In 2023, Ukrainian IT Services Export Faced Its First Decline in Years

According to the National Bank of Ukraine (NBU) data, the export of IT services demonstrated an unprecedented decline in both volume and share of total exports.

 

In 2023, the IT industry:

• generated $6.7 billion in revenue for the Ukrainian economy (8.5% or $622 million less than the 2022 figure);
• reduced its share in total service exports to 42% (compared to 45.3%, a 2022 figure);
• retained its status as the first largest among Ukrainian export industries.

 

IT services exports fell to the 2020-2021 levels—$5 and $6.8 billion, respectively. December has shown growth of 8.3% ($611 million), but it’s misguiding — both the first and the last month of the year are always distinctive in their growth, as projects are wrapped up and started anew,

per the IT Ukraine Association.

   

The decline is likely due to two headwind factors:

• difficulties in continuing the global market operations — due to the legal complexity, hence the improbability of conducting short business trips and Ukrainian IT teams being home-registered;
• an extremely low percentage of IT professionals shielded from being drafted (as of now) and a shortage of highly qualified personnel, the majority of whom are involved in military projects.

 

The exports of IT services have shown a decline for the first time, compared to the previous year. This trend had already been noticeable as market volumes steadily decreased, with the home market share remaining insignificant. A 10-per-cent drop suggests that it is incredibly difficult for Ukrainian IT to maintain the status quo, despite all the efforts of the Ministry of Digital Transformation as well as the rest of the opportunities at hand. The wartime conditions persist, and especially during such challenging times, IT serves an important part of the country’s economic base. The industry, therefore, requires urgent solutions to contain and reverse the decline. We need additional tools to stimulate the growth of the IT sector and, consecutively, of the exports,

stresses Maryna Shevchuk, CEO of IT Ukraine Association.

 

During the same year, the top exporting countries by revenue list remained unchanged:

• United States ($2,677 million)
• Malta ($567 million)
• United Kingdom ($535 million)
• Cyprus ($362 million)
• Israel ($293 million)

 

In 2022, reversely, IT was the only sector of the Ukrainian economy that maintained a positive trend and showed growth of 5.8%.