Before the coronavirus outbreak, Ukrainian IT market had a steady annual growth rate at 26%, and generated over $4 billion in revenue. However, after the pandemic hit, the local IT industry — as well as the international one — had to adapt to the threat and face the new normal.
How has Ukrainian tech landscape changed since the start of the pandemic? In this post, we will discuss the concerns businesses shared regarding the future of the outsourcing industry in Ukraine, and the actual state of local tech businesses today.
What IT Professionals Expected To Happen After COVID-19
The worldwide tech community was deeply affected by the spread of coronavirus. Naturally, Ukrainian IT specialists were worried about what happens after the avalanche of change hits them. The main concerns at the onset of the pandemic were as follows:
1. Shortage of investments and cost-cutting
In May 2020, OECD published a report that predicted an over 30% reduction of international investment flows from the EU countries for the rest of the year. Since Ukrainian IT service providers heavily relied on outsourcing and, thus, international collaborations, local IT companies had concerns about giving up or narrowing the scale of international partnerships.
2. Difficulty of remote work transition
Before the outbreak of the pandemic, most Ukrainian tech professionals had office-based full-time jobs. Sure, the local IT workforce was open to freelance side jobs; however, switching to a full-time remote office was a new experience for many company managers — a lot of team leaders didn’t have the needed tools at their disposal and were anxious about the abrupt transition.
3. Budget strain of safety measures
At the start of the pandemic, Ukrainian tech specialists made forecasts based on data provided by American and European peers. That’s why when Harvey Nash/CIO survey stated that IT companies worldwide start spending an extra 5% of their budgets for safety enforcement, local executives feared that facing the pandemic will be financially strenuous.
4. Burnout and low productivity
Burnout is a concern tech managers have been vocal about for years — in 2019, 60% of IT professionals worldwide reported facing it. That’s why local business owners were challenged to imagine how the uncertainty of the pandemic, lack of socialization, and the limited ability of team leaders to detect the early signs of burnout would impact Ukrainian workforce.
5. Staff reductions
The tension around staff lay-offs started increasing among engineers as the news from Silicon Valley spread across the globe. When Facebook and other global corporations enforced location-based pay cuts, Ukrainian engineers started wondering whether their own job security is at risk.
These were the main concerns of the local IT community before the pandemic. Let’s find out if any of these have become reality.
What Has Actually Happened to Ukrainian IT Market
Since the beginning of the pandemic, Ukrainian companies managed to actually stay afloat, retain and acquire new clients, as well as hire talent. Although pre-pandemic concerns of the IT community were not unfounded, the change encouraged teams to discover new working strategies and, in many cases, optimize business processes.
Here is how the Ukraine IT market managed to navigate the COVID outbreak:
1. Most teams are remote but productive
Remote work transition was a steep process for many IT service providers. Some companies adopted a hybrid approach, allowing engineers to choose between working remotely and coming to the office. Others established hardware budgets to help employees create a productive environment at home.
Over time, however, the benefits of remote work transition became apparent — from cost-cutting to improved flexibility and productivity spikes. There are Ukrainian companies who even declared staying remote forever — such as EVO (IT service provider) and Jooble (a job search board).
2. Growth is slow but steady
Rather than seeing negative development trends, Ukranian IT kept growing in 2020, although the pace was about 30% lower than it used to be the year before. All in all, data scientists and industry experts are optimistic — they believe that the decrease of the growth rate is a direct consequence of having to adapt to operational changes. Once product and service companies figure out how to structure business processes, the field will pick its pace again.
3. Teams are undergoing digital transformation
Encouraging teams to complete digital transformation is one of the positive effects of the COVID outbreaks, according to the KPMG/Harvey Nash survey. Ukrainian IT companies followed the worldwide trend, investing in new tools and hardware. The shift was rewarding — most Ukrainian tech companies report an increase in productivity across all departments after going remote.
4. New startups and projects emerged
Aside from offering IT outsourcing services, Ukraine was an active change-maker during the pandemic, collaborating with worldwide governments and NGOs. For example, local developers designed both an analytics dashboard for the country’s Ministry of Health and the WHO. Other than that, Ukrainian startups with a focus on remote work had successful investment rounds (as was the case for Portal).
5. IT remains the country’s top revenue driver
In 2020, IT stabilized itself as the key economic growth driver in the region that, years ago, was considered a raw-material-driven economy. At the moment, it’s one of the least-affected industries in the country.
New Opportunities in Post-Pandemic Ukrainian IT
As Ukrainian tech professionals face the future, they aim to be on the frontlines of change, helping the worldwide community implement innovation, ensure safety, and unite for coping with the COVID aftermath.
In particular, Ukrainian IT specialists forecast that the following trends will emerge:
- Influx of tech talent. There are several reasons to make this assumption — for one, remote work helps business owners to look for talent across the country, broadening the talent pool. Other than that, the heightened need for online infrastructure shows the relevance of the tech industry and motivates prospective college students to enroll in CS and DS programs.
- Facilitated international collaboration. At face value, the pandemic might have reduced mobility; however, remote work propels teams to make the most out of on-distance meetings. As a result, Ukrainian IT professionals expect most international partners to leave the pandemic with a robust toolset for remote work and the knowledge of best long-distance collaboration practices.
- Increased demand for IT outsourcing (induced by the need of international companies to cut operating costs). Now that the location of service providers will no longer be among crucial selection criteria for outsourcing providers, industry experts expect more room for outsourcing growth. According to Deloitte, business owners worldwide will mostly outsource to cut costs, and Ukraine is a market that covers this objective extremely well.
- Higher adaptability and workflow flexibility. Research shows a steady trend towards agility and resilience in the worldwide tech market. In particular, analysts expect business owners to leverage the power of automation, improve self-management among teammates, and encourage DIY production strategies for hardware makers.
Dealing with the COVID pandemic is an unprecedented challenge that affected both large tech hubs like Silicon Valley and smaller IT communities like Ukraine. However, the good news is, local IT companies turned out to be more flexible and adaptable that was initially expected. In Ukraine, we started using new tools and created systems that help developers work more productively in this new normal.
When it comes to outsourcing, Ukraine is a reliable and risk-free market for business owners. At Honeycomb Software, we have the infrastructure needed to efficiently complete projects of all scales across a wide range of fields. To find out how working with our team helps cut development costs during the COVID pandemic, leave us a message!