Expert’s Overlook on Ukraine’s Tech Scene

30 Oct, 2018

According to IT Research and PwC report, the IT industry in Lviv and Ukraine, in general, has optimistic perspectives for future development. In particular, according to PwC, the number of employees working in IT and related fields is expected to grow to 250 thousand by 2020. IT Research predicts a 20% annual growth of Lviv IT industry. We talked to Andrew Pavliv, CEO & Founder of N-iX, and Supervisory Board Chairman of Lviv IT Cluster and learned about the IT industry dynamics and how IT clusters may catalyze the further evolvement of the tech industry.

Ukrainian export software development industry is accountable for around 5% of total export revenue and 3,5% of the country’s GDP. This is one of the fastest growing segments of the Ukrainian economy. Export revenues are growing every year, and have already exceeded 3,6 billion dollars. Last year software development services took the third place among top export industries. In five years, we hope to become the second export industry, beat the steel industry and maybe even compete with agriculture. Though, it is unlikely to happen because agriculture will grow massively as well. I am optimistic about Ukraine’s economic growth, because we are the highest populated country in Eastern Europe, possessing a valuable human capital of smart and ambitious individuals who are willing to develop our country. Ukraine has an engineering DNA and a profound engineering and mathematical background.

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The number of qualified software developers is reaching 130,000 across Ukraine. Local IT talent pool is expected to reach 250,000 within the next five years, according to PwC report. The number of people who are pursuing technical education and career in IT grows progressively every year.

The development of tech industry nourishes the internal market as well, creating additional jobs in other spheres, pumping additional resources into the internal market. IT is an innovative industry, expanding the horizons for young people, providing opportunities to travel, empowering lifelong learning. IT also gives a push to entrepreneurship: these well-educated, well-paid, and talented individuals create their own companies and startups. This is a very positive trend, influencing most of institutions and transforming the entire country into a free, democratic state.
  

Where the future of Ukrainian tech lies

The digital transformation trend changes companies around the globe. We see certain trends in tech, namely Cybersecurity, Virtual Reality, Data Analytics, EdTech solutions – all of them have great potential for growth. I think Ukraine is developing in all of these directions. At the country level and even at the company level (thinking of N-iX, there are several directions we are moving in), the focus will shift towards more complex intellectual tasks. Data science, product engineering, R&D for self-driving cars – all of these domains have great growth prospects in Ukraine.

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Ukraine offers software development services for technologically complex projects. A well-developed software service industry in Ukraine gives a basis for many startups to emerge here. I think that service industry has to grow further, giving more and more people an opportunity to grow professionally and to gain knowledge background to launch own startups or work at product companies. It’s a win-win for both service and product industry directions.

The place of the Western region on the Ukrainian tech landscape

Ukraine has few innovation engineering centers, which are also on the map of a software export industry. The major city population-wise is Kyiv, where almost a half of the country’s programmers reside. The other half is divided between two large centers and a few smaller ones. Lviv and Kharkiv vie for the second place with an almost equal number of IT specialists, then we have Dnipro and Odesa, followed by smaller centers, for instance, Vinnytsia.

Lviv is second by size, and I would say first for its unique approach and attractiveness. Lviv is the first Ukrainian city to build its development strategy around the IT industry, where Lviv companies promote the city and work together to amplify the local IT sector.

Lviv IT Cluster’s impact on IT in Ukraine

I have been the chairman of Lviv IT Cluster for the last four years, and our company co-founded Lviv IT Cluster 7 years back. I believe this is a good idea to unite industry players around common goals.

The first organization’s objective has always been a human capital development in the city. Lviv IT Cluster’s success is proven by a tripled amount of software developers in the city in the course of 4 years. When we first started to measure this figure, we counted around 7000 IT professionals in Lviv, today this number has reached 20,000. We have achieved this success due to three efforts:

  •    promoting the city as a comfortable place to live and work
  •    working with universities to attract top talent to the industry
  •    promotional projects at schools aimed at informing about IT career benefits

The Cluster has built an effective system and in the last couple of years, we learned how to scale this system. We expand our network of schools, universities, we extend the number of academic programs. In 2017 we visited 80 schools in Lviv region, motivated 5000 students, launched 4 new university programs, in addition to, already existing 5 with over 500 students enrolled.

In this sense our experience is unique: there is no other IT association in Ukraine which unites so many companies, people, and runs so many initiatives. Moreover, in the last 4 years, we experienced a major success with infrastructure projects.

We have realized that further tech industry growth requires an adequate infrastructure development in the city. Caring for the IT community’s comfortable living, we built the IT House  a high-end 10-story apartment building. The city supported this project and provided the land for it. Now we are planning to replicate the success with IT Village  a modern suburban houses project.

1,5 years ago the idea to build IT Park in Lviv was born. We realized the entire IT industry needs a project like that and after 1,5 years this idea transformed into the largest greenfield investment project in Ukraine for office buildings and infrastructure development.

IT Clusters Network Ukraine: vision and the project’s kick off

With this serial success and the knowledge of how to unite companies together with local authorities and educational institutions, and how to govern the Cluster efficiently, we understood we can share this experience with similar associations in Ukraine. A couple of months back we had a strategy session where we discussed the further development of Lviv IT Cluster. We agreed that Lviv IT Cluster has outgrown its initial promotional role and right now the organization is becoming even more meaningful and influential. Our mission transforms into creating an ecosystem for software developers working in Lviv, we try to address their needs which the existing social establishments do not meet.

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For example, developers with more than average (on the country level) income have issues with their savings and annuity insurance, which effectively are not reliable and trusted in Ukraine. The problems are identical for the whole country.

Lviv IT Cluster managed to build an institutional trust with the developers and the city. We can now export our knowledge on how to build clusters which will help the city and the industry to grow. The IT industry certainly influences the environment in the city and we are witnessing it in Lviv. Creative restaurants and bars open outside touristic routes, private kindergartens are in a huge demand, small businesses are flourishing in the city because the IT community creates the demand.

At Lviv IT Cluster we receive assistance requests from other cities, which are trying to start their own clusters. Right now we are helping to launch Rivne IT Cluster. We are open to sharing our experience, therefore, we’ve decided to launch the project “IT Clusters Network Ukraine” this year. We are planning to run a strategy session for all more or less developed IT clusters in Ukraine. We are inviting all IT clusters to participate and envision this strategy session as a platform to discuss common goals and plan national level projects. Moreover, we will also be able to shape a model applicable for all clusters, which can ultimately lead to a success. By consolidating efforts with other cities, we will be able to build those specific instruments for IT employees in collaboration with financial institutions, develop infrastructure and implement multiple projects on the state level. Ideally, we’d like to create a national level organization, focused on the needs of the particular cities and regions.

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