Ukrainian Tech Industry Overview in 2022
After the Russian invasion of Ukraine, the IT sector is one of the few that continues to operate during the war. Ukrainian IT specialists continue to provide high-quality services, support Ukraine's economy, and bring Ukraine closer to victory.
Ukrainian Tech Industry Overview
The war in Ukraine had a devastating effect on the local economy. Ukraine is losing 2 billion hryvnias every day to fight the Russian invasion. According to the Prime Minister of Ukraine, Denis Shmygal, fighting took place in 10 oblasts, where enterprises account for about 50% of the country's GDP. Many logistics chains have been completely broken, many businesses have been physically destroyed, some cannot work in wartime, and many workers were forced to leave their cities.
In only one year, in 2021, the Ukrainian IT industry increased by 36% and generated $6.8 billion in export revenue. It is a 285,000-person sector with the main IT centers in Kyiv, Lviv, and Kharkiv. At the same time, the Ukrainian IT industry, which covers around 4% of the country’s economic output, has been highly stable so far. Today, Ukrainian software companies operate at about 80% of their pre-war levels.
Ukraine's IT sector is one of the fastest-growing IT sectors in Europe. Its annual growth rate ranges between 25% and 30%. Just recently, Ukraine's ambitions for the tech sector were greater than ever - to increase its share of GDP from 4 to 10 percent by 2025.
Fighting a Battle for Ukraine’s Economy
From the outbreak of war, it was certain that the IT industry would be critical to keeping Ukraine's economy afloat. During the first ten days of the war, Ukrainian IT companies donated approximately $23 million to the Ukrainian organization ComeBackAlive. Ukrainian IT entrepreneurs communicate with the rest of the world and the media, promote awareness, and assist in diplomatic and military discussions.
As a result, Ukraine must maintain IT operations on both the firm and client sides.
After Russia invades Ukraine, the IT sector is one of those lucky ones to be able to continue working and support the country's economy. So while the Ukrainian army is heroically defending the country on the battlefield, IT specialists are fighting on the economic front. Ukraine's IT industry generated a record $2 billion in export earnings in the first quarter despite the war, team mobilization, and relocation.
We are convinced that in this challenging situation, everyone, for their part, should do what they can do best. Be responsible for the area with the highest ROI for the country. Today, the main task of a business is to continue full-fledged operational work: everyone in his place, everyone in his project. Every bill paid by the client and every dollar received now in Ukraine is our step to victory. It is taxes paid, and a deduction for the country's needs and the army. All this is a direct contribution to victory. We all do our best: 24/7.
"Even today, the IT industry has stabilized. We see positive signals, and we see growth. Companies are even signing new contracts. Although the threat to the security of our people remains because we are still in Ukraine and plan to stay here", said the CEO of the Lviv IT Cluster.
Ukrainian IT companies, including KindGeek, continue to provide high-quality services to our clients worldwide. We did not let anyone down, and we continued to involve new projects during the war. We have also not stopped the recruitment process and continue to hire new talented specialists to our team.
Working during the Wartime
The resilience of Ukrainian tech businesses to the Russian invasion has been extraordinary. While volunteering, fighting in the IT army, and providing finances to support the Ukrainian Armed Forces, the Ukrainian IT community continues to provide world-class innovative services to foreign clients, just as it has done for many years.
Here at KindGeek, we did not stop working for a day. However, the first few days after the start of the war were quite tricky in terms of efficiency, as the whole country was in shock. Since March, most of our employees have returned to active work. KindGeek is headquartered in Lviv, the west of Ukraine, where the situation is relatively calmer. Some of our workers have been evacuated from other parts of the country where active hostilities have taken place. We reorganized the departments to help move to safer areas of Ukraine or abroad (for women).
We have also organized daily Mental Health Support online meetings and a support chat, where we share feelings and experiences, support each other, practice stress management techniques, and more. In addition, our HR and PM managers conduct regular checks with their teams and are constantly in touch with all employees.
Today, Lviv and the region have become the main relocation points for Ukrainian technology companies. Before the war, the city was third in terms of technology after Kyiv and Kharkiv. Lviv has become the central technological hub of Ukraine now.
The number of IT specialists in Lviv has tripled in just the first month of the war. Before the war, there were almost 31,000 people in Lviv who worked in the IT industry. According to Stepan Veselovsky, CEO of the Lviv IT Cluster, there are between 70,000 and 100,000 IT specialists in Lviv and the region, a third of all Ukrainian IT.
Stepan Veselovsky said that most Ukrainian IT market participants have successfully relocated their companies from the areas of hostilities to the Western regions and almost wholly restored pre-war productivity. Despite all the difficulties, there is even a growing number of new contracts that companies enter. Due to relocation in the West, temporary new hubs have opened.
According to Stepan Veselovsky, IT companies in Ukraine have spent at least $30-40 million moving to Lviv.
According to a study by the Lviv IT Cluster, as of the beginning of March, 98% of participating companies continue to operate, about 42% have the same workload, and every fifteenth has even received more orders.
This struggle has many fronts - military, civilian, diplomatic, state, and business. And each of us these days has and must keep our front. Supporting the Ukrainian economy, humanitarian support for Ukrainian communities, and providing for our soldiers is the backbone that will allow us to pass this test and increase our chances of victory. As a global business born and raised here in Ukraine, we fight for survival. We continue to work to be able to support the country's economy and our families financially.
We at KindGeek are incredibly grateful that our current and former clients join in supporting Ukraine. Support from our clients has been quite crucial to KindGeek these days. Not only did we not lose or delay any projects, but several of our present and previous clients also made personal donations to Ukrainian charities.
And most importantly, our company is not an exception. Ukrainian technology companies have received full support from the international community.
«From our side, we openly communicate with our clients about the circumstances of each particular project. However, four weeks into the war, 95% of our employees returned to their regular workflow» – Yuriy Gnatyuk, co-founder and COO at KindGeek.
In his interview with Forbes magazine, the Minister of Digital Transformation of Ukraine, Mykhailo Fedorov, said that
«…a new window of opportunity will open for us. Now Ukrainians are identified as a brave nation of free people who know how to work in critical conditions. After all, our IT specialists continue to carry out important projects for global brands - they did not disappoint anyone, did not stop fulfilling orders, and did not break deadlines».
The Ministry of Digital Transformation also supported the launch of Meta History: Museum of War, Ukraine's NFT museum. The museum recently sold Kalush Orchestra’s Eurovision 2022 award for 500 ETH or $900,000. Funds will be used for purchasing the PD-2 complex for the Ukrainian army.
Volunteering as a Side Project
Aside from their regular job, IT specialists, like many Ukrainians, are also actively involved in volunteering. They joined IT and Creative armies, collected and organized humanitarian aid, purchased military ammunition and helped people who had been forced to leave their homes or had lost them altogether. Many workers donated % of their salaries to support the Armed Forces and paid their taxes in advance. Only during the first days of the war IT companies transferred more than $25 million to support the Army and citizens with humanitarian aid.
On May 5th, the Ukrainian president, along with the Ukrainian Deputy Prime Minister and Minister of Digital Transformation Mykhailo Fedorov, announced the launch of the UNITED24 platform. U24 aims to unite people from around the globe in their desire to help Ukraine financially. The main goal of the digital platform is to increase the donation’s number in favor of the state as well as ensure the efficiency and transparency of their distribution. All funds will be directed to the accounts of the National Bank of Ukraine and then assigned to the ministries.
Cryptocurrencies have also been allowed in Ukraine. Since the law was passed, the government has collected $66 million in donated cryptocurrency for the Ukrainian Armed Forces.
On the other side, Ukrainian tech entrepreneurs have also initiated fundraising initiatives. One of them is KOLO – a startup-like charity fund launched by 13 Ukrainian IT top managers. KOLO focuses on supporting the Ukrainian Armed Forces with communication and night vision devices and drones. During the first two months, the founders of KOLO delivered ammunition worth $2 million to Ukrainian soldiers.
KindGeek employees have also been involved in volunteering. Some of them launched their own initiatives while others joined the existing ones – from fundraising organizations to mental health support hotlines. In May, KindGeek donated $80k to the ComeBackAlive charity fund.
“Yuriy and his team are true professionals. They also actively support the Ukrainian Armed Forces. For example, they recently donated $80k to ComeBackAlive. We bought night vision devices”, Oleg Karpenko, ComeBackAlive Head Of Partnerships and a veteran of the Russian-Ukrainian war, says on his Twitter.
War Driving Tech Innovations
The war in Ukraine provoked the need for brand new services and digital products. With the Ministry of Digital Transformation, Ukrainian IT and creative communities have been doing almost impossible to help Ukrainian people in wartime. For example, Ukrainians had access to the app that notifies about the air raid sirens depending on the region just a few days after the Russian invasion.
In times of war, Diia, a Ukrainian e-governance tool developed by the Digital Transformation Ministry, has shown to be remarkably successful. The app allows Ukrainian people to use their phones to identify and share digital documents rather than physical ones. Even if they do not have their passports, Ukrainian migrants can now enter EU states via the Diia app. Diia also supports 50 government services, allowing Ukrainians to get help even when their country is shelled. With only one app on their phone, Ukrainians may now report Russian troop movements, contribute to the military, get financial support, watch Ukrainian TV, and pay taxes.
On the first day of the war, Ukrainian tech company Ajax Systems urgently organized a team of programmers and produced the siren app "Air Alert" from their homes and shelters. Every day since they have been rolling out upgrades to what has become Ukraine's most downloaded application. The app works even if the smartphone is in sleep or quiet mode. Almost 4 million people now use it. Apart from the Air Alert app, the team also created a Telegram bot that sends messages about the air raid through the messenger app.
The war that is happening in Ukraine now is for sure different from any other military conflict that had ever happened before. As stated by Ukraine’s Minister of Digital Transformation, Mykhailo Fedorov, the Ukrainian digital industry is now building wartime apps and managing an IT army to beat Russia in what he calls ‘World Cyberwar I”.
“The First World Cyber War. The first IT Army in the world. 270K of angry IT warriors of the cyber frontline. Rutube shutdown. AI tech & identification of war criminals. And many more cases to disclose after the victory”, writes Fedorow on his Twitter.
In the first week of the Russian invasion, Ukrainians formed both IT and Creative armies to fight on the cyber battlefield. Following massive cyberattacks on Ukrainian government websites and civil infrastructure, Ukrainian cyber specialists kept the 27/7 defense and launched security monitoring systems.
Ukrainian Creative Forces is a collaboration platform for Ukrainian creative specialists and artists. While the Ukrainian army is fighting on the battlefield, UCF is defending Ukrainian digital space by spreading information about the war and preventing fake news. UCF team is made up of entrepreneurs, marketers, and creatives and consists of over 30k members. Creative agencies, digital artists, writers, and video producers have united in a battle against propaganda in cyberspace.
The Ministry of Digital Transformation also supported the launch of Meta History: Museum of War, Ukraine's NFT museum. The museum recently sold Kalush Orchestra’s Eurovision 2022 award for 500 ETH or $900,000. Funds will be used for purchasing the PD-2 complex for the Ukrainian army.
World Tech Leaders Support Ukraine
“While Russians are trying to destroy us with cruise missiles and tanks, we still believe in our bright future. And we believe in technology,” Ukraine’s Minister of Digital Transformation Mykhailo Fedorov says. “The future is about technology, and the future is definitely ours.”
During the worst times of the Russian invasion, the whole socially responsible world of technology is on Ukraine's side. It is evidenced by the world's leading companies such as PayPal, Wise, and Revolut entering the Ukrainian market and many other companies and services that help and support Ukrainians during the war. Many conscious companies have also solidarity with Ukraine and decided to leave the Russian market.
On February 27, Elon Musk, the founder of SpaceX, at the request of Ukrainian Deputy Prime Minister Mykhailo Fedorov, launched support for the Starlink satellite Internet service in Ukraine and sent out terminals that provide communication with satellites. In Ukraine, during the war, Starlink made it possible to stay connected even if the fixed and mobile Internet did not work due to damaged networks.
Three months after the full-scale invasion outbreak, on May 24, the Ministry of Digital Transformation of Ukraine organized the first International Diia Summit Brave Ukraine. The summit was held during the World Economic Forum in Davos. The event brought together 12 EU digital transformation ministers for the first time ever.
Every Ukrainian does everything in his power to bring Ukraine closer to victory. Each of us has his front on which we are fighting. Currently, the IT industry is one of the few that provides a reliable rear. We continue to operate, pay taxes, and hire while many people have lost their jobs due to the war. Ukrainian tech is fighting the battle for Ukraine’s economy. You can also contribute to Ukraine's victory by partnering with a Ukrainian service provider for your next project.
At KindGeek, we are convinced that everyone should do what they do best during wartime. Working in the industry with the highest ROI for the country makes us feel responsible for Ukraine’s future. And here we are, doing what we can do best – custom, high-quality, data-driven software.
