Promising directions for IT industry development in Ukraine

IT Cluster IT Cluster

Alexander Medovoy,

Chairman of the Supervisory Board

of Non-Governmental Organization

Kharkiv IT Cluster


Today IT industry in Ukraine is the third industry in the country with export turnover of about 2 billion US Dollars per year, with a forecast of growth to 7.7 billion US Dollars by 2020. It is about 80 thousand of employed persons in 2015 and annual growth of 10 thousand employees. It is the creation by one person engaged into the IT of 3-4 additional jobs in related fields. It is the third place in Central and Eastern Europe in terms of market size and human capacity. It is the first place in Europe and the fourth place in the world in terms of service provision (after the USA, India and the Philippines).

The interest in IT field is growing worldwide. States – global competitors of Ukraine have been increasingly concentrating on business climate improvement for favorable growth of IT business within their territories. The deficit of IT personnel in Europe by 2020 will be equal to 900 thousand people, in Poland – to 50 thousand people. Under favorable conditions, Ukraine can carve out the niche. This is our window of opportunities.

We see three main directions for IT industry development in Ukraine.

The first one is the development of legal framework, namely the development of tools ensuring proper protection and conditions for transfer of intellectual property rights taking IT specific into account; modernization of labor legislation and its unification with international practice models (introduction of non- enticement conditions, temporary ban on work with competitors, obligation to work within the prescribed period, etc.); development of efficient means ensuring protection of confidential and commercial information; improvement of economic legislation for the development of start-up environment. The legal framework for launching commercialization process in respect of insights made by research centers under higher education institutions and enterprise development at the premises of institutions is worth consideration. The experience of Silicon Valley (the USA) demonstrates that higher education institutions can serve the platform for breakthrough in the field of technology and business.

The second direction is connected with the education. Today there is a significant gap between actual practice and education. Companies have to additionally train graduates upon their graduation. Educational programs are not adapted to market requirements. Teachers are not familiar with the practice. The Law prevents launching the process of state-private partnership in this field. Legal tools of such partnership are either underdeveloped or non-existent and strong bureaucratization of the process in higher education institutions makes it difficult to achieve synergies between business, education and science.

The third important direction for industry development is, of course, the improvement of business environment. Political and economic instability, legislation unpredictability, absence of efficient legal means for businesses protection, arbitrary treatment of control and law enforcement authorities affect the attractiveness of Ukraine as a business location, as well as the competitiveness of Ukrainian companies and the state as a whole in the global market of IT services.

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