🇺🇦 Ukraine's $12.7B Tech Industry | Rise of MilTech

🇺🇦 Ukraine IT and Services Exports 🇺🇦 

Last year, Lviv IT Cluster reported on the state of IT exports in 2022. The IT sector was the only export sector that had grown despite the full-scale war. The total export revenue of IT services had grown by 5.85% to a total of $7.3 billion.

Now, new figures have been shared by DOU and data of the National Bank for 2023. While the overall tech industry turnover is expected to rise by 0.45%, IT export revenue is estimated to shrink by nearly 8.5%. Official data for Ukraine’s GDP in 2023 will be published in March 2024 but current estimates put the total economic effect of Ukraine’s tech industry at $12.7 billion.

I asked my friend and Ukrainian correspondent Val Sanin, Director of Sales at YouTeam, to share some thoughts.

Let’s dig into some stats from Lviv IT Cluster’s 2023 research after studying over 7,000 tech specialists and more than 400 companies from all regions of Ukraine.

Talent Market

• The number of tech specialists has increased by 7% to a total of 307,600 people of which 242,000 live and work in Ukraine

• Ukraine specialists are highly qualified with nearly 43% having 6+ years of experience in the tech industry and 8% having 15+ years of experience.

• Freelancing has more than doubled from 4% in 2022 to 10% in 2023

Income

• A whopping 44% of respondents saw an increase in earnings (14% more than in 2022). Earnings dropped for only 10% of respondents.

• While income grew, so did expenses. A massive 72.9% of technologists indicated an increase in expenses YoY.

Startup Investment

Although 500 of Kharkiv’s 511 startups in 2021 are still in operation, VC investment into Ukraine has slowed overall. Investment in the region has dropped by 47% from $743.6m in 2021 to $392.7m in 2023.

Outlook & Support

Estimates all signal to continued expansion in 2024 with revenue projections reaching as high as 10.37% YoY growth.

Local leaders are more realistic in their take. “According to our estimates,” says Vitaly Sadler, CEO of Intellias, “the difficult situation on global markets will continue in 2024. After which, we hope, the growth of the world economies will resume, and the number of orders for the services of Ukrainian IT companies will increase.”

How is the industry continuing to respond? TechCrunch’s two-year retro shares a number of programs bolstering Ukraine’s tech scene including support from Google and the European Union.

🇺🇦 The Rise of MilTech 🇺🇦 

While catching up with Val about the Ukrainian economy, we started to chat about innovation as a whole.

Innovation thrives in chaos. Household names like Microsoft, EA, Airbnb, Whatsapp, Uber, Square, Instagram were all founded during recessions. Calendly was built in Kiev in 2014 at the height of the Maidan Revolution.

Our eyes stay on Ukraine as we watch for the next big thing in MilTech (military technology). Who knows, maybe we’ll see new defense and aviation Unicorns from the region.

Here’s what Val had to say.