Five years ago, Ukraine’s information technology market was off the radar of most investors. But from 2012 to 2013, investment doubled from $44 million in 2012 to $80 million in 2013.
Much of the money ends up on offshore accounts and 2014 numbers are not in yet, but it is not expected to have been a banner year, despite the entry of Digital Future, APEX VNT, FOVentures and others. Ukraine’s first hardware startup accelerator, Carrot, also joined the market.
Yet Yevgen Sysoyev, founding and managing partner of AVentures Capital, says the industry remains strong and increasingly international.
“Most Ukrainian IT companies are players on the global market. Hence, the major influence and trends come from outside the border,” Sysoyev says. “This is why the IT industry might not be as much vulnerable to the crisis as other sectors of the Ukrainian economy.”
More than 50,000 specialists are employed in the industry, contributing to its value of $5 billion. More than 500 outsourcing firms worth $2 billion dominate the marketplace.
There are more than 100 e-commerce and 2,000 software development companies in Ukraine. Their combined value is $2 billion. The country is also home to more than 100 global tech research and development centers.
Denis Dovgopoliy, managing partner and founder of the BVU Group tech company, estimated that seven out of 10 such companies sell abroad, sheltering them from Ukraine’s rough business climate. Unlike other sectors, “crisis always affects our industry in a positive way,” Dovgopoliy says.
Consumer product companies are doing the best.
The outsourcing segment, formed largely by subsidiaries of global software developers, may have slowed in growth from 30 percent in 2013 to 15 percent in 2014. The biggest players are Ciklum, SoftServe, GlobalLogic, EPAM, and Luxoft.
Due to the hryvnia’s depreciation, the volume of online sales in the e-commerce sector dropped in dollar terms from $2 billion to $1.4 billion in 2013-2014, according to e-commerce.com.ua.
Vladyslav Chechotkin, chief executive officer at leading online retailer Rozetka, said that mistrust of online retailers and lack of universal Internet penetration remain problems.
Kyiv Post staff writer Bozhena Sheremeta can be reached at [email protected]. The Kyiv Post’s IT coverage is sponsored by AVentures Capital, Ciklum, FISON and SoftServe.
