Results of a National Study of the IT Industry

Results of a National Study of the IT Industry

In 2021, the Ukrainian IT industry grew by 36% from USD 5 billion to USD 6.8 billion in exports. At the same time, the number of specialists increased from 244 thousand to 285 thousand. Thus, over the past three years, the industry has more than doubled in exports and has grown by more than 50% in the number of specialists.

The place of the IT industry in the economy of Ukraine, in particular, data on exports, investment, education development, salaries and portraits of IT regions are published in the annual report Ukraine IT Report 2021 from IT Ukraine Association.

The study used open data and information from state registers, as well as a survey of 98 Ukrainian IT companies, which by size correspond to the structure of companies participating in industry associations.

Ukraine IT Report 2021 presents both short-term (up to one year) assessments and medium-term (until 2025) forecasts for the development of the IT industry, specialized education, as well as a comparison of Ukraine as an IT country with the neighboring countries. The study also provides answers on the state of the office real estate market and the impact of Covid-19 on the format of work of the companies.

Growth and prospects of Ukrainian IT

The global IT market is growing rapidly. Ukraine has advantages in the IT market compared to its closest competing countries. First of all, this is due to:

  • The largest labor market
  • The largest number of graduates with IT specialization

At the same time, Ukraine has 2-4 times fewer IT specialists per 100,000 of population than competing countries. This indicates a high potential for expanding employment in the IT sector through formal education and retraining.

The volume of exports of the Ukrainian IT industry is growing steadily. The largest export markets for IT companies with development centers in Ukraine are the United States (USD 2.007 billion), the United Kingdom (USD 503 million) and Malta (USD 304 million), followed by Israel (USD 238 million), Cyprus (USD 205 million) and Germany (USD 197 million).

The number of talents in the market is also changing: if at the end of 2017 there were 158 thousand IT specialists in Ukraine, at the end of 2021, according to experts, there were almost twice as many — 285 thousand.

Annually, the IT industry needs additional 25,000 graduates of technical specialties. In particular, currently, Ukrainian higher education institutions train 16-17 thousand new bachelors a year. It is expected that the increased interest of entrants in the profession and additional government funding for educational programs will increase the number of graduates.

At the same time, non-formal and corporate education is actively developing, i.e. IT schools, training courses, academies and corporate programs of IT companies. Now non-formal education prepares 10-12 thousand new IT specialists a year. According to the forecasts of the Association, in the coming years, their number will increase to 20-25 thousand.

Due to the shortage of qualified specialists, some companies have created their talent training programs that inter alia allow people from other fields to get IT education and employment opportunities. Such companies include EPAM, SoftServe, Luxoft, ELEKS, Beetroot and many others. Also, together with universities, IT companies develop educational programs, providing their expertise and mentoring support to students.

Engineering talents of Ukrainian developers, the popularity of the profession, development of educational projects, large capacity of the labor market and favorable tax conditions allow doubling export revenues to Ukraine in 4 years.

Over the past 6 years, fiscal revenues from the IT industry have more than tripled. This is facilitated by the stable growth of the industry, maintaining the possibility of contractual interaction of legal entities with specialists who are individual entrepreneurs of the 3rd group.

In addition, the introduction of a special legal regime for the IT industry, i.e. Diia City, should provide companies with several additional incentives: a special tax regime, more flexible employment conditions, additional tools in the areas of contractual investment protection and corporate governance. Given that as a result of the dialogue between the IT industry and the government, the main wishes of the industry have been taken into account, the implementation of Diia City will indeed be the next step in the further development of the digital economy in Ukraine.

In the world, Ukraine is already known as an IT country, and the IT industry is a significant and fast-growing share of Ukraine’s economy. However, at the same time, the creative industry is still young enough to reach its maximum growth and prospects. Therefore, here, in the Association, we initiated a national study to understand where we are today and to capture key indicators of the industry. This is especially important before the introduction of a special tax regime. We also set ourselves the task of predicting what Ukrainian IT will be in the future if the existing trends prevail, 

said Konstantin Vasyuk, the Executive Director of IT Ukraine Association.

More new data and analytics on the Ukrainian IT industry, including the volume of investment in the industry, office real estate market in Ukraine and portraits of IT regions, can be found at the link in the Ukrainian and English versions of Ukraine IT Report 2021.

Research partners: Sayenko Kharenko, Cushman & Wakefield, Korn Ferry.

The research was supported by: Digicode, Infopulse Ukraine, Innovecs, SoftServe, Techiia holding, Valtech, Ciklum, ELEKS, EPAM Ukraine, Intellias, Luxoft, N-iX, Sigma Software Group, SQUAD.