by Andrii Smytsniuk, HUSI 2020
Ukraine is often seen by the international community as a country of Chornobyl (Chernobyl), political instability, corruption, fertile soil, and agriculture. What Ukraine is not seen as is a country of innovation. On Thursday, August 6, 2020, HUSI students participated in a workshop on MAPA: Digital Atlas of Ukraine led by Dr. Viktoriya Sereda. This digital tool allows one to study Ukraine from angles previously unexamined, illuminating a new side of Ukraine for foreign observers. Similarly, this blog post attempts to see Ukraine from a new angle through examining its technological innovation. Ukraine has a vibrant emerging IT industry with significant potential for growth.
The IT industry in recent years has become an important part of the Ukrainian economy. According to the Ukrainian IT Industry: Analytical Report, IT is the second largest industry in Ukrainian export. The tax revenue from the IT sector in 2014–2017 grew at a remarkable rate of 27% per year. Numerous international IT leaders have opened offices in Ukraine, including Global Logic, Microsoft, DataArt, and Ubisoft.
In addition to IT’s contribution to the country’s economy, the sector has had a positive impact on the society in general. For instance, several large Ukrainian IT companies invest in education, providing technology and financial support to Ukrainian universities and launching specific educational programs. An example of such cooperation is the Data Science program at the Ukrainian Catholic University. Similar programs exist at Taras Shevchenko National University of Kyiv, Ihor Sikorsky Kyiv Polytechnic Institute, Lviv Polytechnic, and many others. Moreover, IT companies often unite into clusters that create initiatives for the well-being of society. For example, the Lviv IT Cluster created a special project to fight Covid-19.
Given the positive effect on Ukrainian economic and social life, the IT industry finds support in the Ukrainian government. President Volodymyr Zelensky and the former Prime Minister Oleksiy Honcharuk publicly announced that the development of the IT sector is one of their priorities. In addition, the industry is supported on the local level, especially in Lviv, the second largest hub city in the country. According to the Сomprehensive Strategy of the Development of the city of Lviv for 2012-2025, the city prioritizes IT businesses for its economic development. Although stated support of the industry is not always reinforced by practice, the current government has at least managed to keep a simplified low taxation system for the industry despite attempts to increase taxes specifically aimed at the IT sector.
Ukrainian companies generally provide software development outsourcing and/or consultation to Western companies. Moreover, Western corporations open offices and/or R&D (Research & Development) centers in Ukraine. The list of companies that opened R&D centers in Ukrainian cities includes Amazon, Google, Oracle, and Samsung.
In addition to these companies, there is a growing trend in native Ukrainian startup development. Ukrainians have launched numerous startups both in Ukraine and abroad that have achieved tremendous success. GitLab, a company whose main product is software for writing code, was started by a Ukrainian and is valued at $2.7 billion. Another company, Genesis, headquartered in Kyiv, combines a handful of different startups valued at approximately $1 billion. A company started by Ukrainians in Odesa, Looksery, was bought by Snapchat for $150 million.
Ukraine’s most famous startup success story is that of Grammarly. Grammarly is what is known as a “unicorn company” (that is, a privately held company that is valued at $1 billion or more) and was created by three Ukrainians in 2009. Its main product is an English language digital writing tool that uses artificial intelligence for grammar checking, spell checking, plagiarism detection, and style suggestions. The company has offices in San Francisco, New York City, and Vancouver, as well as a large office in Kyiv.
All these companies, whether they were founded by Ukrainians or foreigners, benefit from Ukrainian talent. Ukraine has a high number of graduates in IT-related fields but the industry is also attractive to young people from the humanities. Andriy Zapisotskyi, the Growth Marketing Manager from the Ukrainian startup Mailtrap.io, explains the attraction of jobs in IT industry to the next generation of Ukrainians:
“This industry is interesting in that I always work in an environment full of smart people that constantly motivates my self-development. I like working with these people. They are very ambitious.
The IT sector helps me to meet people from all over the world. Thus, I am able to discover the world and better understand other cultures. This is something that is impossible to do if you live in one country only, and yet I am able to do this by working in this business. This industry also operates similarly in the US, Europe and Ukraine. We all work with the same instruments and use similar techniques.
The tech business in Ukraine is especially prominent because compared to other businesses there is little or no bureaucracy. Young Ukrainian professionals employed in IT have comfortable lifestyles given their income. The cost of living here is very low compared to the West, but due to the income coming from more developed countries and low taxation we have financial security. I strongly believe that young Ukrainians working in this field will be able to bring Ukrainian economy to a whole new level.”
In conclusion, the combination of successful outsourcing companies, startups, and educational opportunities makes Ukraine a country of technology. The pace at which the IT-business is growing and the interest Ukrainian talent takes in the industry might further develop the reputation of Ukraine as a country of software development and innovation.