The war’s impact on Ukraine’s IT industry: export revenue may be lower at about $7.2B

The Lviv IT Cluster presented the results of 2022 IT Research Resilience Survey: The War’s Impact on Ukraine’s IT Industry to reveal insights about critical changes in the country’s tech business activities since February 24. The report outlines the current state of the tech sector, explores how the country’s tech industry has changed since February 24, and above all, models scenarios for the future of vision.

The survey was fielded between May and June 2022. AIN.Capital publishes the most interesting insights.

The war’s impact on Ukraine’s IT specialists

  • With the main tech hubs being located in Kyiv, Lviv, Kharkiv, Dnipro and Odesa, there were around 285,000 people working in tech by the end of 2021. As of June 2022, there were 60,000 fewer workers in the IT industry, down to 228,000, a nearly 21% decrease from a year earlier.
  • A lot of specialists faced changes in their personal and professional lives due to the war:
    • every sixth respondent was separated from his or hers family;
    • 27% had to move and change the place of work;
    • 24% said their income decreased.

The war’s impact on Ukraine’s IT companies

  • According to IT Research Resilience, 85% of surveyed companies reported their organization’s business operations being recovered in May 2022, they managed to completely or almost completely continue business activities at the same level as before February 24.
  • In January-May 2022, the IT sector showed signs of stronger growth compared with the same period last year, according to the National Bank of Ukraine.
  • According to the research data, if the growth continues at a steady pace, then the industry’s export revenue may reach $8.5 billion by the end of 2022. If IT specialists who relocated lose tax residency of Ukraine, the estimated export revenue may be lower at about $7.5-7.2 billion.
  • But if approximately 10% of IT specialists cease to be tax residents of Ukraine, the estimated export revenue may be lower at about $7.4-7.8 billion.
  • Despite the war, Ukrainian IT companies keep calm and continue working to keep its businesses sustainable. They are hiring, opening new offices, and increasing compensation level to their current workers.
  • However, 30% of the companies froze regular planned salary increases. More than 40% of companies note that demand for new specialists decreased. Also, a low level of interest in opening regional offices in Ukraine can be observed – the companies prefer to open new locations abroad, mainly in Poland.

Migratory attitudes

  • The survey presented respondents with three potential scenarios they might face  – Positive, Neutral and Negative – which were related to the development of events in Ukraine. The positive scenario related to European integration and liberalization of the economy revealed that there was a widespread attitude towards staying in Ukraine rather than moving abroad. Among respondents, four-fifths (78%) of IT specialists prefer to stay in Ukraine, while nearly 27,000 (12%) would try to migrate abroad, in this specific context of the positive scenario.
  • In the 2022 IT Research Resilience survey, 57% of respondents say they want to stay in Ukraine no matter what.
  • Ukrainian IT companies are actively donating to help Defense Forces win the war. So do IT specialists. Almost 15% of respondents claim they donate more than a quarter of the family budget.