Whether it’s two Swedes who want to start a small information technology company, or a huge Swedish multinational company looking to open research and development center, Ukraine has proven to be a good fit for both types.
In fact, a total of six IT companies either originally from Sweden or with Swedish investments have been officially established in Ukraine in recent years, including brands like Sigma Software, Remit and Beetroot.
Telecoms giant Ericsson, in turn, has been operating on-and-off in Ukraine for more than 120 years – the first telephone exchange in the country was set up by the company in Kyiv back in 1893.
In April of this year, the company also opened a research and development center in Lviv, some 550 kilometers west of Kyiv.
But while some think the attraction for Swedish business to Ukraine is due to “the similarity in the nations’ mentalities,” and the low cost of the labor force, the head of Ericsson Ukraine, Wojciech Bajda, says it’s mainly due to Ukrainian talent for innovation.
“One of the main benefits is the Ukrainian people,” Bajda, 41, told the Kyiv Post. Swedish companies “see great potential in Ukrainian engineers, as they are well-educated, hard-working, and eager to learn.”
Beetroot founders Andreas Flodström and Gustav Henman considered Russia, Belarus, Moldova, Poland, Bulgaria, and Romania. But they decided to launch a software company that currently employs about 100 people in Ukraine.
“The two main factors for choosing Ukraine were the overall business potential in the IT field and that we felt very welcomed here,” Flodström told the Kyiv Post. “So both hard values and gut feeling,” he said.
Ukrainian-Swedish IT company Sigma Software is another example of countries’ business cooperation.
“There’s always something that can be learned from the Swedes – they have created an incredible amount of brands per capita in their country,” Sigma Software CEO Valery Krasovsky told the Kyiv Post. “Swedish business people don’t like hierarchy in their companies. They like to trust people, so that they can show their worth.”
“An easy approach, without any totalitarianism, is their key to success,” he went on.
He says his partners from Sweden were initially attracted by the low cost of the labor force in Ukraine, but later saw that their employees’ enthusiasm for their work and their professionalism were the main plus points of operating in Ukraine.
The offices of the Swedish companies working in Ukraine now employ from 10 to 600 workers.
“There are lots of specialists,” Krasovsky told the Kyiv Post. “Historically many inventions have been designed in Ukraine, and now there are many startups – engineers are creative here.”
However, Krasovsky also said the global demand for IT specialists was encouraging more developed countries to make immigration easier, tempting Ukrainian professionals to relocate.
“So now IT guys can simply move out. Currently, almost every strong idea is aimed at the U.S. market, with relocating to the States following,” he said. “Ukraine has to work out a way to encourage them to stay. It’s an issue of the business climate of the state.”
And that climate still needs to improve, Swedish business believes.
“The main problem here is that the government is always complicating the legislative area, the tax structure,” Krasovsky said. “The support for IT education is questionable as well.”
Although Ericsson Ukraine’s Bajda agrees that “the macroeconomic situation remains difficult,” and that it “influences everyone on the market,” he said the problems in Ukraine for telecom companies are common to every country.
“End users are becoming more conscious about how they spend their money,” he said. “So the companies operating on our market pay more attention to their own efficiency.”
According to him, the country’s digital transformation could be an engine for growth in the next few years.
“That’s why connecting things and creating business models for the internet of things is one of the hottest topics of the near future,” he said, referring to the concept of linking everyday objects to the internet so that they can send and receive data.
And according to Ericsson Ukraine, the Swedish approach to running a business can help Ukraine turn the fast-paced, ever-changing sphere of technological development into a platform for the country’s success, despite the challenges it faces just now.
“The transparent and responsible code of conduct of Swedish companies is especially relevant for a country that is undergoing major social transformation,” Bajda said. “Swedish companies, maintaining their traditional quality and serious attitude to business, know how to bring innovation to life. They know how to disrupt and change, before they are themselves disrupted and changed.”
Beetroot’s Flodström, however, does not underline just Swedish traits saying that the success lies in the combination of both nationalities.
“We are fortunate enough to be both very Ukrainian and very Swedish which gives a great range of opportunities,” Flodström said.
This story first appeared in the Kyiv Post, a syndication partner of Ukraine Digital News.