War has decimated much of Ukraine’s economy, but a notable exception is the IT sector. As of November, the industry’s annual export revenues had hit a record $5.5 billion — 13% more than in the same period last year.
Since Russia invaded in February, 58% of Ukrainian tech firms have processed new orders from clients. Despite brutal assaults, martial law, and general mobilization, 85% have restored their pre-war business activities. That’s according to Lviv IT Cluster, a community of companies, universities, and local authorities.
“Ukraine’s tech industry is not only showing the ability to operate fully, but it’s demonstrating growth,” says Stepan Veselovskyi, the group’s CEO. “The export of IT services grew by 9.9% compared to last year, and brought in more than $6 billion in revenue, surpassing the 2021 figure by $542 million.”
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This triumph over adversity has been indispensable for Ukraine. While conflict ravages the country’s coffers, the sector provides wages for workers, taxes for the economy, and technical support for the war effort. Tech provides the military with encrypted communications, UAVs, and cyber defenses, and civilians with digital IDs, air raid alerts, and online payments.
IT will also be integral to the post-war recovery — but getting there will be tough.
It can be mutually beneficial.
A summer survey by Lviv IT Cluster found that over 50,000 IT workers had relocated since the invasion, while a further 7,000 had joined the armed forces. Those that remain now endure blackouts caused by attacks on infrastructure. Some fear that empathy from clients will dwindle as war fatigue sets in.
As the challenges mount, help from overseas becomes increasingly crucial. But the benefits of support extend far beyond altruism.
“Charity is good, but you can also work with companies. It can be mutually beneficial,” says Oleksandr Yatsenko, managing partner at BRISE Capital, a Kyiv-based investment firm.
Indeed, Ukraine’s tech ecosystem has a unique blend of assets. The country’s rich history in computer science laid the foundations for a thriving sector. Today, it encompasses over 200,000 IT specialists and one of the world’s biggest pools of tech talent. Stellar programming skills, a high level of English, and a timezone that overlaps well with both the US and Europe comprise a compelling package.
These attributes have made Ukraine a global hub for IT outsourcing. Now, the country wants to turn its expertise into domestic tech giants.
President Zelensky’s administration has made bold moves to bring these ambitions to reality. this future. In 2019, his government established the Ministry of Digital Transformation. By 2024, the department aims to put every public service online, expand access to high-speed Internet; teach 6 million Ukrainians digital skills, and increase tech’s share in GDP to 10%. It currently accounts for around 4.5%.
Industry is united with government.
To reach these goals, the government has championed business-friendly policies: low taxation, minimal paperwork, and massive deregulation, alongside extensive anti-corruption reforms and funding initiatives, such as the Ukrainian Startup Fund.
This program has been bolstered by collaboration between the public and private sectors. War has made both sides appreciate their interdependence.
“The world should know that industry is united with the government and they help each other,” says Ivan Babichuk, chairman of the supervisory board of Lviv IT Cluster. “And it makes [Ukraine] a protective and secure place to run a business — despite the whole security issue around the country.”