How the IT industry of Ukraine and Eastern Europe works: a report

According to the assessment of compilers, Ukraine, Belarus, Poland and Romania formed a cluster that is among the top 5 global software development centers, however, its share is still small – only 5% of world service supplies.

The total volume of IT exports from these countries by the end of 2018 was about $13 billion, $4.5 billion of which is Ukrainian. For comparison, China provided IT-services for $38 billion, and India – for $111 billion.

Eastern Europe in numbers:

The total volume of IT exports is $13 billion.
Profit of the largest 477 IT companies from the list is $5 billion.
Annual revenue growth in the region is 20-25% against 5% worldwide.
The number of IT specialists in the region is 700,000 people.
The annual number of graduates in IT field is 60,000 people.
The number of mergers and acquisitions for the 2015-2018 year is 74 transactions.

The report also provides a brief excerpt for each of the leading countries in the region.

Poland

35% of revenue in the market falls on software development.
By 2022, sales of IT services in the country should reach 14 billion euros.
Wages are rising, but still they are 46% lower than in Germany.

Belarus

According to the World Bank assessment, the country is among the top ten countries in the world in conducting IT-friendly reforms.
60.5% of IT specialists are engaged in outsourcing services.
IT industry ranks third in the country in terms of the number of vacancies.

Romania

From 2014 to 2017, the turnover of the country’s IT sector grew by an average of 13.4%. Projected growth is 15.3%.
Altogether, 185,00 specialists are employed in the IT industry.
The software and IT services sector has 96,000 employees. Estimation by 2021 is 125,000 people.
Since 2013, wages have increased by an average of 11.5% per year.
Wages are still more than 50% lower than German ones.

Ukraine in numbers

Total information:

The number of IT specialists is 172,000 people. Most (46%) work in outsourcing. Product development employed 29% of the staff and 11% of outstaff.

Distribution of specialists by type of company and experience

27% of specialists have 1-2 years of experience. Another 29% work in the field for 3-5 years. There are 17% employees with experience from 6 to 10 years.
Men account for 77%, and 23% for women.
72% of employees are under 30 years old.

Distribution of specialists by age and gender

The annual number of graduates in IT field is 23,000.
The number of universities and colleges, graduating IT specialists is 150.
In 2018, the share of IT exports rose to 4.5%. This is the second place in the overall export structure. The expected growth by 2025 is 8.4%.

Companies and locations:

The total number of service IT-companies is more than 750.
The number of service IT-companies with a staff of more than 50 people is 245.

Ukrainian IT Clusters

The most popular form of organization of the company is Limited Liability Company, there are more than 45% of such business organizations.
Most IT companies are located in Kyiv (118). This is followed by Kharkiv (68), Lviv (64) and Odesa (41).
More than 60% of companies have a head office in Ukraine. Another 21% are located in the United States, 14% – in Europe.

IT business revenue:

Annual profit of 245 largest IT-companies is $2.07 billion.
The average revenue per engineer is $50,000 per year. The average hourly rate is $34.

More than 50% of revenue comes from the US market. The United Kingdom comes in the second place.
78% of companies make money on web development, 64% – on the mobile applications development.
Office rental prices vary. A-class office space in Kyiv is $28-38/month, in Lviv/Odesa/Kharkiv – $3-5.

It is reported that attracting IT specialists in Kyiv costs the most. The salaries of project managers here are higher by 22%, team leads – by 19%, senior project managers – 3%.