Ukraine’s once-thriving tech landscape continues to develop, but most have not been exempted from the effects of the full-scale invasion, and for many in the IT industry, the future remains uncertain, both while the war lasts and in the unknown world once it’s over.
Before the full-scale invasion, Ukraine was one of the major IT hubs in Eastern Europe.
JOIN US ON TELEGRAM
Follow our coverage of the war on the @Kyivpost_official.
The tech scene gave birth to numerous well-known startups and unicorns, as well as hundreds of software development businesses whose outsourcing solutions became powerhouses for overseas companies.
Then the war came, and everything changed.
While the IT industry continued to be Ukraine’s largest service export in 2023, contributing 4.9 percent to its total gross domestic product (GDP) at $8 billion, there’s a notable decline compared to 2022 – though data from the National Bank of Ukraine showed an upward trend by the end of 2023.
The instability of war also extends to the industry, where specialists are hesitant to change jobs and, at times, reluctant to work onsite in fear of being mobilized by the military.
As the full-scale invasion inches toward its third year, Kyiv Post interviewed IT workers in different roles to understand the true picture of Ukraine’s tech industry during wartime.
The Great Exodus
“Approximately 70 percent of companies moved within the country and abroad,” said Hanna Yankina, a recruitment manager based in Poland who works for a US-Ukrainian IT firm.
Russian Attacks on Ukraine Energy Could Trigger ’Tipping Point’: UN
According to Yankina, most IT companies in Ukraine relocated to the western regions of the country at the onset of the invasion, and 50 percent of companies have either partially or entirely shifted their operations abroad.
“Companies primarily relocated to countries where they already had opened offices or representations, including Poland, Germany, Spain, Romania, Bulgaria and Portugal,” she said.
“Events like Silicon Valley Bank going belly up gave some people flashbacks to 2008.”
Layoff Trends
Companies have also laid off staff, though it might not be fully attributed to the war.
“On one hand, many companies terminated staff, though typically not key personnel,” said Yankina.
Alex, a head of sales at a mid-sized software development firm, also noticed layoffs in the industry, though he believed it was a long time coming.
“For developers – definitely yes. Global corporations like Google, Microsoft and others fired a lot of people in the last couple of years. This led to more people [in] the labor market with lower numbers of open vacancies. But this is again the global [trend] not connected to war.
“[The] industry started adjusting after the COVID years, firing employees who weren’t needed anymore. Then the global [economic] impact on the industry also led to further decline. Events like Silicon Valley Bank going belly up gave some people flashbacks to 2008,” said Alex.
Dmytro Adrianov, who works as the head of a regional affiliate team, said layoffs could be related to investor-driven decisions, and that he was laid off and rehired – with a significant salary increase – by the same employer in 2023.
Yankina said job loss has had a widespread impact on professionals at all levels in Ukraine, except for architects, leaders and managers.
“Among interns, juniors, and mid-level professionals, around 11 percent are currently unemployed and actively seeking new employment, while an additional 5 percent are on the bench or unpaid leave. The situation is better for seniors, with 8 percent currently unemployed and another 5 percent on the bench,” said Yankina.
She added that overseas staff – including Ukrainians who moved abroad – are not immune to the trends either.
“In both cases, companies seem to be letting go of non-key personnel and changing their bench policy,” she said.
“Men are not ready for onsite work because they fear mobilization and want to avoid traveling within the city.”
A Changing Landscape
Sofiia Tarasova, an HR worker in IT, said it’s increasingly difficult for new applicants to enter the market as companies tried to cut down expenditures.
“I noticed that since last year many positions have been combined into one. For example, a [Quality Assurance] tester also has to either code simple things or do business analysis.
“It became difficult to enter the market. Newcomers face the problem of very low salaries for the first one or two years,” said Tarasova.
Yankina also noticed a similar trend.
“We are receiving more resumes, but there is a decline in the number of high-quality CVs for senior positions. Salary expectations have decreased by approximately 20 percent, though this does not apply to the most qualified candidates,” said Yankina.
The war has also affected working conditions and preferences.
“Men are not ready for onsite work because they fear mobilization and want to avoid traveling within the city,” Yankina added.
As for interviews, Adrianov said he had noticed an increase in interview opportunities over the last two years, but finding the right match was not easy.
“Despite the abundance of opportunities, finding the right match is crucial,” he said.
In terms of Ukrainian companies that relocated abroad, Yankina said they still favored Ukrainian candidates due to cultural differences with locals.
“There has been a notable trend among Ukrainian companies where hiring local European candidates is not as prevalent. This is largely because Ukrainian companies are often not ready to adapt to European working culture, notice periods, and the higher costs associated with recruitment, which are approximately twice as much as in Ukraine,” she said.
Yankina added that the only exceptions would be companies with existing offices abroad before the full-scale invasion.
Relationship with Overseas Clients
Yankina said the war has caused some hesitations for overseas clients to work with Ukrainian teams, but not always.
“New clients often hesitate to engage in staffing in Ukraine due to perceived high risks. Conversely, existing clients frequently opt to continue their collaboration with current engineers.
“In general, larger corporations adopt a cautious approach to security considerations, whereas smaller clients are more willing to embrace risks,” said Yankina, adding that those with positive experience in 2022 working with Ukrainian teams were likely to extend the collaboration.
“However, their decisions are also influenced by the state of the global market and the ongoing economic recession worldwide,” she added.
Alex said the full-scale invasion had an impact at first, but things have gradually returned to a “new normal.”
“When the war began it was chaos at first and some clients were very concerned about working with Ukrainian IT companies. But after some time things started going back to a ‘new normal.’
“There were also some problems with clients during the blackouts of winter 2022-23, but clear communication with clients helped to deal with their worries,” Alex explained.
“Some people might disagree with my opinion, but I know that I'll be moving abroad.”
An Uncertain Future
As the war rages on, companies begin to accept the fact that it’s not going away soon, and they, like the country, are preparing for a long fight.
“In 2022-2023, market players initially attempted to navigate the challenges posed by the war, hoping for a swift resolution,” said Yankina. “However, as the year progressed, the realization set in that the war would persist for an extended period, leading to a more challenging business environment.
“Companies incurred significant expenses, relocating employees and preparing for potential blackouts [...] Nevertheless, with a high probability of a prolonged war, company leaders are now focused on maximizing business adaptability,” she said.
Alex is less hopeful, however, as he believes there will be a talent drain in the country once the war is over.
“This is my personal opinion, and I might be wrong, but I think that the biggest changes will come after the war ends and the borders will be open again.
“What our government does right now will lead to a lot of IT guys moving away from the country. Mindless mobilization of everyone they can grab, absence of the working mechanism to reserve workers (the [government] tries to make you believe that there is such mechanism but check the numbers of reserved IT workers in 2023) and just the [plainly] lying to people will be the main catalysts for IT guys to move away,” he said.
“Some people might disagree with my opinion, but I know that I'll be moving abroad. And I hear from people having the same plans more often lately.”
But for Adrianov and Tarasova, there might still be a silver lining.
“With its flexible workforce and readiness to tackle new challenges, the Ukrainian IT sector is well-positioned to thrive in the global market,” said Adrianov.
For Tarasova, Ukraine’s strength lies in its adaptability.
“In my opinion, the advantages of Ukrainian [developers] are adaptability to the market and smart brains. We are [the] first in the world who digitized documents and data like ID, tax [numbers], etc., and related procedures to this field by using the [Diia app].
“I think we will move forward in this direction,” said Tarasova.
You can also highlight the text and press Ctrl + Enter
