The Ukrainian IT business skilled tough occasions in 2024 however stays one of many key sectors of the nation's economic system. What can we anticipate shifting ahead?
IT is the second-largest export sector, contributing 38% of Ukraine’s service exports. Within the first half of 2024, its share was 11.6% (6.4 billion USD) of whole exports.
Regardless of a 4.6% decline in export volumes throughout the first 9 months, Ukrainian IT corporations are displaying resilience. They’re discovering new methods to draw purchasers and enter new markets.
Supply: IT Analysis Ukraine 2024
Earlier than 2022, the IT business in Ukraine was experiencing a real growth. Purchasers eagerly selected Ukraine as a service supplier, and varied sources known as it the most effective nation for IT outsourcing in Jap Europe. The demand for digital options throughout the COVID-19 pandemic created a precedent out there, permitting Ukrainian IT to thrive. This created a "candidate market" the place corporations competed for prime expertise.
When the struggle began, every little thing modified. Overseas purchasers started to worry the excessive dangers of doing enterprise in Ukraine. Among the many major considerations had been energy outages, worker mobilization, and the challenges associated to the struggle.
Because of venture losses, Ukrainian IT corporations confronted mass layoffs. In line with DOU, the highest 50 largest IT corporations minimize 2,400 jobs, or 2.9% of their whole workforce, within the first six months of 2024.
Ukraine just isn’t alone in dealing with layoffs, tech giants like Intel, Tesla, Google, and Meta additionally introduced layoffs. In line with Layoffs.fyi, over 130,000 jobs had been minimize in 457 corporations in 2024.
The principle causes for mass layoffs worldwide are inflation and rising rates of interest in the US, financial uncertainty as a result of U.S. presidential elections, the market's return to pre-pandemic demand for digital options, and the speedy development of AI’s impression on sure positions.
Outlook for Service Firms
The worldwide economic system stays unstable, affecting the demand for IT companies. A gradual enchancment is anticipated in 2025, however it’s too early to talk of speedy development.
Tech large shares are rising. The "Implausible Seven" (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla) have accounted for over 53% of inventory market income. Wall Avenue expects the U.S. inventory index to succeed in a minimum of 6,500 factors by the top of 2025, representing a 9% worth improve.
Hiring will get better. The business is rising from a multi-year stoop, shifting from mass hiring to extra specialised, high-quality recruitment.
The demand for AI options is excessive. AI is already delivering worth to companies throughout varied sectors, which means many industries would require AI purposes, creating extra demand for AI options within the second half of 2025.
The financial outlook within the U.S. is constructive. Trump’s proposals, together with company tax cuts, regulatory easing, and the introduction of latest tariffs, could enhance firm income and stimulate financial development. Nonetheless, these strikes additionally carry the chance of placing extra stress on inflation.
What ought to we anticipate?
Ukrainian IT is a part of the worldwide market, however we’ve one essential issue that impacts our market greater than it does overseas gamers: the struggle. Every thing is dependent upon the developments of 2025, however in any case, we should always not anticipate speedy development within the business.
In line with my colleague Andriy Yavorsky from GlobalLogic, the market will decline as a result of lack of great development drivers. There gained't be a pointy collapse, however step by step, by $100-200 million per quarter, IT exports will lower.
There are 2,000 IT corporations in Ukraine, 47% of that are outsourcing corporations. The principle markets are the U.S., the UK, Malta, and Cyprus (the latter two are primarily used as offshore zones).
We at Ralabs largely work with purchasers from the U.S. and the UK and we confronted a number of challenges at first of 2022 – the variety of initiatives quickly dropped by 10% as a result of exit of a number of key purchasers.
We minimized dangers for our purchasers by offering workers with different energy sources and equipping the workplace with every little thing wanted to function throughout blackouts. Moreover, we’ve joined "Diia.Metropolis," permitting us to order workers. Final month, we efficiently reserved our first engineer.
Part of our crew (about 25%) works overseas. For some purchasers, that is critically vital, so we proceed hiring specialists within the EU. After all, we at all times prioritize Ukrainians – that is certainly one of our core values.
Our monetary development in 2024 was round 15%. We averted layoffs: we maintained our crew and even grew by 14% because the begin of the full-scale struggle.
The navy – a brand new participant within the home market. The state is actively fostering high quality improvement by mobilizing IT specialists. Throughout my service, I witnessed many proficient professionals be part of the navy and create outstanding initiatives, together with Delta, Reserve+, and Military+.
Moreover, the variety of mil-tech startups is rising, attracting overseas investments, creating new jobs, and constructing an entire {hardware} and software program ecosystem round them.
AI – one of many major companies in 2025. For those who're not investing in coaching your specialists and integrating AI into your processes, there’s an actual threat of being left behind in essentially the most important development of the last decade, or maybe the century.
Hiring will give attention to specialists in area of interest areas. The demand shall be centered on specialists in AI, cybersecurity, and knowledge analytics. There may also proceed to be a requirement for non-technical specialists – entrepreneurs and gross sales professionals. Returning to pre-pandemic job emptiness ranges just isn’t one thing to anticipate.
Conclusion
Uncertainty will probably outline 2025 as a result of geopolitical and financial modifications. The outlook for the world is constructive: the inventory costs of tech giants are rising, hiring is recovering, and demand for AI options will maintain the business afloat.
The Ukrainian IT sector will most definitely proceed to step by step lose floor, however a lot is dependent upon political traits within the nation and the state of affairs on the battlefield. Regardless of the decline in 2024, it stays a powerful export-oriented business that continues to deliver important overseas foreign money inflows to the nation yr after yr.
Regardless of all of the circumstances, Ukrainian IT corporations have proven an distinctive skill to adapt, innovate, and develop their companies.
Ralabs has persistently tailored to those challenges by sustaining consumer engagement and communication. A key instance is the preparation of 12 month-to-month digests in 2024, which had been shared with purchasers to supply worthwhile updates on market traits. Every digest included an vital reminder: "Help the Ukrainian Military in any manner you’ll be able to." This precept stays true for me now: assist the Ukrainian Military in any manner you’ll be able to.