natanaelginting -

IT gives Ukrainian economy resilience in the face of adversity

Computer Weekly speaks to IT companies from Kharkiv a year after the Ukrainian city became headline news across the world as Russian troops invaded

During the first 10 months of Ukraine’s war with Russia and the massive disruption it brought, the country’s IT industry continued to grow.

According to a report from the IT Ukraine Association, the value of IT exports in the time from Russia’s invasion in February last year to the end of December was $6bn, some 10% more than the same period in 2021.

Nearly 290,000 people in Ukraine are employed in the tech sector, and IT exports were worth 3.5% of Ukraine’s GDP and 37.8% of total services exports in 2021. Had the Russian invasion led to the sector’s collapse, Ukraine would have been hugely weakened.

But the resilience of the sector has been a surprise to everyone – apart from the Ukrainian tech sector itself. “These results were made possible due to the effective implementation of business continuity plans, timely relocation of teams, and diversification of development centres in Ukraine and abroad,” according to Konstantin Vasyuk, executive director at IT Ukraine Association, writing in the organisation’s Do IT like Ukraine report.

The IT sector’s importance to Ukraine’s future cannot be overstated. “IT companies continue to operate and implement projects even with blackouts, pay taxes in a timely manner, increase their presence in the global market, and attract new customers. It is thanks to such unique skills and experience that the Ukrainian IT industry has the potential to become the main driver of Ukraine’s post-war reconstruction,” wrote Vasyuk.

IT hotspot

No Ukrainian city was disrupted more than Kharkiv in the east, just 80km from the Russian border.

Kharkiv was invaded early in the conflict, changing life overnight for the people and businesses there. The city is now known across the world, but few people realise it is a hotspot for IT businesses.

“The Ukrainian IT industry has the potential to become the main driver of Ukraine’s post-war reconstruction”
Konstantin Vasyuk, IT Ukraine Association

Before the war started, IT services company Aimprosoft was headquartered in the city. Mainly focused on providing web-based application development expertise, Aimprosoft supplies its customers with individual developers, teams of developers, or a complete software development management service. As co-founder Maxim Ivanov puts it, “outstaffing and outsourcing”.

Ivanov is CEO of the 350-strong company, which was set up in 2005 and has customers in the US and Europe, including UK telecoms provider Virtual 1.

“I did not believe this war would begin because a lot of people in the eastern part of Ukraine have relatives in Russia,” he said, adding that although it was “impossible to think it could happen”, the company did have a backup office in the west of the country.

This office was quickly utilised when Kharkiv was attacked by Russian troops early in the invasion, with Aimprosoft moving its headquarters to Ivano-Frankivsk in the west of Ukraine. Its staff are now spread across the country, with about 20% located in other European countries.

Pandemic preparation

Ivanov said the experience of remote working during the Covid-19 pandemic meant staff were equipped to work in remote locations, with developers having already switched from desktops to laptops. “Everybody was ready to jump in their cars and go to safety.”

He remembers being woken by the sound of shelling when Russian troops moved on Kharkiv. “It is a thing you really don’t want to remember. There was me, my wife, two kids and a cat – we took everything we could into our car and headed to our backup office,” he told Computer Weekly.

Unfortunately, car trouble and the inability to find a mechanic amid a war meant Ivanov and his family were stuck in the middle of Ukraine for months. “Public transport was running, but [we were in] a safe place and it made no sense to rush.”

From a business perspective, he said the early days were the hardest. “Nobody expected it and it took time for staff to get online again, but we were back to full strength within three days.”

Customers were understanding of any service interruption given the scale and global significance of events in Ukraine. “All of our customers understood the situation, and many even paid for the days developers missed because they were on the move. The help from our customers was unbelievable and no contracts have been cancelled due to the war.”

“Many of our customers have issues due to the current global economic problems, but we are still finding new projects. Although we are not in the best shape, we are in quite good shape”

Maxim Ivanov, Aimprosoft

In fact, the company is winning business. “Obviously, many of our customers have issues due to the current global economic problems, but we are still finding new projects,” said Ivanov. “Although we are not in the best shape, we are in quite good shape.”

The company is now giving back to the state. It has contributed financially to the war efforts, supporting military operations through equipment such as cars, medicine and drones. It also has staff on the front line.

One of the company’s main goals is to retain all its staff and continue to pay their wages. “We care about our people and we don’t want to lose anybody,” said Ivanov.

He has no plans to leave Ukraine and is positive about the future. “We feel that we will win in the war. We rely on support from other countries, but if this continues, we will win and rebuild Ukraine. I want to stay here. I love my country.”

As well as opening its main office in the west of Ukraine, Aimprosoft opened five smaller offices across the country, each with its own power generation, to ensure if people lost power in the places they were living they could drive to one of these offices to work.

Safety first

Vlad Khodzinsky, vice-president at Ukrainian software development company Sigma Software, also founded in Kharkiv some 20 years ago, told Computer Weekly: “I clearly remember in the morning just over a year ago being woken by the sound of explosions. From that moment, I began to think about and plan for various scenarios.”

Although the company has since spread across the world, its headquarters and 90% of staff were traditionally located in Kharkiv, where Khodzinsky and his family were when the war began.

From his London office, where he is now based, he said: “As a father and a manager of hundreds of people, my first thought was to move my family to safety. My second thought was to move our employees to safe locations.”

Sigma Software, which provides software development, testing, consulting and cyber security services, has 38 offices in 17 countries, with about 2,000 employees serving hundreds of corporate customers, including Scania and AstraZeneca.

Most of the company’s employees and operations are in the Ukraine, including Kharkiv.

“As long as we are able to deliver services, we can support, donate, provide jobs, pay taxes and grow”

Vlad Khodzinsky, Sigma Software

Once his family and staff were relocated to safe places, Khodzinsky began to think about how to keep the business operating, always looking at the bigger picture. “As long as we are able to deliver services, we can support, donate, provide jobs, pay taxes and grow,” he said.

The company, its partners and its employees raised about $4m to donate in support to Ukraine and its people. The money was spent on equipment for the war effort.

According to Khodzinsky, Sigma Software’s expertise in business continuity kicked in when Russia invaded. The company has been building that expertise for nearly a decade. “For us, the war started in 2014, and since then we have constantly focused on that risk. For example, our infrastructure and servers were already in safe European countries.”

He said its offices also have their own diesel generators which can provide energy for two weeks, as well as backup internet connections.

Distributed workforce

The company now has a strategy to balance its workforce with less reliance on Ukraine-based staff.

“We are hiring more people outside Ukraine now as part of our strategy to have more distributed and balanced teams. We hope to have about half in Ukraine and half in other European countries,” said Khodzinsky.

He said the strategy was to help the company overcome nervousness from customers who are sometimes “not ready to hire in the Ukraine” as a direct consequence of Russia’s invasion of the country.

Reducing its Ukraine-based workforce was a tough decision, but as part of its hiring process the company will look to offer jobs to displaced Ukrainians as well as locals in other countries. “It is an opportunity for us to hire somebody who is in need of a job,” said Khodzinsky.

Power struggles

In September 2022, Computer Weekly spoke to Konstantin Klyagin, founder of Ukrainian software development service provider Redwerk, about the company’s reaction to the war and its business continuity plans.

He said since the interview his company has faced new challenges. “The biggest change is that, starting from October 2022, Russia started recurrent massive air raids on the critical energy infrastructure, which impacted the entire Ukraine.

“Even though our team is distributed across Ukraine, many teammates remained in Kyiv, which was – and still is – the primary target of Russia’s terrorist attacks on civilians”

Konstantin Klyagin, Redwerk

“Even though our team is distributed across Ukraine, many teammates remained in Kyiv, which was – and still is – the primary target of Russia’s terrorist attacks on civilians.” 

He said power outages have become the norm for many Ukrainians.

“Honestly, we weren’t ready for such a turn of events, but the biggest lesson we’ve learned so far is that we need to act fast,” said Klyagin.

He said open, cross-company communication is vital. “Because our company has horizontal management, teammates across departments communicate freely. Everyone started sharing in Slack their tips and tricks on how to set up a home power station using a car battery and inverter, which providers ensure internet connection even during blackouts, where to buy quality power banks, and so on.”

Klyagin said the team was surveyed to see who needed help with what and found power outages and internet connectivity were problematic for many.

“We noticed that business centres started equipping their spaces with power generators and Starlink terminals to ensure an uninterrupted internet connection and power supply,” he said. “We decided to reimburse our employees who attend such coworking spaces and reserve several desks on a regular basis in a couple of centres.”

Those who live far away and prefer working remotely received power banks.

Klyagin admitted there had been a “slight” fall in productivity, but said he was very proud of how responsibly his team handled their projects and how supportive they were of each other.

“It would be impossible to solve problems without the support of IT suppliers”

Oleg Polovynko, Kyiv City Council

Oleg Polovynko, CIO at Kyiv City Council told Computer Weekly that the Ukrainian authorities rely heavily on the country’s IT sector to continue to function in the current uncertain environment.

“IT suppliers and systems integrators play a main role in digitisation. They have high-level specialisation and certified engineers, especially in cyber security, high-end applications and solutions,” he said. “It would be impossible to solve problems without the support of IT suppliers.”

Read more about Ukrainian IT sector’s response to Russian invasion

Read more on CW500 and IT leadership skills

Data Center
Data Management