Ukraine IT industry isolated from political tension and ready to fuel economic growth

I had an interesting meeting with Torben Majgaard, CEO at Ukraine based IT services firm Ciklum. He is a central figure in a movement within the Ukrainian IT that wants the IT sector to support Ukraine’s growth when all the current political troubles are over.

I should start by saying that he believes the situation in Ukraine is being blown out of proportion. He says the Ukrainian government in Kiev makes it sound worse than it is to help it secure foreign support, the Russian are doing the same to justify their actions, and the newspapers just want a good story (I will allow him that swipe). These are his views from the interview and not my comment on the situation.

He says that there are isolated incidents where people are making decisions to fight but that bystanders are safe.

Ciklum is an interesting company. It provides customers, including those in the UK, with services to help them recruit IT skills in Ukraine and get the most out of them.
The company has about 2,500 software engineers working for different corporate global customers.

Ciklum finds the staff its customers need from within Ukraine and Belarus. They then deliver software services to customers for Ciklum’s bases in the two countries.

Interestingly is the fact that the customer pays the worker and Ciklum just gets a fixed fee for the worker. It is therefore in Ciklum’s benefit the more staff it can connect with customers. Quality control is also in Ciklum’s interest.

Central and Eastern Europe are becoming increasingly popular destination for IT outsourcing from the UK. The near proximity and cultural closeness of countries such as Ukraine, Poland, Romania and Moldova make the ever popular agile software development techniques more manageable than in India or China, according to many I speak to.

Torben said that in the Ukraine for example the software engineers will understand the business challenge the customer has ands address this with technology rather than the approach he says is in India where a worker expects to be told what to develop and does not challenge this.

Another interesting aspect of Ciklum’s approach is its use of existing customers to help new customers get up and running. He says that if he has a new prospect they will link it with an existing customer with similar requirements to meet them and discuss what is required.
Ciklum also assists the customers in getting the most out of their IT staff through its productivity consultants. All this for a fixed fee.

The customer is responsible for the pay of the staff and taxes on the pay. He says a highly skilled software engineer in Ukraine will command a monthly salary of $4000 (£2355), before tax.

The other interesting story is Majgaard’s role in the movement known as the Brain Basket. This Ukraine IT industry group  wants IT to be the fuel to grow the Ukraine once the troubles are over. Brain Basket wants to make IT a major driver in creating a strong economy. It will co-ordinate efforts to train 100,000 people and generate $10bn annual revenues by 2020. By boosting education and creating new jobs. Bread Basket was recently praised by Richard Branson.

Interestingly he said it is not just young students that the movement wants to get into the IT sector but older citizens that currently work in different sectors but could be moved to IT.

Majgaard said IT is perfect for Ukraine because it has the resources internally to grow IT. “Ukraine does not have many opportunities for the future but one it does have is in the IT business.”

“There is a lack of infrastructure to support many industries and there is fear at the moment, but when the trouble is over everyone will be using the Ukraine again.”

Read more about Ukraine and central European IT:
Agile software development demand could put nearshore IT in the spotlight
Report on Central and Eastern European nearshoring