Over the past eighteen months, global economies have faced significant struggles in regard to the COVID pandemics. With mass layoffs and businesses closing, companies are bearing serious losses which directly impact the financial situation in countries worldwide. Those sectors which were unable to switch their employees to remote are trying to bounce back. However, the latest research from McKinsey & Company reveals that 68% of organizations from a wide range of industries have not made a detailed plan of incorporating remote work.
Yet, there are spheres that not only managed to recover from the disruptions brought by COVID but also have adapted and grown since the virus hit in 2019. The Ukrainian tech sector managed to withstand the period of an economic crisis due to its flexibility, swift reaction, and rational approach toward business conduct.
The country’s beneficial location, considerable talent pool, and large scope of services provided have contributed a lot to the local IT market progress. In the article, we are analyzing the Ukrainian tech sector, its benefits, and prospects.
Growth of IT services export
With the current 200 thousand IT talent pool, the Ukrainian software development industry is booming. According to the data released by the National Bank of Ukraine, the export of IT services, for the first time in its history, grew to over $5 billion in 2020.
Although the total national export share reduced by 4.6% in 2020, the software development industry share increased by over 20% with $853 million. Hence, IT services account for 8.3% of Ukraine’s export. Since 2013, the software development sector has shown the fastest growth pace compared to the country’s total export of services and goods. And in 2020, this number continued raising as the pandemic hit.
Many experts envision this positive dynamic as an immense field for the development of the industry in the next decade along with attracting international corporations to open their offices and settle in Ukraine.
Open positions vs applications
Probably, one of the main negative trends the Ukrainian IT industry faces today is the shortage of specialists. The number of open positions concerning the applications to them is drastically high. This period last year, due to the crisis and layoffs, there was around 3 thousand open position, whereas, this year it’s almost 10 thousand.
On the other hand, the application index decreased by three times in comparison with 2020. Hence, last year there were 15.61 applications per position and this year it’s 4.27. Generally, April of 2020 was the toughest for the industry as most companies tried to optimize their expenses to overcome the crisis. Due to this, the market demand at the time couldn’t meet the supply of specialists.
These data show the significant shortage in the number of tech specialists the industry needs today to operate at its maximum capacity. On the other hand, lacking this much of the staff, the IT managed to get back on track and grow in the times when many industries undergo decline and businesses close down.
So, who does the industry need today? 17% of the most in-demand positions are for Juniors/Trainees, 37% for Middles, 33% for Seniors, and 13% for Leads.
Salaries and perks
Due to the rapid industry growth within the past year, the rates for hiring software development teams from Ukraine also jumped, which led to the larger service costs.
Software Engineers (SE)
Software engineers’ salaries have increased drastically since the beginning of 2021. The main upsurge is observed for Senior and Lead positions: some rates have grown by 1.5 times since last December. All the rates are medians for the industry and vary depending on the tech scope of the candidates, their The average rate for Senior position is around $5500; for Middle SE it varies between $3500 and $4000; Junior SE – $1200-1500, and may reach $2000 if the candidate’s level is stronger.
Having a DevOps with ~2 years of experience will cost around $3000; 4 years of experience – $4500+.
As to hiring Team/Tech Leads or System Architect, a company shall be ready to pay around $6000-7000.
The current market condition for QA salary is also similar to the engineering positions. Taking a look at Manual QA’s salary range, we see that Juniors are paid $600-1800 depending on their skill set and experience; Middles – $1800-2000; Seniors – around $2500-3500. QA Leads are expecting to get between $3500 and $5000.
For Automation QA, the salary range is
- Junior QA – $750
- Middle QA – $2000+
- Senior QA – $3500
Project Managers and Business Analysts
To hire a Project Manager, companies address their attention to several factors, whether the candidate has or doesn’t have a technical background (i.e. former engineer). For non-technical PMs (say, former QA), the salary variable is as follows:
- Junior PM- $1500
- Middle PM – $2500
- Senior PM – $4000
If the Project Manager does have a dev experience, their rates are higher by about 30-50% of the aforementioned.
Business Analysts’ rates vary around $800 for Juniors; $1800-2500 for Middles, and $4000 for Senior specialists.
Based on the salary increase throughout the industry and desire to work with only the best IT specialists requires meeting the market demands. This entails the cost increase for the companies, hence, choosing the best software development service provider clients have to bear in mind the recent market conditions. It’s always an option to seek somewhere where these costs are cheaper, however, this is the quality that is lost.
However, the financial side is not the only thing that helps to attract specialists. Companies today are doing all kinds of stuff to keep their people satisfied and productive. Medical security, massages, gyms, conference tickets, free English classes, etc. no longer impress anyone. These have become part of the routine. Going above and beyond to create the most favorable conditions for the staff is the key to a successful team. So, we see organizations opening daycare rooms, so their employees can bring their kids and not worry about them, carrying out vaccinations, arranging different activities and corporate events, and many more.
It is believed that creating the best environment inside the company and developing a friendly atmosphere is what’s adding to the overall performance.
Prevailing programming languages, libraries and frameworks
The range of technologies utilized by the developers in Ukraine is one of the main pros appealing to the clients. Along with a cultural mindset and professional approach to their job performance, these traits comprise a solid base for reliable cooperation.
As to the frameworks, libraries, and platforms, React.js, Node.js, and Angular.js are leading the rating.
IT education in Ukraine
Along with the IT sector growth and a huge demand for specialists in order to ensure and support the positive dynamics for the services provision share in the national export. It is crucial to focus on STEM education to satisfy market needs.
The system of higher education in Ukraine provides training under the qualifications of a Junior Specialist, Bachelor, and Master. Annually, Ukrainian educational institutions graduate around 16 thousand specialists (including the qualification level of the Bachelor); up to 30 thousand joined the IT (based on the data from registered Classifiers of economic activities of the State Tax Inspection) in 2018-2019, whereas, to cover the emerging IT market needs, this number shall amount to about 50 thousand.
Besides state universities, institutes, and colleges that graduate IT, specialists, there are a lot of private academies and schools that offer training for those who’d like to join the industry and switch from their career. This helps to partially tackle the deficit of the staff the industry encounters.
The TOP 5 cities that graduate the most IT specialists are Kyiv, Lviv, Kharkiv, Odesa, and Dnipro. These are also the largest IT centers in the country. The top 10 Ukrainian educational institutions offering STEM programs are
- Ukrainian Catholic University
- Taras Shevchenko National University of Kyiv
- Lviv Polytechnic National University
- National University of Kyiv-Mohyla Academy
- Ivan Franko National University of Lviv
- National Technical University of Ukraine “Ihor Sikorsky Kyiv Polytechnic Institute”
- Sumy State University
- Kharkiv National University of Radio Electronics
- V.N. Karazin Kharkiv National University
- Yuriy Fedkovych Chernivtsi National University
Diia City and its impact on the tech sector
As of April 2020, the Ukrainian Parliament supported the adoption of Diia City, a governmental regime aiming at creating regulations around the independence of the IT community in the country. According to the authors, Diia City will encourage the development of Ukraine as a digital state through the unification of the tech business. The bill guarantees and suggests
- Freedom for business conduct
- No governmental interference
- Presumption of eligibility of the residents’ activity
- Simplified procedure for joining the regime
- additional instruments for protecting the IP rights
The Ministry of Digital Transformations states that under industry support, its share in the national GDP will grow to 10% with turnover ratio growing to $16.5 billion.
Although joining the regime is claimed to be non-mandatory, the moods inside the industry are quite different. Many specialists view the interference from authorities as a threat to IT, since, it’s been developing without any assistance from the government so far.
The recent state of the IT industry reveals that it managed to bounce back after tough times at the beginning of the COVID pandemic. The companies are showing steady progress and hire more specialists. At the same time, the financial situation is also improving. With the high demand for Ukrainian engineers, an increase in their salaries is leading to the service costs being increased.
Since most of the tech companies in Ukraine work under software development outsourcing or staff augmentation models, and the majority of their clients are from western Europe or America, the fears arose that the industry may walk into a decline. However, we observe the opposite situation: the share of IT in the national export increased by 20%.
The period of an economic crisis will definitely change the existing models of doing business in multiple industries. However, the IT sector is one of the few in Ukraine that is showing positive dynamics in their growth along with the increase in taxes and other social contributions. It is crucial to ensure the stability of the conditions of the IT market throughout the years. All the governmental initiatives shall be introduced carefully not to break the existing system which may eventually lead to the industry decline.