IT-ринок України в цифрах.
Ukraine has become a major player in the global tech arena. The IT talent pool in Ukraine is approaching 200,000 software developers, tech startups are booming, the flow of investments is increasing, and the number of companies that partner with Ukrainian software development service providers is growing.
There could be no better time for the country with historically strong engineering skills to realize its potential. In the world engrossed with tech innovations, at the time when information and data have become the new oil, Ukraine has an invaluable asset to offer - an unmatched IT talent pool.
The quality of Ukrainian tech skills is recognized across the world and acknowledged by many industry awards. The country is in the top 20 in the A. T. Kearney Services Location Index; it was named Offshoring Destination of the year by GSA; more and more Ukrainian companies are listed in Global Outsourcing 100 by IAOP; a lot of companies are included into Software 500, Inc. 5000 and other industry ratings.
So what is happening in the Ukrainian IT market today? What are the key forces driving Ukraine to the foreground of the global tech scene? Discover this and more about ’the country that codes’ in a special report .
ABOUT THIS REPORT
Ukrainian IT market has become a lucrative spot on the world business map. A lot of research has been done into the industry trends, the growth of the engineering talent pool, major Ukrainian IT cities, the business climate, etc. Yet there have been few consolidated reports on the country’s IT industry.
So the main goal of our research was to bring together all the available information about the Ukrainian software development market to help various market players make informed business decisions. It should be of use to:
- companies that are looking to build development centres in the country;
- organizations that are searching for IT partners to boost their development capabilities;
- Ukrainian tech businesses;
- other market players.
The report gathers the information and stats from almost 100 sources. It is based on the research provided by Ukrainian and international advisory firms, media, business associations, and other reputable sources. It includes findings by PwC, Gartner, CBInsights, StackOverflow, The World Bank, Bloomberg, A.T. Kerney, DOU, EBA, IT Ukraine Association, and others. We are grateful to our partners, namely IT Ukraine Association, EBA, ACC, NUCC, AHK Ukraine, CUCC, and Lviv IT Cluster for their input and kind assistance in preparing this report.
WHAT THIS REPORT COVERS
Country Overview: a quick look at the workforce, population, education, and other key aspects characterizing Ukraine.
Business Climate: analyzing the state of the economy, reforms, legislation, information security standards, and other important factors that impact doing business in the country.
Infrastructure: an overview of infrastructure essential for doing business in Ukraine, such as transport, flights, real estate, hotels, etc.
Ukrainian Software Development Market: industry growth dynamics and trends that determine its development, its role in the country’s economy, IT infrastructure; comparison with other tech markets in CEE.
Tech Talent Pool: a detailed profile of the Ukrainian software developer; key technologies used, STEM education in the country, top universities, innovative educational programs, English proficiency, and more.
IT Cities: an overview of major Ukrainian software development hubs and their capacity – Kyiv, Lviv, Kharkiv, Dnipro, and Odesa.
Ukrainian Software Development Companies: types of IT businesses, their industry focus, services, etc.
Startup Ecosystem: notable Ukrainian tech startups that attracted a lot of investments and got traction on the global tech scene.
Ukrainian IT Service Companies: services provided by the market leaders; key industries they focus on; a look at the Ukrainian IT outsourcing market, key market players, etc.
Much of Ukraine’s success stems from its ample resources. It is the largest country that lies entirely in Europe with a population of nearly 43 million and a workforce of 20 million people. The country has a favourable geographical position as it borders Poland, Romania, Slovakia, Hungary and Moldova in the west; Belarus and Russia to the north and east; Bulgaria, Georgia, and Turkey to the south over the Black Sea. For European businesses, geographical location and time zone proximity significantly simplify collaboration. Moreover, the European mindset and a similar business culture remove communication bottlenecks.
Ukraine is a member of the IMF, the World Bank, the European Bank for Reconstruction and Development, and other financial institutions. In 2008, Ukraine joined the World Trade Organization, it has a free trade agreement (DCFTA) with the EU and with EFTA. The country is a member of many other international associations, including the United Nations, the Council of Europe, the OSCE, and others.
In 2017, Ukraine entered the EU–Ukraine Association Agreement and published a plan of measures for its effective implementation. The country is showing signs of stabilization and prosperity. Its GDP grew by 3.5% in 2018 hitting the target of $391.53 billion, inflation is slowly but surely going down, and it is estimated to normalize at around 6% in 2019. Moreover, Ukraine has gone up 23 positions over the last 3 years in the World Bank’s Ease of Doing Business 2018 (76 places higher compared to 2012).
Since 2014, the state has focused greatly on improving the business climate in Ukraine, and it has taken many measures in that direction. As a result of the continued effort, Ukraine has become an investment hot spot. Foreign direct investment in Ukraine in 2017 came close to $3,000 million.  In the first half of 2018, the country attracted $1 billion in direct foreign investment and in the fourth quarter, it increased by $833 million. So in 2018, this number exceeded $2,490 million.
As an emerging economy, Ukraine has a quite low cost of living. It has the world’s second-lowest Big Mac price of $1.64. Cost of living in Ukraine is 58.29% lower than in the United States. Rent in Ukraine is 74.78% lower than in the United States and a one-bedroom apartment monthly rent is around $200.  At the same time, the country ranks 50th out of 157 countries on the Human Capital Index, which assesses the knowledge, skills, abilities, and health of the population. 
Ukraine is one of the countries with the highest literacy rate reaching 100%. The adult literacy rate in Ukraine has increased from 99.4% in 2001 to 99.8% in 2015. ,  Furthermore, over 70% of Ukrainians have a secondary or higher education. 
The political situation in Ukraine has stabilized since 2014 when the Russian Federation annexed Crimea and started the military conflict. Today the conflict is contained in the east of the country. Ukraine is the continent’s second-largest country so the distance between some cities is substantial. For instance, major IT hubs in Ukraine, Kyiv and Lviv, are closer to Prague, Krakow, and Berlin than to the conflict zones. That’s why the conflict hasn’t affected the life and business flow in other regions. Like many other countries with conflict zones, including Israel, India, Egypt, Morocco, and Pakistan, Ukraine remains an alluring business destination.
IT Market Dynamics
The Ukrainian software development market has enjoyed impressive growth in recent years and became one of the key sectors contributing to the country’s economy. The statistics by the World Bank, PwC, IT Ukraine Association, and State Statistics Service of Ukraine demonstrate steep growth of the sector. Interestingly, the industry has accelerated since the beginning of the 2014 political crisis when the prices for Ukrainian IT services became even more attractive for investors due to inflation.
Here are a few facts that reflect the advance of the Ukrainian IT market:
- ICT became the 3rd largest export service industry, amounting to more than 20% of all Ukrainian service exports; 
- Ukrainian IT industry is growing at a 26% rate;
- There are currently more than 4,000 tech companies operating on the market;
- There are over 1,600 software development service companies in Ukraine; 
- There are over 185,000 software developers in Ukraine; 
- Ukraine ranks 20th on 2019 A. T. Kearney Global Services Location Index of the most attractive outsourcing destinations; 
- More than 100 companies on the Fortune 500 list are clients of Ukrainian IT firms.
This research further covers different aspects of the Ukrainian tech market, such as the IT talent pool, STEM (science, technology, engineering, and mathematics) education, popular technologies, major software development companies, to name a few.
IT outsourcing in Ukraine
IT outsourcing companies constitute the largest share of the Ukrainian IT service market. Although the number of startups (over 2,000 companies) and international R&D centres (over 100 companies) is growing, IT outsourcing companies employ more than 60% of all engineers who live in Ukraine.
The USA and Western European countries remain the largest target markets of the Ukrainian IT service companies. In 2012, the USA was the largest consumer of the Ukrainian IT service exports (81%). Recent research indicates that it is still the main market for the Ukrainian IT export but the share of European businesses has grown significantly over the years.
If we look at the businesses that outsource software development to Ukrainian IT services companies, they range from growing startups to established ISVs to massive enterprises. Cisco, IBM, Atlassian, Travelport, OpenText, Fluke Corporation and a lot of other global companies have partnered with Ukrainian software development providers to bring their digital solutions to life.
Many such partnerships last for years and small outsourced teams grow into large development centres located in Ukraine. For instance, Anoto worked with N-iX, a Ukrainian IT company, for over 12 years. While Lebara, a UK telecom enterprise, expanded its development team at N-iX from 5 to over 100 software engineers. Therefore, market leaders from different industries across the globe have taken advantage of outsourcing software development to Ukrainian engineers.
Download N-iX report to learn more about the growth of the IT market in Ukraine.
Tech talent pool
The biggest asset of the Ukrainian IT market is a vast pool of IT professionals unmatched by the quality of skills. As of Q1 2019, it comprises over 184,700 specialists, and experts forecast it will surpass 200,000 by 2020. Most sources suggest that approximately 60% of Ukrainian software developers are currently employed in IT service companies. However, there is a decent share of captive centres in the country, and the number of tech startups is growing year by year.
There are several aspects that contribute to this growth.
Number one is the financial factor. The minimum official monthly salary in Ukraine is around $150. In 2018, the average monthly salary amounted to roughly $330, and in 2019 it is projected to reach $370. The average salary in the IT industry is almost 7 times higher. This huge gap is the main reason why so many people are trying to enter the sector, both young graduates and specialists from other spheres. In addition, IT jobs are not as sensitive to economic fluctuations as in other sectors, so security and stability attract many professionals.
In addition, tech jobs come with a certain social status and prestige in Ukraine. Many people want to become a part of the Ukrainian IT community and enjoy the benefits of a career in tech, including decent salaries, business travel, international working experience, career prospects, and more.
Another factor that drives the Ukrainian IT market is the historically strong tech education in the country. Most Ukrainian universities have engineering faculties and advanced STEM programs. Today the popularity of tech disciplines is growing, and so is the competition among students for places at the leading educational institutions. A lot of new programs are launched every year with support from the biggest IT companies. Therefore, the talent pool is growing both in its quantity and quality.
No less important are the positive changes in the Ukrainian legislation and the taxation system. The state is trying to cut on the red tape and introduce economic reforms without putting too much pressure on the developing tech sector.
Last but not least, Ukraine’s geographical location is a major selling point for foreign businesses and investors.
Ukrainian software developers specialize in a wide range of programming languages, technologies, and tools. Since over 60% of Ukrainian IT professionals work in IT service companies, they work on many different projects and thus possess versatile tech expertise. Not only do Ukrainian engineers have hands-on knowledge of many technologies but also know how to use them in various domains.
According to HackerRank, Ukraine ranks 11th with an overall score of 88,7 points out of 100 among the top 50 countries with the best software developers in the world.  Also, it is 6th on the TopCoder rating of the best programmers. 
Since the demand for software development services is growing – globally and in Ukraine alike, the number of tech-related job openings is soaring as well. In 2018, the number of posted jobs on DOU has increased from 3,111 to 4,606 a month. While the number of applications went up by 23% – from 270,000 to 330,000. At the same time, the number of companies that offer employment opportunities on DOU grew by 38% – from 2,419 to 3,339.  The most in-demand IT professionals are Front-end, QA, and PHP experts, as these categories constitute 31% of all vacancies.
Surveys of the Ukrainian IT professionals demonstrate that 67% of Ukrainian IT specialists live in Kyiv, Kharkiv, and Lviv.
According to Stack Overflow, there are around 68,500 software developers in Kyiv.  All major Ukrainian IT companies, including GlobalLogic, Ciklum, SoftServe, Epam, N-iX, and many others, have large development centres in Kyiv. Also, there are more than 50 international R&D offices of large enterprises, such as Samsung, Huawei, Ericsson, NetCracker, etc. Many IT startups have offices in the capital, including Grammarly, Petcube, Terrasoft, Augmented Pixels, La Metric, etc.
Lviv is the second largest IT hub in Ukraine. There are over 20,000 IT professionals working in the city and around 317 IT companies, most of which provide software outsourcing services to clients in the USA, Western Europe, the UK, the Nordic countries, and other locations. In 2018, about 14,000 students studied at universities with tech programs, so the industry has a constant inflow of fresh talent.
14% of the Ukrainian IT talent live in Kharkiv, 12,000 IT specialists are located in Dnipro, and over 10,000 live and work in Odesa.
Ukrainian tech companies employ a lion’s share of the country’s IT talent. The market primarily constitutes IT outsourcing companies, IT product companies, and captive centres of global businesses. However, over 60% of Ukrainian IT professionals work in IT outsourcing companies.
In 2017-2018, the number of employees in the 50 biggest Ukrainian IT companies grew by around 35% – from 43,000 to 58,000 specialists. Also, two companies surpassed 6,000 professionals. 25 biggest Ukrainian IT firms have demonstrated a record growth rate in the last 5 years. Twice as many companies from the Ukrainian Top 50 opened new offices in the second half of 2018 compared to 2018 Q1 and Q2. The most popular locations are Kyiv, Lviv, and Rivne. As for the global locations, Ukrainian companies started operations in Malaga, Berlin, Warsaw, Krakow, Toronto, Turin, London, Bucharest, Eindhoven, Chicago, etc. 43 out of 50 biggest Ukrainian IT companies have offices in Kyiv, 21 in Lviv, and 20 in Kharkiv.
Ukraine houses a wide range of top-notch IT product companies including Grammarly, Readdle, Jooble, Depositphotos, TemplateMonster, GitLab, and others. The Ukrainian startup ecosystem is growing by 500 new entrepreneurs each month. Startup investments are growing too. In 2017, there were 44 deals with the total investment volume of $265 million.  Although it is not easy for startups to fight for software engineers with large outsourcing vendors, which dominate the Ukrainian IT market, they have several significant competitive advantages.
A lot of Ukrainian startups expanded to global markets and moved their headquarters to world business centres and the Silicon Valley, others were acquired by tech giants. For instance, Google bought Viewdle, while Looksery was acquired by Snapchat for around $150 million.
IT Service Companies
There are currently over 1,600 software development service companies in Ukraine, and most of them provide software development services to customers around the globe . Therefore, businesses that look for an IT partner in Ukraine come up against the challenge of choosing among a variety of vendors. The selection criteria often include the company’s size, years on the market, a track record of similar projects, references, experience in certain technologies and industry verticals, security practices, etc.
Ukrainian IT service companies stand out among the global competition thanks to the convenient geographical location, cultural closeness, good communication, highly skilled talent and, of course, competitive prices. Therefore, these factors play a decisive role.
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