Yesterday IT Ukraine Association unveiled its annual research on the state of the IT industry in the country. Titled “Digital Tiger,” this 66-page report aims to showcase the country’s capabilities in this field. Various aspects are covered, spanning IT education and workforce, the IT ecosystem stucture and institutions.
The report also analyses the industry segments, the geography and evolutions of IT service export, the digitalization of the country and the way it has changed Ukrainian citizens’ lives.
Key findings from the report include:
- Ukraine has asserted itself as a major, internationally-oriented IT hub. The report praises the “strong IT industry with innovative companies and a large base of highly skilled IT professionals who create world-renowned startups.” It cites several international studies and rankings placing Ukraine high in terms of IT development, e-government achievements, cryptocurrency adoption, and more.
- The country hosts more than 2,000 active IT companies, three quarters of which employ up to 50 individuals. These companies cover a range of segments including, in particular, business productivity software (234 companies), marketing and media technologies (230), financial and insurance technologies (167), health tech and wellness (119), e-commerce and retail (113), hardware and IoT (112).
- Ukraine ranks 15th in the world in terms of technical skills. In 2023, its IT sector employed an estimated 346,000 professionals, including around 265,000 individual entrepreneurs or freelancers, 58,000 employees and 23,000 people with a mixed status. Notably, two thirds of Ukrainian IT professionals possessed at least three years of experience.
- IT services now constitute a major export category. At 13.2% of Ukraine’s total export volume in 2023, IT services were second to agricultural products (43.0%). They accounted for as much as 41% of the country’s total service export volume, or 4% of its GDP.
- Ukraine’s IT service export industry has exhibited rapid growth, outpacing key competitors. Between 2017 and 2022, the country’s export volume in US dollars grew by 195.7% — above Czechia’s 80.8%, India’s 84.4% and Poland’s 127.0%. Ukraine’s IT service export demonstrated even more dramatic growth in value per capita (248.7%), far ahead of Poland (134.4%), Czechia (79.1%) and India (75.3%).
Acknowledging some market issues, the report notes that in 2023, for the first time, IT service exports decreased — reaching $6.7 billion, down from $7.3 billion in 2022. Taking place amid a global industry downturn, this setback is primarily attributed to the war, which, beyond its direct repercussions, has instilled uncertainty among foreign clients regarding the ability of Ukrainian IT service providers to honor their commitments. These developments have impacted an industry that is predominantly export-oriented.
To alleviate the issue, the Ministry of Digital Transformation is actively fostering an industry-friendly environment through initiatives like the Diia.City program, “The state has taken on the role of an ambassador for the IT industry, both domestically and abroad, to actively work on shaping Ukraine’s image as a mighty technological power,” says Digital Tiger.
Analyzing the country’s startup scene, Digital Tiger touts its “potentially unlimited [development] prospects,” with an estimated 2,600 startups as of January 2024. “In recent years, at least six companies with a billion-dollar valuation have emerged,” the report notes.
No distinction is made, however, between startups that were born in Ukraine and still operate mainly from there and those that were only founded or co-founded by Ukrainian entrepreneurs and established their headquarters and main operations in other jurisdictions. A substantial part of what Digital Tiger calls “Ukrainian startups,” and virtually all of its unicorns, fall into the latter category. The report fails to analyze or even mention this phenomenon, which has been characterizing the Ukrainian startup scene from the very beginning.
Click here to download the report.
