, told about challenges and obstacles the IT industry faced, what is currently happening in the market and whether the industry can become the main driver of the Ukraine’s recovery.

- The massive War created new challenges and tests for the IT industry, but even in these conditions, it shows great resilience. What is the current state of the industry?

- IT became the only export branch of the economy that showed growth despite the War. I would like to draw attention to several important indicators with which the IT industry entered 2023: the export of IT services increased by almost 6% and amounted to 7.4 billion dollars; IT industry taxes increased by 16% and amounted to 32.2 billion hryvnias to the consolidated budget of Ukraine. This is 4.4 billion hryvnias more compared to 2021.

- How did Ukrainian technology companies manage to adapt to new realities? What are the main difficulties they faced during the year?

- Most IT companies had contingency plans even before a full-scale invasion started. And on February 24 itself, some of them were rejected or revised. But the companies had something to begin anti-crisis measures with. During the year, the challenges changed, depending on the course of events in our country.

If at the beginning of the War the priority was the relocation of employees and their families to safe cities and regions, then since October the priority has been to provide the teams with uninterrupted power supply and access to the Internet.Thus, the adaptation tools themselves were changing - from the creation of teams to coordinate the logistics of employees to the purchase of generators, Starlink terminals and other equipment for office work.

- How has the global IT market for Ukraine changed in general during the year of the War?

- Talking about the trends of the global IT market, on the one hand, there is still a shortage of technological personnel, and on the other hand, last year we could see reductions in the world's leading IT companies, and this creates expectations in the market about a possible recession.The global shortage of personnel could be a stimulus for the growth of the Ukrainian IT industry, but the risks brought by the War deter international business from cooperating with companies that have development centers in Ukraine.And so negative sentiments on the market make the development and growth of Ukrainian IT even more difficult.

- How did the Association and the state have been helping IT companies in the conditions of military aggression?

- Since the beginning of the full-scale invasion, the main issues for IT companies have become the preservation of personnel and customers. Accordingly, the Association primarily works on these tasks and helps companies with specific efforts. It is about communications with the government regarding the reserving and temporary departure of IT specialists abroad, as well as the development of international partnerships to create new opportunities for members of the Association.

- Regarding the possibility of reserving IT professionals from mobilization during martial law. Ukrainian companies now have such an opportunity. How positively will it affect the IT market?

- Indeed, the relevant law was already signed and the Cabinet of Ministers adopted a resolution. However, since implementation mechanisms have not yet been worked out, the Association's dialogue with the authorities on this issue continues. I hope that jointly we will find a solution that will positively affect the further development of the industry.

- How many IT professionals are now in Ukraine?

- Today, the industry consists of almost 309,000 IT professionals. Despite the War, the IT market continues to grow, which has a positive effect on the Ukrainian economy.

- Regarding the unplanned relocation of IT companies within the country and abroad. How did such changes affect in the IT industry in figures?

- It is currently known that about 13% of IT professionals have relocated abroad. In general, 64% of IT professionals were forced to move due to the War, but by the end of 2022, 24% already returned to the place where they lived before the start of the Russian aggression on February 24.

- The Ministry of Digital Transformation launched the IT Generation programme, within which every Ukrainian can get an education in the field of IT. Will this project help partially cover the need for IT professionals?

- The more educational projects in the IT field in Ukraine are the better.Therefore, I support such initiatives, but it is too early to make conclusions, because the result should be evaluated through the percentage of employment of the participants as successful employment depends on several components. First of all, whether the market is ready to accept a large number of beginners, and whether IT companies have the resources to train them to the needed level.

- Is it realistic to return to Ukraine technological companies together with IT professionals who left due to the War? What needs to be done for this?

- We have figures: the majority, 82% of relocated companies, plan to return. Regarding the return of professionals, this is the most difficult issue for the state and every individual to be solved. That is aboutthe prospects the government will be able to offer to citizens who settle in other countries during the War, so that they have the desire to change their lives again.

- Since last February, a special legal regime Diia.City, designed for the IT industry, has been operating in Ukraine. Did it have a positive impact on the development of the digital economy in Ukraine, and what were the results of itsoperationthis year?

- It is too early to talk about any significant changes or global influence of Diia.City on the industry. Companies are just starting to look at it closely. However, any initiative aimed at simplifying business and taxation is potentially attractive. In my opinion, this project needs to be given more time to show itself.Let me remind you that immediately after the launch of Diia.City, the IT Ukraine Association launched the Diia.City Legal Support service.This is legal support for Association member companies that are considering becoming a Diia.City resident.

- What is the amount of IT clusters in Ukraine now and how do they help the Armed Forces of Ukraine?

- Now there are 17 IT clusters in Ukraine.They all work independently.We have strategic cooperation agreements with most of them, within the framework of which we implement joint projects.Given that the clusters are not part of the Association, we cannot tell you more about their work. But I can give an example of a joint fundraising for an ambulance, which we conducted together with the Kharkiv IT cluster.

- Until February 24, foreign investors were actively interested in the Ukrainian IT market because of the high intellectual potential and flexible business opportunities. A year of full-scale War has passed. Has foreign business confidence returned to Ukraine in this context?

- It is not about restoring trust, but about removing risks and fears regarding cooperation with Ukrainian IT companies.This is currently one of the main goals of not only the Association, but also my personal one: to tell the international technological community that the Ukrainian IT industry is not only ready for cooperation, but has a unique experience of preserving and developing business during the War to be shared with the world.

- What directions of the IT market are currently developing in a most dynamical way in Ukraine, what part among them is played by the segment of high-tech weapons - Military-tech?

- It is logical that the areas of Military Tech, Cyber Security, and Health Tech are developing rapidly. At the same time, we continue to build expertise in the most trending technologies on the global market, such as: AI, AR, Data science, BlockChain, EdTech.I hope that in future, there will not be such a need for the technologies for waging wars and humanity will move towards solving problems related to climate change, preserving ecosystems and social issues.

- Against the background of Russian aggression, European technology companies working with the defense industry are receiving record amounts of funding.Is it realistic to attract such investments to Ukraine, what should be done for this?

- The recipe for attracting any investment is very simple: you need financially proved ideas, market demand and the absence of hostilities.

- At the end of February 2022, the IT Army of Ukraine was created in order to neutralize the enemy in informational and cyberspace.What are its main achievements for the year?

- About 200,000 IT professionals from Ukraine joined the cyber front.Their main goal is to protect Ukrainian cyberspace, databases, state and banking resources. During the War, there was not a single successful for the enemy cyber-attack. Our cyber army not only protects its ownresources, but also attacks the enemy's websites of governmental institutions, mass media, spreads the truth about the War in Ukraine among the citizenry of the country-aggressor.

- The domestic IT industry has all the prerequisites to become the main driver of the reconstruction of Ukraine after the end of the War. However, this requires the synergy of the government and industry in particular.How to achieve this?

- The IT industry in this context is no different from any other one.The synergy between the government and business is built on the foundation of mutual trust and responsibility.Both parties follow the simple rules: the government creates conditions for business development without excessive regulation and bureaucratic obstacles, and business pays taxes and creates new jobs.

- What is your vision of the development of the IT industry? What to expect from the industry in 2023?

- The development of the industry will continue under any conditions, because the world is rapidly transforming in the technological direction.This development is exponential and cannot be stopped.Regarding the industry expectations in 2023, it is difficult to predict something now, because this issue depends on the course of further events on the military front inextricably.

Recorded by Valentin Marchuk, Kyiv

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