To ensure the resilience and development of the tech industry, it is essential to understand the challenges faced by each region, its current state, and prospects. Therefore, as part of the IT Research Ukraine 2023: Adaptability and Resilience Amidst War, the Lviv IT Cluster conducted comprehensive research on the peculiarities of local tech hubs in our country for the first time.
The Kharkiv tech hub, second in the number of registered individual entrepreneurs (PE) with IT KVED codes*, is facing some of the most significant difficulties due to Russian aggression. The immediate proximity to the front line, hence constant air raids and fierce shelling, is the reality the region has been living in for almost two years now. As a result, a significant portion of businesses and specialists relocated to other areas in 2022. This became one of the biggest challenges for the Kharkiv region. However, despite such difficulties, the area and the local community confidently overcome them. Furthermore, we observe that in 2023, some specialists returned to the Kharkiv region.
One in ten active verified** tech companies in Ukraine has an office in Kharkiv. By mid-2023, around 20,000 tech specialists lived and worked in the region. This accounts for 8% of all tech professionals in Ukraine. Moreover, even those Kharkiv tech specialists forced to leave mostly did not change their registration and continued to stay within the regional jurisdiction regardless of their location. Consequently, they continue to pay taxes and support the region financially. This is evidenced by the receipts of the Single Tax (ST), which increased by 17.8% in 2022, reaching 1.44 billion UAH, and remaining at the same level in 2023.
Despite all the challenges of the full-scale war, the Kharkiv tech hub ranked second in the industry’s nominal turnover share*** in 2022, with a share of 15.6%. Each company hiring one tech specialist in Kharkiv creates and maintains 2.2 jobs. The share of the Single Tax from the tech industry in the total volume of the city’s Single Tax payment is 50.7% in 2023, amounting to 740 million UAH for the first half of the year. This is the highest share among other tech hubs. The total amount of taxes paid by tech companies in the region in 2022 was 2.498 billion UAH.
*KVEDs considered in the calculation: 58.21, 58.29, 62.01, 62.02, 62.03, 62.09, 63.11, 63.12.
** A tech company is considered to be a company providing information computer services, involving the transfer of software products, consultancy services regarding software development, software testing, business analytics, and other types of consulting related to information or computer technologies. Verification of company activity implies that it meets at least two criteria of external signs indicating its activity.
*** The indicator for the nominal turnover share of the industry considers the tax residency of participants in the tech market in the location. Source: analytics from the research agency Fama based on the data of the STSU, SSSU.
As of 2023, there are 85,000 tech specialists in the Kyiv region, representing 35% of all tech specialists in Ukraine. Despite active relocations after the onset of the full-scale war, the hub has remained substantial and key in the market. Its share in the nominal turnover structure of the industry is 40.1%.
The Kyiv hub has managed to maintain its position as the leader in the tech industry in terms of the number of directly employed workers and the number of preserved and created jobs in other industries. This figure has already reached 230-233 thousand, which is more than a third of all jobs created and preserved by the Ukrainian tech industry. The share of the Single Tax from the tech industry in the total volume of the city’s Single Tax payment is 26.2% in 2023, equivalent to 1.804 billion for the first half of 2023.
Almost half of the verified active tech companies in Ukraine have offices in the Kyiv region, and one-third of them do not have representations in other regions. The increase in tax revenues from tech companies in the Kyiv region in 2022 increased by 12% compared to 2021, amounting to over 9.359 billion UAH.
The war has altered the regional structure of Ukraine’s tech industry, with the Lviv region becoming a relocation hub. Over the past year, the number of tech specialists in the Lviv region has increased by over 40%. As a result, the tech hub ranks second in terms of the number of employed professionals. Currently, there are 51,000 tech specialists in the region, accounting for a fifth of all those in Ukraine. Lviv’s share in the nominal turnover structure of the tech industry is 14%.
The number of companies with representations in the Lviv region is also growing. As of 2023, there are 599 such companies. Slightly less than half are purely local, without representations in other regions. Overall, 28% of tech companies in Ukraine have offices in the Lviv hub. The increase in tax revenues from tech companies in the Lviv region in 2022 increased by 27.4% compared to 2021, totaling 2.173 billion UAH. The share of the Single Tax from the tech industry in the total volume of the city’s Single Tax payment is 47%, or 0.614 billion UAH in the first half of 2023.
Due to mass internal displacement, business relocations, and the destruction of universities in eastern regions, the number of people employed in the tech industry in Dnipro increased by over 30% in 2022. This contributed to the growth of the local tech industry turnover. Currently, the share of the Dnipropetrovsk hub accounts for 7.5% of the nominal turnover of the tech industry in Ukraine.
As of 2023, there are over 18,000 tech specialists in Dnipropetrovsk Oblast, representing 7.5% of tech specialists in Ukraine. Considering current trends, further growth in the number of tech professionals in the region can be expected. The share of the Single Tax from the tech industry in the total volume of the city’s Single Tax payment is 39.1% in 2023, or 0.47 billion UAH for the first half of 2023.
12% of tech companies in Ukraine already have offices in Dnipropetrovsk Oblast, more than half of which are part of a branched network of company representations in Ukraine and abroad. Tax revenues from tech companies in the Dnipro hub in 2022 amounted to 1.404 billion UAH.
Odesa ranks among the top five largest Ukrainian tech hubs. The region demonstrates positive dynamics in turnover growth and the number of industry specialists. Odesa has also become a center for the relocation of tech specialists and their families from southern and eastern regions. The number of those employed in the industry increased by 30%, reaching 15,000 tech specialists in 2023. However, this is still less than in Kyiv, Lviv, Kharkiv, and Dnipro. Currently, the share of tech specialists located in the hub is 6% of all those in Ukraine. Six percent of tech companies in Ukraine have offices in the Odesa region. Out of 132 active verified companies, only 15% are local companies without representations in other regions or abroad. The share of the hub in the nominal turnover structure of the industry in 2022 was 5%.
Cumulative tax revenues show a growing trend in the tech industry of the Odesa region in 2022. The increase in tax revenues in 2022 was 18.7% higher than in 2021, totaling 0.992 billion UAH. The share of the Single Tax from the tech industry in the total volume of the city’s Single Tax payment is 26.5% in 2023, or 0.22 billion UAH for the first half of 2023.
For more information on the most important trends in Ukraine’s tech industry in the second year of full-scale war, read the IT Research Ukraine 2023: Adaptability and Resilience Amidst War report. The report can be downloaded here.
*The study does not include temporarily occupied territories by Russia and those actively engaged in combat.
To ensure the resilience and development of the tech industry, it is essential to understand the challenges faced by each region, its current state, and prospects. Therefore, as part of the IT Research Ukraine 2023: Adaptability and Resilience Amidst War, the Lviv IT Cluster conducted comprehensive research on the peculiarities of local tech hubs in […]
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