Ukraine IT’s unparalleled resilience

The biggest challenge was explaining to customers outside the country that the company could continue to work at the same level of productivity “when there is a full-scale war in your country, how we could work when bombs are flying, and we are promised conquest in three days,” says Ivanov. But the company’s leaders had confidence, having even signed a contract with a new customer the day of the invasion. “I never stick my head in the sand. Being a leader means being able to be responsible and having a contingency plan,” Ivanov says. “I was lucky because our team is made of people who can be relied upon and have lived up to their expectations. Some employees worked standing in traffic jams while relocating to safer regions of the country.”

The first month was the hardest. “We all had to come to terms with the fact that what we all feared and didn’t want to be had already happened,” Ivanov says. “However, we had a plan B, and we took advantage of it, took a breath, and quickly adapted to the new reality.” The safety of employees and their families came first.  “We didn’t force anyone to work at 100% capacity in the first days,” says Ivanov. “But the demonstrated responsibility illustrated that our team was incredible. No one gave up and ran away. We didn’t fire anyone.”

Within a month, the company was recruiting new hires. And twelve months later, the company’s service levels give little indication of the ongoing turmoil in other parts of the country. “The war changed us,” Ivanov admits. “But what remains unchanged is our responsibility to our relatives and clients.”

Good will and a global talent shortage

In the early days, there was some impact to new business for IT providers in Ukraine. “Clients moved work to other destinations and often other firms,” says Everest Group’s Bendor-Samuel. “However, there has been a strong sentiment amongst the clients to support these firms, and much of this work has now returned.”

The impact of good will for Ukraine — not just from customers but from the broader global community — can’t be understated. “There’s been a lot of stickiness and lots of support for Ukraine,” says Gartner’s Gove. “It’s been pretty remarkable.”

The impact of positive sentiment for Ukraine is reflected in the fact that the IT industry in Belarus and Russia, which has a similar profile to Ukraine, has not fared well.

“Belarus and Ukraine have similar talent pools with both IT service providers and enterprises sourcing there for tech talent for a long time because of their academic tradition and focus on math an engineering,” says Gove. “But Belarus has taken a dip because they’re so connected with Russia.”

The US and UK are by far the largest market for Ukrainian IT services, following by Malta, Israel, Cyprus, Switzerland, and Germany, according to the IT Ukraine Association. “Most [clients] worked to hedge their bets and set up alternative delivery, but if the Ukrainian providers proved they could continue to deliver, they tried to keep the work with them or returned the work or added other work as the new delivery came online,” says Bendor-Samuel.

Aimprosoft has been working with some customers for more than a decade and others for a much shorter time when the Russian invasion took place. Swedish ecommerce consultancy Koalitionen had been working with Aimprosoft for two years. “Our main concerns prior to the conflict was of humanitarian sort: Would the company be able to provide safety to their employees?” says Koalitionen CEO Amir Mofidi. “For us, the uncertainty of not knowing if the staff were safe was the most difficult part. We were relieved when we found out that the people that we work with were safe.”

Aimprosoft felt supported by its customers. “Our clients are amazing,” Ivanov says. Some paid the company’s developers on their days off. Others offered personal bonuses to Aimprosoft employees. Others sent pics of their children baking cookies to raise money for Ukraine. “It touched us to the core,” Ivanov says. “This empathy once again underscores the fact that business is built not only on numbers but also on human relationships.”

Still, performance is critical. “Then and today, customers’ biggest concerns are that the work process may be disrupted because the employee does not get in touch for some reason, data security caused by power supply issues, which impacts whether their business would work tomorrow if a conflict escalated,” says Ivanov, noting that healthcare and finance customers have the highest requirements for availability and continuity. But Aimprosoft has been able to maintain its service delivery and retain all 100 of its clients.

“We were surprised that the downtime was only for a couple of weeks and since then they have been working without any interruptions,” says Mofidi. “The staff are working as any of our other partners — if not more.”

The global shortage of experienced, high-quality engineering and IT talent has also enabled Ukrainian firms to continue to grow even in the most difficult circumstances.

Ukraine has a long tradition of tech leadership, even in uncertain times. The first computer in continental Europe was built in Kyiv in 1951 during the years of post–World War II reconstruction and closed borders. It was developed in a building that had been restored following significant damage during the city’s liberation in 1943.

The country remains a hotbed of talent in part due to a strong academic tradition that nurtures skills in engineering and software development to the tune of more than 31,000 graduates entering the IT labor market annually. (That total dropped to 27,000 last year as some students were forced to suspend their studies during the full-scale invasion.) Prior to 2022, the Russia-Belarus-Ukraine region accounted for about 5% of the global talent pool, according to Gartner.

The availability of skilled engineers and other professionals in Ukraine led a number of global technology firms to set up software development and R&D centers there, including SAP, Snap, Fiverr, Wix.com, Amazon’s Ring, and Nvidia. Developer platform and services company GitLab started in Ukraine before moving its headquarters to San Francisco.

“Companies want and need this talent,” says Gartner’s Gove. “Businesses lives and dies based on IT. Both providers and private enterprises have been willing to have an increased risk profile because the tradeoffs have been acceptable. It may not be as safe and straightforward as getting talent from Boston, but it’s highly desirable.”

Looking forward

Operating in Ukraine remains challenging, but providers have been able to keep a significant core of Ukrainian talent safe and working while also standing up new delivery options. “Clients continue to seem pleased with the work, and while some are careful of creating too much concentration in Ukraine, they seem comfortable with the new arrangements and willing to continue to support these firms by giving them work,” says Everest Group’s Bendor-Samuel. “It looks to me like the worst is over and the Ukrainian engineering and IT industry is surviving.”

Aimprosoft CEO Ivanov notes that new customers may be less willing to hire specialists in Ukraine than they were a year ago. That’s diminished the country’s previous growth trajectory.

“It’s hard to see Ukraine returning to the same role it played before the war anytime soon. That said, if the war ends soon, it is likely that it will still be a viable destination for the services industry, and over time it may reclaim some of its standing,” says Bendor-Samuel. “However, it has clearly lost momentum, and the establishment of other eastern European centers due to the movement of work will affect the overall picture.”

The global shortage of engineering and IT talent works in Ukraine’s favor. “Given the need for these scarce resources, if Ukraine can rebuild its university programs it will find itself with an attractive export market for services and reestablish itself as a premiere country for delivery centers both with the outsourcing community as well as for global in-house centers,” says Bendor-Samuel.

Gartner forecasts no end in sight for the global talent crunch. “The willingness for companies to take on more risk [to access that talent] isn’t going away,” Gove says. Neither is the good will for Ukraine in the marketplace. “That’s substantial,” Gove says. “It will sustain them and allow them to grow.”

Still, Ivanov prefers to focus on winning the war and beginning reconstruction quickly. Aimprosoft’s employees, forcibly resettled to other parts of the country or abroad, are eager to go home — a sign, Ivanov says, that the IT sector has strong roots. Technology workers donate an average of $270 a month toward the Ukrainian cause, says Ivanov.

“Every day I see how hard and selflessly our employees work, volunteer, and donate. If these people have not abandoned the country now, they are unlikely to do so after the victory.” In addition, Ivanov says, the industry is attracting even more workers with its flexible, remote work model.

“We have been through some of the toughest times. Last year showed that the Ukrainian tech sector is incredibly resilient,” Ivanov says. “The whole world saw that Ukrainians are a nation that adapts quickly to difficult circumstances, and we are an example of that, and so is our business. Modern Ukrainian IT people are successors of their heritage: being hard workers with passion in their hearts.”