Ukraine – From a Pool of Developers to an International Tech Hub
By Paula Pärnaste and Mykyta Tsylyuryk, LIFT99 Kyiv Hub
The country that is currently a pool of tech talent for many huge American and Western European IT companies will soon become an ocean of successful startups. The writings are already on the wall.
Today, Ukraine is home for more than 120 000 IT professionals – most of them developers. And the number is expected to double to over 200 000 by 2020 according to the IT Ukraine Report. It is the good price-to-quality ratio that makes it one of the primary destinations for tech giants like Microsoft, Boeing and Magento to outsource their software development needs from.
The new middle-class of Ukraine
The high demand for IT talent has created a win-win situation. On the one hand, global tech companies have found a source for highly qualified tech workforce that is in short supply everywhere. On the other hand, the Ukrainians working in tech and receiving salaries either in dollars or euros have become the new middle-class of Ukraine.
“Working in IT and having a global job is very attractive for young Ukrainians,” says Yuliana Oselska, Head of Marketing at YouTeam, a Ukrainian startup building a marketplace for international development teams. “Firstly, they can access the world’s top-tier IT projects and gain invaluable experience working with the best specialists from all over the world without having to leave their home country. Secondly, the ‘remote’ nature of the IT industry makes it possible to remain in the country with the cost of living significantly lower than their salaries.” Some even say working in tech has become a shortcut to a luxurious lifestyle.
To put things in perspective: the average salary in Ukraine is about $320, while the average salary in IT $2000. This is the reason behind why technology and English courses are becoming widespread and the amount of ‘switchers’ – people who move from other specialities to IT – is growing exponentially. The IT sector currently accounts for approximately 3.5% of Ukraine’s GDP and promises to reach almost 9% by 2025 according to the IT Ukraine Association’s report released in January 2018.
The new wave of entrepreneurs
Ukraine’s challenging situation, both economically and politically, including Euromaidan in 2013, the Crimea annexation in 2014 and the ongoing war in the East, has raised a young generation of hopeful reformers. It’s a generation full of motivation and willpower – the people who are ready to be the change in the country. Combined with the abundance of tech talent, it’s not a surprise that startup success stories have started to emerge.
To name a few, Grammarly, Looksery and Viewdle are part of the globally successful wave of startups that inspire Ukrainians to start their own companies. The online grammar checking tool Grammarly raised $110 million in 2017, the real time facial modification Looksery was bought by Snapchat for $150 million in 2015 and the face recognition software Viewdle was acquired by Google already back in 2012 for $45 million. The increase in the flow of money and investments is creating the desire of other founders for their company to become the next success story – perhaps even a unicorn.
“It’s true – many people in Ukraine including entrepreneurs are hungry for success,” says Max Ischenko, the founder of DOU.ua, the biggest community of developers in Ukraine. “We see what’s possible and we want the same for ourselves. Many are willing to work long hours, including the weekends, and a situation when everybody gets up and leaves at 6pm is rather an exception than a rule. What Ukraine needs is a breakaway story like Skype to put this energy into overdrive.”
Kyiv – the next startup city?
Kyiv has all the signs for turning the Ukrainian startup scene into one that’s as vibrant and buzzing as Berlin or Tel Aviv, if not more. There are numerous events happening every day including empowering hackathons, workshops, meetups, conferences – many of them including big internationally known names. New coworking spaces are springing up like mushrooms after rain and the waiting lists for some of the more popular central ones are being filled before the doors open. Alongside incubators and accelerator programs, these coworking spaces help young startups to mature and grow into strong tech companies.
“Ukraine has excellent talent – the challenge is to bring it to the next level, boost the entrepreneurial spirit in the country,” says Ragnar Sass, the CEO and Founder of LIFT99. “To illustrate the potential for entrepreneurship in Ukraine, take the example of Estonia: the small country has around 500 startups for a total population of 1.3 million people. Ukraine has around 2000 startups for a population of 44.8 million people – that’s 8 times less. If Ukraine had the same startup-to-population ratio as Estonia, the number of startups in Ukraine would skyrocket from 2000 to 17 000.” Let’s do it!
See you in Kyiv!