Battered by the war, Ukraine’s economy will shrink by nearly a third in 2022, according to the country’s central bank. But one sector has fared much better than most
will shrink by nearly a third in 2022, according to the country’s central bank. But one sector has fared much better than most. The Ukrainian IT Association, a tech-industry body based in Kyiv, the capital, reckons that in the first six months of this year software exports grew by 23% compared with the same period in 2021. Only 2% of Ukraine’s 5,000 software companies have folded this year.
Part of the reason why the industry has weathered the war relatively well is clever planning. Before Russia’s invasion GlobalLogic, an American firm with about 8,000 coders in Ukraine, made plans to relocate employees to safer areas of the country and carried out week-long trials working from Lviv, a city in the west. Vitaly Sedler, chief executive of Intellias, a Ukrainian software firm, had a similar strategy.
But ill winds are gaining strength. In recent weeks methodical Russian strikes on critical infrastructure have caused widespread outages of water and electricity. On November 17th 10m Ukrainians were without power, according to Volodymyr Zelensky, the president. For Ukraine’s IT sector this could be “devastating”, warns Andrei Drobot, a professor at the Kyiv School of Economics, speaking from a powerless flat. Conscription is a smaller problem.
This year’s growth may have been helped by what Ihor Kostiv, an executive in Lviv for GlobalLogic, calls “emotional support” from sympathetic Western clients. Such altruism is unlikely to withstand more extensive blackouts. Already IT exports, the bulk of which is software, have slowed. The growth between July and September this year was 13%, according to Konstantin Vasyuk of the Ukrainian IT Association, well below the rate in the first half of the year.
In the longer term the “huge risk”, says Mr Bornyakov, is that more of Ukraine’s IT companies will relocate to Poland or elsewhere in Europe. Of roughly 285,000 tech specialists in Ukraine at the beginning of this year, more than 50,000—mostly women—have moved abroad, suggests a survey by the Lviv IT Cluster, an industry association. To stop that brain drain, Ukraine will need to keep its infrastructure working. And ultimately it will need the fighting to stop.
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