Yuriy Antonyuk, EPAM: “No party has an IT development roadmap”
In May 2019, Yuriy Antonyuk’s responsibilities grew larger: he is now the company’s Vice President and is in charge of the CEE region. Antonyuk will be responsible not only for the Ukrainian business of EPAM but also for the development of the company in Hungary, Poland, Bulgaria, and Spain.
The editor of AIN.UA met with Antonyuk to discuss the local market and development of the company in Ukraine: EPAM has been leading for several consecutive years in terms of staff and growth metrics. According to him, in 2019 alone, the company can add another 1,500 people: no other IT company in Ukraine is growing that fast. Antonyuk himself sees the potential for EPAM to grow to 20,000 employees in Ukraine in a few years. Although, this requires some action from the state, which could significantly help to grow the business.
You are the country’s biggest IT company. How many people do you employ?
We employ approximately 7,500 and we think we are going to have 8,000 by the end of this year.
Is it true that this year alone your company has added about 1,500 new employees?
That’s about it. We can grow even more, but there are business needs. The business is actively expanding in other countries, so in Ukraine, depending on the year, we grow by 1,000 – 1,500 specialists. But the Ukrainian market and the potential are much greater.
You say that the Ukrainian market and the country’s potential are greater – what do you mean by that? That is, are there more people to recruit?
Yes, I am talking about people. This is what we call human capital or the talents that are available in the country. Because Ukraine is one of the largest in Europe because it is still a good educational base that, of course, needs to be mobilized. By mobilizing I mean to work with universities, kick off programs. Ukraine is the largest talent pool in Eastern and Central Europe, and in general in this part of the world.
From what we see, only you and SoftServe are growing fast in terms of employees. Others either don’t grow at all or grow very slowly. Why is that? Does it mean that only you see this potential?
Just like in any other industry, there are leaders. For example, take retail, Amazon is a leader there, or take IT companies, Google is a leader there, or social networks, led by Facebook. That is, there are always leaders.
It’s like a race, for example, a regatta. You start together and gradually overtake others. Allegedly, everyone starts the same, but someone finds some shorter paths or a more strategic direction. That is why there are leaders in the industry. But this does not mean that the industry as a whole is lagging, there is always some development. If you look at the number of operating companies, you will see that the industry is growing very fast. It’s just that there are companies that may not have felt the trend at some point in time and have slowed down a bit, but other players come up all the time. For example, Ring, which grew very fast and now it employs about 2,000 people. That is, some companies have developed together for 15 years, then someone took the lead, then someone fell behind a little bit, conditions changed, the company was acquired or its owners were changed (Luxoft, Ciklum, for example). This is a business.
Moreover, we are not just a big company. EPAM’s shares are traded on the stock exchange, we are a big public company. We have a board of directors, investors, management. One of their goals is to help them grow bigger and faster. And it is exactly what we do.
Just recently I spoke with Luxoft representatives and they explained the slowdown by kicking off offices in other parts of the world. You, despite the opening of new offices, continue to grow domestically. What’s the trick?
We and Luxoft have different strategies. As I said before, there is no other country as strong in this region as Ukraine. Therefore, despite all the difficulties (military conflict with the Russian Federation, limited human resources, political component), we continue to expand and scale up the business in Ukraine. Also, we no longer compete with the local market – we are a global company and our competitors are also global. They have hundreds of thousands of professionals around the world, which we strive to achieve as well. There is an incredible potential in Ukraine. Now I work a lot all over Europe and I can clearly compare Ukraine with other countries.
We are stronger than conditional Hungary, the Czech Republic or Bulgaria: we have more people and more potential for development. Not just in terms of the IT industry, but in terms of the general creative class.
Earlier you said that you expect growth in Ukraine of up to 10,000 people in the next few years. Given the 8,000 employees in 2019, this bar is no longer relevant, are you going to grow more?
Yes, we will continue to grow. I think there will be 10,000 of us in a year or two, and our next milestone will be 20,000. I had some reservations that we would not be able to grow fast, back in 2014. Then people started leaving, a lot of people. But since 2016, the situation has changed dramatically, there is no mass migration.
It is important for the country. The first to leave are usually skilled professionals who can teach successors. If there is no one able to teach, the country begins to degrade. This has not happened, so the potential is great. And it’s not the 200,000 people in the IT industry that everyone is talking about. I am more impressed by the count of the entire creative class, which is about 1 million or even more, within the country. And if you use a multiplier that there are 2-3-4 more people around a single person, it comes up to 4 million people. They are smart, they pay taxes, they participate in the development of the country. I hope that the civic position of these people will catalyze the growth of our country. And if I didn’t see this potential, I would have long left Ukraine.
EPAM is growing fast. Don’t you feel the overheating market everyone is talking about? I’ve learned from other sources that you offer market wages and you do not entice away people. And there’s still growth.
We don’t entice away people with large bonuses. It is possible if you have a small business or, conversely, if you are like Google that can offer 30% more than others. We decided from the start that we would balance between hiring from the market and training our personnel.
Every year we train 2,000 to 3,000 students internally. Depending on the need, we recruit 700 to 1,000 people, others go to the labor market. Other major IT companies in Ukraine do the same. Due to this, we have skilled personnel, they receive an average salary in the market. In addition to training people internally, we also hire professionals from the market through standard hiring channels.
But yes, there is a problem of market overheating because wages are constantly rising. We get a lot of help from our training channel that produces human resources. It is quite an investment for us – every year we spend a few million dollars on various educational programs. But such costs produce a long-term result: a full-fledged channel of personnel. Moreover, we nurture a specialist who knows the company’s ins and outs, and who is ready to blend in immediately. And it takes some time for a person from the market to adapt – usually, it takes months. Today we cooperate with more than 20 universities, we have 15 laboratories, and up to 3,000 graduates annually. We plan to continue developing programs and expanding our activities.
All in all, IT specialists make good money in Ukraine, on par with many other countries in the world. And the reason for moving to, say, the States will not be a higher pay, but a desire to get some other benefits: education for kids, career opportunities, better conditions.
What about personnel in regions, is there scarcity?
Kyiv is not the only place to do business. If it was not for the Russian aggression, yet, even now there are Kharkiv, Kyiv, Lviv, Dnipro, and Odesa. That is, there are 5 regions, we call them clusters, where you can actively develop any business of intellectual type. There are large conglomerations of people that allow you to grow quickly. But not only cities with over 1 million people have good prospects. Let’s take Vinnytsia – we have a large office in the area of automotive and IoT development. It’s only 130 km away from Kyiv bar car, about two hours behind the wheel – the same time you could find yourself stuck in Kyiv traffic jams sometimes, or 2 hours by high-speed train. Now we have 300 people in Vinnytsia. I have a goal to bring this office to 1,000 specialists over the next few years because there is potential.
Yet, there is a downside. First, there is a worldwide tendency for people to move from a village to a city and from a small town to a bigger one. You cannot escape it, but you can work with those who remain in such cities because not everyone wants to live in a metropolis. Secondly, in smaller cities, there are less good quality educational institutions. But if we provide support, then this problem can be solved: for example, we help universities not only financially but also staff-wise by sending there our people to teach.
I am against the idea that all businesses should be built in one place and create a “red ocean” there, a field with fierce competition. Cluster division of Ukraine is rather a plus, I see it more as an advantage. It is only important to support the development of education for this division to remain effective.
You have 3,000 people and 6 offices in Kyiv: have you ever thought about creating some kind of a mega-building to accommodate everyone in one place?
In fact, we think about it all the time. However, currently, there is no such place in Kyiv that could satisfy our needs. UNI.City is still under construction, there is no infrastructure around. And we would like to have a place where people would be pleased to come to, work in, where we would be able to invite clients: these should be modern multi-story buildings, towers, made of glass and concrete. We are currently considering several options, but there is no final decision yet.
You have repeatedly mentioned that the state has to cooperate with businesses. But there is a different view of the business that “We do not need any interference,” especially in the IT industry. Could somehow justify your opinion on how the state should do work with businesses?
I respect the opinion of others. But for me, the IT industry is big enough. When it was tiny, maybe the state shouldn’t have paid attention to it. But today it is hundreds of thousands of jobs and the state must at least understand what is happening in this industry. About ten years ago, nobody talked about IT, and today we are among the top five exporters. Everyone is saying that soon our GTS (gas transportation system) will not be needed by anyone and we will lose $3 billion in annual revenues. But here is a whole industry that is already bringing more. And at the same time, the state did nothing to make it happen: there were no investments, no grants, no support. It is a huge industry that has reached the level to be noticed by the state. “Do not disturb” principle no longer works. EPAM is on the list of the largest taxpayers in the country. Ignoring is not an option anymore.
I believe that the IT industry and the creative economy, in general, is something that can push the economy forward. But not without a hand from the state. For example, do you know what Poland did? It abolished taxes for the youth. They did not do it on a whim: the economy we are reaching is already experiencing a crisis. It would be great if Ukraine took such steps as well.
I don’t want to give the impression that IT has to be the main thing in the country. No, we have very strong, for example, agriculture. But when you are developing an industry that is not post-industrial, in fact, you need fewer and fewer people, while in IT you need more and more people. We are one of the few to create hundreds of thousands of new jobs. And when you introduce modern technologies in agriculture – you do not need a harvester operator because everything will work on its own, and in a place where formerly 40-50 milkmaids used to work, there are now 1-2-3 operators. That is, people are not needed for the industrial economy. Conversely, a new economy, post-industrial economy, the creative economy is dependent on human capital. Because robots can’t do it, and that’s a big difference.
What are the steps the state can take to help the industry? But let’s avoid the issue of individual entrepreneurs for now.
Firstly, it’s education. The state should invest in education. On our end, we have to help, we can share our experience, show how work has to be done, what qualification standards we need – but the state has to do it. If we have public education, and it is public now, then the state must take care of it. If all of our education is paid for, then, of course, we will work with those businesses that will be engaged in paid education, or even we can do paid education ourselves. While education is public, as long as skilled labor is ordered by the government, we would like the state to invest in training and young people to stay away from studying in Poland, Europe or other countries. When a young person goes to study in another country – you won’t see this person for at least 10 years. Few have studied and come back here, they usually stay and work overseas. This is the first and perhaps the most painful issue.
Secondly, there are new standards of work. This is not so much about individual entrepreneurs, but about the challenges that an employer is facing these days in Ukraine. The Ukrainian Code of Labor Laws – the Labor Code, was drafted when I was born. It is obvious that much has changed in the economy and working conditions since then. To give a simple example: people travel, they work, they can work in other time zones. According to the Labor Code, you have a timesheet in which you have to punch 8 hours to indicate that your employee was actually at the workplace. But there are no workplaces anymore. Visit any office and you will see that half of the workstations are empty because everyone does the work where they do it better or more efficiently. Or, some don’t need to work 8 hours to do their job. We, for one, evaluate the overall result of the activity. These are two drastic opposites: working conditions that were developed 50 years ago, and modern realities of life. The question is not even in the so-called FOPs [Individual entrepreneurs], because they are private entrepreneurs, and if you have everyone registered as an FOP, you will become a company without employees – in that case, do not even dream of an IPO. the question at issue is that the state should offer businesses new forms of cooperation. These should be contractors, or whatever you want to call them. It’s not just for IT, it’s for the creative industry at large.
Thirdly, by and large, I would like to see clear and uniform rules of the game for all. For example, everyone allegedly pays 18% tax, but it turns out that there are companies that receive huge benefits. For example, Myronivsky Hliboproduct, which receives millions in subsidies. It makes me wonder, “Sure, we’re not Myronivsky Hliboproduct, but we’re a big company. We pay our taxes, and we do not need privileges or subsidies. So why are you giving it to others? What is the point of such an economy?” I am all in favor of not supporting companies or even industry but maintaining a healthy balance for economic development. There is none right now. They collect money from one, then give it others on terms which are not at all clear. The state should step away from such regulation of redistribution or make it clear. If we support an industry (not necessarily IT), then give a normal explanation: why is it happening and how will we benefit from it.
Fourthly, we need to have a clear and legible development strategy in place. Just recently we had parliamentary elections: no party has a roadmap detailing how it is going to develop the IT industry or the creative economy in the country. That is, if a big investor comes tomorrow and asks what to expect, no one will be able to answer. In fact, the same applies to other industries. Therefore, the task is to formulate a strategy for the development of a new economy for all spheres.
For me, these are the most important things how the state can help businesses in Ukraine.
How do you feel about the initiative of IT Ukraine Association to raise the tax for FOPs to up to 10%? After all, you are still a member of the association.
First of all, I represent the business, I represent EPAM. As a manager, I am inclined to think that you should not touch what already works well. As for me, FOPs work well. They perform their function – so it is not clear to me why it’s needed to touch this issue at all. When there was an initiative to create a special 5th group and to abandon the 3rd group of the FOP, I was strongly opposed to such a change. Just think about it, the entire industry and businesses may have evolved precisely because of the fact that this form of business exists. And instead of supporting such businesses, we are going to kill it. Why? In fact, nobody really asked people, the communication between the authorities and people was bad and most of the questions remained unanswered.
In any case, neither the format of FOPs nor the full-time workers cover what I said above – the realities of a new post-industrial economy. We need something that would fit the mobile digital workplace format: when you do a job that is rated not by how much time you spend at the desk, but by the results you have brought. And no matter how long it took you to sit and how you worked. These are the kind of contractors that are already in place in Canada, the UK and other countries all over the world. I think Ukraine should follow suit.
Why are our IT companies mostly export-oriented today and do almost nothing for the domestic market?
The reason is quite simple. We are a global company – we receive orders from all over the world. There are, conditionally, two clients: one is an international company, the other is a local, Ukrainian client. And very often Ukrainian client does not understand why a service can cost tens of thousands of dollars in development. Their understanding is that it is a job “for a couple of programmers and a budget of up to $10,000.” So far we have no awareness that other people’s work is expensive.
Another factor is the scale. There are not many businesses in Ukraine that are ready to order a project that costs a million or tens of millions of dollars. EPAM’s revenue is $2 billion. Obviously, even if you take projects with a budget of $1 million, you need to work hard to generate that amount. As a global company, we will prefer a client who can pay millions or hundreds of millions.
And again. As for me, the state could meet us halfway. Currently, there are privileges for importing electric cars, the so-called “green tariff”. Why not make a similar program for when a Ukrainian company (not an IT company) orders the creation of software in a local IT company, it (not the IT company) would be compensated for some of the costs or provided with some benefits: minus 20% VAT or cancellation of some tax. Who knows, perhaps such an incentive would give impetus to the development of innovation and the internal market within the country.
Finally, what advice do you have for young individuals aspiring to join the IT industry?
I don’t want to sound trite, but first of all – learn English. Soft skills are a must. The thing is that we do not know what technologies will be needed in 30 years, but the ability to communicate clearly is always an essential skill.
Now, as far as technologies are concerned:
- Data – whatever you can do with it: collect, explore, study.
- Machine learning and artificial intelligence.
- Clouds. This is a new environment that is already here – you need to know and understand it.
- Quantum computing. Because it is a completely different world, it is completely unlike what is being taught now. It is the future. A simple example: currently all secured connections are based on cryptographic protocols. Once quantum computers become mass-produced, all of these protocols can be broken in an hour. That is, we will have to completely redesign all cryptographic protection for all connections. They can’t be broken right now, and classic computers need decades to work around the security. Quantum computers do it within an hour. In other words, everyone will be defenseless. You need to understand the technology to keep up with the new challenges.