Last year was fruitful for the Ukrainian IT industry. According to estimates of the Payoneer payment system, the income of IT companies from cooperation with foreign customers in the second half of 2020 and the first half of 2021 increased by almost a third, and in Kyiv – by more than 40%. All because of the pandemic. It, firstly, stimulated businesses in various sectors to invest more in optimization, and secondly, it encouraged the governments of developed countries to inject funding into the economy. A lot of money means a lot of investment.
This year, the US and other countries will gradually roll back such policies. However, global spending on IT services will grow equally, research company Gartner predicts. What can Ukrainian IT companies expect from such weather on the global market? Let’s try to figure it out.
A boom in spending on innovation
Ukrainian IT business lives in the same ecosystem as global markets, so Gartner’s forecast of a 5.1% increase in global IT spending in 2022, up to $4.5 trillion, only plays into our hands. Businesses in various industries increasingly prefer long-term IT investments and build digital strategies. Gartner expects this trend to continue next year and IT spending will grow by 5% in 2023.
Ukrainian IT usually keeps pace with global trends in the sense that many companies work specifically with foreign customers. The main thing holding back the growth of the IT sector in Ukraine is the lack of personnel. There are real wars going on for developers on the labor market right now.
Larger companies are ready to buy out smaller ones just for the sake of the team. Therefore, we allow activity within the limits of mergers and acquisitions of companies. Smaller players build their own headhunting strategies – more or less successful. For example, someone has already abandoned the long and not always effective search for “ready-made professionals” with the necessary skills and experience and hires promising juniors, investing in their training and development.
Changes in Ukrainian IT
If we abstract from the global situation, then in 2022, a lot of interesting things are expected in Ukrainian IT. The pool of residents of “Diya.City” — a special legal and tax regime for IT companies that should stimulate the development of innovations — is already beginning to form.
Currently, more than fifty companies are officially included in this special regime. By the way, there are also international players among them. Despite the tumultuous political situation in Ukraine, British fintech startup Revolut has joined Diya.City and announced plans to open more than a hundred tech jobs in Ukraine (hello job market).
We expect this to have a positive impact on the market, but the final results will be interesting to look at at least at the end of the year.
Crypt as a booster
By 2024, a third of large companies in the world plan to use cryptocurrencies for payments, storage of funds or securing loans, according to a Gartner survey. The scaling of crypto usage alone will encourage businesses to pay more attention to cyber security, creating an even greater demand for blockchain professionals. And this means demand for related IT services. But these are global data. What about in Ukraine?
Sensing the trend of interest in this instrument, Ukraine is also trying to grab a piece of the pie. Recently, the parliament passed a law on the legalization of virtual assets, in other words, cryptocurrencies.
According to the estimates of the Ministry of Digitization, the circulation of cryptocurrencies in Ukraine reaches 1 billion UAH per day. And in general, the crypto industry has grown fivefold in Ukraine over the past year. It has every chance to become a powerful booster of the development of the innovative economy in Ukraine. Venture investors have invested $33 billion in blockchain ecosystems. Of course, in addition to the adopted law, a lot more needs to be done: the legalization of the crypto industry means that it is necessary to create clear and acceptable rules of the game. This is exactly what we have high hopes for in 2022.
So there is every chance for growth in the IT sector, the question is the development of the labor market, which is becoming more and more overheated every year, and the stability of the conditions for development. In everything else, the business is ready to seize every opportunity for growth.