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On February 14, 2024, Siftead published an article about the Ukrainian tech sector. The journalist Kirstie Pickering describes what the Ukrainian IT industry looks like in reality in the context of a full-scale war.
The state of Ukrainian tech: How does it really look in 2024?
In Ukraine, the daily challenges of war still remain significant almost two years after the invasion from Russia. Despite this — and somewhat against the odds, the country’s tech sector continues to evolve, attracting investment and talent from across the world and celebrating its achievements at its annual IT Arena conference.
As of 2022, the sector represented 4.9% of Ukraine’s GDP, and on average over the last three years IT services exports have valued almost $7 billion.
Last year, the number of tech specialists in Ukraine increased by over 7%. In addition, 36% of CEOs who lead Ukrainian tech companies say they plan to open new offices in 2024.
What’s behind the momentum — and will it continue?
Building the ecosystem
Stepan Veselovskyi is CEO at Lviv IT Cluster, the largest community of IT companies in Ukraine, and its annual tech conference, IT Arena. He believes a key trend in Ukraine’s tech industry in the last decade has been the increasing number of people in the talent pool.
“In 2014, tech professionals counted 75,000 people engaged in the industry — this has grown to 307,000 people in 2023,” he says. “There are currently 2,150 active tech companies operating in Ukraine. High-quality STEM education and rapid industry development are the main factors for this elevated growth.”
According to Paul Oliver, deputy director of USAID Office of Economic Growth, a US governmental agency that aims to assist other countries, 35% of Ukrainian tech workers are women, “an impressive doubling of the proportion compared to a decade ago”.
Veselovskyi also notes the importance of mergers and acquisitions over the last decade, as well as international investments in Ukrainian startups.
In 2020, Ukrainian-founded startup Reface, which has developed AI-powered face-swapping technology, raised $5.5 million. In 2023, Respeecher, which builds speech synthesis AI, raised $1.9 million and AiSDR, which offers AI tools that build customer profiles, raised $3 million from investors including Y Combinator and Pioneer Fund.
The Ukrainian government launched Diia City, a special legal and tax regime, to incentivise more Ukrainian success stories just weeks before the full-scale invasion in February 2022. The programme offers favourable tax conditions and tools that help companies to build transparent corporate structures, attract foreign investment and protect intangible assets.
In its two years of operation, Diia City has attracted over 800 Ukrainian and international companies, including prominent players like Samsung, Revolut and Lyft.
“Despite the uncertainty surrounding the war’s duration, CEOs in the technology sector continue to recruit personnel, engage new clients and operate with confidence,” says Oliver. “Decentralised staffing, rebuilt client engagement processes and a commitment to deliver regardless of circumstances have become integral to the sector’s response.”
Alex Bornyakov, deputy minister of digital transformation for Ukraine, adds that there is a positive trend of growing attention towards the Ukrainian tech sector.
“Before the invasion, there were no initiatives or plans to establish venture capital funds exclusively supporting Ukrainian startups and the ecosystem,” he says. “Now, there are such funds worldwide — namely Blue & Yellow Heritage Fund by ffVC, UFF, D3 Venture Capital Firm and Growth Fund IV.”
